Wells Fargo & Co (NYSE:WFC) has announced plans to further integrate investment and corporate banks in a move aimed at offering better services to its customers and cut on its cost. The plan of the bank, which according to many, may lead to major layoffs in the future is expected to affect a lot of industry advisory teams, coverage groups equity and debt capital markets origination as well as some corporate-banking relationship managers.
In other news, its seems that it’s not only the savings and credit card customers who were misled by Wells Fargo & Co. A number of clients from the wealth management division of the bank were lured into management, which maximized revenue for the bank as well as compensation for its workers. This is according to reports from several people who are familiar with the matter as well as several documents. According to emerging reports, these investments did not serve the best interest of the clients. The investments included loans, trusts and estates.
As recently as 2016, wealth advisers were given very ambitious quotas hence could make more money by luring their clients into accounts with recurring fees and loans. This is according to people close to the matter who include five former and one current Wells Fargo advisers. To attain some goals, a number of advisers used financial planning software to manipulate data and later use the false results to recommend portfolios to clients.
The incentives and quotas the wealth unit’s strategy are the same as the inducements, which led to the company’s workers in the retails business sections to create around 3.5 million bogus accounts. The fake accounts scandal, which was unearthed in September 2016, culminated into sacking 5,300 workers of the bank and the then chief executive officer.
In the response to the allegations, the bank admitted that the wealth-management division used the incentives up to 2017 but noted that the incentives did not harm the customers. The bank has since announced that it is reviewing the activities of the investment and wealth-management unit. In a statement, the bank’s spokeswoman Shea Leordeanu said that any assertion that the bank’s present and past compensation program was meant to achieve anything apart from incentivizing positive client outcomes is not true.