The head of Wells Fargo's wealth and investment management group, which includes 14,544 financial advisers, exhorted his employees in a memo Thursday to remain upbeat and confident in the face of the bank's latest potential scandal.
Hours after the company revealed that in response to questions from the Justice Department, its board of directors had launched an investigation of certain investment practices, the missive was sent to advisers and employees by Jon Weiss, head of the wealth and investment management group.
"We will get to the bottom of these issues and resolve them," Mr. Weiss wrote. "Let's resist any temptation toward cynicism or negativity. Instead, I encourage you to dig deep, stay positive, believe in each other and the good work we do, serve our clients and lead each other forward."
"Never doubt that we are a great and ethical team serving the important needs of our clients and society," Mr. Weiss wrote. "Let's keep marching forward on that noble path."
A spokeswoman for Wells Fargo, Kathleen Leary, reemphasized Mr. Weiss' message to the Wells Fargo troops. Mr. Weiss hopes that Wells Fargo employees "stay positive," she said.
The Department of Justice has instructed Wells Fargo & Co. to conduct an independent investigation of its Wealth and Investment Management business, which includes Wells Fargo Advisors, after whistleblowers flagged "sales problems" in the unit, according
to a report from the Wall Street Journal Thursday morning.
Wells Fargo acknowledged
in a filing with the Securities and Exchange Commission Thursday that the review "is in its preliminary stages."
"A review of certain activities within Wealth and Investment Management (WIM) being conducted by the Board, in response to inquiries from federal government agencies, is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the Company's investment and fiduciary services business," according to the filing.
Wells Fargo has been dealing with scandals for the past year and a half, much to the dismay of many of its retail brokers and financial advisers.
Its retail banking group was fined $185 million by regulators in September 2016 for opening banking accounts for a few million customers without their knowledge or approval. The bank also was scrutinized last year for its auto-loan practices, with hundreds of thousands of clients who took out car loans charged for insurance they didn't need.
Wells Fargo Advisors had experienced
three consecutive quarters of adviser flight after news of the banking scandal broke. However, the firm seemed to turn things around in the third quarter last year, notching an increase of 37 advisers. It then saw a slight decline in adviser head count in the fourth quarter.
The wirehouse ended 2017 with a total 14,544 advisers and brokers, a loss of 20 advisers compared with the third quarter. The total is statistically flat quarter-on-quarter, but is down more than 2% from 2016, when Wells ended the year with 14,882 advisers.
In a statement Thursday, Wells Fargo said: "Our top priority is to rebuild trust with all of our stakeholders."
