Seriously, It’s Time to Quit Wells Fargo
Wells Fargo just can’t handle it. Last week, the Bureau of Consumer Financial Protection fined the bank $ 1 billion for “bad” insurance practices. The Wall Street Journal is now reporting that the Labor Department is investigating whether the 401 (k) banking giant is transferring members from low-cost plans to more expensive IRAs.
Citing “someone familiar with the investigation,” the WSJ reports that “Wells Fargo managers have pressured the bank’s retirement department to recommend that clients open more expensive IRAs when they retire or quit their jobs.”
Under the Employee Retirement Income Guarantee Act, which governs retirement accounts, banks that maintain retirement accounts must act as trustees , that is, prioritize customers’ interests above their own. A whistleblower who spoke to the WSJ claims Wells Fargo violated this fiduciary duty by promoting more expensive plans and forcing members to buy their own funds, for which the bank charges additional fees.
A Wells Fargo spokesperson told the Journal that the company is “making significant progress in our efforts to identify and resolve any issues, rectify the situation and build a more efficient and stronger company.”
According to the magazine, the practice has led executives to institute asset retention targets for employees that sound strikingly similar to the methods that led Wells Fargo employees to open millions of fraudulent accounts and check and credit cards in customer names, a 2016 scandal uncovered.
So what can you do? It’s still early days, but if you are a Wells Fargo customer, double check the fine print on your IRA accounts (and any other financial products you receive through a bank) to assess fees and other management costs. And think about changing banks.