Wells Fargo, the largest U.S. bank by market cap, was hit with $185 million in fines yesterday for secretly creating millions of unauthorized customer bank accounts and credit cards in order to generate fees and boost employee sales figures. The practice is shocking, to say the least, in its scale and widespread adoption across the bank's operations.
Confirming to CNN Money, Wells Fargo said it has fired 5,300 employees over the past few years as a result of these unscrupulous activities. That's right, 5,300. That's more than a few bad apples. That has the appearance of multi-level, multi divisional negligence and blatant disregard for the clients they serve. Unfortunately, while these are staggering figures, the issue is becoming that situations like this have become all too common within the banking industry.
In the never ending quest for profits, banks and brokerages continue to incentivize brokers and staff to cross-sell products, pushing loans, credit cards, mortgages and other bank products in a drive for an ever increasing share of your wallet. Ironically, back in a 2012 article by Forbes writer Halah Touryalai, Wells Fargo CEO John Stumpf bragged about Wells being a leader in these practices, treating customers across divisions as easy sales targets.
So what now? Everyone wants to sell you something so make sure you have a firm control of your resources with a solid understanding how you are being advised. Ask your advisor if he or she is a fiduciary and if not, find one. A fiduciary is required to act in your best interest and can help navigate the world of financial custodians and partners.
The right financial partner could make a world of difference.
Until next time...
-Tim Golas
Partner
Another Day, Another Fine: Wells Fargo Fined $185 Million and Fired 5,300
