Wells Fargo Reverses Plan to Eliminate 401(k) Match
Wells Fargo & Co. on Friday reversed its decision to end matching contributions to 401(k) retirement plans of employees earning $250,000 and higher.
Wells, which employs some 270,000 people ranging from tellers to highly compensated investment bankers, wealth advisors and money managers, couched its initial decision as an attempt to focus resources on low earners who were not saving for retirement.
“After additional review and consideration, we have decided to continue offering the 6% company matching contribution to all 401(k) Plan eligible employees, regardless of compensation level,” Wells spokeswoman Shea Leordeanu said in an email. “At the same time, we remain committed to putting a greater emphasis on how we support our lower-paid employees through our compensation and benefits program, including through a new nondiscretionary base 401(k) Plan contribution.”
It’s a “complete about-face,” chortled a Wells advisor in the Midwest, who said his well-compensated colleagues objected as much to the way the original decision was conveyed as to the loss of the benefit, which in 2020 can adds up to $17,100 to individual retirement plans.
“The senior leaders at Wells Fargo Advisors were not aware the change was coming, and we did not get a single ounce of communication framing the decision,” said the advisor, speaking about the initial decision on condition of anonymity.
The plan to reinstate the benefit was announced to managers earlier Friday, and conveyed companywide in the afternoon.
Pressed by low interest rates, billions of dollars of fines and settlements related to its fake-account scandals disclosed in 2017 and a Federal Reserve cap on its assets that curbs its lending limits, the fourth largest U.S. bank has outlined plans to cut $10 billion in annual expenses and to raise revenue.
Wells Fargo Chief Executive Charlie Scharf is considering selling the company’s $607 billion-asset investment management business, according to published reports, and has asked executives to present efficiency plans throughout the bank.
Barry Sommers, who recently joined Wells as head of its Wealth and Investment Management division, has responded with a blueprint to merge the company’s private banking businesses into its Wells Fargo Advisors brokerage unit. Wells last quarter laid off a “significant number” of salaried brokers, Leordeanu said last week.
The original plan to eliminate the 401(k) match for upper-income employees was not intended to generate “significant savings,” Wells spokeswoman Beth Richek said on Wednesday.
Wells is continuing with its plan to contribute 1% of compensation annually to new or existing 401(k) plans of employees making less than $75,000.