Septuagenarian Broker Accuses Wells of Reneging on Promise of Debt-Free Retirement
A 21-year industry veteran in Trinity, Florida has filed a breach-of-contract and fraud claim against Wells Fargo Advisors over recruiting loan balances that the firm is now seeking to recoup upon his retirement.
Avery Wilkins, 74 and still working, claims Wells Fargo managers had promised him when he joined from Morgan Stanley nine years ago that he would be able to exit Wells without having to pay back his recruiting loan as long as he remained with the firm until at least 2018 and agreed to leave his book at Wells when he retired.
Wilkins said he owes an estimated $479,000 in balances tied to the initial loan and performance bonuses. Although lawyers say odds of prevailing on an oral agreement from hiring managers would be slim, Wilkins’ attorney, Robert Eckard in Palm Harbor, Florida, said that he plans to argue that oral agreements are enforceable under state law.
The broker also states in his complaint that it is “common practice in the financial advisor industry” that if a broker retires and leaves their book to another advisor, the inheriting advisor takes on the remainder of the note.
A Wells spokesperson declined to comment citing policies against discussing pending litigation.
Even under potentially more favorable state law, his case may face long odds, lawyers said.
“About the only way for Wilkins to likely prevail on his claims would be for him to produce indicia of an oral contract or to present emails, instant messages, direct messages, etc. demonstrating that the parties had come to an agreement to waive his repayment and, or modify the repayment terms of the extant contract,” said Bill Singer, a securities lawyer who blogs about brokers’ legal battles, wrote in an email.
These types of disputes, however, could crop up more often as the average age of brokers continues to tick up, lawyers say. The average age of financial advisors is 55, and approximately one-fifth of advisors are 65 or older, according to a study that the business data analytics firm J.D. Power published two years ago. At the same time, firms have been growing aggressive in offering bigger and bigger loans to seasoned advisors, even those who may have less than a decade until they seek to retire.
Wilkins’ complaint does not include claims of age discrimination, although his lawyer did not rule out adding them in the future.
In his lawsuit, Wilkins alleges when he was 65 and Wells was recruiting him, he raised concerns with its managers that a 10-year $460,000 promissory note he was signing would make him “forced to remain” until he reached 75.
A then-regional director at Wells pledged to him that he could instead retire in six years, when he was 71, if he turned over his accounts to his partner and would be liberated from any promissory-note obligations, according to Wilkins’ lawsuit.
Wells managers’ pledge to allow him to retire financially unobligated to the wirehouse by 2018 was “instrumental” in Wilkins’ decision to accept its employment offer, Wilkins said.
In an alleged reversal, however, in 2016, another Wells regional manager told Wilkins the agreement for his retirement would “not be honored,” the lawsuit states. Instead, he would be required to pay about $479,000 representing an unvested portion of the note and additional yearly performance-based bonuses of as much as $92,000 per year that were also structured as forgivable loans.
Although the reversal allegedly occurred in 2016, Wilkins, who is suffering health issues and thus wants to retire, delayed filing his complaint because he had previously been engaged in a “dialog” with Wells that seemed “promising,” Eckard said.
In his claim, Wilkins also argues Wells had wrongly forced him to transfer some 401(k) accounts to his partner, causing him to sacrifice $27,000 in revenues. It also changed the way it calculated financial advisor loan repayment terms in 2016 and 2017 in a way that extended the terms of the loans “without the financial advisors’ consent or knowledge.”