Wells Gives FAs Relief on Small-Account Penalty Payout
Acknowledging the devastating effects of the coronavirus economy on some portfolios, Wells Fargo Advisors is using the higher of current values or where customer household accounts stood as of Dec. 31, 2019, to determine whether to impose a small-account payout penalty.
“Our approach is designed to protect financial advisor compensation,” spokeswoman Shea Leordeanu said of the decision to modify the small-household penalty. “Recent market volatility may have reduced the size of those household values under $250,000.”
The new valuation method will be in effect through the end of 2020, she said.
The policy change is the latest of several that Wells Fargo Advisors and other firms have made in recognition of the unique effects of the pandemic on the economy and investment portfolios.
Wells Fargo Advisors last month withdrew a plan to raise to $500,000 the asset levels customers must have to avoid account maintenance fees, keeping the level at $250,000.
Morgan Stanley delayed until this fall a new grid feature that raised revenue thresholds in order for brokers to qualify for the same payouts as they received last year.
Merrill Lynch has waived a June review to determine if brokerage teams can continue to qualify for higher payouts based on clients’ participation in banking and other noninvestment programs.
RBC Wealth Management U.S. has temporarily relieved its brokers of small-household payout penalties on new accounts and any that fell below $100,000 as of March 1.
“They really are just putting that money back into the advisors’ hands for the rest of the year,” compensation consultant Andy Tasnady said of Wells Fargo’s small-household penalty modifications. “They weren’t counting on accounts above $250,000 falling so much.”
“On Wall Street” earlier reported Wells’s liberalized small-account policy.