How to Avoid Being a Wells Fargo Investment Victim

Why this is important: Investors need to protect themselves against questionable ethics.

How to Avoid Being a Wells Fargo Investment Victim

Why this is important: Investors need to protect themselves against questionable ethics. Below, is at least one way to do so.

I am committed to keep these stories about Wells Fargo out there so that they don't get lost in the media. This bank has a recent history of putting their best interest ahead of customers. What's worst is that it isn't an advisor here or there. It appears to point to their culture. What is happening at Wells Fargo is happening everywhere to some degree. So, you need to be aware. Here is the latest:

Wells Fargo's wealth management business is facing a fresh investigation into whether clients were sold inappropriate investments and steered into high-cost advisory accounts." - see article here .

With a limited amount of knowledge about money, most investors don't know that they are getting taken advantage of. So, I thought I would offer up a protection plan to increase your chances of not becoming a victim of an unknowingly bad decision. When an advisor wants you to move money from the current recommended plan to a new one, go through this process:

(1) Ask what kind of benefit do they get for making this move versus what kind of benefit do you get. This answer should not be a tough one to give. If you find the adviser is struggling with the answer, then the red flag is flying. Also, look for any scripted "canned" answers. If you listen carefully, canned answers are easy to identify. Is this a parallel move or a move that creates added value for the client?

(2) After receiving the answer, have them draw that up in a written letter that is signed by the adviser as well as the adviser's supervisor. Now, the conviction in the recommendation gets tested. If there is firm conviction in the recommendation, getting that letter should not be a problem. I am no attorney and I can't say whether or not that helps in a legal matter. I will say no supervisor wants to sign off on a recommendation of one of their advisers unless they are completely sold on it. Having said that, keep in mind that there are people with zero reservations when it comes to violating ethics.

The question that you should always have when dealing with an adviser is critical. Am I dealing with a salesperson first or a person who is genuinely focused on putting my needs first? In life, you will come across both types.

Comments
No. 1-2
BobBrooks
BobBrooks

Editor

@JosephC - agreed - the Credit Union model is often overlooked - great way to do banking

JosephC
JosephC

Good advice! Wells Fargo is the poster child of why you should use a credit union where you are the share holder and not just the income stream.

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