Wells Fargo Advisors Raising Fees on Money Management Clients
I would hate to be an advisor for Wells Fargo right now. To start with, so many of these advisors are jumping ship and going to other brokerage companies. The name in itself does not raise great confidence because of all of the scandal over the past few years. Now, you have their management team making decisions that are not in the best interest of the clients of Wells Fargo.
Wells Fargo announced in a written letter to their advisers this week that they are going to be applying an additional .006% fee to any clients account that is essentially paying a fee for investment management. Yes it is a small fee. Yet, it is all relevant and it is still a rise in fees. Did administration costs just go up? No, but their advisor division revenues are sure taking it on the chin. They do claim that clients with mutual funds will get an offset of those new fees from the revenue sharing that a broker, such as Wells Fargo, gets with mutual fund companies.
What about the clients with exchange traded funds or stocks that don't have mutual funds in their accounts? They appear to not be so lucky. In fact, the trend is that the retail community is dumping mutual funds for exchange traded funds. So, could that be the reason for the rise in fees that benefit mutual fund clients and penalize everyone else?
What's worst, Wells Fargo advisors were not given enough of the detail to explain it thoroughly to their clients. They can't sugar coat that news. Wells Fargo is raising fees on their money management clients for no good reason.
Now, I have read all of this second hand. Here is the link to the article- https://www.investmentnews.com/article/20190129/FREE/190129933/wells-fargo-to-implement-new-fee-on-advisory-accounts - Maybe the original fee schedule is low enough to justify that rise in fees. I doubt that is the case. It is important to do a few things if you are a client paying fees. First, make sure your fees are in line with industry standard. Second, make sure that you are getting something in return for those fees. These are two things an advisor should be able to clearly articulate.