Who’s Looking Out For You?
The disturbing Wells Fargo story that broke last night hasn’t been given near enough attention in today’s news cycle. A quick recap: More than 5,300 Wells Fargo employees have been fired and the company was fined $185 million following the revelation that Wells Fargo employees have been creating unauthorized bank accounts and filling out bogus credit card applications for their existing customers.
According to the story, this practice has been going on for the past 5 years! Wells Fargo (like many large banks) initiate incentive-compensation programs that measure employee performance based on the number of new accounts opened or the number of customers who apply for new credit cards. The workplace environment gets competitive as a result and bad behavior follows. Large institutions such as Wells Fargo that offer a broad platform of services also reward their employees for cross-selling their various products.
- Have a checking account with our bank, why not open a brokerage account?
- Have a brokerage account, have you thought about re-financing your mortgage with a Wells Fargo line of credit?
- Happy with your mortgage? Check out the benefits our credit cards offer!
These services or products may or may not make sense for Wells Fargo customers, but the point is that most large banks don’t serve their clients’ interest first. These institutions simply are not set up to function with that business model. As I outlined in my new book, More Than Money, I came to this realization early in my career on Wall Street. The second chapter of my book opens with the following passage:
“I can’t emphasize it enough: Wall Street is about numbers and nothing else. If people were numbers and not human beings, the typical Wall Street approach would work fine. But we aren’t numbers. So turning everything into a number isn’t enough.”
I founded The Johnston Group in 1994 to escape this side of the financial world and create an independent firm that solely focused on serving our clients’ best interests. I’m incredibly proud of our unique process, WealthCare360™, that is entirely client-centric and focused on their goals and priorities.
Lots of investors enjoy working with banks like Wells Fargo and their team of advisors because of the strong, national brand name and the vast resources offered within their framework. For them, there’s a certain comfort level underneath the umbrella of these large institutions. I’m not suggesting everyone affiliated with banks such as Wells Fargo are bad people or crooks. But I can guarantee that their overall business model is not designed to prioritize their clients’ overall interests first.
As you make decisions regarding your life, your money and your dreams, always ask the question:
Who’s looking out for you?