You may be asking whether it is time to switch your asset accounts from Wells Fargo to another bank.
For nearly two years federal and state authorities have been investigating the bank’s business practices and have uncovered disturbing trends. The first investigation uncovered the secret creation of millions of bank and credit card accounts without their customers knowing it. Other practices include fraudulent charges imposed on auto and mortgage loan customers as well as on its wealth-management clients.
And most recently Well Fargo is refunding millions of dollars for products ranging from pet insurance to legal services added to hundreds of thousands of customer accounts without their full understanding.
To counter this parade of bad news, Wells Fargo launched a marketing campaign dubbing 2018 the year Wells Fargo was “Re-Established.” You may have seen the full-page double ad in the New York Times or Wall Street Journal.
But should you be swayed and stay with the bank or is it time to go?
What Should You Do?
These investigations uncovered the exposure of all of Wells Fargo’s customers to potentially fraudulent behavior. But should you switch to a new bank if you have a checking, savings, or brokerage account with Wells Fargo?
I hear three reasons why most clients don’t switch to a more ethical bank.
Excuse 1: Moving your accounts is too much work. Who has time?
Folks often have several asset accounts with the same bank: savings, checking, brokerage, investment accounts etc. Identifying a new bank, opening new accounts, changing your auto-debits, and closing the Wells Fargo accounts can be a stressful process. It will need your attention for several weeks, taking time away from other activities.
Although legitimate, these concerns seem trivial when considering the safety of your assets. Spending 1-2 hours over a few weeks to make sure your wealth’s safekeeping can save you from months or years of litigation between authorities and your bank as you wait for reimbursement. And in the process you can simplify your finances.
Excuse 2: I like my local branch and I haven’t been hurt.
You may have a good relationship with a Wells Fargo representative or broker. Or you think you have not been harmed by Wells Fargo’s activities. All true. But with that said, is Wells Fargo the place you want to be?
It is not like they offer superior interest on your savings or checking accounts. Local banks in the Washington area such as National Capital Bank or Navy Federal Credit Union offer higher checking, savings, and CDs rates. And there account fees are lower (or they don’t charge any).
Wells Fargo isn’t doing you any favors by giving you between 0.03% and 0.08% on your savings account! You are losing money staying with Wells Fargo because inflation is running at 2.0% so the money you have with them continually loses value.
Consider this: you shop for gas that is $.05/gallon cheaper but you won’t switch banks when you could be earning $60/month more on your $10,000 checking account balance.
Your Wells Fargo brokerage account is not necessarily safe either. Wells Fargo has been internally assessing whether there have been inappropriate referrals or recommendations about rollovers for 401(k) plan and other investment services. And the bank has found instances of incorrect fees applied to certain investment accounts.
Use these tips to find a fiduciary that has your best interests at heart when evaluating your investment options.
Excuse 3: Taking your business elsewhere won’t make a difference to Wells Fargo.
Consider reframing the thought as doing what’s best for you and not whether Wells Fargo will “feel the pain” of your lost business.
Do you really want to reward a flawed corporate culture? Investigations targeted multiple areas of the bank and revealed deep-rooted values that placed profits before honesty. Unrealistic sales goals lead to decades of consumer abuses including millions of unauthorized bank and credit card account openings. The same thing happened in the home mortgage division and the investment banking divisions. It doesn’t seem to end.
A corporate culture, set by management and reinforced by employees, is not easily changed. A company’s corporate culture can be its most valuable asset, or as in Wells Fargo’s case, one of its greatest liabilities.
In sum switching banks may be a pain, but by doing so you’ll safeguard your assets, not be subject to potential abuse, earn more money, and not reward a lax corporate culture.
Note: Matthew Sikora contributed to this blog.