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Wells Fargo Wealth Management Review

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Wells Fargo

Though it's perhaps best known for its banking services, Wells Fargo is also the fifth-largest wealth management provider, according to Barron's 2017 ranking. The company, which has been in existence since 1852, has nearly 14,400 financial advisors on its Wells Fargo Advisors team and $497 billion in assets under management.

Wells Fargo is both an investment advisory firm and a broker-dealer. Its clients include individuals, pension or profit-sharing plans, trusts, estates, charitable organizations, corporations, governmental entities, educational institutions and banks or thrift institutions. Wells Fargo Advisors generally recommends its advisory services to individuals who have more than $250,000 to invest.

Wells Fargo Background

Founded in 1852 by William G. Fargo, Wells Fargo has been in business for more than 160 years. The company opened in San Francisco, offering banking and express delivery. Its express business led it to get involved in the stagecoach business, and it eventually came to own and operate the world's largest stagecoach operation - hence Wells Fargo's logo today.

The firm was created in 2009 after Wells Fargo acquired Wachovia Corporation. Wells Fargo provides its broker-dealer and investment advisory services through both Wells Fargo Advisors and Wells Fargo Advisors Financial Network, LLC ,the latter of which is a network of independent contractor representatives.

What Types of Clients Does Wells Fargo Accept?

Wells Fargo is capable of working with a notably wide range of clients. Its account minimums make its services accessible to non-high-net-worth individuals, and it also works with high-net-worth individuals. Additionally, Wells Fargo serves pension or profit-sharing plans, trusts, estates, charitable organizations, corporations, governmental entities, educational institutions and banks or thrift institutions.

Wells Fargo Minimum Account Sizes

Wells Fargo notes on its website that it generally recommends its advisory services to those who have at least $250,000 to invest. Programs offered through Wells Fargo Advisors Financial Network, a network of independent contractors that also offers investment advisory services, have varying account minimums. Minimums for its 29 available wrap fee programs range from $10,000 to $3 million.

Services Offered by Wells Fargo

Wells Fargo provides investment advisory services through both Wells Fargo Advisors and Wells Fargo Advisors Financial Network, which provides services through a network of independent contractor representatives. Prospective clients can get a free initial consultation. The firm offers the following products and services:

  • Advisory services
  • Asset management
  • Brokerage services
  • Estate planning strategies
  • Retirement planning
  • Portfolio analysis and monitoring

Wells Fargo also offers comprehensive financial planning as one of its investment advisory services, though this service is not integrated with existing accounts and only includes the creation of a plan.

Wells Fargo Investment Planning Process

Wells Fargo's investment planning process is focused on clients' life goals. The firm takes clients through an eight-step process that it calls The Envision Process. This involves identifying your major life goals and then creating an investment plan and asset allocation that supports those goals. According to Wells Fargo, clients' Envision plans will take into account not only their life goals, but also their education goals, assets and liabilities, cash flow requirements, retirement planning needs, levels of acceptable investment risk and asset allocation objectives.

First, clients will work with their advisor to define their major life goals and figure out what their ideal goals would be, as well as their acceptable goals.  From there, the advisor will help the client to prioritize their goals, which are then stress tested through statistical modeling. After these steps are complete, the advisor presents a recommendation for the client and the proposed asset allocation is then implemented. Once everything is in place, the advisor continues to monitor progress and work with the client to revise the plan as new goals and priorities arise.

Fees Under Wells Fargo

Typically, Wells Fargo Advisors charges clients a percentage of assets held in an account. This fee covers investment advice and trading costs. However, for certain investment advisory programs, clients are charged an asset-based fee as well as commissions on each trade that's made. In this arrangement, a client usually pays the asset-based fee to a third-party manager who has been selected to oversee their account. The commissions are paid to Wells Fargo for any services it provides.

The only advisory service that does not adhere to one of these two fee structures is Wells Fargo's financial planning services. Financial planning clients are charged a one-time fee that only covers the financial plan.

All of the investment programs offered through Wells Fargo Advisors Financial Network, a network of independent contractors, are wrap fee programs. Fee rates vary by advisory program, and the company lists the following rates for its wrap fee programs:

Program Annual Fee
Allocation Advisors 2.25%
Masters Program
  • Equity & Balanced Accounts: 2.50%
  • Fixed Income Accounts: 2.30%
Diversified Managed Allocations Program 2.55%
Private Advisor Network Program
  • Equity & Balanced Accounts: 2.00%
  • Fixed Income Accounts: 2.00%
Private Investment Management, Fundamental Choice and Quantitative Choice Programs 2.00%
Wells Fargo Compass Advisory Program
  • Individual, Multi-Asset and Asset Allocation Growth: 2.25%
  • Allocation Growth Strategies & Income Strategies: 2.25%
FundSource Program 2.00%
CustomChoice Program 2.00%
Customized Portfolios
  • Fixed Income Strategies: 2.28%
  • Equity Portfolios & Option Portfolios: 2.50%
Asset Advisor Program 2.00%

What to Watch out For

As mentioned above, Wells Fargo offers investment advisory services both through Wells Fargo Advisors and Wells Fargo Advisors Financial Network, which can get confusing. The former is a team of in-house advisors, while the latter is a network of independent contractor representatives. All of the investment programs offered by the network are wrap fee programs for which Wells Fargo Advisors will act as a sub-advisor and/or service provider to Wells Fargo Advisors Financial Network. When you’re searching for nearby financial advisors on its website, Wells Fargo does allow you to select whether you’re looking for Wells Fargo Advisors or Wells  Fargo Advisors Financial Network professionals.

It's also worth noting that certain investment advisory programs allow the use of margin, which will enable clients to purchase additional securities but will also increase their asset-based fee. The increased fee may incentivize advisors to recommend this strategy. However, Wells Fargo notes that this isn't suitable for all investors and can increase risk in an account.

Additionally, advisors receive different levels of compensation for different programs, which may create an incentive for them to recommend one program over another. Advisors may also be eligible to receive incentives or bonuses for meeting certain targets, such as referring business to affiliates or promoting investment advisory services.

If you've glimpsed at the news, you already know that Wells Fargo has made headlines numerous times in the recent years for a series of scandals. While many of these have been related to Wells Fargo bank, its wealth management unit also recently made news for allegedly recommending investments that "maximized revenue for the bank and compensation for its employees" and "weren't always in the best interests of clients," Bloomberg reported in April, citing former Wells Fargo employees.

Both Wells Fargo Advisors and Wells Fargo Advisors Financial Advisors Network have also had disciplinary issues with regulatory authorities - see more below.

Disclosures

Both of Wells Fargo’s investment advisory divisions have faced disciplinary issues in recent years.

In 2017, Wells Fargo Advisors consented to a cease-and-desist order, a censure and a civil penalty of $3.5 million after the SEC accused its anti-money-laundering unit of failing to file suspicious activity reports in a timely manner. While Wells Fargo didn't admit or deny the findings, it also agreed to review and update its procedures.

Wells Fargo Advisors Financial Network noted five disclosures over the last decade in its Form ADV paperwork filed with the SEC. Most of these disciplinary issues were related to record-keeping and supervisory systems issues. However, in one instance in 2009, FINRA fined Wells Fargo Advisors Financial Network for allegedly recommending certain mutual fund shares to clients when another option may have been better for certain clients.

Opening an Account With Wells Fargo

To find a financial advisor near you, simply go to the Wells Fargo’s website and scroll down to “Find an Advisor.” You'll then be prompted to enter your address or intersection, city, state and zip code and indicate whether you're interested in Wells Fargo Advisors, Wells Fargo Advisors Financial Network and/or Wells Fargo Banking and Investment Services. You'll then be provided with a list of nearby office locations, along with each location's direct phone number. Prospective clients can also learn more by calling (866) 224-5708.

Where Is Wells Fargo Located?

Wells Fargo was founded in San Francisco and its headquarters remains there, in the city's financial district. The company’s financial advisors are located across the U.S. in Wells Fargo Advisors offices and inside Wells Fargo branch locations. Wells Fargo notes its advisors are also available over the phone.

Tips for Choosing a Financial Advisor

  • Consider an advisor's certifications, which can be indicative of their areas of expertise and level of education. Two of the most distinguished certifications are the certified financial planner (CFP) and chartered financial consultant (ChFC), as they require extensive coursework, a certain level of experience and an agreement to abide by a code of ethics.
  • If you're not sure how to narrow down your search, consider using a financial advisor matching tool. SmartAsset's SmartAdvisor matching tool makes it easier to find a financial advisor by pairing you with up to three qualified advisors based on your responses to a series of questions about your financial situation, needs and goals. You can then read the advisors' profiles and interview them to determine who best suits your needs.

How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about cost of living in retirement there.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology SmartAsset calculated the average cost of living for retirees in the largest U.S. cities. Using that calculation, we determined how many years $1 million would last in retirement in each major city.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors throughout the country. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%, reflecting the typical return on a conservative investment portfolio. Finally, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would last in each of the cities in our study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research