Wells Fargo is ending monthly incentive pay for some call center employees in response to new federal conflict-of-interest rules for retirement accounts, according to people familiar with the issue.
The San Francisco-based bank’s move follows compensation changes previously announced by rivals in response to the U.S. Department of Labor’s “fiduciary rule,” set to take effect in April. The rule requires financial advisers to put clients’ interests first – before advisers’ own profits – in providing retirement investment advice.
Wells Fargo informed affected employees, including in Charlotte, of the compensation overhaul on Wednesday. The change applies to roughly 70 employees, including about 50 in Charlotte, who work in contact centers that handle phone calls from wealth and investment management customers and potential clients, a person familiar with the issue said.
“Right now morale is pretty down,” said an affected employee who works in Wells’ West W.T. Harris Boulevard call center. The employee said he expects the change to result in much lower bonus payouts.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
“A couple of folks have left early from work disappointed,” said the employee, speaking on condition of anonymity because he was not authorized to discuss the matter publicly.
“A lot of folks here can range from $20,000 to $25,000 in commission a year,” he said, calling the compensation changes “frustrating.”
Wells Fargo declined to comment.
Employees who now receive monthly incentive pay will instead receive an annual bonus, another person familiar with the matter said. Base salaries will increase to become a larger part of employees’ overall compensation packages, the person said, adding that implementation efforts are expected to start next year with full roll-out expected in 2018.
The aim is to better align compensation to meet clients’ investment objectives by putting greater emphasis how good a job employees do toward that, the person said.
The compensation changes also come as Wells Fargo is addressing a sales scandal involving a different part of the company, its retail banking operation. Starting in October, the bank eliminated sales goals in retail banking, after authorities said employees under pressure to meet sales target may have opened millions of accounts without customer permission.
Wells Fargo recently has made other changes affecting employees in its wealth and investment management unit.
In October, the Observer reported Wells was changing how it refers to performance meetings for some employees in the unit. In a switch affecting several hundred Wells call center employees in Charlotte and elsewhere, “goal setting” meetings have been changed to “performance review” meetings.
Wells’ wealth and investment management unit is run by Charlotte-based David Carroll.
The employee who works on W.T. Harris said his team refers clients in need of individual retirement accounts to other Wells Fargo advisers who can open such accounts. He said his current monthly bonuses are based in part on how many referrals he makes and how much money clients actually invest in their Wells Fargo IRAs.
Wells Fargo’s decision comes after other banks have taken similar steps in preparation for the Labor Department rule.
Charlotte-based bank of America has said its Merrill Lynch unit plans to eliminate an option for retirement savers to pay commissions for trades. Instead, investors seeking a retirement account at Merrill will be charged a fee based on a percentage of their assets.