Wells Fargo: The Tip of the Iceberg

Kudos to Matt Egan (@mattmegan5) for his piece on the systemic problem of aggressive sales tactics at large banks.  I spent the tail-end of my 'corporate career' as a portfolio manager at a large private bank.  I can tell you the sales pressure is real and unrelenting.  The regulatory environment and low interest rates have blown up the historical business model of traditional banking.  Rather than innovate and look for new revenue streams, big banks have doubled down on squeezing all they can out of existing lines of business. The cross-selling culture created by spreadsheet managers (many of whom have zero clue what it's like to be client facing) incentivizes associates to push products that clients do not need. 


Kudos to Matt Egan (@mattmegan5) for his piece on the systemic problem of aggressive sales tactics at large banks.  I spent the tail-end of my 'corporate career' as a portfolio manager at a large private bank.  I can tell you the sales pressure is real and unrelenting.  The regulatory environment and low interest rates have blown up the historical business model of traditional banking.  Rather than innovate and look for new revenue streams, big banks have doubled down on squeezing all they can out of existing lines of business. The cross-selling culture created by spreadsheet managers (many of whom have zero clue what it's like to be client facing) incentivizes associates to push products that clients do not need. 


The Wells Fargo scandal is on the extreme end of breaching fiduciary duty, but the aggressive sales culture is real throughout large banks.  Clients suffer from misaligned incentives, conflicts of interest, and products they do not need.  Associates are beaten down by management that only cares about selling stuff.  I expect government regulatory agencies to have a field day uncovering incentive systems that work against clients.  Wells Fargo CEO John Stumpf didn't do the industry any favors by punting accountability and deflecting blame. 


Banking executives have stated the massive fines from the financial crisis are now behind them.  The latest scandal is just the tip of the next iceberg.    

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