| NEW YORK
NEW YORK Oct 14 Wells Fargo & Co's
wealth management unit has changed the way it reports
cross-selling, the strategy at the heart of the scandal over its
aggressive sales targets, and now reporting assets referred from
The wealth management business reported a gain of $1 billion
in "referred investment assets" in the third quarter after
referrals from employees in bank branches, according to
corporate filings. The figure is in line with prior trends, the
bank said on Friday.
Cross-selling, or getting customers to buy products and
services from several business lines, was previously reported as
a figure that showed the average number of accounts held by a
client household if that client also had retail bank accounts,
like checking or savings accounts.
In August 2015, the last quarter for which it was reported,
the bank said the average wealth management client household had
10.52 accounts, the highest average account number of any of the
bank's business divisions.
Meanwhile, Wells Fargo said total profits dropped for the
fourth straight quarter as it set aside funds for potential
legal costs from a bogus-account scandal that led to its chief
executive officer stepping down.
The wealth business reported profit jumped 16 percent over
the previous quarter to $677 million on higher asset-based fees
and a greater percentage of brokers' paychecks being deferred.
Cross-selling is a widespread practice at banks and
brokerages, but the affair at Wells Fargo's community bank
raised questions about whether it is appropriate to set
aggressive sales targets for employees, and whether customers
really need all the products offered.
Massachusetts regulators recently charged Morgan Stanley
with "dishonest and unethical conduct" for having pushed
its brokers to sell loans to their clients.
Last quarter, Wells Fargo's wealth and investment management
unit said it was "evaluating changes in our cross-sell
methodology to better align our metrics with ongoing changes in
WIM's business and products," according to corporate filings.
Wells Fargo did not immediately respond to request for
(Editing by Jeffrey Benkoe)