Wells Fargo Advisors Crooked or Stupid, one or the other St Louis Missouri

In a seven year period when the S&P 500 index grew by slightly more than 100%, my nest egg in the Wells Fargo Advisors Fundsource program grew by only 58%.  I made no contributions or withdrawals during this period.

Was the other 42% in squandered market gains all due to WFA’s ineptitude? Good heavens, no! Eleven percent of the original nest egg was PAID to WFA, in return for them squandering the remaining 31%. In summary, I got 58%, WFA got 11%, and the other 31%? Whoosh! Gone (maybe…see below).

The fees were paid because this was a “managed” portfolio, the Fundsource program in particular. I signaled a desire for long term growth and a tolerance for risk. Wells Fargo Advisors, as a justification for their fee, promised regular reviews of the portfolio to remove underperforming elements.

Following a sharp drop in the nest egg’s value in a falling market in the latter half of 2011, WFA appeared to have adjusted its strategy and resumed following the S&P 500 growth trend.

But beginning in 2014, WFA appears to have fired its analysts and trained a pack of orangutans to throw darts at a board full of fund possibilities. How else could you explain the nest egg’s performance since then, including the extraordinary second half of 2014 (circled on the chart), during which the monkeys managed to lose some of the nest egg in a rising market?

These “managed” programs, whose fees are a percentage of the portfolio balance, should contain an incentive for WFA to do better than this.

But conspiracy theorists could be forgiven for speculating on a far more lucrative approach for WFA than waiting for the monkeys to have a lucky fiscal quarter, namely, put all the Fundsource investors’ assets into an S&P 500 index fund (the upper line in the chart), provide the investors with regular reports to justify why their investment (the lower line) consistently underperforms the market - replete with pages of figures and graphs, and yards of disclaimers - and pocket the difference, the lost 31% in this instance.

After all, if WFA is as smart as they should be to justify their fees, they would be quite capable technically of the hypothesis above.  And it’s well within WFA’s ethical boundaries. Remember, this is the company that recently paid a $185 million fine over its staff’s creating some two million fake accounts.

Just as startling as the poor portfolio performance (which fundamentally altered my retirement schedule) was the massive indifference of WFA staff when presented with the summary of the damage they did.  It was an attitude similar to that of the operator of a roadside restaurant that can peddle sorry meals all year long without needing repeat business, just new suckers driving by.

Anyone with a high tolerance for oily claptrap should contact Sean McVey (who consented to the chart’s publication) at 239-254-2230 or sean.mcvey@wellsfargoadvisors.com for his self-serving and condescending explanation of why you too should give WFA your money and wave goodbye to 42% of a rising market in seven years.

For a stern reminder why it’s pointless to complain about people like this, contact WFA Assist. VP David Clement at 314-242-3159 and listen to his “past performance is no predictor…” patter.

Run don’t walk your money away from these crooks.