Wells Fargo will halt on January 1 its 401(k) matching contributions for employees who earn more than $250,000, a spokesperson confirms.
At same time, the bank will make “discretionary” 401(k) contributions — ranging from 0% to 4% of yearly compensation — for employees earning less than $150,000 annually, according to a Wells Fargo memo sent to all employees.
The bank will also start contributing 1% of “certified compensation” to 401(k) accounts of all employees who earn under $75,000 annually, the memo says.
The changes are aimed at “supporting our lower-paid employees” and helping “create greater economic opportunities for all employees,” according to the memo.
“These changes are not intended, and we do not expect, to realize significant savings,” the memo adds.
The new 401(k) matching contributions policy was first reported by Advisor Hub, which says that Wells Fargo’s full 401(k) matching contribution had been 6% and that majority of the employees will remain eligible for that.
The Wells Fargo spokesperson didn’t say how many of the bank’s 12,908 financial advisors will stop getting matching 401(k) contributions. The matching contribution will be made annually and deposited at the end of the plan year, with compensation for eligibility purposes defined as annual certified compensation paid in the year, plus any deferred compensation amounts, according to the spokesperson.
The new 401(k) matching contributions policy will probably spare advisors generating less than $600,000 in annual production, based on Wells Fargo’s payout grid formula, according to one recruiter who asked not to be identified.
Some advisors will gripe, though, he says.
“You take something away, people are used to it, you’re going to irritate a few people,” he says.
The recruiter nevertheless forecasts that the compensation of most Wells Fargo advisors will rise as stock market appreciation has boosted their fee-based production numbers and, therefore, their payouts.
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