Wells Fargo Advisors puts limits on dining with clients

The firm joins Merrill Lynch in revamping policies around client perks

Wells Fargo Advisors is joining Merrill Lynch in creating restrictions on how registered brokers and financial advisers at large financial institutions pay for or receive perks like meals with clients or outside money managers.

Taking clients out for a steak dinner or holding large meals at restaurants for prospects are time-honored traditions in the brokerage business, which has its foundation in a culture of sales but for the past 20 years has embraced financial advice.

Now, as several states and the Securities and Exchange Commission busily enforce or create new sales practice standards, big firms appear to be rethinking that brokerage tradition. They’re making the changes to meal and gift policies during the COVID-19 pandemic, a time when advisers and clients are staying home and avoiding face-to-face meetings.

Wells Fargo Advisors recently provided “clarification” to its advisers regarding sending meals to clients during a virtual meeting, according to one Wells Fargo adviser. Clients and adviser must be together via Zoom or other platforms eating together during their meeting.

“Clients must be in the virtual meeting while eating food,” the adviser said.

A spokesperson for Wells Fargo Advisors, Shea Leordeanu, confirmed the guidance to advisers. “We updated our policy to be in alignment with Finra’s guidance,” she said, referring to the Financial Industry Regulatory Authority Inc.

Wells Fargo Advisors last month updated its policy to allow virtual meals.

It appears that the brokerage industry is focused on the issue. In a widely reported memo Tuesday, Merrill Lynch said that “third party product and service providers” — think outside money managers and annuities underwriters — “cannot pay for gifts, meals and entertainment for employees.”

“That said, employees can attend business entertainment events and meals hosted by [outside managers] as long as they cover their own portion of the expense,” according to the memo.

“These changes further ensure business interactions with third parties continue to be in the best interest of our clients,” Merrill Lynch spokesperson Matt Card wrote in an email.