Report: Wells to Require Pre-Approval for Outside Investment in FiNet Shops

Wells Fargo Advisors is introducing a new policy mandating independent brokers within its “FiNet” financial network channel obtain approval before selling stakes in their practices, according to a November 5 report by AdvisorHub citing anonymous sources familiar with the matter.

The move arises out of FINRA's Rules 3270 and 3280 that independent brokers seek prior approval for private deals that may conflict with client interests, with Wells Fargo reportedly expressing concerns that some outside investments may run afoul of this regulatory obligation.

Wells Fargo began cascading the policy to brokers in recent months, AdvisorHub said, noting that LPL Financial similarly told larger practices on its platform they must receive authorization before accepting outside investment. Unlike Wells Fargo, LPL also buys stakes in the independent practices on its platform.

One source told AdvisorHub that the move could push some FiNet practices to leave and start their own independent shops.

Source: https://www.advisorhub.com/wells-fargo-requiring-pre-approval-of-outside-stakes-in-finet-practices/