Wells Fargo Advisors, a unit of Wells Fargo & Co., is no longer letting its advisers sell leveraged and inverse exchange-traded funds through advisory accounts.
The policy was adopted several weeks ago, according to a Wells Fargo adviser in the bank brokerage channel, who wished to remain anonymous.
"As a matter of firm policy, we can't solicit those products," the adviser said, adding that the change affects a small number of brokers. Clients may still buy leveraged or inverse ETFs unsolicited through a non-fee-based account if the profile on the account includes "trading and speculation," the adviser said.
A Wells Fargo Advisors representative had no comment on its sales policies regarding leveraged and inverse ETFs. In an e-mail last month, the representative said the company was reviewing its policy regarding nontraditional ETFs.
"There are brokers out there who lack the sophistication to understand how these products work, and how damaging it could be if the market were to move against a client," the adviser said. "The firm is just trying to protect itself."