Warren Buffett Still Supports Wells Fargo Despite Scandals



May 5, 2018 –


Billionaire investor Warren Buffett thinks Wells Fargo is a good investment even after the bank’s scandal history.

“The fact that you are going to have problems at some large institutions is not unique,” Buffett said in an interview at his annual shareholders meeting in Omaha, Nebraska.

The latest scandal emerged in a report by The Wall Street Journal.

It stated the U.S. Labor Department is investigating whether Wells Fargo coerced its customers who had affordable corporate 401(k) accounts to swap them for higher priced IRA plans once they exited their jobs or retired.

Want proof of Mr. Buffett’s loyalty to the bank? Here’s a video of Fox Business anchor Liz Claman interviewing Mr. Buffett:

History of scandals

Mr. Buffett’s support of Wells Fargo raised eyebrows because Wells Fargo has been mired in a quicksand of disgraceful behaviors.

For instance, the financial institution was hit with a $1-billion fine after it was learned the bank charged customers for unneeded car insurance, pushing some customers to default on loans and having their cars repossessed.

The Federal Reserve has also reprimanded Wells Fargo over “consumer abuse.”

In 2016, Wells Fargo created millions of fraudulent accounts without their customers’ permission. CEO John Stumpf immediately resigned. He was replaced by CFO and President Tim Sloan.

“The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office.”

-Dwight D. Eisenhower

Mr. Buffet believes Well Fargo’s wrongdoing was merely urging its employees to create the accounts.

Wells Fargo’s leadership

The Oracle of Omaha thinks the scandals won’t hurt the bank long term as long as Mr. Sloan remains as CEO.

“I see no reason why Wells Fargo as a company…going forward is in any way inferior to the other big banks with which it competes,” he said. “We have a large unrealized gain (in the stock). I like it as an investment.”

The bank traded at $52.41 per share the day before Mr. Buffett’s interview with Ms. Claman.

Let’s hope Mr. Buffett proves to be right.

From the Coach’s Corner, here’s a relevant article on B2C selling:

Want a Wealthy Clientele? Lessons from Investment Firms  — If you want a wealthy clientele, lessons from investment firms show you must focus on your relationship skills. You need to provide exclusivity, special client experiences with generosity and product quality.

Here are relevant business-banking articles:

6 Best Practices to Capitalize on a Business Loan — Whether it’s a business loan, a cash advance against your credit-card income, equipment lease or purchase or commercial mortgage loan, don’t have stars in your eyes. Be pragmatic.

4 Best Practices to Refinance Your Business Loan — Would you benefit by refinancing your small business loan to get a better interest rate and lower loan payments? Certainly, you would benefit from a lower interest rate and loan payments if you have cash flow issues. But there are other matters to consider before refinancing your loan.

To Get the Lowest-Cost Small Business Loan, Here Are 6 TipsThe U.S. Senate’s rollback of some Dodd-Frank’s banking rules appears to be a good sign for small banks and small-business owners.

Applying for Bank Loan? Here’s How to Shorten the Process — Business owners generally have two concerns when trying to get a bank loan or line of credit. Either they can’t qualify or they face scrutiny beyond belief. Wouldn’t it be great to save time and shorten the process?

Debt Consolidation Will Sink You without These 6 Tips — If you’re not careful in your debt-consolidation plan to bundle your debts for a lower interest rate and minimum payments, you might get into more financial problems. Here are six precautions.

5 Tips to Build Your Business Credit, Access Capital — Sometimes a business needs access to capital to grow. But in order to grow, it helps to build credit profiles to land financing.

“The supreme quality for leadership is unquestionably integrity. Without it, no real success is possible, no matter whether it is on a section gang, a football field, in an army, or in an office.”

-Dwight D. Eisenhower


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Author Terry Corbell has written innumerable online business-enhancement articles and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.




11 Financial Management Strategies for Turnaround Success



When it comes to management strategies for a successful turnaround, a quote by financial-world wizard Warren Buffett is apropos. 

“Risk comes from not knowing what you’re doing,” Mr. Buffett said.

My response: “Touché.”

It’s all about capital mobility created by effective management.

It stands to reason that turnaround success starts at the top – management must know what it’s doing and see the big picture. 

To help you see the big picture confronting you, here are 11 turnaround principles: 

1. Before acting, get the right information

Don’t get paralysis from too-much analysis, but know the difference when to act quickly or to be still. That’s where having experienced advisors will be productive for you.

2. For a 180-degree turnaround, use a 360-degree HR approach

Many solutions lie within your company. Employees should be assets. Conduct an organizational assessment.

Some employees can provide valuable insights about company culture, accountability, middle management, processes, internal communication, and customer preferences.

3. Consider yourself a CEO of your profession, not just your company

Complete balance is necessary. Whether you’re in the automobile business or technology, consider the perspectives of all your stakeholders not just your company.

“Risk comes from not knowing what you’re doing.”

-Warren Buffett

4. Be careful to whom you listen

Lawyers don’t always know best. After the Gulf oil spill, my sense is that BP suffered in crisis management because the CEO listened more to lawyers than business and reputation experts.

5. Become a master in tough-love management

Don’t allow yourself to become uncomfortably straitjacketed. You have to make tough decisions on which to act. This is not a time for people-pleasing. Evaluate your each member of your staff. Get rid of unproductive employees.

6. Analyze the root causes of your situation

They usually include the poor-employee performance, marketplace competition, inaccurate sales forecasts, unproductive strategies, weak execution of strategies, expenses, inadequate cash flow, ineffective financial controls, and weak economy (which is why my writing also focuses on public policy).

7. Do your due diligence regarding your future

Assuming your firm is worth the turnaround effort, assess your prospects. How do your prospects align with your potential for improvement? A lot depends on two key elements of culture.

The abilities to innovate and to respond to the marketplace have a direct impact on your success. So if you’re dissatisfied with your revenue, it’s time to evaluate your culture. Why? Superior culture drives business performance.

Superior culture drives business performance.

8. Plan strategically with proven approaches

Consider time-proven tactics, which include dumping poor assets, increasing revenue, lowering costs, managing your inventory costs and making strategic purchases.

9. Assess your cash-flow issues

Develop and implement an emergency cash-flow plan.

Your image can also suffer with vendors or with customers, if you don’t manage your cash flow. There are at least seven ways to creatively manage your cash flow.

10. Restructure your company

By now you’re ready to implement solutions. They include improving company culture, making operational changes, adding or changing products, and fixing your branding approach.

11. Think big picture

Start working to become known as the go-to authority for your industry. That includes getting involved in public policy that adversely affects your industry and business.

Conclusion

If you’ve implemented the 11 strategies, you’ll be well on your way to increasing your business value.

If you can’t enjoy a return to profits, an exit strategy is your last alternative. Actually, you should always have an exit strategy in place, anyway.

An immediate abandonment strategy means you might have to sell to another company or liquidate your assets. 

Otherwise, you might consider harvest strategies, which allow you to evaluate your success against benchmarks. Options include preparing an initial public offering or selling to your employees in an employee stock option plan (ESOP). 

For an ESOP, you’ll need a positive company culture. Poor morale or divisions among employees will lead to their failure as a company. 

From the Coach’s Corner, here are related resource links: 

Step-by-Step Solutions for a Financial Turnaround — Difficult economic conditions have exacerbated the woes facing many businesses. But business success is possible for companies suffering through financial red ink. Here are financial solutions that will help facilitate a company turnaround.

Overcoming Obstacles for Business Turnaround — 13 Steps — For a successful turnaround of financially troubled businesses, there are usually two obstacles to overcome.

Cutting Costs — 9 Best Practices to Avoid Making Reactionary Decisions — In chaotic times, it’s common for businesspeople to be fearful and reactionary when they feel they must cut expenses. But entrepreneurs need to be unemotional so that they make decisions that will bolster their objectives. They can take the emotion out of their decision-making — by eliminating stress factors – if their priorities are clearly defined with values.

6 Steps to Implement a Cultural Change for Profits — If your company is lacking in teamwork, morale is poor and profits are weak, chances are you need to change your organization’s culture. Be forewarned, changing a culture is a monumental chore because it will take strategic planning and super powers of persuasion.

8 Simple Strategies to Give You Pricing Power If you’re struggling with pricing strategies, you’re not alone. Many big companies struggle, too.

“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”

Peter F. Drucker


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.



Seattle business consultant Terry Corbell provides high-performance management services and strategies.