3 min read November 2022 — In an Interview with Invest:, Kenneth LaChance, high net worth executive at Wells Fargo Advisors, discussed key highlights and milestones over the past year, challenges the region is facing, adaptation to an era of ESG and his outlook for the economy. “High interest rates and the stock market are on everybody’s mind,” said LaChance.
What have been some of the highlights and milestones for Wells Fargo over the past 12 months, and where do you see priorities lining up for the rest of the year?
The business itself has been going through a transition from different brands and segments. We are repositioning and removing some of the internal barriers and setting up segments and coverage according to those segments. There is a lot of volatility, and it is getting to a very exciting place as the strategy and vision starts to emerge, which is helpful to stabilizing customers and employees. We are focusing more on our clients and getting new tools. There is a lot of excitement about that, and the timing is not too bad. The markets are turbulent and when that happens people rely on advisors and advice, and that is something we pride ourselves on.
What do you view as the key challenge you’re facing today in your new role?
One of the biggest challenges in my new role will be getting the collective parts of Wells Fargo to team up and work together again. We have a lot of existing client relationships, and we are excited to grow from here. Part of that is getting everyone to see the collective strategy. We have new people and new leadership, and we’re getting everybody familiar with each other and the organization. That is the biggest challenge, but it is also what I’m most excited about. Our organization continues to change in its entirety.
What challenges do you see happening across the region?
On the housing front, we continue to have a shortage of low- to moderate-income houses. This is a challenge because a lot of it is government funded and there’s a long process from getting the funds to building homes. Thankfully there are a lot of good nonprofits in the region that are working on this.
There is still uncertainty about what will happen to downtown office space, but we are seeing increased demand for multifamily housing. Rents are going up significantly. With interest rates going up, it will probably impact homeownership trends. I don’t feel like we are going into a recession, but we are heading into tougher times.
On another front, labor is on every business owner’s mind. Places of work are becoming more mindful of their location, what they are asking out of employees, the amenities they offer and work-life balance. Workers have the upper hand. However, we’ve already begun to hear that as rates go up it’s leading to some layoffs.
What progress is Wells Fargo making on the technology font?
During the disruptions caused by the pandemic, we embraced technology. I’m sitting in an office in Downtown Minneapolis and the area hasn’t rebounded. We haven’t seen people return to the office in the urban setting as much as in the suburban setting. Everybody is dealing with how to get folks into the office, and probably neither having a fully remote nor fully in-person work environment is the right answer. There are some benefits of being in the office, especially for mentoring purposes and management.
We have accelerated the use of technology beyond everyday efficiency and are investing heavily in automation, especially due to workforce constraints. We are a volume-based organization that needs automated ways of getting processes and procedures in place both by enhancing our tools and investing in systems that can elevate client experience. People see the robust technology we have and the ability it gives us to serve them in superior ways than our competitors.
What are some ways Wells Fargo is adapting its offerings to an era of ESG?
Wells Fargo has its pursuit of ESG. We also help advise individuals and create awareness for businesses looking to integrate them into their business plans. It went from an idea to something a lot of people didn’t know into something that is now a top-of-mind strategy. We are still challenged as an organization in how we can help everyone understand why it is a business imperative and how embracing ESG can have a positive impact on their bottom line. We have ESG leaders in our commercial and corporate bank to help clients become more aware, because of growing demand.
How does the amount of capital searching for investment opportunities today compare to pre-pandemic levels?
We have bounced back. Lately, there has been a slowdown as rates go up. We are a big mortgage lender, and the rising rates have had an impact on the number of mortgage loans we transact. On the business loan side, we have continued to see improved demand. There is a lot of competition despite growing risks, yet still today rates and margins continue to be competitive. Customers are starting to get paid better for deposits in contrast to chasing stock market returns.
What are your thoughts on how the next year or two will play out for the overall economy?
In my former role on the commercial banking side, there weren’t a lot of stats and metrics that would indicate we have a problem emerging in the economy. The economy is doing fairly well, and business financials remain strong. We moved from an economy that was heavily impacted by COVID and that brought dramatic change in how goods and services flow. During the resulting correction things got overheated, and now the government is trying to cool it down through the raising of interest rates. That might lead to a recession from a statistical standpoint, but in Minnesota we have record low unemployment rates and those things do not usually go hand in hand.
Rates have gone up dramatically over the last few months, inevitably impacting the borrowing by individuals. Similarly the investment returns they can get from having cash is improving. From the personal investment advisory side, we are trying to spend more time with clients and give them the guidance they need in these unprecedented times. We seem to be leaving a period of record growth and above-average returns, to a time that caution and strategy will reward. We stand ready to help provide our clients with that very advice.
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