I bought one almost identical to that coloring (a bit smaller and even paler, though) from my LFS. Within a couple of weeks he colored up to the point he is almost as bright as the other YWG they have in the store.
Maybe yours is a different species, or it may be like mine, and just color up after it gets settled in.
Yes what you have is a yellow watchman. They come in 2 variations. The yellow w/blue dots and then the white/tan with blue dots and the bars on the body. From what i know your style will get up to 4-5 bars and they will get darker with age.
I also purchased a watchman that was that color. I did not know it was a yellow at the tie of purchase. I kept it in a 29G tank for several months with only a couple other fish. Never changed color.
HOWEVER, as soon as I put hi in my 225G reef, he paired with the tiger pistol I had. In a couple week he began to turn yellow and after a month or so was totally yellow.
Mine has a pistol in there with him. He is in a 55g reef. IDK why he is so pale but hopefully it is just that he is that variation of the yellow watchman.
i'm a saltwater novice, but I was under the impression that pale watchman had turned into a female and the bright yellow was a male. I have one of each in my tank. they stay in the same small cave. I may be wrong my wifw says I am constantly.