Take control of your money. I am really sick of hearing that phrase. It seems to be overused marketing jargon in the financial services industry and from what I’m seeing it really means: take control of you money just long enough to give it to us and then we’ll take control from there.
I hate to sound like I’m ranting, but that’s what happens when I get irritated. You see, I’ve been working with many new clients that are fed up with the way some financial institutions are treating them when it comes to managing their own money.
So how does it go from a marketing message of empowerment to the reality of being treated like a child? Pretty easily in my opinion.
In working with many clients to clean up accounts, reduce investment costs, get better target allocations, and to simplify the over site of their accounts, I often help them find easier to use, low cost custodians so they have direct control over their accounts.
I find some (too many) traditional financial institutions make managing money more complicated than it needs to be and direct control impossible. And, heaven forbid you need to move money out of some of these accounts. Of course one might surmise that if they keep their clients dazed and confused with the process it’s a way to justify their existence and excessive charges.
With the permission of my client, I will speak generally about a recent case where I helped them consolidate a few IRA accounts.
One IRA was held by the brokerage arm of a traditional household name bank. Transferring to a new custodian should have been simple. In theory, yes, but in reality it was not. After dealing with 3 different account numbers on one statement and being told 3 different times which account number was the correct one to use, after contacting the “investment rep” and after numerous phone calls to the service department, the funds were finally being transferred to the new custodian.
Or were they? No. An automated letter was sent out, making no sense to my client, requesting a phone call to discuss and noting that the transfer was placed on hold. Client calls and deals with more push back. We’re told they can’t release the funds because the account number on the form was changed and needed to be initialed. This after the bank changed the account number and after the client was told 3 times to use a different account number and after we were told everything was a go. Are you kidding me?
A simple but time consuming fix was made and submitted. We should be good now, right? A week later, another automated letter arrives stating a conduit IRA cannot be transferred to the Traditional IRA as the paperwork requested. Since tax law changes in 2002 , this is not suppose to be an issue. Long story short we had to make numerous calls, but finally got the funds transferred.
Unfortunately, while perhaps a bit extreme, this is not an isolated situation. I am seeing more walls being thrown up when people try to access their accounts. And I’m sure people trying to do this on their own are just giving up or don’t bother to challenge it as they have a life to live and other demands to attend to.
It should not be this difficult to “take control” of your money. It is your money, even if they treat you like they’re doing you a favor.
My caution to you is if you transfer your money to a new custodian, have an exit strategy in mind. First make sure to do your homework on a new custodian to get a good fit and not just because someone has a slick ad campaign. What if you decide the institution is not right for you or they change their way of doing business or fees? How easy is it to leave them? How easy is it to get to your money without having to feel like a child asking for an allowance?
One final bit of advice is if you have a gut feeling that your current custodian is giving you the run around or is talking to you in a condescending manner, be persistent and committed to making the change.
If you can, find a fee-only financial planner that works on an hourly or project basis to help you sort things out and push forward against these gatekeepers. I suggest you locate a member of the Garrett Planning Network (www.garrettplanningnetwork.com) in your area and ask if they can help you with account setups and transfers. Full disclosure, I am a member of the Garrett Planning Network, but I get no compensation or benefit from making this recommendation.
Until later…