So we had the same stock broker for many years -- a very nice woman who had clients much richer than we are. Wifey loved the fact that she was a woman -- good for the Ds to see a woman in business -- and when we opened accounts for them, they got to know her, too.
Well, about 5 years ago her company announced that they could only handle accounts on a yearly fee basis. Instead of paying a commission for trades, we'd pay an annual fee on the Ds' accounts, Wifey and my investment account, and my retirement account. The problem was, the fee was going to be, in total, about $70K per year! That was MORE than double the amount of my first and second year's salary as a lawyer.
Nah -- that dog wasn't going to hunt. Plus, the broker had brought her son in to work with her -- a tall, very handsome, and, well, not too bright young man.
He called me one day to say that a mutual fund I held in my SEP account was closing, and I had a choice -- did I want to leave the cash in the SEP, or have him send it to me. I thought he was kidding. Surely he knew a SEP holder younger than 55 1/2 would be heavily penalized for taking money out of that account. Nope -- he had no idea until I told him. I wondered how many mistakes like that he made with clients who didn't have any real financial knowledge at all.
So -- we made a switch. I moved my accounts to the online version of our broker's company. No fees, and even the trades were free. The Ds opened accounts at another online trading company.
But there was one holding that I couldn't switch to Edge. I had a small annuity that I had bought back in '93, and it required an actual financial advisor. The broker's son asked if I would just leave it with him -- apparently the more accounts he had, the better for him, even though the value of that annuity was only about $11K. I agreed.
And so things cruised along fine -- the annuity is linked to my online account, and I see it earn its few hundreds of dollars each year. But last week I got an email from the assistant to our old broker and her son -- there was a new minimum charge for every account -- $65 per year.
I wrote back to Evelyn, the assistant, and said hardly made sense to pay $65 per year for an account that only earned a few hundred. Would they waive the fee? Nope, she replied -- not possible.
So I contacted the annuity company, and told them to take the account "in house." They sent me the paperwork, and I filled it out.
But here's the rub. Evelyn has sent me no fewer than 10 emails, following the progress of this transfer. It's fine -- she's a lovely person, but it occurred to me this is costing a LOT more than $65 worth of her time to get this done. I have nothing but extra time -- so I make it a point to respond each time Evelyn writes -- which invites even MORE emails from her.
The point is, some business people just don't get it. For a failure to waive a stupid $65 yearly fee, our ex brokers are spending a ton of time and effort to accomplish this final part of our financial divorce.
And... once the transfer is made, I may end up adding funds to the annuity -- which would have thrown off a commission to the old broker. Instead, the annuity company will save that -- no difference to me, the annuitant.
The episode reminded me of a matter I was asked to handle back in the late 80s. A client had taken a case away from my firm, and settled it on his own. My two bosses sent me to a hearing in which the firm claimed a fee for work the firm had done. I attended, and met the client before we went to see the judge.
The client, a savvy con man kind of guy, told me our firm ought to rethink going forward. He had information about my two bosses that was highly embarrassing. Unless they agreed to waive their claimed fee, he would tell the judge.
Now -- I was only a few years out of law school, but knew enough to agree to postpone the hearing. It was my bosses' call.
I went to their office and told them what had happened. I think the fee in question was about $5K. My younger boss exclaimed "The client is extorting us! It's clearly extortion!" The senior partner said "Yes -- but the price is sure enough fair."
In other words, for that small amount of money it wasn't worth stirring up a proverbial hornet's nest. I called the ex client, told him he had prevailed, and the lien was waived.
My boss's knew which way the wind blew. Alas -- not so much for my former broker.
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