I Un-Heart Merrill Lynch Direct
Posted on March 28, 2006 by Her and tagged ira, mistakes, roth ira
A few years ago, I opened a Roth IRA with Merrill Lynch. While this was a bad idea at the time (I used borrowed money to finance the account), over the years the account hasn't continued to financially hurt me. Until now.
I did pretty well with my taxes this year - pretty much came out even with Uncle Sam. But I expect to owe some money next year, and have recently been considering opening an IRA to help reduce my future tax burden. So I was wandering around Merrill Lynch's website looking for information on an IRA when I came across their fee schedule for IRA's and Roth IRA's. Having never paid an annual fee, I was shocked to see a $50 annual fee for balances under $20,000. So I called to find out what that meant. The man told me that yes, they have started charging an annual fee of $50, and that it has already been charged to my account. I asked him why I was never notified about the fee. He said they sent out e-mails a long time ago and it was also posted on their website. I never got that e-mail, and told him so. I also argued that it took me 7 clicks to view the fee schedule and didn't feel it was fair to bury the notice under 7 clicks and then claim it was "posted" on their website. He checked my account and found that the notice had been sent to an inactive e-mail address (which I specifically recall updating last year). Simple enough, I thought: they will see my point of view and refund the fee. I asked him to void the fee. He checked with his supervisor, who said no. I told him I was very upset with their service and would be closing the account if he did not refund the fee. He put me on hold and went to ask his supervisor again. While I was on hold, I was browsing the fee schedule and I saw another $50 fee, called an "Account Termination Fee". The guy finally came back on the line and said his supervisor would not approve the refund. I asked him about the account termination fee and he said that when I closed the account they would indeed charge me another $50.
To restate: They take $50 out of my account without notifying me, provide crappy customer service, and then help themselves to another $50 when they drive me away. Is this a freaking JOKE?
I said as much to the rep and he agreed that this was unfair. He put me on hold again and a while later told me they will have to charge me the termination fee, but that he will refund it later. He gave me his name, city, and extension. I started filling out the paperwork to move the account to Vanguard as soon as I hung up. I have wanted to move my account to Vanguard for a while anyway (I was already unhappy with ML's customer service and commissions before their final assault). I am going to deposit some extra cash into my ML account before the transfer goes through so they won't liquidate my holdings (at the cost of another $180 charge) to cover my fees.
I think I'll try calling again and argue the same fight with a different rep. Maybe I can get them to refund both fees. In any case, I am pretty confident that it is going to take a LOT more work before I see any refunds!
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Wow. I'm really sorry to hear that. I don't use brokerage services, but I know I get charged an annual fee because my balance is less than $5K. (But I'm working on it.)
I've been happy with Edward Jones. Unlike Merrill Lynch, they are happy to have small investors. Plus their customer support (both the local office and for the website) have been excellent.
Diana | Mar 29, 2006
We moved our money from ML to Vanguard last year when ML implemented their higher fees. Been very happy with Vanguard - no surprises, great fund choices. Good luck to you!
My only experience with ML was actually positive. When my son was born, an old friend from high school (who was surprised to find at 18 that she had a seven-figure trust fund) wanted to open a UGMA account for him. So she opened an account with her ML broker, and transferred some mutual fund shares into his account. The value of the account was $500. Her ML broker called me and said, hey, our account fees will eat up 10% of your son's account balance in the first year alone. Can I talk you into closing the ML account and holding the shares directly with the mutual fund company? That's what I would have done anyway, but I was impressed that he was looking out for my best interest like that.
BTW, I should also say that when I finally closed my Roth and brokerage accounts at Wachovia Securities (which I had had since they were Prudential Securities), I think they charged a $75 termination fee per account! But I was so excited to get rid of the $150/year in account fees that the termination fee didn't hurt so much.
But still, these jerks who charge us to get our money out of their clutches--evil, isn't it?
Bond Trader | Mar 30, 2006
Inchoate is right. My roommate works for ML, and it's company policy that they are only interested in people with >$100k investable assets. If you have less than that & ask to close your account, they won't even try to stop you from leaving.
And to think that Merrill was where I started my career-Ouch! The best and most efficient thing you can do is to write a letter to the branch manage outlining your complaint. De mention the broker and cc the compliance officer. When that letter hits the managers desk she will tell the broker to "fix it"-they hate written complaints! Good luck.
Ouch! I'm very sorry to hear they socked you with those fees all of a sudden. Way to stick it to the small customer. I have heard great things about Vanguard from someone whose financial acumen is rather impressive, but for what it's worth I just opened my IRA (a Traditional one... my accountant said it would be better and so I'm going with his advice) with Pax World Funds. They got good ratings from Morningstar and are socially responsible, which might appeal to you given that the both of you are environmentally conscious and want to lower your consumption, be more aware of how you live.
I agree, ML isn't that great for those of us who don't have a ton of money to invest. My husband and I had IRAs with Amvescap for several years. Earlier this year, ML bought them out, and our money went into a 'holding' account with ML. I called to set up the funds we wanted, and got the $50 annual fee story aswell. Screw that. I searched around and decided to go with TDAmeritrade instead. No annual fees, and they charge $10 to make a trade. Maybe ML doesn't realize that those of us who are 'small investors' in 2006 might have a good chunk of change by 2026, but I guess that's their loss.
Inchoate Random Abstractions | Mar 28, 2006
Unfortunately, companies like Merrill Lynch have figured out that it's much more profitable to target high net worth clients. I suspect that they implemented the $50 fee because they want to discourage smaller customers from investing with them. So, the threat of closing an account that has a balance of less than $20,000 doesn't really mean much to them because that's precisely what they want you to do.
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