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“What Do You Mean, My Balance Is Zero?”

no-money.jpgMy office got an unusual number of phone calls and emails from clients in June. Most of them went something like this: “Rick? I just got my TD Ameritrade statement for this month, and it says last month’s balance was $873,000 and the current balance is zero. And I see from reading your webpage that you’ve been traveling a lot lately. Is there something you haven’t been telling me?”

It’s true that I have been traveling and that I found Norway an expensive place to visit. It’s also true that the latest brokerage statements for all my clients showed zero balances. There was, however, no cause-and-effect relationship between those two facts.

The reason for the zero balances was simple enough. Client accounts have been transferred within TD Ameritrade from one entity to another. This was explained on the statements, as follows: “Please be aware that this statement shows a zero month-end balance because the assets were transferred to TD Ameritrade Clearing, Inc. mid-month. You will receive another statement from TD AMERITRADE Clearing, Inc. for the month of May. That statement will show all positions and transaction history post-Conversion.”

The explanation appeared on page five. In small print. Not highlighted in any way. It was followed by this helpful sentence: “If you have any questions about statements, please contact your Advisor.”

In fairness, there was a full, easy-to-find explanation on the company’s website. It was easy to find, at least, for those account holders with website access who remembered their login names and passwords. Everyone else who had questions apparently picked up the phone. When my assistant called the company on behalf of some of our clients, the lines were so busy that it was two days before she could get through.

Perhaps TD Ameritrade’s account-management software wouldn’t allow putting a highlighted explanation on the td-ameritrade.jpgfront page of the statements. And printing an extra cover letter and sending it with all the statements would have been expensive. Still, the cost of providing an attention-getting, clear explanation would have saved thousands of clients from momentary panic. It also would have saved the company—as well as financial planners all over the country—the time spent answering all those client phone calls.

Doing a poor job of customer service can be extremely expensive in the long run. There are significant tangible costs; it takes a lot of staff time to respond to thousands of phone calls from confused or irate customers. The intangible costs in terms of lost trust can be even more damaging.

One of the many decisions businesses need to make is how to balance customer service with administrative costs and convenience. Obviously, there is a limit to the amount of “hand-holding” a business can provide and still keep costs at a reasonable level. Those costs, of course, are ultimately paid by customers, so it makes sense as a customer or client to keep yourself informed and not demand unrealistic levels of service.

panick.jpgOne might argue that those who received zero-balance statements should have read them more carefully to find the explanation. Still, people tend to be a bit sensitive when it comes to issues related to the security of their life savings. When you open a statement and read that your money seems to have disappeared, picking up the phone is an understandable response.

One component of customer service means accepting that the responsibility for clear communication belongs primarily to the business, not the customer. For those of us who are dedicated number-crunchers, it may even mean accepting the reality that very few people read the fine print on page five.

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3 Responses to “What Do You Mean, My Balance Is Zero?”

  1. Eric Jacobsen June 26, 2007 at 10:21 am #

    This is why I use Fidelity. 😉

    It entertains me to imagine what must be going on in the meeting rooms in Ameritrade after this…the finger pointing is probably out of control. Those at fault are no doubt positioning themselves to be seen as heroes for somehow coming to the rescue in this time of acute crisis. Meanwhile, those who could actually say,

  2. I enjoyed Rick’s newsletter! I haven’t had anyone else comment on the TD statements (adviser clients nor clients of clients).

    I will say one thing, while there are some excellent custodial firms out there – TD being one of them in terms of going the extra mile for folks – there are some not so good ones – including those who push proprietary products far too much (without mentioning any names).

    Professionally and in my personal business, I have not had a negative thing to say about TD. I think their compliance controls and service to Advisers is excellent. Mistakes happen from time to time – no one is perfect.

    Best regards from Michigan –

  3. H. Streeter Shining June 26, 2007 at 1:24 pm #

    Dear Rick,
    Glad to see you still have a good sense of humor.

    Streeter