The Ways Financial Companies Legally Steal from You

[oldtoyota]

I can't help but think charging $50 to rollover a Great West 401K into a Vanguard IRA is a form of legal stealing. To do the rollover, I must sign a document that allows Great West to charge me $50 to transfer money in any format. I am paying to move my own money??

It's asinine.

It might be worth a letter to my congresswoman, because this should not be legal.

And this is coming off the tail of dealing with T-Mobile and their overpriced charges for no service. How a company can charge you when they provide no coverage in your own home is beyond me.

Okay. Okay. Call me a complainypants. I am having one of those down moments where it feels as if the world is down on me, but I can tell you I will come out of that funk swinging.


Editing title from "mutual fund" to "financial."

[BC_Goldman]

They have to pay the people who process all the paperwork somehow don't they?

[GreenGuava]

Ugh, tragic that it's legal for that.  But at least you'll recover the difference in lower fees with your new one.

I'm in the process of rolling a 401(k) from my immediate prior employer from American Funds to Vanguard.  I didn't see any fees in the paperwork (I checked), but I'll post back what happens when I get the confirmation from Vanguard in a week or so.

[renbutler]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

[oldtoyota]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

Banks have made loads of money off of the money of their customers by paying lower interest rates than they get. Getting money out of a bank should not cost anything.

With ATMs, one at least has other options for getting the money out. You can use your bank's ATM for free, for instance.

For the 401K, there's no other option but to pay $50 to rollover the money. And it's done automatically--no humans involved.

The $50 must be an enormous cash cow. And as the economy got worse and people were laid off and rolling over the 401Ks, Great West was probably raking in the cash (if people actually rolled over their 401ks at all). If not, then GW got to charge them each year for "maintenance."

[matchewed]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

Banks have made loads of money off of the money of their customers by paying lower interest rates than they get. Getting money out of a bank should not cost anything.

With ATMs, one at least has other options for getting the money out. You can use your bank's ATM for free, for instance.

For the 401K, there's no other option but to pay $50 to rollover the money. And it's done automatically--no humans involved.

The $50 must be an enormous cash cow. And as the economy got worse and people were laid off and rolling over the 401Ks, Great West was probably raking in the cash (if people actually rolled over their 401ks at all). If not, then GW got to charge them each year for "maintenance."

Other than manifesting money out of pure outrage how do you expect the financial institution to make money for the services provided? The expense ratio is probably agreed upon by the group in control of the fund. The transactions regardless of the fund are then controlled by the financial institution.

They need to make money off of the services they provide that includes things like roll overs. Getting angry that people rolled over a 401k and a company had to use their resources to help their customers to do so and therefore need to get paid seems weird. Do you get angry at the tire/car mechanic if they fix a flat for you and charge you? Do you get mad if you have to pay a fee for a security deposit box at a bank?

[bUU]

I am no fan of high fees, but I think calling it "stealing" is far worse than charging the fees.

$50 is a pretty standard fee. Retirement account carry with them legal obligations regarding reporting to government, and that $50 doesn't go far toward covering the typical costs of such reporting and record-keeping requirements. It is important to remember that one thing we require in our society is a level of transparency, so authorities can enforce the laws and regulations, so that some people don't abuse the situation and lie, cheat or (literally) steal to get ahead for themselves. There is a cost for that, and it makes sense to assess that cost on a per-use basis, rather than tacking it onto other costs.

With regard to T-Mobile, they're providing you service as per the coverage map which is available to you before you subscribe. I can access it right now, and I've never been a T-Mobile customer. There's a link right on their website's home page, "Check Coverage". Here's a direct link to the tool the link leads to:
http://www.t-mobile.com/coverage/pcc.aspx/
I put in my exact street address, and found "satisfactory" coverage, which is below "good" - in other words, I know that I would not get good service from T-Mobile in my home, because their coverage map says I won't. I also found that just a half mile away, there's good service, but I don't live there, so that's useless to me. :)

I'm sorry you're having a tough day, though. One of the things I've learned in recent years, as part of my preparation for retirement, is the importance of setting my expectations in line with reliable foundation. That means I try to make sure that before I develop any expectations whatsoever, I have enough knowledge about the situation to have those expectations based on what I really can expect, rather than what I used to do, based them on what I would hope. This starts with retirement itself: I'd love to think that I'll live out the rest of my days at our current standard of living, but I'm working to ensure that I don't develop that expectation until the numbers say we have enough saved up to justify that expectation, and if we never get there, I shouldn't ever develop an expectation along those lines. I think a lot of us could find that approach useful.

[Another Reader]

The title of your post is inaccurate.  Great West is not a mutual fund company.  It is a retirement plan administrator.  It makes its revenue from fees to administer 401k plans.  The fees would have been disclosed to you in the plan documents.  The other posters have explained why such a fee is reasonable.

[oldtoyota]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

Banks have made loads of money off of the money of their customers by paying lower interest rates than they get. Getting money out of a bank should not cost anything.

With ATMs, one at least has other options for getting the money out. You can use your bank's ATM for free, for instance.

For the 401K, there's no other option but to pay $50 to rollover the money. And it's done automatically--no humans involved.

The $50 must be an enormous cash cow. And as the economy got worse and people were laid off and rolling over the 401Ks, Great West was probably raking in the cash (if people actually rolled over their 401ks at all). If not, then GW got to charge them each year for "maintenance."

Other than manifesting money out of pure outrage how do you expect the financial institution to make money for the services provided? The expense ratio is probably agreed upon by the group in control of the fund. The transactions regardless of the fund are then controlled by the financial institution.

They need to make money off of the services they provide that includes things like roll overs. Getting angry that people rolled over a 401k and a company had to use their resources to help their customers to do so and therefore need to get paid seems weird. Do you get angry at the tire/car mechanic if they fix a flat for you and charge you? Do you get mad if you have to pay a fee for a security deposit box at a bank?

You have some good points, and they have helped me clarify my frustration with this fee.

I know they have work to do. However, I am invested in Vanguard via Great West Retirement Services. I will now have to pay $50 to move my $$ from Vanguard via GW over into Vanguard. This is a silly process.

And what I want, I realize, is for the government to allow us to get the same tax advantages when investing in our own choice of mutual companies while skipping the "retirement service" company. In sum, I want the middle man--who is not providing value to me--to be removed. The value is coming from Vanguard, and I'm cool with paying for a service when I perceive its value to me.

Problems with the $50 as I see it:

1. I get no value from this fee. (In my mind, I should have had to use GW in the first place.)
2. If I wanted to invest in a 401k, my only choice was Great West. I could not invest in Vanguard directly.
3. The fee is buried in documentation. If GW thinks this fee is so fair, then put it right where people will see it without having to wade through 14 pages of documentation (which I do read because I am that way).

Until recently, my understanding is that companies such as this one could hide their fees. The government has forced mutual fund companies--and perhaps retirement companies too--to make their fees more obvious to consumers. I appreciate that this is the case now. Even with Vanguard, I see that the fees for each fund are "out there" for me to see in a chart with all of the other information about the funds.

[oldtoyota]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

Banks have made loads of money off of the money of their customers by paying lower interest rates than they get. Getting money out of a bank should not cost anything.

With ATMs, one at least has other options for getting the money out. You can use your bank's ATM for free, for instance.

For the 401K, there's no other option but to pay $50 to rollover the money. And it's done automatically--no humans involved.

The $50 must be an enormous cash cow. And as the economy got worse and people were laid off and rolling over the 401Ks, Great West was probably raking in the cash (if people actually rolled over their 401ks at all). If not, then GW got to charge them each year for "maintenance."

Other than manifesting money out of pure outrage how do you expect the financial institution to make money for the services provided? The expense ratio is probably agreed upon by the group in control of the fund. The transactions regardless of the fund are then controlled by the financial institution.

They need to make money off of the services they provide that includes things like roll overs. Getting angry that people rolled over a 401k and a company had to use their resources to help their customers to do so and therefore need to get paid seems weird. Do you get angry at the tire/car mechanic if they fix a flat for you and charge you? Do you get mad if you have to pay a fee for a security deposit box at a bank?

Of course not. Because I can choose whether or not to have a car. Because I can shop around at various mechanics for better prices. Because I can choose whether or not to have a security box deposit.

I like your posts most of the time, but these are silly comparisons you are making. The difference is that I did not get to choose whether to use GW's services. A venture capitalist in NY--or a board member--made these choices. Okay, you can say I could have chosen not to have a 401K at all, but I don't see that as an option in a time when most companies do not offer pensions.

And I don't think a 401k can be compared to having a tire changed.

[oldtoyota]

With regard to T-Mobile, they're providing you service as per the coverage map which is available to you before you subscribe. I can access it right now, and I've never been a T-Mobile customer. There's a link right on their website's home page, "Check Coverage". Here's a direct link to the tool the link leads to:
http://www.t-mobile.com/coverage/pcc.aspx/
I put in my exact street address, and found "satisfactory" coverage, which is below "good" - in other words, I know that I would not get good service from T-Mobile in my home, because their coverage map says I won't. I also found that just a half mile away, there's good service, but I don't live there, so that's useless to me. :)

Thank you for your reply. I changed the title based on your comment. You're correct it's not a mutual fund company.

I understand the point about the coverage map. The coverage map for my area is not accurate. It says I have excellent coverage when I actually have zero coverage. I have screen shots of the map. I also have taken videos to show I do not have coverage and then filmed my house and the street address to prove I am at my house. I can only hope T-mobile comes to their senses. Before they do, they are going to cost me a lot of time. I've already spent six hours on phone support--they have had me reset my phone two times now--and that is not counting the time my husband has spent or visits to the store to try to fix this.

At this point, I'm unable to make phone calls from my house. I have to drive several blocks to get only two bars.

Their solution was to tell me to use my wifi. So, I'd be paying for using my ISP to make phone calls. Then, why would I be paying T-mobile?

[bUU]

However, I am invested in Vanguard via Great West Retirement Services. I will now have to pay $50 to move my $$ from Vanguard via GW over into Vanguard. This is a silly process.

I see the source of your confusion. You established a relationship with GW and asked them to secure an interest in a Vanguard fund for you. Now you want to move your holdings in that Vanguard fund to Vanguard brokerage. But your brokerage relationship was with GW - not with Vanguard brokerage.

Why didn't you just start out establishing a relationship with Vanguard brokerage? (I know you have a reason for that - my point is that that reason explains to you why the process isn't silly: You got a certain kind value from each step along the way, value you couldn't get without going through these various steps, and that explains why things went this way.)

In sum, I want the middle man--who is not providing value to me--to be removed. The value is coming from Vanguard, and I'm cool with paying for a service when I perceive its value to me.

Again, this is a reflection of your confusion between the funds and the brokerage: You are getting value from both: The fund is providing you an investment instrument. The brokerage is providing you legally-mandated custodial services and brokerage services. You're not allow to hold your own tax-advantaged funds. That would lead to too much tax fraud. And beyond that, Vanguard doesn't issue anything like stock certificates for their funds, so you will always require someone to serve as brokerage for your Vanguard fund holdings. That's one way Vanguard funds keep their costs down.

All you're doing now is electing to change who provides you custodial and brokerage services. You're not actually getting rid of either.

Problems with the $50 as I see it: 1. I get no value from this fee.

Not true: Without a custodian, it would have been illegal for your to tax-defer the income or gains.

(In my mind, I should have had to use GW in the first place.)

I think you meant "show not have had to..." So why did you? Probably because your employer made that choice for you, and in choosing to work for your employer, you chose to defer that decision to them. There are many things that you have to defer to your employer (like which health insurer to use, which building to put your office in, etc.)

2. If I wanted to invest in a 401k, my only choice was Great West. I could not invest in Vanguard directly.

Again, that's your employer's decision, and you granted them that power over you when you agreed to work for them according to their terms and conditions for compensation and benefits. Your alternative was to choose to be self-employed.

3. The fee is buried in documentation.

The fee disclosures are now closely monitored by regulators. I think when people are hit with fees they want them to be the most prominent thing in the company's promotional brochures, but the reality is that in our society it is proper for companies to make the advantages be the first thing they put in their materials, and the disadvantages go in the back. Even cigarettes are allowed to have a pretty logo on the front, and the Surgeon General's warning is relegated to the side of the box or the back.

The coverage map for my area is not accurate.

That's valid grounds to rollback all the transactions with T-Mobile (including the contract) within the first month. Hopefully they'll comply with your request.

[oldtoyota]

PS: It'll cost me a total of $847 to get out of my T-mobile contract even though I moved to a no-contract plan.

Their solution du jour was to send me a new-to-me phone, which would likely be refurbished...when I have already paid for a NEW phone. I would have to return the new phone for which I paid full price and, if I did not return it within 7 days, would be charged more than $500.

Tell me that is not stealing.

The thinking behind sending me the new-to-me phone is that my cell phone "doesn't like" the local tower. This is technology. How can my cell phone "not like" a cell phone tower?

[renbutler]

PS: It'll cost me a total of $847 to get out of my T-mobile contract even though I moved to a no-contract plan.

...

Tell me that is not stealing.

Are they doing ANYTHING in violation of that contract?

If not, it's not stealing.

Buyer beware.

[oldtoyota]

However, I am invested in Vanguard via Great West Retirement Services. I will now have to pay $50 to move my $$ from Vanguard via GW over into Vanguard. This is a silly process.

I see the source of your confusion. You established a relationship with GW and asked them to secure an interest in a Vanguard fund for you. Now you want to move your holdings in that Vanguard fund to Vanguard brokerage. But your brokerage relationship was with GW - not with Vanguard brokerage.

Why didn't you just start out establishing a relationship with Vanguard brokerage? (I know you have a reason for that - my point is that that reason explains to you why the process isn't silly: You got a certain kind value from each step along the way, value you couldn't get without going through these various steps, and that explains why things went this way.)

I think you are missing my point, and I'm not at all confused. We're all aware of the tax advantages of a 401k. The only way I can play the 401k game is to have a job and to use their middleman for the maintenance of my retirement plan.

Yes. I could go to the trouble of starting my own company so I could invest how I want in a SEP or make the company large enough to have its own 401k plan with a middleman (back where I started). I have no desire to start business just so I can have tax-deferred savings. I'm sure many others also do not want to start a business so that they can invest without a middleman.

The point for me is that the government should allow individuals to avoid the middleman who doesn't provide value.

I do use Vanguard. My point is why the government won't just let me invest directly with Vanguard--while still getting tax advantages--rather than being forced to use a middleman who charges me fees. I think it has to do with all of the restrictions on the 401k. Since many people won't save--or would deplete their 401ks to buy a car or shiny TV--then the government puts restrictions on everyone. Maybe that is the reason for the middleman. If that's accurate, then we're all paying middlemen for not very good reasons.

[oldtoyota]

PS: It'll cost me a total of $847 to get out of my T-mobile contract even though I moved to a no-contract plan.

...

Tell me that is not stealing.

Are they doing ANYTHING in violation of that contract?

If not, it's not stealing.

Buyer beware.

They run through a long list of items on the phone that I would be agreeing too. If I had not happened to hear him speed past the "new or like new" part of the schpiel, then I would not have realized they would provide me with an old phone. Taking someone's new phone and replacing it with an old phone doesn't seem right, especially when the reason you are doing it is because your company's coverage map is wrong.

They can change the contract at any time without informing people. They can even extend your contract without telling you they extended it. How that can be legal I have no idea.

I did see that the Washington State Attorney General's office took them to task for their misleading advertising. They advertised "no-contract" plans yet they tried to charge early termination fees for those who wanted to leave the "no-contract" plan. T-mobiile claims they did nothing wrong.

[Spork]

Is it possible that your issues here are with your company's choice of 401k plan administrator?  (My company also uses GWRS.  I'm not thrilled with them... but I also don't think they've really "ripped me off".)

It might be something to take up with your company (not "there should be a law" but "hey guys, this company isn't serving us well.")

[oldtoyota]

Is it possible that your issues here are with your company's choice of 401k plan administrator?  (My company also uses GWRS.  I'm not thrilled with them... but I also don't think they've really "ripped me off".)

It might be something to take up with your company (not "there should be a law" but "hey guys, this company isn't serving us well.")

Good question. I just have to suck it up and pay the $50. I do not work for that company any longer. I left the $$ there because it was doing really well, and I did not want to sell at that time. The company probably has some kind of reason for wanting former employees to get out of the plan, so they sent me a bunch of paperwork to move it over. It's still doing well, but I don't want to pay GW fees any longer. So, I am moving it from Vanguard to Vanguard basically.

[bUU]

Their solution du jour was to send me a new-to-me phone, which would likely be refurbished...when I have already paid for a NEW phone. I would have to return the new phone for which I paid full price and, if I did not return it within 7 days, would be charged more than $500. Tell me that is not stealing.

It depends on who you bought the new phone from and when.

The thinking behind sending me the new-to-me phone is that my cell phone "doesn't like" the local tower. This is technology. How can my cell phone "not like" a cell phone tower?

I can think of a number of reasons. I'm not sure any of them would necessarily make you feel better about the situation. :)

I think you are missing my point,

Rest assured, I'm not. I'm merely presenting a different way for you to look at it.

and I'm not at all confused.

My comment in that regard stemmed from you making a point about "Vanguard" being both the fund and the brokerage you were transferring the fund to. If you weren't making a point about that, then I apologize for my confusion.

We're all aware of the tax advantages of a 401k. The only way I can play the 401k game is to have a job and to use their middleman for the maintenance of my retirement plan.

Not true: You can choose to be self-employed and have a Solo 401k Plan.

Yes. I could go to the trouble of starting my own company so I could invest how I want in a SEP or make the company large enough to have its own 401k plan with a middleman (back where I started). I have no desire to start business just so I can have tax-deferred savings.

Your choice. I respect that.

The point for me is that the government should allow individuals to avoid the middleman who doesn't provide value.

Perhaps the issue is that you need to explain what you mean. For example, what you're talking about sounds an awful lot like you want the government to open a brokerage, perhaps something akin to Social Security, but with self-directed choices.

I do use Vanguard.

I already mentioned one way you could do so, the Solo 401(k). Another is to forego the $17500 tax advantage and simply use an IRA to shelter $5500.

I think your focus on the brokerage as a "middle man" misses the point, but we can agree to disagree.

[matchewed]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

Banks have made loads of money off of the money of their customers by paying lower interest rates than they get. Getting money out of a bank should not cost anything.

With ATMs, one at least has other options for getting the money out. You can use your bank's ATM for free, for instance.

For the 401K, there's no other option but to pay $50 to rollover the money. And it's done automatically--no humans involved.

The $50 must be an enormous cash cow. And as the economy got worse and people were laid off and rolling over the 401Ks, Great West was probably raking in the cash (if people actually rolled over their 401ks at all). If not, then GW got to charge them each year for "maintenance."

Other than manifesting money out of pure outrage how do you expect the financial institution to make money for the services provided? The expense ratio is probably agreed upon by the group in control of the fund. The transactions regardless of the fund are then controlled by the financial institution.

They need to make money off of the services they provide that includes things like roll overs. Getting angry that people rolled over a 401k and a company had to use their resources to help their customers to do so and therefore need to get paid seems weird. Do you get angry at the tire/car mechanic if they fix a flat for you and charge you? Do you get mad if you have to pay a fee for a security deposit box at a bank?

Of course not. Because I can choose whether or not to have a car. Because I can shop around at various mechanics for better prices. Because I can choose whether or not to have a security box deposit.

I like your posts most of the time, but these are silly comparisons you are making. The difference is that I did not get to choose whether to use GW's services. A venture capitalist in NY--or a board member--made these choices. Okay, you can say I could have chosen not to have a 401K at all, but I don't see that as an option in a time when most companies do not offer pensions.

And I don't think a 401k can be compared to having a tire changed.

Well you're more at the whim of your employer in who they choose as a custodian for the 401k. That is something you can affect through employee organization.

My comparison was in that they do perform a service and need to get paid for it. Whether that service is worth the $50? I agree that the answer is probably not but they're investing in the infrastructure (the website/CS Rep) that you use to initiate and perform the transfer.

[oldtoyota]

matchewed--

"Whether that service is worth the $50? I agree that the answer is probably not but they're investing in the infrastructure (the website/CS Rep) that you use to initiate and perform the transfer."

This is so funny if you think about it. The web is not involved, which seems weird to me.

I'm actually filling out papers (3-5 papers to fill out and 14 total to read). The papers will be snail mailed to a contact at my previous employer. She will then do something on her end and send it on to the plan. It seems to me like the retirement service is doing the least work of everyone involved, but maybe I am missing something.

If they had a web process for this, it would be SO much faster.

[jpo]

GW got to charge them each year for "maintenance."

"Maintenance" fees are what really irk me. Money down the toilet for some records in a database, seriously?

[bUU]

Auditable records to keep you and them honest. Seriously.

[matchewed]

matchewed--

"Whether that service is worth the $50? I agree that the answer is probably not but they're investing in the infrastructure (the website/CS Rep) that you use to initiate and perform the transfer."

This is so funny if you think about it. The web is not involved, which seems weird to me.

I'm actually filling out papers (3-5 papers to fill out and 14 total to read). The papers will be snail mailed to a contact at my previous employer. She will then do something on her end and send it on to the plan. It seems to me like the retirement service is doing the least work of everyone involved, but maybe I am missing something.

If they had a web process for this, it would be SO much faster.

Yes it would. It seems like your previous employer was lax in making sure they had a good custodian for the 401k. It's unfortunately not uncommon. When we've, as an online community, have had discussions about employers being responsible for making sure their employees are paid enough or other such debates, the question of whether the employer is doing a good enough job in ensuring their employees have the options and training to make sound investment decisions. This is easily undermined by bad options. I think you're in the case of that.

[renbutler]

GW got to charge them each year for "maintenance."

"Maintenance" fees are what really irk me. Money down the toilet for some records in a database, seriously?

That's why competition is so important.

Choose companies that provide you value and don't nickel and dime you to death. If enough people do that, others will have to follow.

[oldtoyota]

matchewed--

"Whether that service is worth the $50? I agree that the answer is probably not but they're investing in the infrastructure (the website/CS Rep) that you use to initiate and perform the transfer."

This is so funny if you think about it. The web is not involved, which seems weird to me.

I'm actually filling out papers (3-5 papers to fill out and 14 total to read). The papers will be snail mailed to a contact at my previous employer. She will then do something on her end and send it on to the plan. It seems to me like the retirement service is doing the least work of everyone involved, but maybe I am missing something.

If they had a web process for this, it would be SO much faster.

Yes it would. It seems like your previous employer was lax in making sure they had a good custodian for the 401k. It's unfortunately not uncommon. When we've, as an online community, have had discussions about employers being responsible for making sure their employees are paid enough or other such debates, the question of whether the employer is doing a good enough job in ensuring their employees have the options and training to make sound investment decisions. This is easily undermined by bad options. I think you're in the case of that.

It gets even more amusing. My former employer runs some of the biggest websites/newsletters in financial planning. You would think they, of all companies, would have a 401K plan with fair stewardship. Alas.

[oldtoyota]

GW got to charge them each year for "maintenance."

"Maintenance" fees are what really irk me. Money down the toilet for some records in a database, seriously?

That's why competition is so important.

Choose companies that provide you value and don't nickel and dime you to death. If enough people do that, others will have to follow.

You are right, of course. It's tiring to police it all just in one's own life though. Phew.

[renbutler]

Definitely. And it would certainly be beneficial if service providers were more transparent!

It would also be nice if there were more consumer groups (preferably independent and transparent in their own right) dedicated to providing such comparisons to complement our own individual efforts.

[matchewed]

It definitely is a tough nut to crack. There is some truth to the difficulties in developing regulations to promote transparency or as ren suggests come up with independent consumer groups who can rate financial service providers.

Those providers happen to have a large amount of cash to push back on government regulations and the average consumer isn't their direct customer (usually) as companies choose which provider to use.

It would be nice to have an online community that may be able to discuss this sort of problem and start to raise awareness amongst the population. Where would I find a financially literate group such as that? I'll give it some thought.

;)

[jpo]

GW got to charge them each year for "maintenance."

"Maintenance" fees are what really irk me. Money down the toilet for some records in a database, seriously?

That's why competition is so important.

Choose companies that provide you value and don't nickel and dime you to death. If enough people do that, others will have to follow.

All my accounts don't have maintenance fees, except I haven't found a HSA provider who doesn't have maintenance yet. :-/

[bUU]

I understand the recording requirements on HSA are especially onerous.

[oldtoyota]

I understand the recording requirements on HSA are especially onerous.

I have never signed up for HSA for this very reason. One exception was a company that I worked for that put your money onto a debit card. When you needed to make a purchase, you would use the card. If the item was not acceptable for the HSA program, the sale would be rejected. It was wonderful to know up front what would or would be paid for as opposed to buying the item, submitting paperwork and then finding out weeks later that the item was rejected.

[mpbaker22]

I understand the recording requirements on HSA are especially onerous.

I have never signed up for HSA for this very reason. One exception was a company that I worked for that put your money onto a debit card. When you needed to make a purchase, you would use the card. If the item was not acceptable for the HSA program, the sale would be rejected. It was wonderful to know up front what would or would be paid for as opposed to buying the item, submitting paperwork and then finding out weeks later that the item was rejected.

I have that now.  Quite nice it is.

Regarding financial firms fees (transfers, ATMs, etc.)  I figure if they're clearly laid out when you sign up, it's perfectly legitimate and you ought to be reading the fine print.  If they change the terms and hit you afterwards, then yes, I have problems with that.
I also think the re-ordering of transactions on debit cards in order to collect maximum fees is highly unethical.

[Daleth]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

They manage to have ATM's in Europe without charging you anything to withdraw your money. And ATM's also allow banks to hire fewer tellers, since if there's an ATM people won't come into the bank and occupy a teller's time just to withdraw some pocket money. So having an ATM either saves money or is a wash.

They would charge you just to walk in the door if they could. Anything to maximize profits to their shareholders.

[oldtoyota]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

They manage to have ATM's in Europe without charging you anything to withdraw your money. And ATM's also allow banks to hire fewer tellers, since if there's an ATM people won't come into the bank and occupy a teller's time just to withdraw some pocket money. So having an ATM either saves money or is a wash.

They would charge you just to walk in the door if they could. Anything to maximize profits to their shareholders.

This is a great point. In the "old days," banks did not charge you to use a teller. Why should they charge you to use a machine teller?

Either in this thread or another, I shared how people rioted in Honduras when mobile phone companies planned to charge both callers AND recipients. Mobile phone companies do this in the US, and people just shrug and pay it.

When I had a land line, I only paid when I made the call. But the land line recipient on the other end did not have to pay if I called them.

It's funny when folks get so accustomed to being nickled and dimed that they either do not notice it or start to defend it!

[matchewed]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

They manage to have ATM's in Europe without charging you anything to withdraw your money. And ATM's also allow banks to hire fewer tellers, since if there's an ATM people won't come into the bank and occupy a teller's time just to withdraw some pocket money. So having an ATM either saves money or is a wash.

They would charge you just to walk in the door if they could. Anything to maximize profits to their shareholders.

This is a great point. In the "old days," banks did not charge you to use a teller. Why should they charge you to use a machine teller?

Either in this thread or another, I shared how people rioted in Honduras when mobile phone companies planned to charge both callers AND recipients. Mobile phone companies do this in the US, and people just shrug and pay it.

When I had a land line, I only paid when I made the call. But the land line recipient on the other end did not have to pay if I called them.

It's funny when folks get so accustomed to being nickled and dimed that they either do not notice it or start to defend it!

All of that makes a great narrative that paints a picture of banks just seeking pure profits regardless of everything else. I'd love it to be that simple but it really isn't. As these companies have invested in infrastructure beyond the brick and mortar they need revenue to cover that investment. Without a doubt they're going to charge more than they need to, they are for profit after all.

If we remain on the point of ATMs this may be relevant.

[mpbaker22]

I think banks should be able to charge whatever they want as long as their transparent about it.  Maybe they should charge for the teller service.  That would actually increase cost transparency compared to increasing the interest rate on your mortgage by .05%.

They shouldn't be able to re-arrange transactions for maximum overdraft charges or change the percentage of a loan (i know this would be a variable rate, but I think that's a very predatory practice in the low-rate environment).

[oldtoyota]

They have to pay the people who process all the paperwork somehow don't they?

Sounds about right to me.

This is like when people complain that ATMs charge you to "get your own money," without ever thinking that somebody has to maintain, re-stock, secure, and provide power to those things.

They manage to have ATM's in Europe without charging you anything to withdraw your money. And ATM's also allow banks to hire fewer tellers, since if there's an ATM people won't come into the bank and occupy a teller's time just to withdraw some pocket money. So having an ATM either saves money or is a wash.

They would charge you just to walk in the door if they could. Anything to maximize profits to their shareholders.

This is a great point. In the "old days," banks did not charge you to use a teller. Why should they charge you to use a machine teller?

Either in this thread or another, I shared how people rioted in Honduras when mobile phone companies planned to charge both callers AND recipients. Mobile phone companies do this in the US, and people just shrug and pay it.

When I had a land line, I only paid when I made the call. But the land line recipient on the other end did not have to pay if I called them.

It's funny when folks get so accustomed to being nickled and dimed that they either do not notice it or start to defend it!

All of that makes a great narrative that paints a picture of banks just seeking pure profits regardless of everything else. I'd love it to be that simple but it really isn't. As these companies have invested in infrastructure beyond the brick and mortar they need revenue to cover that investment. Without a doubt they're going to charge more than they need to, they are for profit after all.

If we remain on the point of ATMs this may be relevant.

I would counter that you're not taking into account whether banks have fewer brick and mortar locations than they did before. Do they have fewer employees? If so, that could make up for the cost associated with ATMs. I imagine ATMs require setup and maintenance and that the cost of them would be lower than paying a teller salary and benefits to sit behind glass all day.

I am not sure of the answers, yet it would be interesting to be on the inside and see how brick and mortar vs ATMs have evolved in relation to each other.

If companies are creative, they can provide services to their customers without jacking up the prices. I work in a fiscally responsible organization and we come up with all kinds of creative ways to save money that don't involve nickle and diming people. Maybe my organization is doing something rare!

[Jamesqf]

If companies are creative, they can provide services to their customers without jacking up the prices.

But why should they?  They're in business to make profits, no?  So any sensible business should look to maximize profit.  Maybe they charge more, and hope customers don't go to the competition; maybe they charge less and hope that'll attract more customers.

So you've got the mirror image of that: how do you minimize your cost for the services you want?

[bUU]

They manage to have ATM's in Europe without charging you anything to withdraw your money.

European countries tend to be governed more for the benefit of their citizens than the United States is.

[renbutler]

It's funny when folks get so accustomed to being nickled and dimed that they either do not notice it or start to defend it!

If you're talking about me (since I was the one who brought up ATMs), I'm smart enough to completely avoid ATM fees. But, whatever...

[renbutler]

They manage to have ATM's in Europe without charging you anything to withdraw your money.

European countries tend to be governed more for the benefit of their citizens than the United States is.

Well, that's certainly the narrative that Socialism strives for, and which which many unfortunately fall for.

[renbutler]

But why should they?  They're in business to make profits, no?  So any sensible business should look to maximize profit.

Uh-oh...you said the "p" word...

[mpbaker22]

It's funny when folks get so accustomed to being nickled and dimed that they either do not notice it or start to defend it!

If you're talking about me (since I was the one who brought up ATMs), I'm smart enough to completely avoid ATM fees. But, whatever...

I think the bigger disconnect is that I avoid most of these fees.  I have a cheap cell phone plan with terms clearly laid out, and no contract.  I haven't paid ATM fees, ever.  I figure if people are stupid enough to pay more for the same service elsewhere, let 'em do it.  There's another option elsewhere, and if there wasn't, it would be because the banks weren't making enough money and HAD to charge fees.

[mpbaker22]

They manage to have ATM's in Europe without charging you anything to withdraw your money.

European countries tend to be governed more for the benefit of their citizens than the United States is.

Well, that's certainly the narrative that Socialism strives for, and which which many unfortunately fall for.

Unless you're going to compare interest rates in, interest rates out, dividends to investors, and the other x million factors that go into banks expenses and revenues, looking at ATM fees is meaningless.

[bUU]

Well, that's certainly the narrative that Socialism strives for, and which which many unfortunately fall for.

Consideration of the human condition and human decency are not solely socialistic values. You may not recall, but thirty or forty years ago, there was a general understanding about how capitalism could also be compassionate instead of strictly cold, calculating and callous.

[mpbaker22]

Well, that's certainly the narrative that Socialism strives for, and which which many unfortunately fall for.

Consideration of the human condition and human decency are not solely socialistic values. You may not recall, but thirty or forty years ago, there was a general understanding about how capitalism could also be compassionate instead of strictly cold, calculating and callous.

Could also be?
Are you suggesting that socialism is compassionate?

[matchewed]

Neither socialism nor capitalism are inherently compassionate. Both have the capacity for the governments practicing that form of economics to be compassionate in their own way.

[bUU]

I'm suggesting that compassion isn't exclusive to, nor mutually exclusive of, either socialism or capitalism.

The question is whether one advocates society be callous and uncaring, and that society fosters the avaricious, or instead advocates that society be compassionate, considerate of those less fortunate, and that society fosters economic justice. These decisions can take place independent of the underlying economic system.

[mpbaker22]

Neither socialism nor capitalism are inherently compassionate. Both have the capacity for the governments practicing that form of economics to be compassionate in their own way.

Agreed.  I think the government in charge probably matters more than the form of economy.
But capitalism theoretically provides more freedom to choose vs. socialism.