• Michael Wellings

You've Got to be Kidding Me: The Case Against Big Financial Firms


Listen, I know we’ve been going hard on those big, commission based firms lately. It’s true that the last two articles I’ve placed on this blog have been about why you need to work with fee-only, boutique firms. The lambasting of, and righteous indignation with, large outfits in our industry is completely and totally justified, and we’re well aware that there is no shortage of articles and hot takes concerning the shortcomings of the aforementioned outfits. But this was too good to pass up… This time, their mistake was personal.

It was a usual Tuesday afternoon here at Strategic Advisory Services when Jeremy Joiner, CFP®, received a phone call from a distraught client. Upon investigating the matter, he discovered that our client, who had previously done business with a large insurance company that handled her 401k, had been notified of several thousand dollars in taxes she owed the IRS. We had no idea where this had come from, and after further inquiry discovered that it was a mistake made in a rollover transaction within the insurance company. The mistake triggered a 1099-R showing several thousand dollars of additional ordinary income. Now, please understand that mistakes do happen. Wherever you choose to do business, you’re doing business with fellow humans who will, inevitably, mess up in some form or fashion. What distinguishes a person or company, therefore, is how they rectify the mistake. In this particular instance, the fix is easy enough. The right thing to do would be to send a revised 1099-R to the IRS and the client, rectifying the mistake.  But that didn’t happen or at least not yet, and here’s why:

  1. This firm serves thousands upon thousands of people, our client was just a number in their books.

  2. The account manager has no economic stake in the success of the client or in getting the error corrected.

  3. People hate owning up to mistakes.

Number three hurts the most. That’s the one that separates the men from the boys, as it were, and reveals a person’s humanity and humility more than anything. See, I don’t have a problem with mistakes being made. But when your client tries to get into contact with you to discuss the mistake you’ve made, and can’t because of company bureaucracy and red tape, that’s not simply unprofessional; that’s despicable. Allow me take you through the process of attempting to get this company to right the wrong: Call the company, get connected with a customer service rep that’s probably had about two weeks of training, and get the run-around until you give up. That process is a pretty accurate representation of the three reasons listed above. The big company won’t really care if it loses your business; as I’ve said, they have thousands of other clients and won’t hurt for money. Perhaps the service rep did locate the manager who made the mistake, but he likely won’t care; his role is complete and doesn’t want to deal with the unpleasant conversation discussing his mistake.

I cannot stress enough the importance of working with an advisor you know and trust. Our client came to us with this problem, and we will absolutely do everything we can to help her and keep her from paying thousands of unnecessary dollars to the IRS. To be honest, there’s not a lot we can do because it wasn’t our mistake. If it were our mistake, you can bet your bottom dollar that fixing it would be priority number one for everyone involved. Unfortunately, all we can do is try to compel this large company to take the time to fix it.

If you do business with a large financial or insurance company, take a note of caution; this sort of thing could happen to anyone. All it takes is one small typo on a form to cost you thousands and thousands of dollars. Just remember, the mistake isn’t the important thing. It’s how it gets fixed. Will the huge outfits treat you with the honor and respect that you deserve?

I think you know the answer to that.

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