When your Mutual Fund Company makes a Mistake
Something was terribly wrong, I was sure of it.
I checked my bank account and the deposit I was expecting wasn’t there. I checked my 401k and thousands of dollars had been withdrawn… four days earlier.
Oh *&$#!
The Paper Trail
It had been a month since I began the process of taking retiree distributions for the first time from my 401K. I slogged through 26 pages of documentation from my mutual fund company. I checked all the proper boxes and signed all the correct lines. As instructed, I took the forms to my bank to be notarized. Then I bundled it all up and sent it off by certified mail.
Because I tend to worry, I even made a phone call two weeks later. Yes, I was assured, all the documentation was there. I’d be getting my first disbursement from my 401K as scheduled.
Except I didn’t.
Panic Sets In
When we first retired, we were living off our non-retirement savings. To avoid adding to our tax burden, I had decided to wait until the January after retirement to start taking distributions from my retirement account. But with our savings now running low, we were counting on that initial 401K withdrawal to pay for some important things. Like the mortgage for our new home for retirement.
Now, that money had vanished.
The Phone Calls
My first call was to the mutual fund company. I was told that everything processed correctly. They weren’t sure why it was taking longer than normal, but believed the money would probably be in our bank account the next day. My wife then called the bank. She was told they saw no indication of an upcoming wire transfer. We agreed to give it one more day.
The next day – no sign of our money. Back on the phone again. No sign of the cash on either end.
Time to make noise.
“That’s not Good Enough”
Now when I say ‘make noise,’ I don’t mean yelling. Nobody on the other end of a screamfest is going to want to be very helpful. But I was determined to be a thorn that would not go away without painstaking extraction.
I was passed around a couple of times at the mutual fund company as they tried to figure out the correct person to handle my issue. Finally I reached Jake who assured me that my case would be expedited. “Expedited” meant I’d get a call back – perhaps today, but maybe in two to three days. With my mind wondering what would happen to our FICO score with a missed mortgage payment, I snapped.
You know, pleasantly but firmly.
“Jake, you’ve been very helpful, but that’s not good enough.” I think Jake was a little surprised by that sentence, and I gotta tell you, I was too. The next words out of my mouth were “I want to be directly transferred to someone who can help me with this situation today.”
After ten minutes on hold, Jake handed me off to RJ, a supervisor with 16 years experience with the company.
“Our Mistake, Not Yours”
RJ and I worked together to figure this out. He could tell that the money was transferred to the Federal Reserve Bank to be sent to my local bank. But that’s as far as he was able to see. At the same time, my wife was on the phone with our bank branch manager who could see to her side of the Federal Reserve system. No money there.
So, great. The Feds had our money. I was sure that excuse would go over well with our mortgage company.
My wife makes sure we keep a copy of all important documents, and that was about to pay off. I pulled out our copy of the stack of forms we sent in a month earlier. Then RJ and I went over the paperwork again.
In my previous phone calls, I reconfirmed our bank account number. Each time, I was read the last four numbers of the account. RJ did this again. Check.
Then I got a strange feeling. “RJ, can I read you my whole bank account number? Is there any security reason we can’t do that on the phone?” “No,” RJ said, “this line is secure.”
I read the number.
Pause.
RJ – “We’re missing a number.”
Me – “I read the account number directly from the copy of the cancelled check that I sent you.”
RJ – “Right. WE are missing a number. It’s our mistake, not yours.”
I suppose I thought that all those forms were fed into some infallible computer. Nope. A regular person like you or me just missed a single number when typing in our bank account information.
Now What?
You would think that with a few quick keystrokes, RJ could stop the transfer and direct it to the correct account. Apparently the U.S. banking system is more complicated than that. The Federal Reserve had to wait until some computer that transfers money to my bank figured out that no such account number existed (and we checked with our bank to make sure that ‘wrong’ number didn’t exist). Our money would then be transferred back to the Federal Reserve and then to the mutual fund company.
The mortgage company might be sympathetic, but they would still want their money. (We actually called them during this process and they were sympathetic. But they still wanted their money.)
We couldn’t wait for the process with Fed to play out. I asked RJ to start a new transfer to the correct account immediately. We still had a few days before the mortgage was due and we might just make it.
Show Me the Money
RJ promised that he would keep a sticky on his computer and check each day to make sure we’d get our money. And I knew that he would. You see, RJ and I had bonded by now. We discovered that his office was only a few miles from where I grew up. We’d had time to chat about the local sports teams, and the unusually cold weather.
And I never freaked out on him.
RJ called me with updates later that day and twice the next day. The following morning he was excited. “You should have your money!”
We’d already checked.
“We’ve got the money, RJ! Thank You.”
I was a little sad that this would be my last conversation with RJ. Well, maybe. He gave me his direct line which is now in my contact list. Because, you never know.
What I Learned
There were a few key learnings I took away from this experience. You may find them helpful as well.
First – Mistakes Will Happen
I haven’t named the mutual fund company because I still believe they are the best out there and I don’t want you to shy away from using them. I can tell you it’s one of the “Big 3” and has a stellar reputation for performance as well as service. But no matter how big the company or how stellar the reputation – when humans are involved mistakes happen.
Second – Document Everything
My wife makes sure we have documentation for every important issue in our lives. Dates and times of conversations, photocopies of anything we mail or e-mail. Having the copy of our cancelled check and being able to tell JR I was reading from it, left no doubt who made the mistake.
Third – Stay on the Phone
If I had hung up when Jake said I’d get a call back at some point over the coming days, it would not have led to the solution we needed. Almost everyone has a boss or someone who knows more about an issue than they do. Politely insist that you need to talk to that person and you’re staying on the line until that happens. And do expect it might take time to track someone down. In my notes on one of these calls I wrote – length of call 41 minutes.
Fourth – Stay Calm
Easier said than done, I know. But when Apollo 13 encountered crisis, lead flight director Gene Kranz told his crew “Let’s solve the problem.” That’s your goal. Reacting calmly but firmly allows both sides to work on finding a solution.
Fifth – Be Part of the Solution
When it was apparent that the first distribution wasn’t going to happen on time, I suggested starting a new withdrawal. RJ confirmed that he could do it immediately and make sure it was going to the proper account. Teamwork.
Sixth – Get a Commitment and a Number
When RJ had taken as many steps as he could, he told me when I could expect to hear from him again. I also got his direct line so that I could contact him if necessary. Reach an agreement on what the next step is and when it’s going to happen.
The Mistake I Made
I’m not above learning from my own mistakes, so here’s mine. I should have done a test withdrawal, and I recommend that you do the same. In December, I could have taken a one-time minimum distribution to make sure everything was ready for that first big automatic withdrawal. We would have paid a few extra dollars in taxes, but it would have highlighted the error at that time, and we would have avoided a week of stress and worry.
In my pre-retirement days, one of my duties was to anticipate mistakes and prevent them from happening. I’m quickly discovering that I have to have the same approach in retirement. If one of the biggest financial companies in the world isn’t beyond making a simple mistake, no one is.
