
Allan of Iowa City, IA on April 15, 2011
Over the years, I have had IRA accounts with Fidelity, Scottrade, Diversity, Vanguard, and Edward Jones Investments, to name a few. I have more than a little experience with online investing and I have never had a real problem with any of the brokers--until I tried Schwab. I have never experienced poorer customer service than that at Schwab. To qualify for use of their StreetSmart trading software, I decided to move over a couple of our IRA accounts from Fidelity so as to bring my family account balances to over the $1 million balance required for use of the software.
A new IRA account for my wife was opened online from our home computer in Iowa City, and funded with a transfer of an existing IRA from a major brokerage. There was no change in the name, address, email, or phone number or any other information associated with this account. The account to be transferred had been opened for over 15 years. This simple action started the following series of events:
- We received a form letter from Schwab indicating that they had trouble verifying my wife's identity and stating that no trades, deposits or withdrawals would be allowed until they could verify it.
- One day later, we received a letter stating that the account was opened and asking us to contact them if any of the information, as reprinted in the letter, was incorrect.
- Two days later, Schwab accepted and processed multiple deposits to the account totaling about $100,000. Checking the Schwab Web site, it indicated that all the funds in the account were available for trade or withdraw. There was no indication of any restriction on the account. This never changed.- Next, we submitted forms to Schwab to grant POA (Power of Attorney) to me on my wife's account and to my wife on my account. Schwab set up the requested POA for both accounts as requested.
- A Schwab representative from their closest local office contacted my wife to introduce herself. She made no mention of any restriction on her account. - We received the February statement on her account. There was no indication of any restriction on the account. - My wife received and accepted an invitation from the Schwab office to attend a dinner/seminar, which we both attended. - A Schwab representative contacted us to discuss fixed income vehicles.- On April 3rd, we tried to make our annual $6,000 deposit to the account via ETF, but we could not do so because Schwab requires up to two weeks before allowing a deposit via ETF. (Fidelity allows deposits immediately and only requires additional time to verify the information for withdrawals).- We sent checks to Schwab for IRA deposits to both our IRAs via our bank's Bill-Pay.
- On April 8th, I saw that the deposit to my IRA was posted the previous night, but my wife's deposit was not. After 15:00 CDT, I called customer service to make sure that the delay was normal. I was informed that the check had been returned via postal mail because the account was restricted. In subsequent conversations with Schwab representatives that day, we were told that:
a.) the account was restricted because we applied for it from New Jersey (What?), and
b.) Schwab did not make any attempt to notify us that they had rejected our deposit because the Patriot Act does not allow it.
Schwab saw nothing wrong with their handling of the situation. They did not think that rejecting a time-sensitive deposit, without notification, was a big deal even though it would have cost their client over $2,000. They offered us no means of facilitating a timely deposit, would accept no culpability for the situation and never apologized.
Five days after filing a written complaint, I was called by a Schwab representative who reiterated their non-apologetic position, although he had no explanation for the conflicting information regarding the status of the account that we received from them. Nor could he explain why they thought the I.P. address originated in New Jersey. Clearly, either their criterion for flagging accounts is faulty or their processing is sloppy. He also claimed that they mailed out a letter to us to tell us that they rejected the deposit (the precious representative said that would be illegal).
But after five days, we still have not received the rejected check back or any notification of the rejection. If it had been mailed, as what they claimed, I expect that we would have it before now. I never heard a hint of an apology. Schwab's only apparent concern through all this has been their desire to justify their inexcusable handling of this account.
On the sixth day following the date they claim to have mailed the check, we finally received it. The postal marks on the envelope clearly indicate that it was received at their local branch four days after they claim to have mailed it. The letter accompanying the check stated that the check had been rejected because the account was closed. As I stated earlier, there was never any indication of this on their website or with any communication with them. We also just received the March statement for this account--again, with no indication of any restriction on the account and certainly no indication that the account was closed.
In order to make the IRS deadline for our 2010 IRA contribution, we were forced to re-open the Fidelity account which we closed to move the funds to Schwab. We have now submitted a transfer of account order back to Fidelity. Schwab intends to charge us $50 for closing the account even though they never actually opened it and refused the only service request ever made.