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H&R Block, Inc. Message Board

  • wishfulthinkin27 wishfulthinkin27 Mar 3, 2004 9:16 PM Flag

    Ashamed I sold XIRAs

    I will never "sell," "offer," or even mention XIRAs to clients again. I had one of the highest XIRA rates of the entire district last season--thought they were a good idea to help people who knew they had to begin saving for their future but didn't have a lot of money to put to that purpose. Sure, the money market rates were low and I had a hard time understanding why people had to pay a fee every time they added money. Yet for many clients it was a first step (which is always the hardest) and they left resolved to keep it up and rather pleased with themselves.

    A pitch I always used is that once someone had enough money in their xIRA, they could speak with a financial advisor who would analyze their goals and risk tolerance and recommend appropriate funds where their money could grow faster. Those thoughts engaged before I attended this year's training. One of the handouts detailed the true cost of an HRBFA brokerage account. I was flabbergasted, and that's before I fell out of my chair. The annual custodial fee is $30, PLUS a quarterly administrative fee of $12.50. That's 80 bucks off the top, or nearly a full percent of the $1000 minimum investment. These fees are waived if they invest a mere $20k. On top of this, they pay additional fees charged by the particular mutual funds they choose, every one of them funds with loads. They're looking at a minimum of 2 or 3 percent between Block and Fund company fees (which don't ever go away if 12bs are involved). Reinvesting still costs money, and it costs $75 to get out once they realize they made a big mistake.

    No way will I ever point a client in this direction again. I'll steer them toward Fidelity, Vanguard, T Rowe Price, or the local bank. I've talked with the FA who covers our office a few times this season, and she never mentioned these fees when I asked how she'd serve clients investing $500 (which she agreed would allow them to move into mutual funds). And Block's management wonders why their financial services division is still losing money? It deserves to be exposed, shut down, and forgotten. Offering this type of service is not conducive to developing "relationships" or "partnerships" with clients. Offering this type of service is a sin.

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    • Well said!
      From me a past HRBFA

    • My friends IRA was converted from the regular money market IRA and put into a mutual fund. She had to pay fees but the IRA has increased by 20% this past year. She's not complaining about the fees believe me.

    • "The annual custodial fee is $30, PLUS a quarterly administrative fee of $12.50." by wishfulthinkin27

      The Quarterly admin fee is for Investors accounts not an IRA account.

      "These fees are waived if they invest a mere $20k." by wishfulthinkin27

      Please get the facts straight. An account is exempt from the quarterly administration fee if the account meets one or more of the following conditions:
      Executes one or more commissionable trades within the previous 6 months
      One loaded mutual fund/UIT purchase within previous 6 months
      $20,000 minimum account balance
      Systematic investing of at least $100/month
      At least $100 in margin interest in the previous 6 months
      Enrollment in cash management features

      Also as for the fees on the IRA:
      The fee and waivers will be applied during the last 2 weeks of April for the previous tax year or upon account closure. The
      IRA custodial fee will be waived if the account meets one of the following conditions:
      One commissionable trade within the previous 12 months
      One loaded mutual fund/UIT purchase within 12 months
      $20,000 minimum account balance
      Systematic investing of at least $100/month
      The fee will not be charged on Educational IRAs

      So bases on these exemptions, the IRA Custodial fee would be waived, if there is just 1 mutual fund purchase in their IRA.

      The only IRA's that would be charged would be dormant ones where there is no activity.


      • 2 Replies to hrbmike2003
      • If my facts are wrong, it's not my fault. They came directly from a handout at midseason training. Didn't everyone get the same handout? The chart in it clearly compares the xIRA to the HRBFA brokerage IRA. So you're saying the quarterly fees and minimums cited don't apply to the brokerage IRA, only to the regular (taxable) brokerage account? SOMEONE SHOULD TELL THE FOLKS WHO PUT TOGETHER THE TRAINING MATERIALS! If there are no quarterly fees, exactly what fees are waived if the investor "Executes one or more commissionable trades" or "One loaded mutual fund/UIT purchase..."?

        PS, I still think it's too expensive to help clients reach their goals. If they understand what a "commissionable trade" or "UIT purchase" is, they know enough to find much less costly alternatives.

    • Another person spouting off when they don't know what they are talking about - mixing XIRA information with retail brokerage account information.

      Yep, just mouth off on a message board instead of finding out the facts. Hiring this type of employee is a sin.

      • 3 Replies to rock_n_roll_oldie
      • "Another person spouting off when they don't know what they are talking about - mixing XIRA information with retail brokerage account information." rock n roll oldie

        EXCUSE ME, but I think it's the other way around. Perhaps you didn't get the same handout in midseason training we did, the one titled "Tax Professional Guide to Express IRA." In it there's a chart comparing XIRAs with HRBFA brokerage IRAs and directions for how to move clients from the money market xIRA to the brokerage variety. Every number I cited comes directly from that chart. Clients who want to make more than the money market rate by going into mutual funds, etc. get to pay a $30 annual custodial fee and and $12.50 every quarter in account administration fees = $80. So they can lose money by staying in the money market that pays less than 1% but comes with a $10 annual custodial fee, or lose money by opening a brokerage IRA that skims $80 off the top.

        ihatemichiganmore, how can you feel that you're serving your clients by putting them into these high-cost vehicles? Don't you feel even a tad guilty? Do you really need the $5.50 commission that bad?

      • One thing I really like about being self employed is the ability to talk to clients about the advantages of using Vanguard for retirement services.

        Now that I work by myself, I can go to the Vanguard site and show them how to use it (have a lot of elderly clients). For the younger ones, I just show them some of the major categories and how they might use it.

        Could not do that at a company that is selling their own financial products.. even if we had the internet at our desks, which we didn't.

        In addition, I can look up basis for stock, get records for stock splits while the client is here so they don't have to make another trip.

        I also make housecalls for my senior citizens and don't charge extra for it. Many of them really love the service and I like to get out of the office now and then, so a win-win for us.

      • Wrong-putting down someone to make yourself look good or feel better is the "sin".

    • "Offering this type of service is not conducive to developing "relationships" or "partnerships" with clients. Offering this type of service is a sin".

      Actually the sin in this case is your total lack of knowledge on this subject.

      • 1 Reply to Bigbob5
      • I am constantly amazed at the lack of financial knowledge among our clients. When I come to the XIRA screen, I ask if they contributed to their IRA in the previous year. Most of the time, I get a blank stare followed by a negative response. I then ask if they know what an IRA is. The answer is almost always, "No."

        I then proceed to explain about 401Ks (which they all seem to have heard of), traditional IRAs and Roth IRAs. I spend several minutes explaining about the need for and the procedures for planning for retirement.

        Most of them do not want an IRA at this time, but at least I've got them thinking. If they get an IRA someplace else, that's better than not at all. If they choose to do it through HRB, that's fine. I explain about the negligible interest rate and the need to have $1000 invested before moving from a money market to a stock mutual fund. I also explain about the fees.

        Most clients seem thankful for the time I spend explaining this. I know, it's not very productive in terms of this year's return count, but if I am going to serve my clients, I owe it to them to make sure they understand what all this IRA business is all about.

        My XIRA take rate is about four or five percent. Not very high, but every client who took one knew exactly what they were getting into.

        If I skipped the IRA screens and let clients continue to move through life in blissful ignorance, then I would feel ashamed. But I will never feel ashamed of informing clients of their options and letting clients make informed decisions.

    • You need to work for another company.
      we do not need anyone like you "living the mission". I also helped "fund" xiras and my district mgr won awards for my efforts. I have a returning clientel still investing in their future. You have to believe in the product & be proud of your job, effort, & company....get a job!

    • Correction: $80 in fees on a $1000 investment is 8 percent. (Scary to think I work with numbers, isn't it?) It's late and I'm overworked and I can't believe HRB would charge that kind of money. What kind of return on investment would someone have to get to recoup 8% plus 2-3% inflation, and still stay ahead? They truly would be better off burying their money in the backyard.

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