UnThreaded | Threaded | Whole Thread (18) | Ignore Thread Prev | Next
Author: starvingactor One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4956  
Subject: A Disgruntled (now former) Customer Date: 7/21/2005 4:08 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
Hey, folks. So I'm posting this message for those of you who are Buyandhold customers, or who are considering becoming them, just to give you a heads up.

As I'm now transferring my IRA to another institution, I thought I'd share a few things I've learned along the way about Buyandhold.com.


Things you don't think about (or KNOW) when you first open an account:

1) There's a large number of stocks on the open market they just don't trade. At last look, you couldn't buy Berkshire-Hathaway class B shares (or A, for that matte...but really, who can afford it?), nor could you buy many promising small-cap companies until after the news had already hit and they had moved up into 'mid-cap territory.'

2) You don't purchase by number of shares, but in dollar amounts. This means that you'll almost always have fractional shares in your account.

3) They have quite possibly the most confusing statements of any financial institution I've ever encountered. One example of this is that when a security pays a dividend (which you have set to automatically reinvest), the amount of the dividend shows up as its own transaction. The price of shares purchased shows up on a different transaction, with no amount shown deducted from your account. Finally, the amount deducted from your account (which doesn't always match the dividend) shows up, unlabeled, on another line.

It may sound petty to be harping on something as trivial as statement design, but when you're dealing with 15 securities, many of whom release dividends around the same time, the transactions get jumbled, and it adds at least a good 5 minutes onto reconciling your statement each month. Additionally, stock splits are simply a NIGHTMARE. When Pixar split earlier this year, my statement registered a Pixar dividend (? - my thoughts exactly), then deducted the dividend, but purchased the shares as if I had the dividend money in my account (before doubling the shares from the split)...and it wasn't until a month later that the situation was resolved on paper. All of this would've been much easier to follow if things on their statements a) showed up together and b) were labeled as dividends, or purchases, or reinvestments, or splits.

I mentioned this to them when I first became a customer a number of years ago, and apparently it's not a high priority to them...despite my having to call at least three times a year because of not being able to decipher the screwy items showing up on my bill.

4) Though not as absent/removed as izone.com, I've had great difficulty getting them on the phone a few times...though the rest of the times it was okay. (Despite the fact that their customer service reps are a bit rude, but hey, I'm willing to overlook that if they at least do their job).


Things that you won't know until you decide to transfer out (unless you read ALL the fine print before you sign up):

A) The process of transferring your holdings out is a three-step process. First, they move the whole shares to the other account. Then they liquidate the partial shares. Finally, once those trades have settled, they deduct fees and transfer the remaining cash.

Note well: they'll sit on your cash until the last moment, so if you want to purchase anything, do it before you begin the process, because otherwise you're pretty much locked out of doing anything until it is complete.

This is further complicated by:

B) The time it's taken me to transfer away from Buyandhold has been twice as long as anywhere else I've previously transferred from (which are Charles Schwab and TD Waterhouse, in the interest of disclosure).

C) Here's the kicker - look back at point A. See how I say 'they liquidate the partial shares'? Did I mention that they charge their normal commission for liquidating the shares? Which means that you think your costs for getting away are just the $50 transfer fee...but really, if you've purchased ANY shares while at Buyandhold, it's gonna cost you a whole lot more.

This wouldn't get my goat so much if there was ANY WAY to purchase shares on their site that would allow me to dictate that partial shares NOT be purchased. But, as I mentioned in #2 above, there isn't. And for some reason, they don't charge me an additional commission for originally purchasing the partial shares - it's included in the $2.99 transaction fee. It's only when you're leaving later that they decide to stick it to you.

This again is one of those practices that none of my other brokers have ever employed.

Seriously, what good does it do to reinvest a dividend if you know you'll be paying it back in commissions when you decide to leave?

------------------

I guess my message is this, folks - it seemed like a great plan to me. The $2.99 trades, the emphasis on long-term DRIP investing...all were right up my alley. Until I couldn't buy the stocks I wanted to because they weren't offered, and I watched them skyrocket in the weeks following my intended purchase.

Then when I went to get out, I saw the darker side to this company. Given my experience , I can say Buyandhold.com is obviously not concerned with providing the consumer with the best investment service possible - otherwise these sorts of things wouldn't be built in.

The extra commissions you can't avoid? That's just downright shady. They're selling you something earlier that they know they fully intend to take back in the form of unavoidable commissions at a later date.

I know, I know, it's the old 'hidden in plain sight' thing - I didn't do my due diligence with enough attention to detail before I opened an account. (Though there were some things I couldn't know about until the account was open and I was able to access certain parts of the website.)

Anyway, that's why I'm posting this to you all. If you're looking at going to Buyandhold.com, I'd give it a second thought. Unless you plan to stay with them 'til you die. (And you know right now you don't ever want to buy any shares of Berkshire-Hathaway or Montpelier Re.)

Hope my sharing this has helped some of you, in some way. I really liked the premise of the service Buyandhold.com was offering...but when it comes down to it, I should've gone to Firstrade to begin with. It would've cost the same, in the long run.

C'est la vie,

SA
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (18) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Netflix Riles Investors
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement