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Author: tlpriest Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 757652  
Subject: Wachovia Date: 10/18/2003 10:45 AM
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I have a managed brokerage account at Wachovia Securities (formerly First Union Securities formerly Wheat First Securities formerly Wheat Securities when I started). I was balancing last month's statement with Quicken when I decided to read a note "Information about a change to your account agreement." I'll reproduce the startling part here:

"An important change made to your account agreement, as set forth below, authorizes Wachovia Securities, without any consent or action on your part, to establish a new "Default Cash Sweep Option" for your account and to move funds in your existing Cash Sweep Option to the new Default Cash Sweep Option. Another change clarifies the ability of Wachovia Securities to modify, change or eliminate any of the Cash Sweep Options.

Wachovia Securities and its affiliates may take into account their own business considerations and profitability in selecting Cash Sweep Options for your account and in changing the Default Cash Sweep Option for your account. Under the new terms of your account agreement, you expressly agree that Wachovia Securities does not have any fiduciary duty to you to act in your best financial interest as opposed to its own interest or to select Cash Sweep Options for your acount that are better for you than other available Cash Sweep Options or similar investments that are available in the market."


Did you get that! I pay a quarterly management fee for Wachovia to manage this account and they in turn ask me to agree they have no fiducitary responsibility to act in my best interest and can consider their own profit over mine when selecting how to invest my money! Adjectives like absurd, irresponsible, and illegal are flashing through my mind.

Wachovia should not be permitted to amend account agreements this way and disclaim fiduciary responsibility for something they are being paid to do - the precedent here is stunningly bad. Clearly, Wachovia will be losing my business next week, but are these terms legal? Seems like after sending a letter to my broker, I need to send one to the SEC or my Congressman. Thoughts?

Travis
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Author: joelxwil Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128456 of 757652
Subject: Re: Wachovia Date: 10/18/2003 11:15 AM
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That is absolutely stunning! I would suggest (1) an official complaint to the NASD, and (2) moving to Brown and Co.

I do not think it is legal for one party to amend a contract. In any case, you do not want to do business with these jokers.

I was considering opening a bank account with them just to have somebody with a local office. Currently I am with Waterhouse, and I have to do everything by mail and ATM machine.

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Author: twocbock Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128459 of 757652
Subject: Re: Wachovia Date: 10/18/2003 11:28 AM
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That is absolutely stunning! I would suggest (1) an official complaint to the NASD, and (2) moving to Brown and Co.

I do not think it is legal for one party to amend a contract. In any case, you do not want to do business with these jokers.


Actually, I think that the OP should look at all of the documents he has signed with Wachovia. I would be willing to bet that there is a provision, to which he agreed, wherein Wachovia could change the account unilaterally. Probably something similar to a credit card changing the terms of the card - interest rate, when payment is due, etc.

This doesn't mean that he shouldn't complain or move his account. But there is a lot of stuff in the fine print that companies manage to slip by.

twocbock



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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128460 of 757652
Subject: Re: Wachovia Date: 10/18/2003 11:30 AM
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tlpriest asks,

Wachovia should not be permitted to amend account agreements this way and disclaim fiduciary responsibility for something they are being paid to do - the precedent here is stunningly bad. Clearly, Wachovia will be losing my business next week, but are these terms legal? Seems like after sending a letter to my broker, I need to send one to the SEC or my Congressman. Thoughts?



Since Wachovia has likely bought and paid for a platoon of Congressmen and Senators, they can pretty much do whatever they want. However, you don't have to put up with it. I'd move the account elsewhere immediately.

intercst


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Author: workwayless Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128467 of 757652
Subject: Re: Wachovia Date: 10/18/2003 11:55 AM
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I pay a quarterly management fee for Wachovia to manage this account and they in turn ask me to agree they have no fiducitary responsibility to act in my best interest and can consider their own profit over mine when selecting how to invest my money!

I suspect that the company is motivated by the recent plethora of suits in brokerage industry by angry investors. They're trying to limit their future liability. Personally I think this company is trying to eat its cake and have it too. The company gladly took your money to manage your account, but then doesn't want to be held fully accountable for its decisions? Bogus! To me this just provides one more compelling reason why investors should self-manage their accounts, if at all possible.

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Author: FoolNBlue Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128511 of 757652
Subject: Re: Wachovia Date: 10/18/2003 1:54 PM
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Dump "WalkAllOverYa!"

They bought out the only Bank I've ever liked (Central Fidelity) in the mid 90's and immediately screwed it up. Now, I'm sticking strictly with mutually owned institutions, two credit unions and Vanguard.

FoolNBlue (Who knows that friends don't let friends use banks)

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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128551 of 757652
Subject: Re: Wachovia Date: 10/18/2003 3:36 PM
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What is now know as Wachovia in fact is First Union Bank, which is pandering under it's new name of Wachovia. The reason for the name change was the numerous acts of illicit conduct perpetrated by the securities division and other divisons of First Union. It's reputation was so bad that it bought Wachovia so it could use a name that had an excellent reputation for conservative and ethical management.

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Author: tlpriest Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128558 of 757652
Subject: Re: Wachovia Date: 10/18/2003 4:10 PM
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Agreed. The First Union wolf is not doing a very good job of hiding in the Wachovia sheep's clothing.

But wait, there's more. I've been digging through the amended agreement language and have learned that not only is Wachovia Corporation the parent of Wachovia Securities, Wachovia Bank, Evergreen Investement Management, etc. but that each of these separate entities charges the other for services. That is, Wachovia Bank charges Wachovia Secruities a 1% management fee of the average monthly balance held in money market accounts (Evergreen charges 0.80%, currently waived -- guess where Wachovia Corp intends to move all the cash sweep: to the 1% overhead option). This 1% management fee is paid by clients. Currently, 2.5% of my account is held in cash, and assuming that's the Wachovia Securities average, then Wachovia Corp is going to add 1% of 2.5% of their entire assets under managment to their bottom line. WB investors should be happy with this move.

And, when this proves to be an insufficient profit margin, all of Wachovia Securities' account holders have waived their rights with respect to fiduciary responsibility and left Wachovia Corporation free to increase it's internally charged management fees under the covers to generate more revenue at customers' expense. Whoopie! Wonder if I should invest in these guys but move my money elsewhere? :)

This is like your doctor incorporating different parts of their business: patient care, billing, and records, and each entitiy charging the other for services which are then billed back to the client. Here's your $100 doctor's visit bill along with a $0.50 billing corporation service fee and a $0.25 filing corporation service fee. Nice way to move expenses from opex to a revenue stream.

Travis


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Author: Kestrel2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 128786 of 757652
Subject: Re: Wachovia Date: 10/19/2003 8:37 PM
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What is now know as Wachovia in fact is First Union Bank, which is pandering under it's new name of Wachovia. The reason for the name change was the numerous acts of illicit conduct perpetrated by the securities division and other divisons of First Union. It's reputation was so bad that it bought Wachovia so it could use a name that had an excellent reputation for conservative and ethical management.

This merger was a very big deal in North Carolina since both banks have large presences here (and did you know Wachovia was founded in Winston-Salem, NC? The town was originally settled by Moravian settlers in colonial times, and Wachovia was one of their names for their initial settlement.) I didn't like it because First Union is pure evil in my opinion after they bought out several local banks and threw a bunch of people out of work (including a few friends of mine.) I guess they got tired of their old unofficial motto "We put the F U back in banking." and have now switched to WalkOverYa. :)

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Author: BenSolar Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 129107 of 757652
Subject: Re: Wachovia Date: 10/21/2003 10:12 AM
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pay a quarterly management fee for Wachovia to manage this account and they in turn ask me to agree they have no fiducitary responsibility to act in my best interest and can consider their own profit over mine when selecting how to invest my money!

Get out of this boondoggle as fast as you can. It will cost some money to move, but probably no more than one quarterly management fee. I'd move my assets to Vanguard, read '4 Pillars' by Bernstein and stick the money into a blend of index funds appropriate for your circumstances. You will save a bloody fortune! And likely outperform the 'managers' at WalkOverYa.

B.

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