The Importance of Follow Up

I was reminded recently why it’s so important to follow up on transactions to make sure instructions have been properly completed. I’m part of several professional forums where advisors can collaborate with each other, pose questions, etc. Here’s a recent post from another advisor, slightly edited for clarity:

Back in January, I helped a client donate stock to their church. The donation left a Charles Schwab account and went to the church’s Fidelity account. Somehow, the account number on the form was one digit off. Instead of rejecting the transfer because the account number and registration didn't match, the shares were deposited into this random wrong account at Fidelity.

Though my client told me that they would verify that the church received their gift, they let me know last month that it never came through. I contacted Schwab and they went through their reclaim process. However, they were told by Fidelity that the receiving account had been liquidated and closed and there was nothing more they could do.

Does this sound right? Has anyone else ever run into this situation? What next steps can I take?

While this sounds like a random, unlikely event, it caught my attention because I had the reverse experience several months ago. As I assume is the case with the advisor above, I custody client accounts at Schwab. I received an alert from Schwab that a transfer of assets (7 stocks & 1 mutual fund) was received into one of my client’s accounts. Since this client had given me no expectation of assets transferring in, we called Schwab immediately to inquire.

Due to privacy issues, it took a lot of back and forth just to learn the distribution came from a Wells Fargo account with the notation “transfer to beneficiary due to death.” We were also given a name that “might” be associated with the transferring account, but Schwab could not be sure of that. With that information, I contacted my client and confirmed there was no knowledge of any expected inheritance or maybe a forgotten, long-lost relative. We then worked with Schwab to have Wells Fargo reclaim the assets. Note that I have spared MANY details of this process, but I will share that these holdings were worth more than $250,000.

Most of the time, things work the way they are supposed to, but sometimes they don’t. That’s why follow up is so important. Until we see confirmation, we assume something will break along the way. When assisting clients with a charitable gift of securities as the advisor above describes, we confirm instructions with the charitable organization and then request an email confirmation to our office and the client once the charity is in possession of the gifted assets. We then request the charity to provide a written receipt to the client, which the charity should do in any case, but we would rather not wait until year-end. Until that happens, we treat the transaction as incomplete.

This is only one example where follow up is needed. Endless scenarios involve this kind of diligence, such as:

Making and updating beneficiary designations
Account titling
Making sure a custodian follows specific withdrawal instructions, including proper tax withholding
All the details around investment management
Having current estate planning documents
Having copies of those documents in the hands of the key players
Pretty much anything that involves another party doing something

As written about in our blog post Quantifying the Value of Financial Planning Advice, most of these things come under one line item out of all the things financial advisors do, namely: Ensure Things Actually Get Done! The value = Priceless!

As always, we are glad to talk about your specific situation to see how we might add value.

Any information presented here is general in nature, believed to be reliable as of the date published and is not intended to be and should not be taken as legal, tax, investment or individual financial planning advice. Competent, licensed professionals should be consulted when implementing any kind of financial, estate, tax or investment strategy.