By Michelle Higgins, The Wall Street Journal
and Jeff McKinney, The Cincinnati Enquirer
Finding a bank or broker that wants your business is easy. Dumping the previous one is the hard part.
Just ask Michelle Voon. When she moved to New Jersey this past March, she took all her money out of a bank in Brooklyn, N.Y., and closed her account. She also called her insurance company to reroute a monthly automatic debit from her checking account.
But a month later, Voon got a statement from the Brooklyn bank with a $30 overdraft charge. The insurance company never shut off the automatic debit, and the bank never closed the account. Ms. Voon says it took three months, even more overdraft charges and many phone calls to the insurance company to close the account: "It was just a whole nightmare."
A growing number of banks and brokerage firms, including some in Greater Cincinnati, are seeking to provide one-stop financial services for customers, from cradle to grave.
That's one reason banks are pushing online bill payments - once they're set up, a customer is 70 percent to 80 percent less likely to defect, according to Gartner Inc. Brokerage firms, meanwhile, are offering anything from home mortgages to credit cards with generous awards to entice customers to keep all their finances in one place.
But such lifetime relationships have a big drawback: As people's finances get more intertwined with a particular bank or brokerage firm, it becomes that much harder to move your money elsewhere. "The more services they provide, the less likely you will leave the institution," says Robert Tetenbaum, executive vice president of First Manhattan Consulting Group. Indeed, banks lose just 14 percent of customers annually on average, according to Celent Communications.
As competition heats up, some banks are now trying to make it easier for customers - of other banks, of course - to switch.
Kathy Beechem, executive vice president at U.S. Bank in Cincinnati, said the bank offers "EZ Switch" kits to individuals and business customers who want to change banks. She said the kit allows those clients to easily switch their accounts - one of the biggest headaches for most bank customers - to U.S. Bank.
For instance, U.S. Bank will fill out information for customers to take to their employer's payroll department to change their direct deposit account to U.S. Bank. It also will complete a similar process for those who want to change their mortgage accounts.
"It takes the hassle out of it for the customer," Beechem said. "... We want to make changing their accounts from another institution as easily as possible."
Washington Mutual Inc. and Bank One Corp. both provide new customers with "switch kits" that include forms needed to move automatic deposits and bill payments from their former bank, as well as a letter to that bank requesting that it close the account.
Some brokerage firms are taking similar steps. Charles Schwab Corp., for instance, assigns "concierges" to assist customers who are rolling over a retirement account from another firm.
When it comes to switching brokers, the firms will do much of the work. But there are still hassles. Investors submit a transfer form to their new brokerage firm, and then must wait for their old broker to hand over the assets. The process is supposed to take no more than a week but can end up taking months because of incorrect paperwork. The old firm can reject transfer requests, for example, if the transfer form is incomplete or inaccurate - even if just one digit in an account number is wrong.
One way to minimize problems: Make sure to attach a copy of your most recent brokerage statement to the transfer form to avoid mistakes. If you still have problems, file a complaint with the Securities and Exchange Commission at www.sec.gov.
Brokerage firms with many online customers are trying to automate as much of the process as possible. For example, customers moving assets to ETrade Group Inc. or Fidelity Investments have to type in pertinent information such as their name, address and account numbers only once. Transfer forms are then created automatically with the customer's information already filled in. Fidelity customers still have to print out the forms, sign them and mail them in. ETrade offers an e-signature option.
Other brokerage firms are just trying some old-fashioned selling to win new business, including Gradison McDonald Financial Group in Cincinnati, a unit of Cleveland-based KeyCorp, the parent of Key Bank.
"Gradison McDonald Financial Group has one great advantage over our brokerage competitors, and that is our ability to offer traditional brokerage services bundled together with Key Bank products and services," said Richard Curry, managing director of Gradison McDonald in Cincinnati.
He said because of the integration of Gradison and Key over the past 18 months, a client can receive a package of brokerage and banking products and services through one contact.
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