The California fires have brought back memories of the mid-1980’s when we had another series of bad fires in the San Francisco Bay Area. Not quite as bad as this year’s, but my school was near the foothills and I remember smoky days and charred landscapes.
There’s another part of my life from California days I’m trying to leave behind. An investment account decades old that has just a few dregs of dollars in it, yet I can’t seem to get my money out. I’ve tried a variety of tactics, but it seems you have to jump through many many hoops to close what I once thought was a simple account.
Investment firms obviously want you to stay with them and will disincentivize leaving.
Like the quote from the Eagles song Hotel California.
“You can check out any time you like, But you can never leave!”
Although there are lots of “soft” ways of enmeshing clients lives with the firm so that they stay, the most obvious way of disincentivizing transferring your money out is exit fees. Many people are unaware these exist until it’s time to move.
Exit fees come in all kinds of shapes and sizes. These could be redemption fees for getting out of a fund early, fees when you sell shares to leave or a straight out percentage charge when you leave.
A few articles to investigate further:
A nice comparison of exit fees.
US specific. Old but still relevant.
This is the most egregious one I came across. Old Mutual charges 5% of your assets to move certain pensions started prior to 2000!
Check the small print and don’t get trapped in Hotel California like me.