There are very few other things I have spent as much time on with my computer.  I like mutual funds.  I understand them.  And I like the industry because they provide products that help people.

One percent of $30 billion is a lot of money.  $300 million to be exact.

It is very simple:  pick stocks and sell shares.  Theoretically you could do it with a list of companies and a dartboard.  It is much more difficult to do in reality and highly skilled professionals make a lot of money at it.  There is a lot of competition and that keeps them on their feet.  It is a great way to invest.

You have to be careful.  Any investment can be risky and there are dramatic ups and downs.  Sometimes certain investments or commodities do well and sometimes they do not.  Over the long term diversity helps with overall success.

These ups and downs are the nature of the beast and should therefore be part of the plan.  The good funds tend to even out.  Professionals being professionals, if you do your homework and go with the best companies and best funds you should do well or perhaps even better than average.

The key then is going with a reputable, honest, and credible company.

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For me, mutual fund management fees are one of the largest expenses I have.

This is what I am trying to understand:  Why do customers tolerate sub-par service, particularly with something as important as financial investments?   I am grateful to the participants on the Morningstar forum.  None appear thrilled.  Many seem to have low expectations and several have experienced problems.

On the flip side, why don't mutual fund companies realize this and create an environment where customers' expectations are not only met, but they are exceeded?

By service I mean the entire customer experience...

It is surprising and disappointing that a firm like Morningstar does nothing to assess mutual fund service and customer satisfaction.  Shouldn't that be a major factor in selecting a fund or fund provider?

Scudder

Deutsche Bank really destroyed one of the oldest, and first, no-load mutual fund companies...  

American Century

Ah, the situation with Ultra.  I stuck with it forever.  For five straight years it underperformed its benchmark.  American Century didn't say a thing; they actually withheld peer and benchmark data which would have useful for customer decisionmaking.  This is not what one would logically consider full disclosure.  And this from one the historically bigger and better no-load mutual funds; certainly this fund had the resources to provide better performance.  Its fees never decreased.  Then I looked into their organization and governance...  Gale Sayers and a bunch of 70-year old retirees on the "board?"  It was a joke.  

The answer is in the numbers AND in the information provided by the company.

Vanguard

I really thought I found a firm that valued customers and service with this one.  At least that's what they say...

Janus, Friday 3/23/07

It really is an awful company.  Twice in the last year I have made purchases and twice I have had problems.  You could call it bad ethics or typical of business in Colorado.

Yesterday the two executives who characterized themselves as the ultimate decision makers in customer retention (they seemed more like mid to low level managers to me) hung up on me.  You can definitely call it lousy service.  The best word I can think of to describe it is “bullying.”

My first encounter involved overzealous sales and a website and infrastructure that didn’t support it.  I was left to bear the burden.  Then they closed that fund and spent a lot of time and money merging it into another, with a different fund manager, while customers were left in limbo.

Still, the financial performance of several of their funds was good so I invested more.  Because of their odd account-opening procedures I called to find out what the latest incarnation of their rules was.  I was told I could not do it over the phone despite numerous already-opened accounts and tenure as a customer of some fifteen years.  So the next day I laboriously entered my address, social security number, bank and routing information, etc. etc. via their website.  I did all this twice to open two new funds.

And yes, I made a mistake.  So I asked Janus to correct it—or rather, simply to let me get out of the fund I didn’t want—without paying a fee.  The reason I will be closing all my Janus funds is both that they said no and how they said no.  Their rationale?  I didn’t use the terms “account” and “fund” properly when I called.

It is a simple concept really, a guarantee.  Legitimate companies have it because they are confident in their products and service.  They realize that not only is it the honest thing to do, it is the only way they can improve.  They recognize that existing customers are easier to keep and are more profitable than finding new ones.  They know that the customer’s perception is key.

The result was relentless, merciless “customer service.”  What, you dare to question us?  Slam!

And all this was after sticking with Janus through the scandals a few years back.  I think I even owned some of the affected funds and I remember reading about damages that might be or were paid to shareholders.  I recall it as not much more than a couple of bucks.  Certainly the real cost to shareholders was much more than that.

The bottom line?  These are companies that don't understand business and don't understand the value of customers.  It is ironic that it is their role to pick stocks--companies--to invest in.  They supposedly know how to find  and choose the best companies...