Prudential Securities has run into public relations trouble with new service fees announced this spring. Clients were told theyd have to pay a $50 annual fee for basic accounts starting July 1, and $32 twice a year to use its on-line service.
Brokers report clients have complained. Office after office wrote letters to senior management signed by the brokers to protest the $50 fee, says a Prudential broker in the South who headed up his offices letter-writing campaign.
Meanwhile, Bloomberg News ran a story after a Prudential client contacted the service about the on-line use fee.
Brokers feel the fees are attempts by the firm to push clients into the firms Command central asset account. Command account holders are exempt from the fees.
Prudential says both fees were misunderstood.
But some reps are livid. The new $50 annual fee would have been charged on a clients multiple accounts, brokers say. I have one client who would have faced $390 in annual fees, says a Midwest Prudential rep.
Brokers say the firm sent a memo in June announcing the $50 fee would be waived for custodial accounts, retirement accounts and book-entry only accounts.
With all the brokers screaming and hollering, says the broker in the South, they made changes.
But a Prudential spokesperson says the firm waived the $50 fee for those accounts from the beginning. Press reports that the firm retracted the fee for some accounts in the face of client complaints are false, the spokesperson says.
Whats not in dispute is that brokers feel more pressure than ever to open Command accounts. The firm has set an Aug. 30 deadline for brokers to calculate total assets for each household. Households that have at least $500,000 in assets get a free Command account and access to Prudentials on-line site. Households that total $400,000 can pay $150 a year for both a Command account and free on-line use--a $14-a-year discount on the total fees.
Thats what the Midwest broker plans to do with his multiple-account client the firm could have nicked for $390. If I can have him open just one Command account, his fees will drop to $150.
The new on-line use fee isnt new at all, the Prudential spokesperson says. The fee has been in place as an annual fee since 1997. Whats new is requiring it to be paid in two installments. The letter sent to clients, though, stated the fee is new, Bloomberg News reported. Prudential told Bloomberg the wording in the letter was inaccurate.
Brokers have been threatening to leave the firm over the $50 fee. Its no coincidence that the $50 fee hit on the fifth year of our Wealthbuilder plan, says the broker in the South. If reps leave now, theyll now lose a lot under the plans payout provisions. You get your first year of Wealthbuilder paid on the fifth year. If you leave the firm anytime in the first five years, you get to keep nothing from the plan.