Sorry for the length, but I know it's easier when one has full information.

I had two mutual funds with a company, one of which had a maintenance fee for accounts under $10,000 of $10/year (which they charged $2.50 per quarter). The other fund had a lower minimum which I was over, so had no fees.

So I get this letter with a fee structure change. They changed it that all accounts would now have a $20 annual fee for balances under $10,000. This would now include my no-fee account since the balance was under that. Two funds with the new $20 fee. At first I didn't much care cause I was doing cost averaging on the one fund and planning to get it to that level anyway. The other one I had to think about.

So then I get online to check my account following the day they were making this change. They had just charged the $20 to both accounts, which I didn't expect. (i.e. I expected $5 per quarter charged at the end of each future quarter.) This means 3 things: One, the one account I'd already been charged 1st quarter fees for was charged again. Second, they charged them retroactively, which not only seems a little odd, but the letter never stated they were going to do it, i.e. there was opportunity to avoid future fees, but none to avoid retroactive fees. Third, they charged the entire year, even though the year had not passed yet.

Well, that really ticked me off, especially that double-charging of the first quarter and the retroactive thing. I just decided I didn't want to deal with that kind of company, plus it was obvious they were steering away from small investors like me. Plus, I simply didn't like the fees, duh. So I sold them both. (It was the best thing in the long run, but bad timing -- I reacted to something emotionally. You can slap me.)

It's hard to believe a company like this would do something illegal (simply cause it'd be too easy to get caught -- I mean, it isn't exactly hidden). But that retroactive thing just seems like it oughta be illegal, especially when we weren't told. Of course, there's always special rules that apply. As for charging the whole year, there's probably no rule they can't charge for a partial year, even if they used to charge by the quarter. (Although they didn't state they were making such a change.) I sold them -- I just don't see why I should have fees for the entire year. (Interestly, they did not charge the early redemption fees for the last few payments to the index fund.)

Any thoughts?

Though I don't invest in any mutual funds you need to realize that they are going to do things like this to compensate for a downturn in the market. Mutual Funds don't have significant returns anyway for the company in regards to the stock market. A lot of their revenue is from fees like the one you referenced. Though I don't know the exact laws they must abide by I guarantee they have not done anything illegal as any business in any industry is allowed to do reasonable price/fee adjustments to compensate for any downturn in the company/industry.

Though I don't know the exact laws they must abide by I guarantee they have not done anything illegal as any business in any industry is allowed to do reasonable price/fee adjustments to compensate for any downturn in the company/industry.

True, but your accountant can't come back and tack on extra fees for work already completed at an agreed-on price.

True, but your accountant can't come back and tack on extra fees for work already completed at an agreed-on price.

Again, while I don't know any exact laws regulating this in the financial industry, a service provider can tack on extra fees for completed work. It happens all the time. Contractors, will charge more if a certain raw material inflates in price, web designers can charge more if the services take more time than initially estimated. However, that is neither here nor there. BUT, IN YOUR CASE I really have no idea. Since you already sold off the investment any avenues you would have had to get your first quarter fee back is probably out the window. I was merely commenting on the fact that I would highly doubt what they did was illegal. Either it was completely within the law, or it was an accident which they would have corrected. I work part time with Wells Fargo while I go to school and if there is a mistake like that made we correct it. I just don't think they are going to put themselves at risk for a $2.50 fee.

Again, while I don't know any exact laws regulating this in the financial industry, a service provider can tack on extra fees for completed work. It happens all the time. Contractors, will charge more if a certain raw material inflates in price, web designers can charge more if the services take more time than initially estimated. However, that is neither here nor there.

I have a guy coming to do a fence later this year. Once we decide on the job and the price, if he tries to raise after starting the job cause his materials go up in the meantime, I'll tell him to go screw himself. And I'm quite sure I'd win if it went to court. After all, I never agreed to pay that price and why should I be the one out the money? Both parties have to stick to the contract. If there's an estimation of time, and it's known to be an estimation, places can charge within a reasonable percentage of the original estimation. That's estimated time. If I tell someone I will charge them $35 an hour to tutor them, I can't come back after I've done the job and say, "Sorry, you owe me $40 cause of inflation." I can of course says it's $40 an hour from here on out, but not on work already done.

Just cause stuff happens, doesn't make it legal. Even at financial institutes. I once knew a lady who worked in banking and she knew all the legal junk. I had a bank trying to pull stuff off that according to her was illegal. And she said the problem was that people don't know and don't do anything about it.


I just don't think they are going to put themselves at risk for a $2.50 fee.

Actually, it's the $40 I'm concerned about, not the $2.50. The $2.50 was perfectly legit. There's a pretty big difference between a $2.50 fee and a $40 one. Even if it's legal, I don't find it particularly ethical.