Issue with brokerage reinvesting dividends

[ExDripper]

Moderators- I hope this is the correct forum, if not please move as applicable.

I caught an issue with my brokerage a couple of weeks ago, and it is obviously a problem with their system that has not been corrected as of today.

Here is the issue:

1. Day 1: I change positions (mutual funds, ETFs, individual stocks, it doesn't matter) to reinvest both dividends and capital gains. I may change one or more.

2. Day 2: The next day, the positions I changed on Day 1 to reinvest are set to my wishes, but other positions that were previously set to reinvest have arbitrarily changed to deposit to the core account.

3. Day 3: I reset the positions that changed Day 2 without my
input back to reinvest.

4. Day 4: The positions I reset on Day 3 are now set to reinvest, but other positions that were okay have now changed without my input. There seems to be no rhyme or reason to which get reset without my input.

This is a maddening jack-in-the-box game that is literally impossible. Thus far, two dividends that should have been reinvested were deposited in my core account. Hopefully, I can get that reversed.

I started keeping screen prints now for two days to prove this program bug. Friday I telephoned the brokerage to officially start a record of the issue. They reset the account default to reinvest, and earlier in the day I had reset two stocks that were arbitrarily changed without my input back to reinvest. All should have been fixed.

This morning I checked and the two stocks I reset are back to reinvest, but an ETF that was set to reinvest is now changed without my input to deposit to core. I am especially concerned about this issue because of upcoming capital gains season and further dividends.

I'm ready to move brokerage firms with all my account if this isn't fixed PRONTO.

So the purpose of this post is to alert people to check their status settings for reinvestment and ascertain if they are correct, and stay correct if you trade or make changes. This probably only affects people who are active or somewhat active traders. I specifically didn't mention the brokerage because I'm not sure of forum rules regarding naming brokerages, and I'm hopeful this issue gets fixed SOON, very soon. It's a bad time of year for surprises like I'm experiencing on a daily basis.

Please check your accounts.

[navyasw02]

What brokerage are you using? With Fidelity, whatever you have selected on the dividend record date is what will happen when its paid. Doesn't matter what happens between the record and payment date.

BTW - this isnt a big deal. It has no effect on taxes. You get taxed on that dividend whether its reinvested or taken as cash anyway.

[Jimbo]

I use Merrill Edge and TD Ameritrade and have no problems like that at all.
M.E. will not drip BP, only gripe.
TD I need to call to drip Mutuals.
With that as the only problems.
Jim

[Rasec]

Jimbo, what does gripe mean (apart from = flu in Portuguese)?

I'm opening an account with ME (basically for the free trades as I bank with BofA) and I thought I could DRIP with them.

Btw, Vanguard works pretty well for dripping (my current broker).

[Jimbo]

(11-02-2015, 03:31 PM)Rasec Wrote: Jimbo, what does gripe mean (apart from = flu in Portuguese)?

I'm opening an account with ME (basically for the free trades as I bank with BofA) and I thought I could DRIP with them.

Btw, Vanguard works pretty well for dripping (my current broker).

"Gripe" complaint.
Don't get me wrong, I love M.E.
Due to some "technicality" they do not automatically drip, you need to get the notice online and call each quarter.
Jim

[Rasec]

Are you serious? Call each Q?

Hmm, is it worth $7 per trade? I'm making an average of 2 trades per month after my initial bigger purchase. And I know I can trust Vanguard.

[ExDripper]

UPDATE:

There is a bug in the broker's software that does not allow selection options to work as they should. As far as I know and was told, this issue has been turned over to the technical department.

I also discovered account level settings not available to the customer. The workaround involved changing a setting. Since I do not plan to make any further individual position settings at this point in time, I do not know if the issue is truly resolved and have no patience left to test their fix.

At the account level customer service has access to a default setting; namely, either 1. All positions default to reinvest capital gains and dividends, or, 2. Capital gains and dividends for all positions will be deposited to the core MM account. Edited to add: The customer does have a setting to apply the change to all positions in the account, but it DOES NOT WORK.


To recap the issue:

My account default was set to deposit all capital gains and dividends to the core MM account. This should NOT have precluded me from changing individual positions to reinvest, however it did.

When I changed individual positions to reinvest, the system did process the change. However, it then arbitrarily changed other positions that were set to reinvest to deposit to core. I then had to fix those positions, and the next day other positions had flipped. It was a real nightmare every single day.

The customer service rep changed the default on my account to reinvest capital gains and dividends. The last two equity fixed I made seem to have "stuck," and all equities are now reinvested. I don't dare change a mutual fund position to deposit to core and I don't want to take a chance on playing the musical chairs game again.

Interestingly, when I purchased an ETF, the customer service rep had to set it to reinvest for me because the default was deposit to core.

Truly a maddening experience, but at least I can ignore it now and take a breather.

I have been with this broker for about 15 years and never one time has this issue. It seems to have been introduced with a system upgrade that was not fully tested.

Again, my reason for posting was not to slam the broker, but caution people to check their accounts to make sure the settings were what they intended. I am satisfied that my account has been corrected and realize the customer service reps have zero control over these system problems, but are the ones bearing the brunt of responsibility for satisfying customers and fixing them.

[Dividend Watcher]

(11-04-2015, 03:25 PM)ExDripper Wrote: Again, my reason for posting was not to slam the broker, but caution people to check their accounts to make sure the settings were what they intended. I am satisfied that my account has been corrected and realize the customer service reps have zero control over these system problems, but are the ones bearing the brunt of responsibility for satisfying customers and fixing them.

That's frustrating. If the trades you wanted weren't performed as requested, I'd send a comment to the SEC and cc them a copy. I had been using email to change dividend reinvestment settings at TDAmeritrade and somehow the DRIP settings for one of my wife's stock was not changed to reinvest before the dividend was paid. After I brought it to their attention with copies of the emails and timestamps and asked them to make it right, they went back 3 weeks later and fixed it at the correct amount and with the dividend reinvesting at a price several dollars lower than it was currently trading at. Finally (!), they updated the software to allow customers to set the DRIP settings individually. Haven't had a problem since but now I'll be watching.

In the end, the brokerage is supposed to do what you directed them to do.

[rayray]

I've been using Vanguard (brokerage and ROTH) and Fidelity (brokerage and 401k) and have never ever had a problem with either one.

[Rasec]

So I decided to open an account with Merrill Edge and asked to move my securities from vanguard to ME... I have to admit I'm a bit nervous now that my stocks are out there somewhere in between brokers. I hope they don't lose anything