REACH OUT AND TOUCH YOUR MUTUAL FUND
Want to discuss market trends? Wondering how currency fluctuations are affecting your international holdings? Confused after reading the latest article on the use of derivative securities? If you invest in mutual funds, you can get many questions answered through an 800 number.
Spurred by competition and aided by technological breakthroughs, fund companies have put vast resources into their telephone lines and the people who staff them. "The phones are underutilized," says John Brennan, president of Vanguard Group. "I don't think shareholders understand what a resource they can be."
Service reps can do a lot more than state the current yield on a money-market fund or arrange for transfers among accounts. They have a wealth of data at their disposal and are trained to answer a variety of questions not always related specifically to their funds. "Our people can handle calls as diverse as `How are you hedging the Swedish krona in a bond fund?' to `I just inherited $10,000: What should I do?"' says Christopher Wilson, a Scudder, Stevens & Clark principal who heads customer relations. "We love it when people try to stump us."
DAILY UPDATES. The service isn't limited to the largest fund groups. John Keefe, president of Keefe Worldwide Information Services, estimates that the top 25 to 50 companies all have sophisticated phone Q&A operations. Computers give service reps instant access to account records, fund research, and market data. They can even call up copies of paper correspondence while talking with customers.
Initial training--often three to six weeks--includes more than learning how to wade through databases and handle calls efficiently. Staffers gain technical skill in financial markets and learn about the sponsor's entire product line. And they must pass a two-hour and 15-minute test to obtain a license to sell mutual funds and annuities on the phone.
Phone reps receive daily news summaries and update sheets on funds' use of derivative securities, for example. At many companies, they meet periodically with portfolio managers. This lets reps ask questions about strategy and managers learn about shareholder concerns. Brennan says Vanguard believes staying in touch with customers is so important that every manager, even Brennan himself and founder John Bogle, must answer phones for a few days every year.
Officially, reps can't give advice--that is, recommend a specific fund--but they are trained to ask investors about their investment needs, time horizon, and risk tolerance. Reps then narrow down the options and send out materials on a few funds. Recently, some companies created workbooks and computer programs that walk investors through the fund-selection process. T. Rowe Price first brought out a retirement-planning kit in 1989 (updated yearly), then added a software version in 1992, and recently created a guide to developing a diversified portfolio, called Personal Strategy Planner.
NO DRONES. You won't face a hard sell, because phone reps don't earn commissions on sales. They're trained to focus on an investor's needs, hoping that people who understand their funds will stick with them, says Wilson. It's unlikely you'll talk to a dullard, either. Sponsors attract high-caliber people, since phone jobs are seen as stepping stones to more lucrative careers, says Stephen Gibson, head of mutual-fund marketing at Putnam Investments.
Investors who just need quick access to account information can call automated 24-hour phone lines that use voice-response technology. Such systems let callers transfer money between accounts, request forms or prospectuses, or check on share prices. T. Rowe Price updated its system last year, improving security by providing personal identification numbers. It allows investors to create a "funds to watch" list that automatically provides share prices and other data for funds they select. And a free computer link lets them perform these functions through their PC. Plus, they can use electronic mail to correspond with customer reps.
Of course, phone reps aren't financial planners or stockbrokers, who offer a much broader view of investment options. But fund-company staffers can provide fairly detailed information to help make decisions. Keep in mind that you are paying for the service through your fund's expense structure. So if you're not calling the 800 number when you have questions, you're not getting your money's worth.Amey Stone