USAA Brokerage Services

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They Take Care of Inexperienced & Conservative Investors

Dec 17, 2004 (Updated Jan 6, 2005)
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Pros:Considerate, high quality service. No-load mutual funds. No high pressure tactics.

Cons:Less fund offerings than some of their competitors.

The Bottom Line: An ideal company for 401K rollovers, as well as the experienced and in-experienced investor.

USAA Investment Management Company is one of the several USAA companies I have dealt with as a member of the armed forces. Originally established to provide auto insurance for military officers, the company eventually branched out in various directions to become a full-service financial services company. In addition to the auto insurance and other property & casualty insurance products, they offer traditional and online banking services (credit cards, etc) at the USAA Federal Savings Bank, as well as a comprehensive range of investment products through USAA IMCO.

I came to utilize USAA IMCO after leaving one employer in early 1989. Since I had not been with the company long enough to leave my 401K with them, I had to take a distribution. To prevent tax penalties, I did a fund to fund transfer, never seeing the funds. USAA provided and handled all the paperwork, informed me when they had received the funds and then, a personal representative patiently assisted me when I sought guidance as to where to park my monies.

To be quite frank, I am NOT the most astute investor and I would label myself a fairly conservative one. I guess I'm not that tolerant of risk and I've told that to the numerous USAA reps I've spoken to over the years. I am now certain that they have heard that countless times before, since their initial customer base was comprised of military officers, many with little financial training and as a group, they needed help in increasing their financial assets and portfolios.

Each and every time I've called USAA, I have had a ridiculously SHORT wait to speak to a rep. It's so short, it's almost non-existent! I love that! It's called service!

Several years after completing my first 401K rollover, I had to do another one. I had been laid off by GE after returning from military service in the first Gulf War and was very angry with GE. Although I could have left my money in their 401K system, I opted not to. Once again, I turned to USAA and their famous customer service skills came into play. For some reason, I elected to get the check (now not possible due to IRS regulations). I then mailed it to USAA. They again informed me that they received the funds and were awaiting instructions as to where to disburse the monies. I again contacted a rep and explained that I was a conservative investor and wanted to protect my principal while allowing any dividends or profits to be plowed back into the accounts, thereby allowing for the purchase of additional shares. Once again, those famous USAA reps helped with patience, consideration and an incredible amount of professionalism that when I think about it, amazes me to this day.

Granted, I am not a large scale investor. I am also NOT using their brokerage services for individual equities or bonds; what I do use them for is the management of my mutual fund/401K rollovers. Because I am not investing with them regularly or in any really organized way, I cannot comment on their other investment banking services and the customer service for those functions. What I have heard from folks who do is that they are universally pleased and would deal with no one else. That's refreshing news to me, because I have given thought lately to getting into some form of regular investing (above and beyond my company's 401K offerings) and I am considering opening a more traditional brokerage account with USAA because of past excellent results and experiences with my mutual funds.

My roll over of two 401Ks was effortless and with a minimum of administrative hassle. Should I roll over my most recent past employer's account, I know that it will be handled with the same relative ease as in the past. The consistency of service quality and professionalism is really something when you stand back and look at it objectively.

My roll overs have been evenly distributed in a minimum of five separate funds that are ZERO load. I really like that I incur NO FEES for these accounts and the attendant services. USAA also provides me with online access to my accounts, investment guidance and research information for stocks, bonds and the various fund categories that they offer.

To be sure, as a couple of other reviewers here have stated, USAA does not have the huge number of funds offered by such competitors as T. Rowe Price or Fidelity. To some serious investors or those who seek a really huge variety, that might pose a problem. For small fish like me, it is not and I am content to operate within the realm of funds managed by this firm.

There are some other intangibles about USAA IMCO worth mentioning that I believe will assist you in your planning and decision making. Some of the most important (at least to me) are:

1) The reps are NOT commissioned sales people. Paid a livable salary, they have ZERO incentive to give bad advice or to try to get you to churn your account positions.

2) They know that their original client base was primarily military, with little or no formal financial training and experience. Consequently, they know how to deal with people who don't even know what questions to ask. Every time I have asked some basic questions, the reps have been patient, considerate and very helpful. I doubt you'd find any better elsewhere.

3) High quality and easy to use literature. While prospectuses are often filled with arcane facts and figures and much of the language is legalistic, financial charts are easy to follow, understand and interpret. This is a very useful feature for decision making.

4) 24/7 online access with real time information features that are user friendly and available to assist in decision making.

5) When transactions are ordered by a client, the rep ALWAYS sends a confirmation letter indicating what changes have been made, when, and in what amounts. Historical tracking data for share prices for funds can also be provided and will be, upon request.

One of the other nice features about USAA IMCO is their ability to grow with you. Their offerings in both traditional equity investments as well as mutual funds are diverse enough that should an investing member decide to branch out and diversify their portfolio, USAA has the resources to allow doing so without diminishing account value through high commission and transaction fees.

As Patti Aliventi wrote here in her scathing review of Morgan Stanley Dean Witter and their overall lack of interest in small investors, rest assured that USAA, a company founded on the principle of service to those in the service of their country, has never lost that primary focus. USAA knows that small investors were and still are the majority of their clients. They know what they need to do to help them reach their personal financial goals. They keep that in mind with every customer they deal with and in this day and age where impersonal, insensitive and large banks have all but forgotten the 'little guy,' the folks in San Antonio, Texas have not.

One other closing note: while USAA Property & Casualty has been opened to enlisted personnel, it is STILL a company that deals almost entirely with military folks and their dependents. The USAA IMCO is open to ANYONE who wants to use them for their investment and financial advising services.

If you'd like to re-learn what it means to be treated respectfully and with patience and consideration in your financial planning, you could do far worse than trust USAA IMCO.

Recommend this product? Yes

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