I opened the handwritten letter and a $50 note fell out.
No, it wasn’t a letter from my grandmother. But it was written by someone’s grandmother.
Truth is, I get a lot of snail-mail from old folks who read my column.
Often they include money to pay me for my time … because they’re old-school, and they don’t expect to get something for nothing (though I always send the money back).
They also do it because they’re afraid and they need some advice.
As you read what happened next, think about an elderly person in your life that you could help.
The Frozen Fund
Barefoot: “Hello! It’s Scott Pape … the Barefoot Investor… from the newspaper.”
Mrs Jones: “I don’t want to buy anything!”
Barefoot: “Mrs Jones, you are mistaking me for an Indian telephone scammer. You wrote me a letter… about your money.”
Mrs Jones: “Oh, yes!”
Seriously, most of my calls to elderly readers begin this way.
Along with the $50 note, Mrs Jones (not her real name) sent me a copy of her latest statement from her financial advisor. It showed that she had 38,000 units in the ANZ OnePath Income Trust, with a dollar value of “zero”.
She had no idea. That’s why she wrote to me.
It turns out, at the height of the GFC, when the government made the decision to guarantee bank deposits, most income funds, including Mrs Jones’s ANZ fund, were hit with a stampede of investors wanting to get their money out.
So the managers ‘froze’ the fund — and stopped their investors from taking their money out so they didn’t have to liquidate their fund at firesale prices.
But here’s a key point: while the ANZ fund managers took the drastic, emergency action of freezing their fund … they did not freeze their fees. Which, according to a spokesperson from the ANZ bank, amounted to 1.75 per cent a year… which includes the trailing commissions paid to the financial planners who put their clients into the fund.
Lock the money up — slowly drip it out over years — and continue flogging them with fees … Kerching!
Getting her money back
Now you may be wondering, dear reader, how long these guys can get away with such behaviour.
Well, eight years, and a whole lot of worry later, the last of poor old Mrs Jones’ frozen fund is still … err … thawing.
Drip. Drip. Drip.
I contacted ANZ on Mrs Jones behalf, and was told that the bank “made the decision to stop charging fees on the fund last year”. Which strangely — coincided with 95 per cent of the fund (eventually) being paid out.
They also assured me that they’d put their best people on “making sure Mrs Jones receives her final 5 per cent, pronto”. (And that — strangely — coincided with a phone call from me.)
Mrs Jones and Me
So I called her back:
Barefoot: “Good news, Mrs Jones, I’m told you’ll get the last of your money.”
Mrs Jones: “That’s a relief. I wasn’t sure whether I was right or wrong.”
Barefoot: “Well, you were definitely in the right, and they were definitely in the wrong.”
Mrs Jones: “I knew you’d be able to do it”.
Mrs Jones: “Because you’re from the Mallee, like me!”
Barefoot: “Thanks Mrs Jones … and I’ll be sending you back your $50”.
Mrs Jones: “Well, when you’re next in town, be sure to knock on my door and we’ll have a cup of tea. And I’ll make you some scones”.
Tread your own path!