A Finra arbitration panel on Sept. 17 awarded a client of Fidelity Brokerages Services LLC $110,000 because her account got lost in the shuffle at the mutual fund and brokerage giant.
“It was Fidelity's system, under which clients were repeatedly shuffled from one agent to another, that caused injury to the claimant,” according to the three arbitrators' award decision. The claimant, Viola McNeill of Westport, Conn., is 79. She suffers from Parkinson's disease.
Ms. McNeill's $700,000 account was in Fidelity's Portfolio Advisory Services fee-based management program. In 2007, Fidelity brokers recommended she convert her retirement and brokerage accounts to a fee-based account. She agreed, and stated her investment objectives as preservation of capital and income.
At the time, her PAS portfolio was weighted 60% to stocks and 40% to fixed income, said Neil Sussman, an attorney at Sussman & Frankel who handled the matter for Ms. McNeill. But as her account was handed off from one broker to another at the Stamford, Conn., branch, that allocation was not altered, he said.
Problems stemmed from the brokers' view that she would outlive her money if she didn't take on greater risk, Mr. Sussman said. By failing to ask about Ms. McNeill's health, Fidelity employed a “one-size-fits-all” approach to the client, he said.
“In this case, Fidelity lost continuity in planning,” said Mr. Sussman. “Seven or eight investment professionals worked on it, and pieces of the plan were dropped as it got passed on.”
The portfolio's asset allocation was not changed, he said. In 2009, Ms. McNeil became aware that her accounts had lost more money than she was withdrawing for living expenses, according to the lawsuit she filed last year with Finra Dispute Resolution Inc.
The Financial Industry Regulatory Authority Inc. panel awarded Ms. McNeil $87,850 in damages, plus $19,000 in interest and $4,000 in legal costs.
“We disagree with the panel's findings regarding our customer service system or that this caused any injury to the claimants,” Steve Austin, a Fidelity spokesman, wrote in an e-mail.
Ms. McNeill originally sued the Fidelity brokers, but the Finra arbitration panel said any references to the arbitration should be wiped off those brokers' employment records. “The evidence showed that [the brokers] acted properly and used their best efforts to serve” Ms. McNeill, the panel said.
“Fidelity's business model is designed to provide great service,” Mr. Austin wrote. “Regardless of who an individual might meet with, Fidelity has systems in place to track and monitor each interaction and financial planning session so that every representative can be equipped to meet that customer's needs,” he wrote.
E-mail Bruce Kelly at bkelly@investmentnews.com.
