Walk-In Investor Centers: Educational and Free
Several blocks west of Los Angeles’ Garment District and just a stone’s throw from the many jewelry shops along Hill Street, you can do some serious shopping for mutual funds.
Four large no-load and low-load fund companies operate walk-in investor centers in the downtown area. One of them, Fidelity Investments, also has offices in Century City, Irvine and San Diego, while a fifth no-load outfit, USAA Investment Management, has a center in San Diego.
There’s nothing unusual about buying mutual funds in person from a broker, banker or financial planner--and paying a commission for the service. But face-to-face service is still something of a novelty among companies that charge little, if anything, in terms of a sales fee. Many of the local walk-in centers have opened in the past five years.
Besides Fidelity, the other three low-cost fund groups with downtown offices are Dreyfus, T. Rowe Price and Scudder Stevens & Clark. All four rank among the six largest no-load and low-load fund companies, having built their businesses primarily over the phone and through the mail.
The walk-in centers offer added wrinkles in terms of convenience and service. Some novice investors will appreciate the chance to visit a local office and meet a fund company’s representatives face to face rather than over the phone. “For people who come in person, it’s a matter of trust,” says Lyn Spector, a marketing vice president in Scudder’s Los Angeles office. “The money is still managed on the East Coast, but they have a personal contact here.”
Besides trust, novices who visit a local center can get their investment questions answered without being subjected to a sales pitch. Representatives of a no-load company may not offer investment advice, but they can explain how different funds work and help you analyze your own situation. “We’ll ask a lot of questions to find out about your risk tolerance, investment needs, retirement planning and the like,” says Sal LaBarbara, the senior vice president for Fidelity’s Western region.
As noted, there’s no added cost for the face-to-face attention available at these centers. Scudder, USAA and T. Rowe Price don’t levy any sales fees on their funds. And while Dreyfus and Fidelity offer a combination of no-load and low-load portfolios, the cost structure is the same whether you buy in person, over the phone or through the mail.
One nice feature of the walk-in centers is that they don’t tend to get crowded. In a spot check of all four downtown L.A. offices on a recent Tuesday, there wasn’t a single person waiting for service at any of the locations.
James P. Rankin, a T. Rowe Price vice president, estimates that his company’s office gets only about 10 investor visitors a week--the result, perhaps, of its lofty perch on the 31st floor of Arco Plaza. LaBarbara believes that the four Fidelity branches, which have ground-floor locations, attract between 100 and 300 mutual fund customers a week, with lunchtime drawing the biggest crowds. All five companies recommend appointments. Some say they’ll meet with you after hours if you call first.
Is it altruism that prompts these companies to offer no-cost investor centers? Hardly. No-load and low-load fund groups have a natural interest in seeing people become more financially sophisticated, just like home-improvement stores benefit from individuals who are confident enough to tackle repair and remodeling jobs on their own.
“We’re very concerned with the education of our shareholders,” says Spector, with the implication that knowledgeable investors will choose no-load funds to save on commissions. Besides, the local offices perform other functions too--such as housing discount brokerages (in the case of Fidelity and T. Rowe Price), private money managers (Scudder), telephone reps and other marketing personnel. So there’s a sharing of expenses by these various departments.
Fund company representatives say the costs to run the walk-in centers aren’t passed on to shareholders. Yet the centers can be expensive to operate, which explains why most competitors haven’t done the same.
In some cases, even sophisticated investors might benefit from using a local fund-company office. Suppose you think that a stock market rally is imminent and you want to buy into an equity fund quickly. By dropping into an investor center, you can obtain the prospectus, fill out the application, write a check, purchase shares at that day’s price (assuming you enter the office before the market closes at 1 p.m.) and get a receipt on the spot.
By contrast, it might take one or two weeks, if not longer, to request a prospectus and application over the phone, wait for the package to arrive by mail, complete the paper work, mail it back and wait for the company to process your form and send you a statement.
Also, a walk-in center can save you time if you need to beat a deadline--such as the 60-day IRA rollover requirement or April 15, the last day for making a prior year’s IRA contribution. Some of the offices tend to get busiest around that date and Dec. 31.
While there’s nothing you can do in person that you can’t also do over the phone, certain chores can be accomplished more easily. For example, many fund companies require you to get a signature guarantee from a brokerage or bank whenever you sell shares and want to have the cash sent to a place other than the address you listed on the application--a problem if you’re moving or own a second home. “We can waive this requirement for an investor who comes into the office with proper identification,” says Rankin.
Several of the offices also have investor libraries, where you can read fund research reports, flip through financial magazines and the like.
So while most no-load investors are content to handle their mutual fund transactions over the phone and through the mail, a local walk-in center can be handy, especially for novices who want personal help but don’t want to pay for it. In fact, this counseling service might be the closest thing to a free lunch in the mutual fund area--although you might want to avoid those lunchtime crowds.
L.A.’s No-Load Fund District Looking for a mutual fund prospectus or merely some help defining your financial goals? Then drop into one of the walk-in investor centers in Los Angeles run by Dreyfus, Fidelity, T. Rowe Price or Scudder Stevens & Clark, four companies that offer at least some funds without any sales commissions. Appointments are recommended, and all four firms say they’ll validate parking. Hours vary.
Dreyfus Service Corp., 800 W. Sixth St., 10th floor, 213-623-1711.
T. Rowe Price, 515 S. Flower St., 31st floor, 213-239-8800.
Scudder Stevens & Clark, 333 S. Hope St., 37th floor, 213-628-1144.
Fidelity Investments, 607 Wilshire Blvd., 800-544-9797. This telephone number also works for Fidelity offices in Century City, Irvine and San Diego. (Another no-load company, USAA Investment Management, also has a center in San Diego.)
