Friday, October 19, 2007

Tales of Failure from The Trenches: BankAmerica

Building on my tale of the failure of two retail giants, EBay and UPS, to correctly and successfully execute my transactions with them, in this post, yesterday, today I will describe my experience offering a frontline platform officer at Ken Lewis' BankAmerica the opportunity to take our E*Trade options investment business and convert my partner to a BofA institutional/private banking customer.

Last Friday, I literally walked into a local retail branch of the Bank of America, sat down with an officer whom I know from a few prior transactions, and offered her the opportunity to take our options portfolio management business away from E*Trade.

Having experience in re-engineering the trust and custody businesses of Chase Manhattan Bank some years ago, as well as over a decade in asset management, I am well-versed in knowing what a diversified conglomerate financial institution like BofA should be able to offer my partner's and my business.

After spending about ten minutes explaining our business needs to the retail branch officer, she called one of her contacts in the private banking area. After they spoke briefly, she handed me the phone, and I repeated most of my earlier conversation with the branch officer.

I explained our problems with E*Trade, and precisely what we expected and wanted BofA to do for us.

Several times during my conversations with the two BofA officers, I said something like,

'I'm interested in seeing if Ken Lewis' universal bank model works. I'm a retail customer, offering you an opportunity to get several million dollars worth of institutional investment business.'

In my conversation with the private banking officer, I confirmed that BofA has institutional trust services, an asset management group, and a Wall Street brokerage presence. Later, I also recalled that they had bought US Trust from Charles Schwab, after the latter failed to make that acquisition fit with their discount brokerage business. So BofA has all the necessary pieces of our required, requested solution.

The result? Utter failure. As I write this, four and a half business days later, nobody has contacted me. Not the officer with whom I met. Not her colleague in private banking, with whom I spoke.


As with UPS and EBay earlier this week, BofA demonstrated a lack of frontline, customer-contact skill. A new piece of business literally walked in the front door of one of its branches, and was summarily dropped from sight.

I know yesterday's horrendous earnings report from the bank was largely marred by trading and investment banking problems.

However, to me, the retail experience I had last week seems emblematic of the bank's sheer size as a feature which prohibits it from being competently managed.

As I discussed this experience, and post, with my old Chase friend and colleague, B, today, he related a truly horrific experience of his with Chase. They confused social securities numbers on accounts, and froze some of his assets for no cause.

As we discussed the treatment we had just received from two of the country's three largest banks, and watched the third, Citigroup, imploding from the managerial incompetence of its CEO, Chuck Prince, combined with the complexity of running the sprawling institution, B and I reaffirmed our belief that these financial juggernauts cannot long, if ever, consistently outperform the S&P500 anymore.

Reviewing the 2- and 5-year Yahoo-sourced charts above, you will not that BofA cannot manage to surpass the index over either timeframe on a simple basis, let alone consistently.

Between Lewis' corporate banking travails, and his retail bank's inept staffing, I don't think BofA will be giving anyone reason to prefer it to the S&P5oo as an investment anytime soon.

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