No, your direct stock purchase in Procter & Gamble stock (PG) didn’t disappear. After using Computershare as its stock transfer agent for the past three years, Procter & Gamble switched to Wells Fargo Shareowner Services on June 9th.
However, when Procter & Gamble commenced the switch last Friday, the shares just disappeared from the accounts of those that had been dripping through Computershare as if the position had vanished. The next day, a message appeared to great those logging into Computershare that Procter & Gamble was switching transfer agents to Wells Fargo Shareowner Services.
That wasn’t the end of issues relating to acceptable prior notice. It wasn’t until this past Monday June 13th that Wells Fargo Shareowner Services began mailing out notifications to create accounts to view their Procter & Gamble investment position, meaning most people were locked out of their holdings from the 9th until the 13th, 14th, or 15th. My sympathy to those who needed to sell their Procter & Gamble stock during this time, or who logged onto the account on the 9th and didn’t immediately get the message that appeared the next day. Of course, you could have called Procter & Gamble Shareholder Services and learned what was happening, but it was sloppy work to require this affirmative step from long-term oriented shareholders.
While that is the short-term political side of the story, the bad news for Procter & Gamble investors is that the switch to Wells Fargo Shareowner Services is accompanied by higher fees. Over the past half century, the Procter & Gamble Direct Stock Purchase Program (DSPP) was one of the best in the country because it let you purchase an outstanding company with essentially no fees. It didn’t cost anything to start an account; have money taken out of your checking account to invest; or to reinvest dividends. The only processing fee associated with the acquisition of shares is that you had to pay two cents for every share that got added to the account. Buy 100 shares for ~$8,000+ over two years? It only cost you $2 in total.
Now, Procter & Gamble takes its toll on each activity. It costs $15 to open, $1 to invest from checking ($5 if you write a physical checking), the dividend fee is 5% on the first 150 shares, and the process fee gets bumped up a cent and the costs of selling increased by $5.
This isn’t a disaster; the terms of the deal shift from “outstanding” to “fair.” If you invest $100 into Procter & Gamble per month, you still get to acquire about $98.97 worth of Procter & Gamble stock. But those $2 in cumulative fees on an $8,000 capital outlay will turn into nearly $30 in fees on a $2,400 investment over the same time frame depending on the price at the time of reinvestment and the future dividend amounts.
Before, it didn’t matter what you invested into the Procter & Gamble plan–you were building wealth no matter what you were able to set aside each month and you were rewarded for whatever you set aside. Now, the fees demand that you be a bit more strategic. My view is that it’s fine to invest under the new terms in automatic allocations greater than $200; doesn’t make much sense to do it if you’re investing less than $100 per month, and the $100 to $199 range would be the gray area where reasonable minds can differ.