Online Brokers - Best Savings Rates But Lousy Service?

I’m sometimes tempted to switch to savings accounts paying the highest rates or the online brokers charging the lowest commissions. But I find 30-day GICs in my TD Waterhouse online account give me top interest rates without having to go through the hassle of opening up an account at a new institution and transferring money back and forth.

I’m not a frequent trader so I don’t mind paying the higher commissions at TD Waterhouse and other places to gain access to their broader package of offerings such as online research reports and stock screeners (besides, TD Waterhouse recently began now offering disounts for larger accounts).

Now there may be another reason for staying put: service levels. Canadian Capitalist wrote a recent blog post, 'Giving up on Questrade,' detailing a frustrating experience with service staff at Questrade.com. Also, the RedFlag.com forum has a thread, 'Warning about ICICI,' complaining about poor service at ICICI Bank.

No doubt many customers at these places aren’t having any service problems but one wonders, as suggested by bloggers and discussion board posters, if the likelihood of encountering such could be higher. It may be that the back offices at these places are a little more of a jumble because of the surge in customer sign-ups that comes from having the best rates.

Comments

[Vladimir Se...:]

I clicked on this title expecting to read about author's personal experience with one of those cheap brokerages. Instead i read about something . . . else. I'm not sure what exactly. I remember blogs and forums were mentioned.
Who was that famous guy who advised writing about what you know?
Speaking of that. What do I know? Not much, really. But when it comes to brokerages, banks or anyone else for that matter, I came to conclusion that just about everybody does, eventually, screw something up. Perhaps some more than others. Sometimes it feels like you could be better off doing business with no one but yourself :) But let's get back to reality.
Some say it is easier to deal with larger or more established firms because there could be less problems, on average. Some say it's better to deal with smaller or newer companies because someone who really wants your business will care more and will put on personal touches when it comes to customer service instead of making you fill out forms and call outsourced support centers and automated voice machines.
This is as far as I can go with generalizations. It doesn't say much of anything specifically about cheap vs expensive.
My personal experience with brokerages has been limited to just a few: DLJ direct, Etrade, Ameritrade, and more recently Scottrade and Zecco. I can't say that i really had any serious problems with any of them, although something happened with just about any of them at some point :)
I conducted a few experiments on execution and got very good results across the board.
Commissions I paid were significantly different. On a yearly basis, even a few trades here a there easily result in hundreds if not thousands of dollars in commissions.
So far, cost seems to be far more important to me than unproven possibility of having better service elsewhere.
While I'm not at all a day trader, I also have to admit that having "cheap" commissions makes new strategies available to me. For example, instead of buying relatively large blocks as I used to do, I can now cheaply execute smaller purchases and this makes building and maintaining a more diversified portfolio rather easy.
If i wanted to, i could perhaps replicate some indexes :)
As options became a lot more affordable I started using them and so far I'm pretty happy with the results. Previously most options strategies I tried were just not cost effective, now there are some that actually work OK.

2007 Oct 01 10:52 PM

[Zack C.:]

TRADERS BEWARE OF QUESTRADE’S SHADY ACCOUNTING
PRACTICES

I have had the single worst experience of my entire life with Questrade over the last few days, as I write this MY ACCOUNT IS MISSING $923.45 or 35% of my entire account balance & life savings after 3 CONSECUTIVE DAYS OF ACCOUNT IMBALANCES. I am actively spreading the word of my ordeal through any medium I can until the problem is fixed I have gotten a letter to the editor posted in the Kingston Whig-Standard and am awaiting publication of my letters to the Toronto Star, Toronto Sun and the Globe and Mail. My uncle is one of the webmasters at Craig’s List so I should have a leg up in informing as many people as possible.

I have personally traded stocks, options and funds for 7 years and ETF’s, FOREX and bonds for 5, so I consider myself informed about the online broker business. I am not a wealthy person but I enjoy investing in a ‘hands on’ fashion. I had an account with E*Trade for 6 years with no problems. A few months ago I left them for Questrade because of the cheaper commissions and their favorable consumer ratings.
Up until the morning of March 5, 2009 I had a very good experience with Questrade, I even got my account set up in only 4 business days, which was very impressive!

*Note all figures include commissions and exchange rates at the time of the transaction. Also, I have a TaxFreeSavings account, which means no margin account, no loans, no borrowing, no overdrafts. I can do transactions up to my current cash balance, any more money and it will reject the order because of insufficient funds. I can prove all claims/ figures through screen shots of history and physical account activity forms mailed to me after every day that I traded. With that in mind……

The night of March 4, 2009 at 4:05PM I bought 23 shares of FAZ (an ETF) @ $79.80 USD=$1,840.44 USD (total after trade commission) x 1.27(the exchange rate at the time)=$2337.36 CAD worth of stock in my account + $54.72 CAD in cash left in my account=$2392.08 CAD is my total account balance.

The morning of March 5, 2009 at 9:33AM I sold the same 23 shares of FAZ I carried over from the day before @ $86.86USD=$1992.81 USD (after trade commission) x 1.2785(the rate at the time)=$2547.81 CAD + $54.72 CAD (cash left in account since night before)=$2602.53 CAD total cash in account now. But there was actually $2232.04 CAD showing in my account balance when I checked it after the trade like I always do. That means my account was $370.49 CAD… just like that.

I’m not going to go in to greater detail but the same thing happened the next two days as well taking $165.04 CAD on the morning of March 6,2009 and then again for $396.96 on the morning of March 9, 2009. I suspended my account at that point and stopped trading. They had taken $923.45 CAD by the end of it, or 35% of my life savings (I am still young and busy paying off student loans). I would’ve suspended it after the first day but they assured me it would be fixed and after the second day I was waiting for this manager to call me back, which he failed to do.

Now you would think that in the face of this irrefutable evidence, and the fact that they admit a computer glitch took money through faulty a exchange of currency from a bunch of other people’s Tax Free Savings Accounts over these same days, that they would admit the error. Boy was I wrong, the real fight had just begun as I spent 2 hours and 06 mins. that day (have long distance phone bill to prove it) on the phone to 3 different people at customer service, trading desk, etc. They just tried to explain it away going down a checklist of things; didn’t add in trade commissions (even though the totals I used from webtrader history have them added in), exchange rate (which I took from the forex website), my miscalculations, etc. Each person would say they would “send a report to the back office and someone would follow up with me in the next few days. Guess what, not one of them did, I called again on Friday March 6, 2009 and asked to speak with a manger that didn’t call me back for 4 business days and when he did he brushed me off, even though they admitted “some money was taken from my account and put back”, $181.82 CAD on March 5, 2009. He refused to understand that I sold stock for this price and then my account balance said I had much less then what I sold the stock for, even though this is very simple concept. Robert Chandler is the name of the “manager” I spoke with. He at one point 30 mins. into the conversation said hold on for 5 mins. and pretended to have an audit done on my account, even though another manager told me audits take at least 3-5 business days. Apparently Rob is a superhuman adding computer… either that or a bald faced liar. I called him on the amazingly quick audit he was able to do and he hung up (I have a witness who was also listening to the call), after 45 mins. of denials. I spoke with him a few days later and said he couldn’t bully me into submission, that I wanted a real audit of my account. He told me a real audit is $75 an hour charged to my account. I asked if Questrade was found to be at fault, would the audit be free? He said no the audit would be around $500.00 in total and would not be refunded even if they found that Questrade took money from my account.

I then attempted to go higher then Rob by using a good comment blog post and contacting Emil Vojkollari and Nicholas Roussos, both in middle management, who seem to help people on the blog I saw solve problems with Questrade, and guess what? I have left 2 messages for Emil seeking assistance in the matter and 4 for Nicholas asking him for help as well and both HAVE YET TO RETURN ANY OF MY 6 MESSAGES. That is not client support, that is an abomination and I intend to make it my hobby for the next few months until every cent of my $923.45 CAD is returned to me with an apology of mass proportions. The ironic thing is that after my forensic auditor finishes his assessment I can take them to small claims court where if found guilty of taking money from me they would be on the hook for $1000’s to pay for my legal counsel (my dad, who charges $300/an hour) and $1000’s for their own legal counsel plus have to explain the verdict to the IIROC Canadian securities regulatory body and risk losing their retail broker license.

Sorry it took so long to read, but PLEASE, ANYONE WHO DOESN’T ALREADY HAVE AN ACCOUNT WITH QUESTRADE…DON’T, ANYONE THAT HAS AN ACCOUNT ALREADY…CLOSE IT. THIS AGGRAVATION HAS GIVEN MY WIFE AND I WEEKS OF SLEEPLESS NIGHTS AND UNTOLD STRESS. This recession has been hard enough on everyone let alone being taken for 35% of my families entire savings. Questrade are at best a terrible company with horrendous customer service and complaint response, and at worst criminal with gross misconduct on the part of ROBERT CHANDLER. You don’t hang up on someone or lie and say you are doing an “audit” that was magically finished in 10 mins. instead of the standard 3-5 days. The fact that neither Emil nor Nicholas has bothered to return my calls proves that the upper management is also not taking customer’s complaints seriously. It’s sad what this world is coming to sometimes, I hope between the huge ad on Craig’s list and the letter in the Whig-Standard, the letters hopefully in the Tor. Star, Tor. Sun and Globe & Mail: people will recognize the absolutely vile way they have handled me. I was only trying to get my family ahead using a discount broker to save fees, I didn’t deserve this, my wife didn’t deserve this and my 5 month old daughter certainly didn’t deserve this. Shame on you Questrade.

Zack C.
[e-mail]

Mar 24 12:57 AM