GT (Glitch Topic) >> Keeping Investors On Hold (From NationalPost.com)

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["You Dislike the Waiting but the Technical Glitches are Even More Exasperating"]-snip-

Keeping investors on hold

Discount brokerages are sporting a black eye as a surge in RRSP activity paralyzes trading. The industry can't cope with the volume and investors can't cope with the service

Thomas Hirschmann Financial Post John Lehmann, National Post

Gabriele Di Bernardo waited and waited and fumed and is now trying to cancel his service.

John Lehmann, National Post Delays and more delays -- Mr. Di Bernardo says it will take weeks in order for TD Waterhouse to cancel and transfer his account.

It was supposed to set investors free, but instead the discount brokerage business has made investors slaves to their telephones and the victims of dismal service and blunders.

RRSP season has brought chaos to the discount brokerage system, which is proving unable to cope with the surge in demand. The quality of service in the discount business already had its critics but lately, according to a groundswell of consumer outrage, the industry is becoming a disgrace. All the convenience, ease and cost-effectiveness these firms have been pitching to consumers has dissolved as clients find themselves waiting for service and missing opportunities.

The discounters are blaming government regulations -- such as a lengthy training period for new traders and the fact each transaction has to be overseen by a registered trader -- but most investors aren't buying it. They say that the brokerages should have been prepared for the increase in volume or they shouldn't have taken on so many clients. And the anger isn't directed at just one or two brokerages -- the entire industry is smarting with one big collective black eye.

Investors have told us that sometimes they wait in vain for service, and others who have had success in making trades have later been the victims of technical foul-ups. Some discount investors have discovered tricks like using French services instead of the crammed English service lines. Other have already thrown in the towel and are going back to their full-service brokers.

We thought it was time to let discount investors commiserate, and here are some of their stories, which might be familiar to you if you're with a discounter.

- - -

You Wait and Wait and Watch Opportunity Slip Away.

Manuel Vieira, a Scotia Discount Brokerage client from London, Ont., has been trying and trying to buy Canadian National Railway Co. and TransCanada PipeLines Ltd. via the telephone. He's waited for up to an hour for somebody -- anybody -- to take his order. He was especially frustrated on Thursday, as he watched the price of CNR stock climb by $1.50. When somebody finally came on the line, it was a Scotia Discount representative telling him he would have to wait for a minimum of 30 minutes to place an order. "This is no good for me," says Mr. Vieira, who moved his portfolio to Scotia only four months ago and is now considering a move to Charles Schwab Canada in hopes of finding better service. "What's the point of having your RRSP at a discount broker if you can't get through and make trades?"

You Wait and Wait and Fume and Try to Cancel Your Service.

"What scares me is what if I can't get through to sell a stock and I'm wiped out?" says Gabriele Di Bernardo, a quality surveyor at a construction company. He claims to have waited as long as four hours on hold, only to be cut off. "I'm not a multimillionaire, but that's why they have this service. It's there for people like me, and I'm still paying for a service. They advertise that they provide a fast and cheap service and then don't deliver. It's ridiculous." Mr. Di Bernardo says that after he realized that he wasn't getting what he bargained for, he wanted to leave TD Waterhouse. He was told he would have to wait three weeks and pay $30 to cancel the contract. "I'm not going to take this sitting down, but what am I supposed to do for the next three weeks?"

You Wait and Wait, Write An E-Mail of Complaint and Then Wait Even Longer for a Response.

This is an excerpt from a letter that an investor received 12 days after e-mailing CT Securities with a complaint: "While we do empathize with the fact that our clients are required to wait longer periods in order to place telephone or Internet trading instructions, we assure you that these longer waiting periods are not exclusive to CT Securities given current industry circumstances.

You are Hindered in Trading Because of Mistakes in Your Account.

Roy Rustamji is a day trader who moves around about $20,000 each day. He says that he has been the victim of several mistakes at TD Waterhouse. In one case, he says he printed out a copy of a filled order at a certain price. He says that the order was recorded later in his account at a different price, and that the TD Waterhouse people said his copy of the filled order was wrong, even though it was printed directly off TD's system. Mr. Rustamji also says that a transaction in U.S. dollars was not translated properly into Canadian dollars in his account, causing his balance to drop dramatically. When he subsequently placed an order for JDS Uniphase Corp. stock, he was informed that he did not have enough money in his account, so the order went unfilled. "It makes no sense. They are losing money if I can't make a trade."

You Wait in English, and Get Faster Service in French.

One investor was incensed that he was put into a massive line for service in English, but received faster service in French. He equated it with the French getting preferential treatment, but more likely it was just that the French lines don't have the number of investors cramming them that the English lines do ... a word to the wise, bilingual investor.

You Aren'T Waiting as Long as You Used To, but Still Have to Issue Threats to Get the Service You Deserve.

One investor who uses Bank of Montreal's InvestorLine phone service says that the service has actually improved of late -- but is still bad. "I feel like I'm talking into a big hollow drum," says the investor, who used to be a branch manager at a bank. "I don't need to speak to someone very often but when I do, I don't want to be walking around my phone for half an hour on hold." When he tried to set up an account for his son, he made numerous telephone calls which left his questions unanswered. When he threatened to call the chairman's office, he says he was given immediate service.

You Dislike the Waiting but the Technical Glitches are Even More Exasperating.

Adrienne Jones, an investor at Royal Bank Action Direct, has been having a technical glitch in her investment account when an RRSP transfer got bungled. After speaking with tech support, she says the problem still hasn't been fixed. She also reports difficulties at times getting connected online in order to review trades. And whenever there is a problem, she spends her time waiting for support. "I've read recent reports about discount brokerages that list Action Direct right near the top. What in God's name are the lesser discounters like?"

You Wait and Wait and Then Finally Speak to Someone Who Can'T Help You (Aka: You Should Have Chosen the Option That Wasn'T Provided.)

An investor with TD Waterhouse says he was put on hold repeatedly. "A message said their phone lines were experiencing 'random silence,' whatever that means." When he did get through, the person couldn't execute the trade, and suggested he should have chosen the broker option on the automated system. The investor informed the customer service rep that there wasn't a broker option. The brokerage has promised to look into it.

You Blame the Whole Mess on the Government

Myles Lu, a Vancouver client of TD Waterhouse, is frustrated with the role government regulations play in the mess. In Canada, there is a know-your-client rule, which means that every trade must be approved by a real person who can cross-reference a transaction against the investor's profile to see if it's suitable. That slows things down. They could hire more people to speed things up -- and they have been doing this -- but there is a rule that people must spend 90 days working in the industry before they can process a trade. That slows things down again. The securities industry says it is working on revising the rule.

You Blame Red-Hot Customer Growth

Bruce Dickson, a senior vice-president with Scotia Discount Brokerage Inc. in Toronto, says industry growth is a factor in what he agrees is the current unacceptable level of service. "I don't think that anyone in the industry could have predicted the huge increases in volume that the discount brokerages are now experiencing. ... We have experienced 240% growth in volume in barely three months."

You Go Back to Investing the Good Old-Fashioned Way.

One young investor is closing his TD Waterhouse account. John Poulos used his father's broker for a trade once and says he won't go back to his discount brokerage. "I am divorcing TD Waterhouse. I called [my father's broker] and he was on the phone. His secretary said he'd call me in 10 minutes, and he did -- on the nose. That's good service, and if I have to pay more, it's worth it."

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-- Dee (T1Colt556@aol.com), February 17, 2000


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