Readers offer critiques of on-line brokers

After three years of rating on-line brokers, Globe and Mail readers and I have settled into a comfortable routine.

I say which brokers I think are best and worst, and readers pepper me with their own critiques. This is especially true of the top-rated brokers. Since TD Waterhouse took the honour this year (read all about it on Globeinvestor.com), readers have had a lot to say about this choice.

Some people, like Cam McCulloch of Airdrie, Alta., flat out disagreed with TD as the best out there. "I long ago switched my RRSP to E*Trade and nothing has dissuaded me from instigating a similar transfer of my wife's accounts," Mr. McCulloch wrote.

I thought TD did an excellent job redesigning its Web site recently, but Mr. McCulloch wasn't impressed. "When you factor in the billion dollars in profits enjoyed by the TD family, it's cruel how little they put back into Web design."

Other readers criticized TD Waterhouse in such areas as the quality of the stock research it offers, its policies for handling automatic monthly mutual fund purchases, and the fact that it doesn't offer on-line short-selling.

It wasn't just TD Waterhouse that bugged readers. Allen Lau of Markham, Ont., e-mailed to say he's dissatisfied with the length of time it takes for Merrill Lynch HSBC to execute stock trades.

"Time is of essence, for an active or even an average investor," Mr. Lau said. "Unless they can seriously improve the speed to execute orders, I don't think ML HSBC deserves more customers than it has."

Scotia Discount Brokerage was criticized by one reader for a new commission schedule that makes some trades more expensive (and others cheaper), while all Canadian on-line brokers were slammed by a couple of people for charging more than their U.S. counterparts.

Positive comments, anyone?

Definitely the happiest customer to respond to the rating was a Calgary resident who uses Qtrade Investor, a new player in the on-line brokerage business.

This reader said he was disappointed with the C-plus grade assigned to Qtrade. "I have been a client for over 12 months and I simply love the service I receive," he wrote in an e-mail.

I liked Qtrade myself -- with a few tweaks it could easily move up the rankings.

A few readers wondered why Disnat and Credential Direct were left out of the rating. Disnat is a force in Quebec only -- if parent Mouvement des caisses Desjardins ever reaches out to customers in other provinces, I'll definitely take a look.

Credential Direct is a new on-line broker for credit union clients. If it grows in the year ahead, it will be included in the 2002 survey.

An issue that came up several times was the availability of short-selling through a broker's Web site as opposed to the more expensive method of contacting a representative over the telephone.

For the record, BMO InvestorLine, Charles Schwab Canada, eNorthern and Merrill Lynch HSBC all offer on-line short-selling. Quick addendum: To me, it's more important for a broker to offer limit orders on-line than short-selling.

Several people asked which brokers were the fastest to fill orders to buy or sell stocks. That's a tough question because of the variables involved. For example, how crazy are the markets at the time you place your order, and how good is your Internet service provider? Also, there are temporary technical glitches at the brokers themselves that can bog down trading.

E*Trade Canada has a promotion in which it promises to waive your commission if certain trades aren't executed in 60 seconds. If your broker is consistently slower, then you have something to complain about.

Getting back to TD Waterhouse, one reader wanted to know how it could be rated No. 1 when it earned only a middling customer satisfaction rating in a survey conducted on the Globeinvestor Web site last month. Respondents were asked to specify which broker they used, and whether they were satisfied or dissatisfied with the service.

TD's approval rating -- the percentage of clients in the survey who said they were satisfied -- was 78.7 per cent, which placed it ninth out of the 12 brokers rated. To be fair to TD, its satisfaction rating was within a percentage point of the next two brokers, Charles Schwab Canada and Action Direct.

Waterhouse's market-share dominance comes through clearly in the fact that of the 3,077 people who participated in the survey, 1,133 were its clients. That's more than double the next most mentioned brokers, Action Direct at 494 and InvestorLine at 348. It may be that when you're the biggest player out there, you also have to take the most guff from customers. Regardless, TD Waterhouse rules for this year.

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