The Word on the Street
Looking through the Canadian investment forums this week, the radar picked up quite a bit of chatter about TD Direct Investing, specifically on the Canadian Money Forum.
The first posting raised an interesting example of what happens when the value of an investment falls beneath the price of the commission it would take to get rid of it. Often this occurs for companies that have either been delisted or have lost so much in value that they are trading at a small fraction of their previous value. In this posting, the author points out what happened with their experience at TD Waterhouse (TD Direct Investing).
Still on the Canadian Money Forum, forum member ‘recklessrick’ describes their process of deciding upon and opening a TD Direct Investing account. It is an interesting perspective on the fact that discount brokerages that have physical locations still appeal to investors even though opening an account online is still possible. As the comments point out though, just because things are done in person, service between locations can definitely be variable.
Finally, the last thread about TD Direct Investing was a very interesting cautionary note regarding order entries. In particular the post’s author did not have an account that was set up to short stocks (or so they thought) however an order entry mistake proved otherwise. It sounds like even though commissions were refunded the loss on the trade was not, highlighting the importance of understanding how to place different order types properly.
Self-directed investors should take it in stride, however, as order entry mistakes happen to professional traders all the time (and are, in fact, blamed for most of the major “flash” crashes that have taken place over the past several years). That said, there are so many moving parts that enable self-directed investors to trade online that technical difficulties are a fact of life. Even though many people don’t dwell on the subject, as this post illustrates, service interruptions because of software updates are common at the bank-owned discount brokerages as well as at the independent discount brokerages.
U.S. Self-Directed Investors Can’t Get no Satisfaction
J.D Power and Associates released the results from their annual Investor Satisfaction Survey of U.S. self-directed investors earlier this week. The key findings from their study showed that overall investor satisfaction declined compared to last year, with communication with the discount brokerages being cited as a possible reason for the decline. We recently reviewed the importance of customer service to discount brokerage customers and the recent results from the U.S. discount brokerages highlight how client interaction can impact overall satisfaction scores.
Overall, the US discount brokerage that received the best score was Scottrade with a score of 810. The average score of all US firms investigated was 752 which is still above the Canadian discount brokerages’ average score from 2012 which was 700. For an explanation of how the J.D. Power Investor Satisfaction Survey is conducted, check out our special series on it (Part 1, Part 2 &, Part 3).