Overheard:Waterhouse Gripes Reach Crescendo on Online Boards
By STACY FORSTER and CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
It's not unusual for investors to gripe on Internet message boards about unsatisfactory service from their online brokers, but this week the complaints against TD Waterhouse Group appeared to hit a crescendo.
The flak from unhappy customers was so intense that a Waterhouse message board on Silicon Investor (www.silconinvestor.com), one of the busiest stock-chat sites, was among the hottest on Tuesday
What was all the screaming about? All the usual service issues that have plagued the online industry: problems executing trades, long waits on hold to speak to someone on the telephone, and unhelpful customer service representatives.
Officials at Waterhouse, the online brokerage arm of Canada's Toronto-Dominion Bank, admit that some customers did have problems making trades on Tuesday and that its Web site was shut down for half an hour.
John Chapel, an executive vice president at the New York firm, says heavy traffic at the Web site can cause problems with online services. "There are times we don't do so well, it's challenging," he says.
Complaints against online brokers usually rise during times of extreme market volatility when trading surges and companies' systems and staff become swamped. To some extent, that may have been the case this week when blue-chip stocks tanked and trading volumes soared.
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The Dow Jones Industrial Average skidded nearly 400 points on Tuesday, fueling the second-heaviest trading day on the New York Stock Exchange. Computers and telephone systems at brokerage firms can become taxed during such times as nervous investors dump stocks and seek help.
"The increase in trading results in an increase in phone calls, it puts more pressure on customer service teams," says Dan Burke, an analyst at Gomez Advisors in Lincoln, Mass., which tracks the online trading business.
Even without the market volatility, service issues at Waterhouse have been building. The company slipped one notch to 11 in Gomez' winter rankings. "TD Waterhouse struggled to provide timely customer service" and "performed poorly in e-mail and customer service inquiries," Gomez said.
Keynote Systems, a San Mateo, Calif., company that measures Web site performance, says Waterhouse's site has lagged other online brokers' sites recently. On average, customers at Waterhouse had a 52% success rate performing their transactions compared with an industry average of 81%, says Dan Todd, a spokesman for Keynote.
While service disappointments have roiled its customers, Waterhouse isn't without company. Other online brokers also face constant jabbing, including some during this week's market havoc. Moreover, several brokers have been plagued in the past by embarrassing computer outages.
In the face of high-profile embarrassments and investigations by regulators, many online brokers have stepped up efforts to improve service, especially the capacity of their computer and telephone systems. Indeed, the industry has withstood volatile periods recently much better than it has in the past.
Mr. Chapel, of Waterhouse, declined to disclose the company's expenditures on customer service and systems improvements. But he says the company is aggressively hiring more service representatives and making various technical enhancements to its Web site.
But that's no comfort to Waterhouse customers, who were stymied this week when they made stock trades or tried to get help from the company over the telephone. Some worried that the problems may have caused them to lose money.
Tom Phillips, of Atlanta, says he was waiting to see whether the company would compensate him for any losses that result from a trade that wasn't executed on Tuesday when he placed an order to sell more than 500 shares of Creative BioMolecules. Mr. Phillips says an apparent computer problem at the Waterhouse site had left him unable to confirm his order on Tuesday.
He says the site provided him with an automated notification that his order was being processed, but never gave him a confirmation that the trade actually went through -- even after several attempts. The order apparently failed. He says the stock had fallen about $3 from the price at which he had intended to sell it, meaning he would lose more than $1,500 on the trade.
"There's been such volatility on a few stocks that I own that it's clear you can make a little money intraday," he says. "It's very difficult ... to buy back a stock you think you've sold an hour ago if you can't be confident it's sold. Flying blind is what it feels like."
Mr. Phillips, who also voiced his displeasure on Silicon Investor, says he also had problems reaching a customer service representative via telephone to confirm his order, and also on Wednesday to help resolve the problem. He says he spent 35 minutes on hold for a customer service representative.
Online investors were venting on other boards, too. "Down again this morning!" wrote one participant on a Yahoo! Finance board for Waterhouse (quote.yahoo.com) on Tuesday. "I can't even trade and you can forget about reaching them by phone."
"Yesterday morning I placed a sell order ... and the order has just sat there with no fill. Yesterday I tried to call three times and gave up after being disconnected twice and being on hold for over an hour last time," wrote another.
Waterhouse spent $36.1 million in advertising and marketing in the last three months of 1999 to lure new clients, the most it has ever spent in one quarter. The company signed up 260,500 new accounts, excluding the effects of attrition or acquisitions. At the end of the quarter, Waterhouse had about 3.3 million total accounts.
Waterhouse registered 136,900 trades per day during the last quarter of 1999, up from 56,900 a year ago and from 70,000 in the previous quarter. |
