Monday, Oct. 9, 2006 (A.G): Online Trading Systems - What Went Wrong?

For the last 4 months my wife has been subjected to a daily refrain from me along the lines of: “Am I the only one who has problems with these damn systems?”.

For much of that time I was talking about TD Ameritrade.

But over the last couple of weeks Fidelity.com has been the cause of my increasingly desperate despair – having transferred my assets from TD Ameritrade to Fidelity.

Though reasonably healthy and known to run more or less daily, about 3 weeks ago I was convinced I was having a heart attack after a particularly galling incident with TD Ameritrade.

The TD Ameritrade system was scary.

Fidelity.com is flakey.

Schwab, in stark contrast, appears to be impeccable but, alas, is expensive.

On the Record

I am not making this stuff up.  Both TD and Fidelity, of course, have records of all of my interactions with them.

In the case of TD I ended up formally writing to their compliance department 3 times and reporting them to the SEC!

But before we go any further let me also say this to be fair to all.  My gripes are with their automated computer systems … not with the people.  Big difference.

Great Reps; Lousy Systems

Ironically there appears to be an inverse correlation between the soundness of the computer system and the helpfulness of the call center reps.

The call center reps. in general have been great.

The TD Ameritrade reps, with maybe just one exception (hopefully to prove the rule), were outstanding.  Their supervisors were committed and tried to bend over backwards to help.  They were also extremely ready and generous in giving me FREE TRADES to compensate for my palpable frustration.  At the time I left TD I think I still had over 20 unused free trades.

The Fidelity reps are also great and always eager and bubbly.  I have, as yet, only spoken to a supervisor once … and that was to commend a trader who spent 20 minutes with me updating the cost basis of all my transferred positions.  But that in itself tells you something.

I had to call them up to update my cost basis.  Yes, I could have done it online myself.  But their interface for doing so sucks.  To update a single cost requires dealing with 3 separate screens and then they don’t even take you back to a point where you can update the cost on another position.  It is fine if you only need to update the cost on one position but is incredibly inefficient if you need to do so on 40.

Batch Mode Updates in 2006

And let me throw this in to keep you all interested.  Fidelity, blaming it on the mainframes they use, can’t display the updated costs in real-time!

It can take them 1 to 2 ‘nights’ (per their trader) – though so far I have got updates overnight.  This is crazy.  You would think that we don’t have real-time reservation systems that nonchalantly book millions of airline seats a day.

In essence Fidelity still works in good ol’ 1970s batch mode.  Simple as that.

Yes, yes, yes, I know that we have to use batch mode for final reconciliation, journaling and back-up etc.  But give me a break.  We sure have the technology to update the cost basis of a stock in real-time – and Schwab sure can do this in real-time.

One Fidelity rep actually told me that I should come and help them sort out their mainframe system.  Yes, it was on a recorded line.

Overriding Gripe

With Fidelity I am never sure as to what my account balance is!

It is simple as that.  It is like flying blind.

The same was true with TD.

I really do not think it is unreasonable in 2006 to expect that I can have an accurate account balance of my holdings at the END OF THE DAY.

I am not asking for a balance at 4:01pm Eastern.

Yes, it would be nice, if as with Schwab, I can have one, like clockwork at 6pm Eastern.

But in my old age I have patience and I am even happy to wait till 7.

One Fidelity rep, helpfully told me that maybe if I checked at 3am after the batch run!

Right now I have a Fidelity.com tab open on Firefox.  Depending on where I look I can get at least 4 widely differing numbers as to what my account balance is!

Do you folks think that is OK?

I have ended up having to use a spread sheet as well as an electronic watch-list on Excite to track my balances.  I am spending 40 minutes a day tracking my own balances!

At least with Fidelity all the differing numbers are on separate screens.

With TD I used to get a single page where the numbers would not add up!  That is scary!  It first makes you think you are cracking up.

On one occasion a TD supervisor spent 2 hours, off-line, and then called me up to CONFIRM that yes, indeed, the numbers on my screen did not add up!

This is 2006!

We glibly talk about SOA.

I feel like I am in a time warp.

Please help me out

I had tried to find a ‘consumer report’ on online trading systems.

Yes, I can find comparisons of what they charge.

But I have yet to find REVIEWS of the various online systems.

I think we need to fix that.

Yes, to fully appreciate the nuances and idiosyncrasies of these systems you have to be a REAL user.  I don’t think you can evaluate these systems unless you have REAL SKIN in the game – and that means what is left of your hard earned money AFTER the dot.com fiasco.

So PLEASE let me know in full confidence what YOUR experiences have been with the various online systems.

So far I have only had experience of 4: Schwab, Raymond James (which is not really a true online system), TD Ameritrade and Fidelity.com.

I am no stranger to Fidelity or Schwab.  I first opened an account with Fidelity in 1985 and bought into Magellan in the days when Peter Lynch was god.  I have had an account with Schwab since at last 1992.

Why Did I leave Schwab

I started using the Schwab online system probably in 1998.  Over the last few years I use it daily.  So I can claim to have reasonable experience with online trading systems.

So this begs the question as to why I ended up at TD and then Fidelity. Well I didn't take all my assets out of Schwab. Something, deep inside, told me about 'the known devil etc.' I am sure glad that I still have a Schwab account. I logon to Schwab for peace and tranquility. So I have also learned a hard lesson, yet again. You get what you pay for.

There were two reasons as to why I became disillusioned with Schwab.  Schwab was (and still is) EXPENSIVE.  They can also do much better when it comes to customer service … especially now that I have seen how ‘nice’ and helpful TD and Fidelity reps. can be!

Nonetheless, the Schwab computer system, which does use some mainframes, is SUPERB.  I love it.  Over the years I have used it I can’t recall ever encountering a software glitch.  Yes, there have been outages and some days it is beyond slow.  But when I see my account balances on that system … I KNOW I can take that to the bank.

Other Problems in Brief

The folks at TD are acutely aware that their computer system lets them down.

When I encountered my first set of problems with them in June/July they kept on assuring me that they were getting a new system in August and that I would be all set.

In August I found out that the new system has been delayed and that I would have to wait until next year.

So there is some hope for TD.

A root cause of their problems is the erratic real-time quotes they get from a 3rd party.

In June for a whole trading day they gave me the WRONG value for stock that I owned.

In general, if there was a split or a dividend I was screwed.  I won’t even go into what happened when a stock I owned changed its symbol … because it moved from NYSE to NASDAQ.

The problems TD has when a mutual fund doles out dividends would be kind of funny if it wasn’t so sad!

TD also relies too much on easily blockable pop ups!

TD also had this extremely annoying habit of ignoring buy orders!  I would place an order and get a confirmation screen.  I would check later and there would be NOTHING.  Nothing.  Once it made me doubt whether I had actually placed the order.  So I placed it again.  That disappeared too!  Then I knew I wasn’t cracking up.

If you need all the gory details I will be happy to share them with you.

With Fidelity my main gripe is the batch mode processing.

But like TD it also sometimes likes to play tricks with your eyes and your mind.

I am looking at a screen right now.  The cost is WRONG!  They show me 3 columns which read: $49.26, $4761.64 and 9,666.54%.  Yes, it would be nice if I was that good to have made a 9,666.54% profit on an investment.  If I had, this would not be itindepth.com.  It would be “get-rich-with-anu.com”.

So help me.  Help us.  Help the industry.

What worries me is what about the folks who don’t check this stuff 

I am sorry that this was so long.  I had to get it off my chest.  As I said I thought TD was giving me a heart attack.