 |
By Rob Carrick
The Globe and Mail
Report on Business
Saturday, September 21, 2002
|
The Globe and Mail's fourth annual rating of on-line brokers has
found investors in a testy mood.
As usual, there were numerous potshots directed at the winning
broker, which was Bank of Montreal's BMO InvestorLine. But there
were also some complaints about on-line brokers in general, many
of them from active traders who were dissatisfied with the level
of service they receive.
BMO bashers had both specific and general criticism to make.
"It is a pretty sad state of affairs when BMO is the No. 1
rated on-line broker," Ross Howard of Combermere, Ont., wrote
in one e-mail.
A reader from Orillia, Ont., e-mailed to say that his experience
as an active trader with BMO InvestorLine has been unhappy because
of frequent technical problems with the Web site, including problems
logging in as a client.
Adrian Mastracci, fee-only investment counsel
at Vancouver based KCM Wealth Management, says, “Every provider
has one or two warts, but we’re generally happy with the ‘A’
and ‘B’ crowd.
The good sign is that I've only had a couple of
requests to change accounts.”
"I've enjoyed BMO from Day One as they were my first [broker]
to trade with and they always seemed to be dependable," he
wrote. "I'm actually losing my confidence with them."
Vancouver's John Nickel wrote to criticize InvestorLine's plan
at month's end to raise its annual administration fee for registered
retirement savings plan accounts to $100 for accounts with less
than $15,000 in assets. The current fee is $25 for accounts with
less than $25,000.
Mr. Nickel said that with $650 in his RRSP account, he was in line
to pay a fee equivalent to more than 15 per cent of his holdings.
"Well, to say the least I immediately phoned and closed the
account," Mr. Nickel wrote. "[It] makes you wonder how
many other customers the BMO will lose on this astronomical increase.
Or do they care?"
Several readers complained that the service from on-line brokers
isn't fast or cheap enough to satisfy aggressive traders. In fairness
to on-line brokers, their target clients are mainstream investors
and not the type of person who trades very actively, say on a daily
basis.
Investors in this category would do well to consider a direct-access
broker, where they'll find an emphasis on ultra-fast trade execution
and, often, lower commissions.
The down side is a lack of services for mainstream investors. In
fact, some direct-access brokers don't offer RRSP accounts or access
to Canadian stock markets.
Among the other brokers that came in for criticism from readers
included Royal Bank Action Direct and E*Trade Canada.
For example, one Action Direct client complained about missing
some trading opportunities because of slow Web site response, while
an E*Trade client related a story about a slow-moving Web site and
poor service regarding a problematic mutual fund switch order.
Stephen Eaton of Toronto wrote to register his dissatisfaction
with the service at ScotiaMcLeod Direct Investing after moving over
from Charles Schwab Canada. U.S.-based Schwab closed up shop in
this country earlier this year, selling its assets to Scotia.
"I think it would be very telling to find out how happy ex-Schwab
customers are with Scotia Direct," Mr. Eaton wrote. "My
hypothesis is that Schwab set the bar very high and Scotia is unable
to match it."
Not all people who responded to the rating wanted to vent. Adrian
Mastracci, a Vancouver investment counsellor (that's a
high-end adviser), said he has many clients who trade on-line, and
most of these people have had good experiences with the brokers
who scored marks of A to B.
"Every provider has one or two warts, but we're generally
happy with the 'A' and 'B' crowd," said Mr. Mastracci, president
of KCM Wealth Management.
"The good sign is that I've only had a couple of requests
to change accounts."
Fund fees were considered in the cost area of the survey, but weren't
broken out separately for the sake of brevity. The brokers with
no fees or commissions to buy or sell funds on-line are eNorthern,
E*Trade Canada and Merrill Lynch Canada. In each case you must hold
funds for three to six months or a fee will be imposed.
Most other brokers sell both load and no-load funds with no commissions,
but they'll charge a redemption fee of $30 to $40 or so. Even with
fees like this, on-line brokers are an ideal place to invest in
mutual funds.
|
