A dramatic shift has happened in the number of complaints from investors about bad service from online brokers.
Exactly zero complaints have dropped into my e-mail in-basket in recent weeks. Flash back a few months and the flow of angry e-mails and tweets was non-stop. Queues to talk to a live representative by phone lasted hours and some clients never got to speak to someone because they were cut off. Website outages and interruptions were commonly reported.
Finally, progress. The investment industry consulting firm Dalbar Inc. reports that the average amount of time required to get through to a broker’s contact centre was 14 minutes in mid-May, down from 92 minutes in January. Half the firms surveyed answered in under five minutes. “Happily, the wait times have come down tremendously,” Dalbar Canada vice-president Anita Lo said by e-mail. “Firms should be given some credit for staffing up.”
More detailed results from Dalbar’s January survey can be found in the 2021 Globe and Mail Online Brokerage ranking. They show that brokers were caught unprepared for the surge in demand for stock-trading in the pandemic. The breakdowns caught the eye of the Investment Industry Organization of Canada (IIROC), which announced recently that it will look into whether service breakdowns are becoming an investor protection issue.
It took months for brokers to hire and train enough staff to bring waiting times down. In the future, brokers have to be more nimble in staffing up as required. Digital investing using trading apps on mobile devices has opened stock trading to more people than ever before and we should expect surges in trading volume every time markets go on a run.
There’s a lesson for investors as well in what’s happened with brokerage service levels. Whenever market conditions lead to a frenzy of trading – in the pandemic, or previously with cannabis stocks and, going way back, tech stocks – there’s a chance that brokers will be gridlocked.
The term for this problem is access risk – the risk that you won’t be able to access your account or your broker’s contact centre to do what you need to do. It’s a negative of online investing. Of course, we should all expect and demand better service. But the volume of stock trading seen early this year was beyond anything seen before. The next retail stock trading boom will almost certainly do likewise.
To prepare, investors who call their brokers frequently should pay attention to the Dalbar results both in January and May. Top online brokerage performers in May were Questrade, National Bank Direct Brokerage, Virtual Brokers, BMO InvestorLine and Qtrade Direct Investing, all of which had average response times below the industry average of 14 minutes. RBC Direct Investing was right on the average. Scotia iTrade and Desjardins Online Brokerage had the longest average wait times at 25 and 55 minutes, respectively.
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