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Hate your broker? Start your own brokerage!

I've seen so many posts from investors complaining about this and that concerning on-line brokers. I suggest two approaches for dealing with your woes:

1. "Like it or lump it."
2. "If you can't beat them, join them."

The first option seems to be the conclusion drawn by most investors who have experiences with many different on-line brokers. I believe I would be correct in saying that all on-line brokers have problems of some sort at one time or another. This is why their Customer Agreements are so long. Live with it.

The second option, as far as I can see, has never been discussed - at least not publicly. Start your own. If you think you can do better, do it. There must be enough experience and money in Individual-Investorland to at least generate some interest in this idea. But how to avoid becoming one of the pack? That is where I believe the 'X-broker-sux' crowd can help.

Rather than offer broad statements ('They should get their act together', 'Too slow', 'My emails go unanswered', 'Phone always busy'), why not come up with some real working models that can be used. A contributor with experience in customer service could examine just what it takes to keep thousands of anxious customers satisfied. A telephony specialist could comment on what it takes to provide an efficient phone service. A computer systems analyst could comment on what systems would be required to handle thousands of deals in real-time, and handle hundreds of new accounts per day.

Doesn't seem so easy anymore does it.

Still think there is a better way? Then let's get the ball rolling...

What are the requirements for the Ideal On-line Broker? Lets be reasonably specific here if possible.

For example (and these are mainly service related since that's where most problems seem to be, but feel free to add anything):
1. Trade time < 1 minute for market orders.
2. Real-time quotes. Up-time 99% during trading hours.
3. Phone service. Answer < 10 'rings'; connected to live person < 5 minutes.
4. Globally orientated.
5. Commissions .....
6. Extra fees....

You get the picture - start posting!



If anything ever comes from this post (like a new customer orientated Foolish on-line broker), then the one thing I would most like to see is a customer agreement that has a minimum of phrases that start with "The company reserves the right to..."! In my opinion this phrase translates to - "If you have a problem with us, tough!". It may be good legalese, but it allows customer service to go down the drain.


Enough!

The revolution has begun.


-Fooltocry.
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Fooltocry wrote:
What are the requirements for the Ideal On-line Broker? Lets be reasonably specific here if possible.

For example:
1. Trade time < 1 minute for market orders.
2. Real-time quotes. Up-time 99% during trading hours.
3. Phone service. Answer < 10 'rings'; connected to live person < 5 minutes.
4. Globally orientated.
5. Commissions .....
6. Extra fees....


Thanks for starting this discussion. Here is my two cents.

I see many posts where the broker was good, and then went south. Why? I think in most cases because they expanded before they had an infrastructure that could support their expanded client base. I think this does more to kill a business than anything - no strategic plan, only a tactical plan.

For me the ideal broker would not accept new clients until it could adequately support them through the proper level of service/support/systems. I think the broker needs to keep a waiting list, and not just accept people until the system utterly fails. The ideal broker has to stand up and say no until it can provide a guaranteed level of service.

I will use an example of my ISP - Mindspring. I joined them a couple of years ago, and after they bought out a company called Pipeline they discovered that what they bought was not quite as advertised. There were inadequate Points-of-Presence (POP) servers, and the infrastructure was not there in many cities. Therefore, if you lived in one of these substandard cities, all you could hope for was to be put on a waiting list until they improved the infrastructure to the point where the service was adequate for the need.

I will add additional requirements as I think of them, but this is my first thought (after my first cup of coffee).

L:et's keep this thread going to try to crystalize the ideal broker.

Jon
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Just about any broker would be fine if they delivered what they promised.

So far as the list

For example:
1. Trade time < 1 minute for market orders.
2. Real-time quotes. Up-time 99% during trading hours.
3. Phone service. Answer < 10 'rings'; connected to live person < 5 minutes.
4. Globally orientated.
5. Commissions .....
6. Extra fees....

I do not know how to interpret 4.

I would add real-time updates of the portfolio (or at least 20-minute delayed) and in particular a field that computes your available balance to trade with.

Another thing that would be nice is to be able to print out an order confirmation. While this seems to be true in all cases, one of the deficiencies of Waterhouse is that if you enter an exchange from one mutual fund to another, nowhere is the fund you are selling displayed.

Waterhouse made a mistake in my account which left it with a negative money market balance of more than $90,000.00. Was fixed, but took about 2 hours, about half of that time being while I was on hold.

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Hate your broker? Start your own brokerage!

I agree...let's start being part of the solution, not part of the problem!

Joel
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How do I find out how much each broker requires to open and account? Seems like I've searched endlessly to locate this info, but am having difficulty.

signed A. Novice
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Firstly, thanks to those who have shown an interest. I will try to keep this tread alive as long as possible, because just maybe someone from the press or a discount broker may be reading and do something positive. We can only hope! I also posted a link from the E-trade stock folder after their recent system failure. Maybe some more interest will be generated from that one.

Anyway...

The list so far with additions:

Requirements for the Ideal On-line Broker

1. Trade time < 1 minute for market orders.
2. Real-time quotes. Up-time 99% during trading hours.
3. Phone service. Answer < 10 'rings'; connected to live person < 5 minutes.
4. Globally orientated. (See note 1 below)
5. Commissions .....
6. Extra fees....
7. Application waiting list. (note 2)
8. Realtime accounts update. (3)
9. Easily printable information. (4)
10. Full fee disclosure.
11. Quicken/Money interface.

Notes:
(1) Globally orientated.
I put this one in to highlight the fact that most on-line brokers do not seem to cope very well with non-US residents. Anything from no support at all (ScotTrade) to legalese that is tailored specifically to the US clientel. The Ideal On-line Broker should accept and handle investors from all over the world, and provide adequate information on the relevent tax issues (withholding, CGT). Enrollment forms should be tailored specifically to the investors circumstances.

(2) Application waiting List.
A good suggestion this. In order to cope with rapid client growth, no new accounts would be opened until the TIOB is able to cope as a whole, not just the computer systems.

(3) Realtime Account Updates.
A tricky one this. When do you update the account? When the trade has been entered or when it has been executed? I'll leave this open to discussion.

(4) Easily Printable Information.
This seems to be a feature requested often, perhaps mainly by those who have been burned by brokers by not having hard-copy proof of deals. So be it. Your choice: print, or log locally for later off-line printing.

Feel free to add your own explanations (especially for 4 & 5). I don't want to do all the work!

A good start, but more interest would be good. If you too believe this thread can help, advertise! Point others this way! Nominate for post of the day! Support the cause! Create your own "Ideal On-line Broker!


Keep the ideas coming!
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>What are the requirements for the Ideal On-line
>Broker? Lets be reasonably specific here if possible.

>For example (and these are mainly service related
>since that's where most problems seem to be, but feel
>free to add anything):
>
>1. Trade time < 1 minute for market orders.
>2. Real-time quotes. Up-time 99% during trading hours.
>3. Phone service. Answer < 10 'rings'; connected to
>live person < 5 minutes.
>4. Globally orientated.
>5. Commissions .....
>6. Extra fees....


1. Adequate Server Capacity and reliability.
2. Quick trades and confirmations.
3. Real-Time Quotes.
4. Trading from a single page which shows your portfolio with performance and quote informations. You should never have to leave this view to get additional quotes or make trades!
5. Give me back end services and not interface design. Personally, I'd like to trade directly from my finacial software (Money, Quicken...). You would use the net to move the small amounts of data, but not have to worry about pumping gobs of graphics and page layout data.
6. Fees should be based on actual costs. You pay for what you use.
7. Immediate updates of postions and balances (again on the same page as the portfolio view).
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Give me back end services and not interface design. Personally, I'd like to trade directly from my
finacial software (Money, Quicken...). You would use the net to move the small amounts of data, but
not have to worry about pumping gobs of graphics and page layout data.

I totally agree with the above statement. I don't remember E*TRADE having the problems they are having now when their site was more text-based and less glitz and glamour. I could load the "old" E*TRADE home page in almost no time. Now, with their new focus on marketing, it takes much longer to load their crappy, content-free home page. I used to be able to get six quotes with one query and now I'm lucky if their single quote even works. I am in the process of transferring my funds from E*TRADE to SureTrade. I will never again have an account with a brokerage I see advertising on TV.
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Requirements for the Ideal On-line Broker

1. Trade time < 1 minute for market orders.
2. Real-time quotes. Up-time 99% during trading hours.
3. Phone service. Answer < 10 'rings'; connected to live person < 5 minutes.
4. Globally orientated.
5. Commissions .....
6. Extra fees....
7. Application waiting list.
8. Realtime accounts update.
9. Easily printable information.
10. Full fee disclosure.
11. Quicken/Money interface.


I would add the following:
EFT capability for easy fund transfers

To Fooltocry:
Why don't you re-title this thread to something more appropriate? How about:
Ideal Discount Broker
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Although I have yet to take the dive into online trading (Datek doesn't accept accounts yet to people from my state!), I find this thread of great interest.

It would seem to me that a company could design some client side software that had a good interface and handled all the tasks you perform on a web page. This piece of software would communicate, via the Internet, directly to the company's server. The information transmitted would be minimal and would speed up transactions time, and allow more users to be online at one time. Eliminating, as much as possible, the web browser.

This piece of sofware could handle all sorts of tasks. From the actual traded, to graphing and charting. It could also receive confirmations of complete trades and automatically notify and/or print the confirmation.

The web is great for reading news and whatnot, but for real-quotes and time critical trades, the web seems to be the wrong tool. The idea of a dedicated, stand alone software package comminication via the Internet seems much more resonable.
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It would seem to me that a company could design some client side software that had a good interface and handled all the tasks you perform on a web page. This piece of software would communicate, via the Internet, directly to the company's server. The information transmitted would be minimal and would speed up transactions time, and allow more users to be online at one time. Eliminating, as much as possible, the web browser.

Yea...like when I'm playing MS-Golf99. I've got a large and powerful application running locally and some information is being sent over the internet to a game server that allows me to interactively crush my opponents. ;)

I think that's a great idea.

Joel
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It would seem to me that a company could design some client side software that had a good
interface and handled all the tasks you perform on a web page. This piece of software would
communicate, via the Internet, directly to the company's server. The information transmitted would
be minimal and would speed up transactions time, and allow more users to be online at one time.
Eliminating, as much as possible, the web browser.

This is a good idea. I have no idea how to communicated it to the right people, but this is a start.

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****It would seem to me that a company could design some client side software that had a good interface and handled all the tasks you perform on a web page. This piece of software would communicate, via the Internet, directly to the company's server. ****

The only problem is that the software would be resident on the computer, and would eliminate the use of the broker on other machines without the software.

At present, your broker is accesible from any machine anywhere in the world.
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>The only problem is that the software would be >resident on the computer, and would
>eliminate the use of the broker on other machines >without the software.

> At present, your broker is accesible from any machine >anywhere in the world.

True, but a web based interface might still be available for those away from their primary machine, or who have a machine that won't run the dedicated software. However the advantages of the dedicated client, at least in my opinion, far outweigh the disadvantages. I would still like to have the option to perform my daily operation via the web, but a dedicated client could have many potential advantages. For both the user and the broker.

The broker would conceivably be able to serve more customers with less bandwidth being taken up. Be able to provide more services (via the client and updates to that client), and increase their revenues. There would be a initial investment of capital in the development of the client/server system of software, but in my humble opinion the payoffs in customer satifaction far outweight this. However I agree. A web based interface (Perhaps one without tons of graphics, but still well designed and easy to use), is still a requirement.

Enough of my ramblings for the moment.

--
Jack
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<< Give me back end services and not interface design. Personally, I'd like to trade directly from my finacial software (Money, Quicken...). You would use the net to move the small amounts of data, but not have to worry about pumping gobs of graphics and page layout data. >>

The customer has spoken ... are any e-brokers listening?
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uno113a wrote:
Give me back end services and not interface design. ... I don't remember E*TRADE having the problems they are having now when their site was more text-based and less glitz and glamour. I could load the "old" E*TRADE home page in almost no time. Now, with their new focus on marketing, it takes much longer to load their crappy, content-free home page.
---------
My 2 cents: This is a good comment on the web in general. {Oh heck, I've got to say it} I've been on the net since it was bloody ARPANet, when there was no such thing as a browser and everything was text. Except for e-commerce, nothing has changed... Lack of content with pretty pictures is still lack of content.

I told you it was just 2 cents. I guess I'm part of the problem.... :) :)
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