Online Broker Survey: Brokers Improve, but Many Customers Still Dissatisfied

Surprise. Online brokerage customers are actually happier with their brokers than they were six months ago.

According to TheStreet.com's latest Online Broker Survey, brokers are doing a better job providing reliable Web sites, real-time quotes, fast order confirmation and good execution prices. Most importantly, customers say they are having fewer problems getting access to their accounts, and when there are problems, they are resolved faster.

How Often Are You Unable to Access Your Account?

The online survey, conducted from Aug. 23 through Sept. 17, drew more than 2,400 responses. Lighter trading volume during the summer months may have eased some of the strain that the brokers' systems had been experiencing. And that could be one reason satisfaction levels have risen. The last TSC broker survey was conducted in February and March, a period of heavy trading activity, and drew more than 10,000 votes.

How Long Do Your Access Problems Typically Last?

Still, some brokers clearly aren't doing as well as others. And with a big increase in accounts -- E*Trade (EGRP Quote) has more than doubled its customers to 3 million in the past year -- there's still a lot of catch-up work to do.

Here's how readers ranked the seven brokers that received the most votes.

Top-Scoring Brokers*
Broker	Score
Datek	24.07
DLJdirect	23.49
Ameritrade	23.25
Schwab	23.12
Fidelity	22.78
E*Trade	21.56
TD Waterhouse	19.15
*Among brokers who received more than 100 votes. See these brokers' scores in 11 key areas. See an explanation of our scoring methods.

For a closer look at how these brokers scored in the 11 areas that readers deemed most important, see this chart. For an explanation of how we ranked the brokers, check out this story.

Datek Online, the privately held Iselin, N.J., brokerage that caters to active investors, is the survey winner once again. (It won the last three surveys.) Datek was top-ranked in five of the 11 categories that survey participants said were most important: fast order confirmation, best execution prices, easily implemented trades and low commissions.

Online Broker Survey Six-month update

Reliability Improves; Rankings

Cutting Out the Middleman

Profiting From Your Trades

Mellow About Margin Calls

How We Tallied the Scores

Curiously, Datek ranked an unimpressive fifth in Web site reliability, and that's the category that survey participants rate as most important time after time. Customers have been complaining about the reliability of their brokers' Web sites for years, sparking investigations from most major regulators and technology upgrades at the brokers. DLJdirect, the online unit of Donaldson Lufkin & Jenrette (DLJ Quote), won this category and came in a close second overall. (DLJdirect finished fourth in the last survey.)

At the far end of the spectrum are E*Trade and TD Waterhouse (TWE Quote). Among brokers that received more than 100 votes, TD Waterhouse ranked last in 10 of the 11 key categories. The exception was low commissions, where it ranked third. The only surprise here is that on Sept. 1, in the middle of the survey period, TD Waterhouse actually raised its prices for online limit orders to $15 from $12. That move came as other brokerages started giving away trades for free. But it seems survey participants don't mind -- or don't know.

TD Waterhouse spokeswoman Melissa Gitter says the firm believes it is providing customers with "the best combination of products, price and service," pointing to its low attrition rates. And she says a redesign of the Web site during the Labor Day weekend -- during the middle of the survey period -- could have affected customers' "electronic experience."

Raising the Bar

While customers may be happier overall, it's clear that if brokerages want to hold on to their increasingly savvy and demanding customers, the toughest days may not be the ones that just passed but the ones ahead.

Take Neil J. Beck, a semiretired Houston lawyer who spends much of his time investing. During the past few years, he says he has tried out FleetBoston's (FBF Quote) Suretrade, E*Trade, TD Waterhouse, Morgan Stanley Dean Witter Online (formerly Discover) and Merrill Lynch (MER Quote). But he has moved most of his accounts to Fidelity because the broker went the extra mile for him.

"The one thing I noticed with Fidelity that I noticed was missing from other companies was that their executions were good. In a number of cases, I put in a limit order and they beat the price I put in for," says Beck.

Now that these online brokerages have gotten the business, the question may be whether they can keep it. According to the survey, nearly one in four investors is considering dumping his or her broker in the next six months. For brokers near the bottom of the rankings, the percentage of customers wanting to leave is noticeably higher.

We Want Out We asked, "Are you contemplating changing brokers in the next six months?"
Broker*	% of Customers Saying Yes
TD Waterhouse	41.6%
E*Trade	32.8
Ameritrade	24.6
Fidelity	21.2
Schwab	20.8
DLJdirect	19.8
Datek	17.6
*Includes only brokers who received 100 or more votes.

Given the hundreds of millions of dollars that the brokers spent to get those customers and the fact that the market's decline has directly hit new account openings, the impact of those potential departures could be painful to the brokers.

And while TSC's last survey showed that investors were frustrated with the red tape involved in closing an account, participants in the most recent survey made it clear that packing their bags is no problem.

Look at Beck. He has left behind about five brokers in his quest for the best one for him. The brokers may be doing better in general. But it's not good enough for everyone.