Online Brokers 2000: The Final Insult -- The Torment of Closing a Brokerage Account

Think it was hard to shake that high school boyfriend who carved your name in his calf and wept on your porch for days after you dumped him?

Try closing an online brokerage account.

According to TheStreet.com's Online Broker 2000 survey results, it seems almost as tough. Investors who try to break from their online brokers run into delays and indifference, and often leave small pieces of their financial lives with their old flames.

Online Broker Survey 2000 In Today's Package Closing Your Account Calendar of Stories Message Boards

One TSC reader reported: "I've notified Wit Capital (WITC) by mail, email and registered mail for over a month now to close my account and remit me the cash (over $100,000). So far, one email acknowledgment. But no check in the mail." Wit did not return a call for comment.

Another wrote: "Web Street Securities (WEBS) took four months to transfer the residual amount in my account. Did not respond to my emails." Web Street did not return a call for comment.

Others recount tiny account balances that bring monthly statements even though they have closed their accounts. (Charles Schwab (SCH), for one, said a reason for $6 account balances is that dividends paid after an account is closed often end up at the previous online brokerage, which opens an account for them.)

Why Investors Divorce Their Online Broker Because it was ...
... unreliable	12.7%
... too expensive	12.0%
... had poor customer support	11.5%
Source: TheStreet.com Broker 2000 Survey

It's as if this pattern of behavior is what drives clients to want to leave in the first place. Our survey showed that investors want consistent service, reliable technology and someone to at least answer the phone when they need help.

Instead, because they run into problems, so many try to protect themselves by having multiple e-brokers. More than 40% of readers surveyed said they use more than one broker.

A total of 31% of investors in the survey have used two firms (though not necessarily at the same time), 16% had used three, and 11% had used four or more.

Of those who changed brokers, 12.7% said their previous broker was unreliable, 12% said its prices weren't competitive and 11.5% blamed poor customer support.

Whatever the reason, switching is no easy task.

A Schwab spokesman says the best way to ensure an account gets closed is to call and write a letter -- yes, that means snail mail -- and request that all money market funds be closed and paid to date.

But it doesn't work out that easily. Wrote E*Trade (EGRP) customer Christine G. Weir, "They make it extremely difficult to move your money in and out of an account. Their customer-service department does not follow through and is not very knowledgeable." E*Trade could not be reached for comment.

In the short run, the bureaucracy may seem to work in firms' favor -- if it's harder to switch, perhaps you won't bother.

Said Christopher Cooper, the "worst part of TD Waterhouse (TWE) is customer service. ... I'd love to switch, but I understand it is a real pain in the neck."

TD Waterhouse said it's easy to close an account, but transferring an account can take two to three weeks because of an industrywide transferring system. This system can frustrate people who are accustomed to things happening in real time on the Internet, a spokeswoman said. She added that the company is as responsive with someone who wants to close an account as it is under other circumstances.

In the long run, it's in a firm's interest to be attentive to clients, from the beginning of the relationship to the end. If it is, there's less chance there will be an end.

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