"Blame the machines," for
James J. Cramer
Let us know what you think. Should the machines be held accountable or the machinations of man?
Here's what some
readers had to say:
James Cramer: You really disappoint me with your "blame the machine" defense of the Etrade fiasco. Are you sure you weren't programmer in a former life? As a trader, surely you can't subscribe to the liberal "no one is responsible" defense for all things bad.
As an E*Trade customer of long standing Platinum Level, I've watched the cycle of "get more customers, then gear up to handle them" several times over the last 2 years. Each time, service declines, trades get delayed, confirmations are long delayed, and the Officers of E*Trade tell the reporters, "this is a small problem", "this just effects a few of our customers", "it only lasted a short time" , all lies in my experience.
I will take some responsibility for my problem. When the news broke that E*Trade was going to use the $700 million investment from the Japanese bank to revamp the site and go after more customers, I should have seen the writing on the wall and made other arrangements for my trading. I didn't;
I think it is only fair that the people at E*Trade take responsibility for not planning to keep an acceptable level of service during their growth period. Slow servers, slow trades, delayed confirmations are not related to broken machines, but to too many customers trying to use too few resources. Shades of AOL! I'm voting with my feet!
"Someday we'll all trade this way" -- Wrong!
JJC: How can you defend the online brokers? Yes, it's the machines that break down, but to me, it speaks volumes about the lack of a solid back end in these organizations. As you and I know, these companies have been experiencing amazing increase in the number of clients but don't seem to be adding the corresponding number of customer service people.
For example, I recently attempted to switch my IRA from Fido to EGRP. I didn't hear anything nor receive anything from EGRP for a month and felt the need to place a phone call. To my amazement, I was not able to get through on 15 different occasions. I finally got through by calling at the exact moment they opened and I still had to wait fifteen minutes for someone to pick up the phone! When speaking to the rep, I asked how many people they had in their customer service dept. She replied 90. Ninety!?! Clearly not enough to handle the tens of thousands of clients who may be trying to have an issue resolved.
I am dismayed by this lack of, in my opinion, foresight on behalf of these organizations to not do a better job of staffing qualified customer service reps, or to at least hire a corresponding number of reps for each 1000 customers they sign up. It's not as if these companies started yesterday. Like any other net company, if they don't have the proper back end, they are destined to fail.
I just finished reading the story on E*Trade and their technology problems. What can I say? You get what you pay for! I am a financial advisor with
and we have had no problems, whatsoever, handling orders from our customers. This is one of the benefits of dealing with a full service house like Pru. We are always available to our clients. Even on the heaviest trading days we are accessible. I doubt very much that E*Trade, Schwab, DLJ Direct and company can say the same.
Michael A. Colannino
After reading Cramer's column on e-machines, I am left with two thoughts. He's right about machines. He's wrong about the way some online are handling themselves.
If your business is growing at a 10% rate, how much should you expand your customer support system? If its growing at 40%? If your perspective is short term financial, you short the market. This is what happened at E*trade. In late November and early December, before the softaware changeover, it took me 45 minutes of wait time to talk with customer service. This was after calling 10 to 15 times and getting a busy signal. Did you ever hear of a broker that got so many calls, their system rejected incoming? E*Trade's did.
That might have been forgivable. However, if you called their new account line, you got through in minutes. Adding more weight to the system when the system is overloaded is poor management. Those people who were taking new orders should have been answering the hotline at customer service, even if only to say we are sorry, let me take a note of your problem and someone will respond.
The other avenue of correcting wrongs in an account would be to send email. Most of my email attempts to customer service kept coming back to me. Their email complaints pile weighted down the email incoming computers so much that they were rejected. Do you want to know why a good percentage of complaints came to E*Trade? It was because their portfolio manager showed stock that had sold 2 weeks before as still there in the account. This is not a guess on my part, this is a reflection of my portfolio manager which is still screwed up.
Brokers break, yes. But what's inexcusable is to blanket air with ads getting customers you can't handle; only caring about million customers instead of investing is customer service and technology. Promises you can't deliver is a problem, not crashes.
I made the mistake of opening an IRA at E*Trade in December. Couldn't connect with them for two months, no one picks up the phone. It's just plain fraud not a technology problem.
I'm an E*Trade customer that trades daily. The problems they have experienced the last two days have been very frustrating for me and cost me several $$$. I'm looking for a good reliable replacement I had to wait 55 minutes to get through to a etrade broker yesterday. Today I hung up after 20 minutes. How about giving them so hard press to get their stuff together. The E*Trade stock has gone up as you know, but the service they provide is worsening!
There will always be glitches in computer programs, but E*Trade was advertising yesterday and today as if nothing had happened. Until they get their act together they should cool it and work to satisfy their existing clients. It is a lot easier to change brokers now than it once was, and access is a very good reason.
JJC, good article, but as a daytrader who has been trading from my home via the net for the past 3 years, I can tell you that the equipment breakdowns causing a temporary lack of access is old news.
The big problem is the new bottleneck that has formed as all these e- brokers have added customers and equipment and have totally deluged the market makers with tens of thousands of orders on one stock symbol in a matter of seconds. Now, the MM's systems cannot handle the volume and they turn off something called "auto execution" and try to handle all these orders manually! Impossible! Before they can get through these buy orders the price is naturally moved up dramatically and here comes tens of thousands off sell orders!
When the dust finally settles all that is left for the MM's is to tally up their losses and to try to figure out how to stop the "red rover" activity as you call it. This is what I see out here in Daytrader land. I am interested in your thoughts since you know the other side so well.
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