For Canadian discount brokerages, the idea of providing great client service is a moving target. Not too long ago service used to refer to the ‘offline’ world and meant having a face-to-face interaction at a branch. That gave way to the telephone, and the telephone to email, and email to web chat and web chat to social media.

The result of this communication evolution is that online brokerages are forced to cater to a wide spectrum of touch points that consumers can now access in order to manage their online investments. While consumers benefit from being able to (theoretically) stay connected to their brokerage howsoever they please, the reality is that client service at any brokerage on any channel is only going to be as good as the brokerage’s investment on it.

DIY investors shopping around for online brokerages based on client service should take note of this. If client service, and specifically telephone service, is of interest, then Dalbar Canada’s recently released direct brokerage evaluation of telephone client service interactions is worth looking into. And, while many brokerages are finding their way through the myriad of new technology touch points, telephones, it seems, still matter to online investors.

Who You Gonna Call?

Where and how telephone-based client service fits into today’s highly screen-driven age is a bit confusing. On the one hand while some issues can be resolved via online only methods there are times when getting someone on the phone is necessary.

From highly specific account inquiries to routine trading strategies, such as ‘journaling’ or exercising options, there are still many roads that require DIY investors to turn to telephone agents to address their needs. Of course, when a website goes down or a trading outage occurs, the only way to get an answer is to turn to the phone. Those interactions, as it turns out, impact how a client experiences doing business with that provider and what they ultimately tell others about those experiences.

Dalbar Canada, a financial service analysis firm, understands the value and impact quality service has on direct brokerage client relationships and has been measuring the quality of telephone interactions for many years now.

Given that brokerages use the results of Dalbar’s evaluations in their advertising, it is important for DIY investors to understand some context behind the results.

Widening the Circle

According to Dalbar, “quality” of client interaction at a direct brokerage is broken into four key components:

• product and procedural knowledge
• professionalism
• ease of doing business and
• the ability to deepen relationships with clients

These categories reflect strategic points around which a firm can either strengthen or weaken the relationship with their clients. While what a telephone agent knows is certainly crucial, how they communicate that information goes a long way in providing a positive experience. Whether the agent takes a ‘big picture’ view of clients question or simply responds literally to the question asked also influences whether a client leaves the call feeling frustrated or satisfied. What Dalbar measures when they analyze the interaction between provider and client is therefore a clear snapshot of the ‘human’ element of the brokerage experience.

It should be mentioned that one of the parameters these awards either don’t measure or report is the availability (i.e. hours to reach an agent) nor the duration. So, while it may be nice to get a nice person, there is still something to be said about getting a person when you need one, even outside of market hours.

And the Winners Are..

Dalbar moved away from the model of declaring a sole winner of their Direct Brokerage Service Award replacing it with a new standard known as the “Winner’s Circle”. There are a couple of important differences to the Winner’s Circle compared to the previous Direct Brokerage Service Award.

First, in order to qualify for the Winner’s Circle, firms have to score above a particular threshold across all categories. What this means is that no firms can fail a particular category and still gain the distinction. Another important difference is that more than one firm can achieve the distinction even though they have different scores – meaning that there is no “winner” per se.

For 2014, the Winner’s Circle recipients were RBC Direct Investing and HSBC Invest Direct, both of whom achieved the designation last year and have won the Direct Brokerage Service Award in years past. Encouragingly for self-directed investors, the average scores for the field increased this year to 72/100 up from last year’s 69. Scores ranged from a high of 79 to a low of 66. Interestingly, only three firms were “above average” this year – the two designees and National Bank Direct Brokerage. BMO InvestorLine who was above average last year, slipped underneath the average this year.

The firms profiled for 2014 were the same as in 2013 and included (listed in alphabetical order):

• BMO InvestorLine
• CIBC Investor’s Edge
• Disnat (Desjardins Online Brokerage)
• HSBC InvestDirect
• National Bank Direct Brokerage
• Qtrade Investor
• Questrade
• RBC Direct Investing
• Scotia iTrade
• TD Direct Investing

Not evaluated this year were:

• Credential Direct
• Interactive Brokers
• JitneyTrade
• Virtual Brokers

The Bottom Line

According to the latest Dalbar evaluation, client service among discount brokerages is about the same as where it was in 2014.

With many brokerages spreading client service agents across digital, telephone and in-branch, allocating resources to the ‘call-centre’ may continue to be constrained. The economics of competition make scaling up a call-centre an expensive proposition. In addition, finding good people who are experienced enough and willing to stick it out in client service is also becoming increasingly rare. With fewer people choosing to use phones, smaller online brokerage firms may place their efforts toward the digital side – such as with chat or social media.

For DIY investors that value phone interactions as part of choosing the right online brokerage experience, firms that already have a strong call-centre or telephone infrastructure in place are better options than those who don’t.

Dalbar’s Winner Circle designation may help reveal strengths in client service at HSBC InvestDirect or RBC Direct Investing however without knowing the numbers, it’s difficult to draw any definitive conclusions about the rest of the pack.