TD Waterhouse (now TD Ameritrade) Sucks

A story of gross, pervasive, consistent incompetence at a major brokerage

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At some point in time I became a customer of TD Waterhouse. First off, let me say that TD Waterhouse did not earn my business. I had been with Jack White and Co. for years and quite pleased, at least in the sense that nothing was ever screwed up. And I had been with other brokers as well, with no problems over a 15 year period. In contrast, during the year 2000, TD Waterhouse screwed up virtually everything that can be screwed up in a brokerage account. Again, they did not earn my business - they bought out Jack White and Co., and my business with it. Perhaps this should have been my first warning sign and a signal to shop for a new broker. But it seemed easy enough to just go with Waterhouse, and my prior dealings with Waterhouse back in the 80's (before they were bought by Toronto Dominion Bank) had been good, so I figured what the hell.

I was trading 4 accounts, a regular and IRA account for myself, and a couple of accounts for family members.

I think the first sign of trouble was increasing amounts of time spent on hold. It eventually got to the point that before I would put in a call to TD Waterhouse, I would make sure that I had gone to the bathroom, that it wasn't close to a meal time or an appointment, that I had something to drink, and that I had some work to do or some form of entertainment while I waited.

Let me assure you, in terms of wasting time, this was a monumental problem, particularly if you were trading with any frequency. I figured that for the year 2000, between actual trades and (mainly) customer service regarding all their screwups, I probably spent the equivalent of a 50 hour workweek just on hold. You could forget daytrading. It would have been impossible with TD Waterhouse.

The fact that there was so much hold time should have alerted me to the fact that TD Waterhouse was taking on new accounts faster than they could adequately service them.

The Back Office Boogeyman

This conceptual character is an important part of the story, because while TD Waterhouse seems to have gotten a handle on the hold time problem (apparently by hiring lots of incompetent people), their back office problems persist to this day. Basically, my view of TD Waterhouse is that anything that requires any kind of change to an account will be screwed up. This would include adding features to an account such as checkwriting, transferring money, closing out an account, etc. I've also been given fax and phone numbers that don't work. It's really pitiful. It would also include transactions such as wiring money, anything out of the mainstream such as selling short, placing stop orders, pretty much anything other than the simple buying or selling of stocks or mutual funds, and even then you must be extra careful as you will see below (The Fiasco).

My recommendation to any TD Waterhouse customer reading this would be to avoid changing their account if at all possible. If you must add checkwriting or something, I would recommend taking the bulk of the funds out of the old account by check and start up a clean, new account with the desired features. Yes, this is basically what TD Waterhouse would do in a behind-the-scenes way, but let me assure you, you will be far better off doing it yourself, and you will always know exactly where your money is. Then close out the old account at your leisure, but be careful (see Closing out the Accounts).

Check, Please

Back in February 2000, I was considering various options for some large purchases, including simply writing a check from my brokerage account.

Since these purchases were large, and my checks were from Jack White, I decided to ask a customer service rep if these old checks were okay. Unfortunately for me, according to a rep, the old checks were not considered to be okay, and I would need to get new ones. Later, as what became an immensely frustrating and painful process dragged on, I came across some reps who said this was not necessary, i.e. the old Jack White checks would have worked, but who really knows. By this time the broken wheels were in motion.

Sidebar on the TD Waterhouse Customer Service Rep

Similar to the Back Office Bogeyman. At first glance, and on an individual basis, it would appear to the average customer as if the customer service reps actually know what they are talking about. Yet every rep seems to have a completely different story about what is going on. Kind of a company-wide false bravado. Yet their false self esteem and knowledge could not be farther from the truth. No one knows what is going on in the rest of the company, beyond their little cubicle. This is one reason things are getting screwed up, and it is the reason you don't want to do anything complicated at all with them. Do nothing that will take the rep beyond their basic knowledge or that will require them to call another department.

Judging by results, it is abundantly clear that they absolutely don't know what is going on, yet once again each rep seems to exude the secure knowledge of a freshly converted faith healer. Their incompetence shows them for the charlatans that they truly are. What the hell ever happened to something like, "I don't know, let me get your number and call you back with that information?" Or just plain "I don't know?"

Back to the Checks

So at this point the process had begun to get new checks. Not just for my account, but for 2 other accounts I manage which also had checkwriting from Jack White. The 4th account, my IRA, remained unscathed as it did not need checkwriting. Little did I know what I was going to be in for during the next 6 months.

It is important to keep in mind that regarding this whole checkwriting thing, I was never told that this would require any kind of transfer, or new account numbers, or new trading authorization forms, nothing, just that I would get new checks in 3 weeks.

Yeah, right.

Now I did manage to get new checks for one account in about 7 weeks (which sounds easy enough, but read on), and for another account after another couple of months, but I think it is important to realize that on the last account, checks were never received. That's after 6 months, dozens of calls and countless hours on the phone.

Many stories and excuses were told to me regarding these accounts. But it's funny, though, because I personally filled out identical forms for all three accounts and mailed them on the same day. And they clearly received all the forms, because the troubles which follow (believe me, we're only at the tip of the iceberg at this point) happen only to these three accounts for which I filled out forms.

Online Trading Intermission

It's worth noting that because hold times were so egregious I signed up for online trading. I liked online trading because it was fast, at least in comparison with a broker. I was often able to execute trades in 4 accounts in not much more than about 5 minutes. With a broker, it was more like 20, mainly because of waiting to get large trades authorized, and that's after you got through waiting on hold for an average of 20 minutes. As near as I was able to determine, there was no fast way through to Mutual Fund trading. I think my minimum hold time was about 10 minutes, and because I had been "trained" to wait, one day I was on hold not once, but twice for 45 minutes each time, finally giving up and calling back. On the third call, after mentioning the wait, I was told it couldn't be - because there was "zero wait time." Uh huh. I guess I just repeatedly "imagined" those 45 minutes with a phone held against my ear, listening to Bloomberg and the repeating message that I will get the "next available" broker. Another rep I called to complain about the situation told me average hold times were 3 minutes. I can only imagine they were averaging in the hold times for the middle of the night or something. At the time, my shortest hold time was 10 minutes, with the average about 20 minutes. Talk about totally out of touch! This is typical of the poor communication within the company.

But even online trading is unreliable. I have heard people call TD Waterhouse's Webroker "Webroken", and rightly so. One day I traded all 4 accounts, got confirmation numbers for each trade, but there was something a bit weird about the session. I wasn't able to access things like the account value, although I was able to trade. As much as I hate calling them up and wasting time on hold, I called up and mentioned it. Thank god, because it turned out they had absolutely no record of the trades. I had confirmation numbers for these, and they knew nothing about it. Very very scary stuff. But the scariest is yet to come (see The Fiasco).

Even when online trading worked right, they eventually managed to screw it up, at least as far as I was concerned. A couple of the accounts I trade are fairly large, and one day it turns out it won't let me make the trades. I call up and it turns out they have put a dollar limit on online trades. If you trade by phone, you can trade over the limit and they get a manager to approve it, but online it will no longer go through. Now mind you, this is a policy that changed without a letter, without a warning, nothing, just one day you're trying to trade and it doesn't work.

Several more calls and I find that in theory you could work around this by breaking up the trade into parts so that each trade is below the limit. This of course gives them multiple commissions on what should be one trade. The policy was intended to limit people's risk, but it turns out that you can make as many trades under the limit that you desire, so I wouldn't call that a very effective algorithm for reducing risk. By the way, as far as the workaround, that was my idea. Didn't want you to get confused and think someone from TD Waterhouse had an original thought.

Although I had been trading online, the next time I log on, ready to try the "workaround", I can't trade, at all. What's up? Well, turns out they have assigned new account numbers to the three "checking" accounts, and I am told it will take 2 weeks to get online trading activated. So I call up in 2 weeks and a rep tells me I'm ready for online trading again. But, as you might guess, it still doesn't work. This process continued, kind of an on-again off-again thing for months (up until I left them, anyway). I'd trade online, it would stop working, a rep would say it would be taken care of, it wasn't, etc. etc. And mind you, these are not problems that had anything to do with my computer or my browser or something. These were their back office problems with the account numbers, or their glitches. Over a period of about three months this remained unresolved.

Piece de Resistance number one

"I hope we didn't scare your mother"

One day I get a call from my folks for whom I manage a couple of accounts. Seems some hard nosed guy from TD Waterhouse's risk management department had called up my poor little old mom and basically told her that there was no money in her account and how is she going to pay for the large debit balance in the account? Okay, so now I'm about to call TD Waterhouse, but immediately after I hang up, my phone rings, it's TD Waterhouse calling me, and this guy's on the line telling me the same thing he told my mom, except it's about my personal account. Now on the one hand I know I've gotten confirmations for all my trades, and I know everything should be okay, but, and this is a big but, for a few nanoseconds I remember there was that day not so long ago that the trades didn't go through, and I consider that I had been trading long and short, with leverage, and well, there had been some huge down days lately in the Nasdaq, and maybe, just maybe, we had all been really screwed. Let me tell you, that is a pretty earth shattering vision, to imagine even for an instant, being totally wiped out and in debt.

Trying to keep my cool, I had the guy take it step by step through the trades and it became clear it was a problem between the old account numbers and the new numbers assigned to the accounts. They had a loss for one losing trade associated with the new account number, but all the equity was in the old account number. It was quite amusing to hear this very stern guy who wanted to know "how are you going to pay for this!" turn into "I'm so sorry sir, it's our fault, I hope we didn't scare your mother, thank you for your understanding ..."

And again, this was something that he said he'd take care of, but I continued to get mailgrams that said the same thing for many weeks, basically until I stopped trading with TD Waterhouse.

What an absolute nightmare. And it continued. Having traded these accounts through all this bullshit over the past few months, and having traded my parents accounts for more than 5 years, I'm told that I don't have trading authorization for one of these accounts. They can plainly see that, yes I clearly had it on the old account, but I don't have it on the new account. New account? What new account! Jesus Christ, I just asked them to update the freaking checks! And maybe, just maybe, do you possibly think this could have been addressed a few months ago, back when I asked for the checks?! But of course this would have required reps who know more than "just fill out the forms and you'll have your checks in three weeks." Hell, if anyone had been able to convey to me one-one hundredth of what I've gone through, I would have never, ever, ever done it. I would have run so fast and so far away that you would have never been able to find me.

Piece de Resistance number two - this time it's real

The Fiasco

Because of a losing second quarter I was spending some time re-evaluating my trading strategies and had been away from trading for a few weeks. I decided to go ahead and tally up my losses for the 2nd quarter and I came across the fact that a short in one account had never been covered. On the day in question three accounts had been traded with identical market-on-close orders, the trades had been read back to me and I received a confirmation number for each trade. I know that I had seen a couple of the paper confirmations in the mail, but since I don't reconcile those (at this point in the story it may not surprise you these are often duplicates or mistakes, etc.), and since I knew that I was out the market, and since I didn't have to pay any taxes on gains and since at that point I was pretty much exhausted with trading, I just didn't check up on it.

As soon as I found the error, I called TD Waterhouse within seconds, and at this point I figure it's like all the other stuff, it's just some glitch with the account numbers and as soon as we look into it, we'll find that trade in one of the account numbers. But it was not to be.

This was a genuine Big Time Fuck Up - I placed a trade that was read back to me (verbally confirmed) by a broker, I was given a confirmation number for the trade, and it turns out the trade, a market order, was not executed, and I had not been informed.

There's a whole lot more I would like to say about this, but the matter has been settled, and I have signed a confidentiality agreement as to the specific details of the settlement and the process that led to the settlement. Let's just say it took a long time, it was not completely satisfactory to me and it wasn't any fun. The final handling by the top brass was particularly weasel-like. It was an extremely stressful situation overall and I lost a lot of sleep and money over it.

Interestingly, during the time this was going on I noticed a story in MoniResearch about a money manager who had been doing their trades through a unnamed "mutual fund supermarket" and reported a similar story. In their case, they noticed the mistake within a completely reasonable amount of time, but since they were dealing in such a large amount of money under management, the broker refused to make good on any of it. Amazing.

The lesson here is that you should be keeping close records of your trades and confirmation numbers, as I was. Then, unfortunately, you probably need to actually call up the broker the at the close of the trading day and say "hey, you know this trade I did today, that you read back to me and you gave me a confirmation number for? Can you tell me if you actually did that trade?" Sad but true. That is the only way to avoid getting hit with something like this.

Closing out the accounts: Check, Please - part deux

So once the Fiasco was settled, I finally did the sensible thing and voted with my feet.

I should preface this by telling you that before dealing with TD Waterhouse, I had closed out accounts or transferred accounts with 4 brokerages. In each case, they apparently knew what I meant when I said I wanted to close out an account and have a check sent to me for the balance, or to have an account transferred to another brokerage. But apparently not TD Waterhouse. It took from three to six phone calls and two checks per account to get the job done, and frankly, it's not really done. There's still a few dollars left in every one of them.

In every case (and over multiple attempted closings) for all 4 accounts, the amount of money that was sent out was not the complete amount. This includes the IRA transfer. Apparently, interest was tallied for the final day and left in the account. Since these were large accounts, the amounts were sometimes substantial. In any case, I didn't want them to have one penny that they didn't deserve. After the first tries, I explained in detail that I wanted the accounts closed in such a way that there was no money left in them, that I would receive no more statements, that the money should not accumulate interest, etc., yet I still had problems.

And, as was usual with TD Waterhouse employees, everyone assured me that they knew exactly what needed to be done and that they would take care of it. HA! I find this one of the most frustrating aspects of dealing with TD Waterhouse - the employees always act as if they know their job, yet my experience has consistently shown the opposite. It is extremely rare to find an employee that can say the words "I don't know". I did come across one. He was some kind of low level manager in charge of the department that was dealing with the "Fiasco". Ray, they should make you the god damned CEO.

For those dealing with TD Waterhouse and wanting to close out an account, my speculation at this point is that you must tell them first that you want to close out the account. Maybe try and tell them at that time you want to stop collecting interest. Then wait a while, a long while, maybe until you see a statement that says "closed" on it. Then, and only then, ask for your check. This is pure guesswork on my part, however.

While my previous experience with other brokers closing out accounts had been good (i.e. competent), in fairness one woman I told this to recently said she had had a similar problem closing out an account at Bear Stearns. It just blows me away. What part of "I want to close out this account" do they not understand?!

In a particularly priceless piece of irony, in the "Fiasco" account where they botched the trade, I never received the first check. They didn't seem to know what happened. Eventually, we had this check cancelled and put a stop payment on it and a second check issued. It never came either. When I called to follow up on it, they admitted that it looked like the second check was never sent. At this point they said they would issue a third check and send it Fedex. And they did, although it was sent by UPS and was left on my front door step without me signing for it.

Final Thoughts

I would guess (if anyone actually reads this far) there is probably someone out there who hasn't had any bad experiences with TD Waterhouse, or perhaps you think I am just extremely unlucky, that I am exaggerating, or that I have a bone to pick. Well, I certainly have been unlucky with TD Waterhouse, but my experience is not as unusual as you might think. TD Waterhouse has been consisently blasted on Donald Johnson's broker rating page [update: no longer in existence] for some time, due to poor customer service. And I am not prone to exaggeration. I'm not one of those people who say they were on hold for 45 minutes when it was really 20 minutes. For me, that means I was on hold at least 45 minutes. And believe it or not, the chip on my shoulder is no more than a small piece of sawdust. I'm kind of "done" with TD Waterhouse. Sure, I called the page "TD Waterhouse Sucks", but believe it or not, to me it is more a statement of fact than a vendetta. I mean, they're a big bureaucracy, they clearly grew the business faster than they should have, and the quality of their product suffered because of it. Hence, they suck.

Johnson's ratings have been easing up on TD Waterhouse because their hold times have come down. Yes they have. Absolutely. But hold time, although important, says nothing about getting the job done. The back office fuck ups continue. And I am most definitely not alone. Out of the people I know personally, a few have accounts at TD Waterhouse, and they all have quite similar stories of frustration.

So in summary, TD Waterhouse Sucks. My recommendations: Do not do business with TD Waterhouse. Stay away from TD Waterhouse at all costs. Use Donald Johnson's page or other resources and find a suitable broker.

I hoped that I have helped someone out there. Either steered you away from TD Waterhouse, or if you choose to stay, at least given you the motivation to make sure you really cover your ass when dealing with them, or anyone else. I have taken my business to
Profunds, a mutual fund company.

Postscript: My Six Cents

The closing out of the accounts was, of course, a pain in the ass. Multiple "closings" were required just to get the accounts close to zero. In the case of my IRA, it was a somewhat bigger pain, because their failure to transfer all the funds leaves me with a taxable distribution, and the loss of multiple decades of tax free returns on that money. So I insisted on what became multiple IRA transfers. Jesus. Anyway, what I'm getting to is that some six months or more after this was (more or less) all said and done, I got this in the mail, which I found humorous:

Humorous, I guess, because, for one, this was supposed to have been, ahem, completely closed out on numerous occasions, and two, because it cost them a lot more to send the check than what the check is worth, six cents. I'm guessing they actually closed this account out because it is some IRA requirement or something, as the remaining 3 accounts still have similar small balances, and I suspect they always will. And they continue to print up and send out account statements every month for these accounts. You go, guys.

Post-Postscript: Confirming my Suspicions

Just came across this: Dr. Michael Parent at the Ivey International Business Conference in April 2000 mentioned in his talk on E-Commerce that TD Waterhouse pulled most of its advertising in March of 2000 because they were unable to cope with demands for online trading. Why am I not surprised.


And, 11 years later, out of the blue they take a long ago closed out account and tell me it's ready for trading with TD Ameritrade. Awesome, guys.