Saturday, June 02, 2007

TD Ameritrade's Quiet Consolidation

A SURPRISING THING HAPPENED OVER THE WEEKEND of May 12 when 2.7 million one-time TD Waterhouse accounts were converted to the TD Ameritrade (http://www.tdameritrade.com) platform.

Virtually nothing.

That’s news because the Electronic Investor’s experience with account changeovers has shown them to be filled with pain and misery. Our e-mail inbox has at times been stuffed to overflowing with investor complaints as online brokers muddled through the process. But this is TD Ameritrade’s eighth consolidation of another firm’s customers, and it seems to have gotten the job done right.

We did hear a few murmurs, mainly about the processing of dividends that were paid within a day or so of the conversion. The dividends were sent to TD Waterhouse’s previous clearing firm, ADP, so they didn’t show up immediately in the newly converted accounts.

Kim Hillyer, TD Ameritrade’s manager of communications and public affairs, says that all those dividends were in the correct place by May 21. “We allocated 18 months for the conversion, and it only took 15 months,” she adds.

There was a notice on TD Ameritrade’s Website for a few days after May 12, indicating that call volume to its phone support lines was way up, and letting potential callers know that they might have to hold for a while. Hillyer says that most calls were queries about navigating the site, and a few involved a minor glitch in processing online cash transfers. “This was a new site for legacy Waterhouse customers who hadn’t seen it yet,” she notes.

A couple of clients were upset about changes in service. Former TD Waterhouse customers who don’t qualify for TD Ameritrade’s Apex service level (over $100,000 in assets in all accounts) must pay $2 per month if they want their statements sent via snail mail. In addition, TD Ameritrade doesn’t generally give its clients access to initial public offerings; that was a major draw for many TD Waterhouse customers. Hillyer says that the firm is evaluating the possibility of offering access to IPOs.

With the biggest conversion in online broker history now complete, what’s next for TD Ameritrade? The firm is getting ready to launch some new tools over the summer, aimed at both long-term investors and frequent traders.

“We’re really pleased by how it’s turned out,” said Hillyer. “It’s done and now we move on.”

Tool for Trend Trackers

Interested in market timing? VectorVest (http://www.vectorvest.com) offers an interesting package of analysis, graphing and sorting that can help you pick stocks on the move. To be honest, the firm’s Website looks like a direct-mail piece and is therefore off-putting. But if you can get past that, you’ll find a suite of stock-picking and back-testing tools that can help you develop your own trading system.

We looked at VectorVest Online, which lets you analyze the U.S. markets. There are also versions focused on Canada, the U.K. and 10 European markets; an Australian version will launch over the summer. The product uses end-of-day trading data, but the firm plans to offer real-time processing during the third quarter.

The opening page shows the prevailing market trend and is designed to read like the front page of a newspaper—albeit one where the big story is timing the market. The first thing you see is Color Guard, which is a dial showing the current state of the market. If the needle points to red, customers are advised to get into cash. If it’s tilting to green, VectorVest says it’s time to get into the market, while yellow suggests caution when buying or selling stocks.

The site calculates various market timing indicators, assessing a stock’s value, safety and whether it’s time to buy or sell. VectorVest tracks 8,000 U.S. stocks, and its UniSearch tool lets you dig through the information and locate stocks that fit certain technical criteria.

VectorVest issues a Buy, Sell or Hold rating on each stock in the database every day, based on a combination of fundamental and technical studies. A graph of a particular stock shows the price and a recommended stop price; at the bottom, timing indicators are displayed. Sell signals are typically generated when the stock-price line drops below the stop level. Buy signals integrate fundamental data and, as a result, are more complicated.

You can test the program yourself for $9.95; a subscription costs $59 per month or $645 per year for each product. You can add products—say, Canadian equities—to a U.S. subscription for another $20 a month.

Posted by twcarey on 06/02 at 03:51 AM
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