April was the cruelest month for Wall Street, as stocks plunged day after day and wiped out much of the huge gains earned during the previous two years. Not surprisingly, many investors aren't very happy.
But J.D. Power reports self-directed investors using online trading platforms may be the least satisfied of all. It reports that investors who opened accounts for the first time at the start of the pandemic have reported “significantly more problems” with their accounts and lower levels of customer satisfaction.
Robinhood attracted a legion of new investors in 2020 who traded stock advice on forums like Reddit and bid up the price of beaten-down stocks like AMC and Gamestop. But fortunes began to change in late 2021. When it reported first-quarter earnings last week, Robinhood said revenues were down and there were fewer active users.
Bob, of Port Jefferson Station, N.Y., is a Robinhood user who expresses frustration with the platform’s system.
"They will take your money without asking for anything except your bank account but when you try to buy stock or to get your money out they will require all sorts of verification and proof including govt. photo ID," Bob wrote in a ConsumerAffairs review.
‘Heightened expectations’
“Pandemic-era investors who entered the financial markets during a real gold rush period of heightened expectations, significant disruption, and extreme volatility represent a unique set of challenges for retail brokerage firms,” said Michael Foy, senior director and head of wealth intelligence at J.D. Power.
A wave of retail investors entered the market in mid-2020. They opened about 25 million new accounts and helped drive stock prices higher after a huge drop at the start of the pandemic.
Foy said these new investors tended to be young, less financially secure, and more apt to experience problems that are not currently being addressed effectively by their brokerage firms.
“Right now, most firms are missing the mark when it comes to delivering the level of tailored customer experience that will help them convert this next generation of investors into loyal and profitable clients,” Foy said.
Satisfied investors
But not all self-directed investors are unhappy. Sheila, of Hattiesburg, Miss., says she is a longtime trader using TD Ameritrade and is satisfied enough to give the firm a 5-star rating at ConsumerAffairs.
“The website is user-friendly,” she told us. “The support is always immediate no matter how they are contacted. The agents are knowledgeable and friendly. The trades could not possibly go more smoothly.”
In J.D. Power’s survey, T.Rowe Price has the most satisfied users. Vanguard ranks second, and Charles Schwab ranks third.