I always find surprising that Robinhood was able to build such a large business with such mediocre customer support.
I switched to Charles Schwab and just the fact that there's a 24/7 phone number compensates for the lack of simplicity.
I used to think that I wanted the simplicity of something like Robinhood. But I have learned to appreciate the complexity of Schwab. The reality is that behind Robinhood's simplicity there's a lack of sophistication and process in their operation.
I commend what they built, but Robinhoood it's too exposed to the cross winds of retail trading and regulatory scrutiny.
I feel that by having my investments in Robinhood, I'm adding some sort of risk multiplier that has nothing to do with the nature of my investments. It has to do mainly with how amateur-ish their brokerage operation feels.
Yup. The playbook of modern tech companies seems to be:
1. Solve the easy 80% of the problem.
2. Deploy that "solution" - which would not be considered acceptable in just about any other industry - as widely as possible. Do not offer proper customer support.
3. Take the money you save on not solving the hard parts and not having customer support, and funnel it into marketing, to stimulate growth.
4. Continue until you fail, get acquired, or dominate the market.
5. If anyone asks what kind of outfit you're running, make a sad puppy face and say "scaling is hard!".
I've seen a bunch of (usually smaller or just starting) tech companies win out business because of how responsive their customer support even though their product was inferior.
Robinhood won because it saw an opening in changes in market demands:
- Increasingly lax SEC rules for retail traders.
- Increases in income inequality whereby the poor side of the spectrum has been told they can't have access to the rich's set of investment tools (i.e. millennials with varying degrees)
- Per transaction fees that made day trading appear less lucrative (see point before)
- Competitors with terrible UIs for non professional traders
Part of the reason the ETrade/Schwabs/TD's of the world didn't do what RH did was because it meant deliberately making creating a trading account more difficult. For example - Vanguard almost deliberately makes their service hard to day trader because they don't want to carry that risk profile.
So, this was not a market that was crying for better customer service but one that wanted cheap, easy to use access to investments that were seemingly unattainable previously.
I'm actually more surprised the SEC (or a class action lawsuit) didn't thwart RH turning into a large business when it was much smaller...not the competition.
I do want to add some nuance to the salty and cynical takes here, even though I share the overall conclusion that tech support is terrible across the board.
You can't compare a service like Robinhood (or Coinbase, the like) with a product like Google or Facebook:
1. Unlike these free services, at an exchange, you really are a customer. The business model is that you pay fees for transactions. That's not the same as a free "take it or leave it" situation. As a paying customer, it is far more reasonable and expected to get support.
2. The nature of the support queries are far more serious. This isn't about your Instagram app glitching, this is about money. People unable to access it, transactions not coming through, withdrawal errors, fiat/banking errors. All very serious matters where not only you expect support, you expect urgent support and typically human support.
Now combine the above issues (true support needed, and much of it human support), we add the third and fatal ingredient: user growth. These services grow by at least a few million users per month.
I don't know how many require support, but even a small percentage means you're on a constant hiring spree.
Google and Facebook scale up by just not giving any support. How do you scale up this fast giving real support, so not just an FAQ or chat bot?
>I always find surprising that Robinhood was able to build such a large business with such mediocre customer support.
This is the standard people have become trained to expect. Google does the same thing. The idea is basically that a certain level of scale, you can completely ignore customer support. There's always new users signing up, and placating any single one is no longer worth your time.
Anyone who does serious trading knows the value of actual 24/7 human customer support, and uses a platform like Schwab or Fidelity. But Robinhood is arbitraging the naivety of the millions of people who've never invested.
If consumers are not willing to pay for the product, it makes sense that they would not get good customer service. The users are not customers of Robinhood or Google. The users are the product that Google sells to advertisers and Robinhood sells (in the form of data) to hedge funds and HF traders.
Schwab and Fidelity can deliver a good product with good customer service because users pay money for the product and are actually customers.
That is right Google operates under the assumption of people as in large groups of individuals. Their primary drive is to add billions of more people to their graph, https://nextbillionusers.google
If you read through the marketing material, you will notice that they use the word people and not individuals or persons or you. "People are at the center of everything we build."
For what is worth, Fidelity customer service is quick and reliable. They've always answered by questions or solved my issues over the phone.
During my time at Amazon we used to joke about an, alleged, Bezos quote: He hates CS and wished he could live without. The narrative was, that operations weren't good enough to make CS unnecessary. Well, it sometimes seems it was just a question of scale, as you said. And maybe Amazon is just figuring out whether or not they can get away with it, little by little.
I can't imagine anyone doing "serious trading" using Robinhood. I also can't imagine a scenario where I would need to talk to a customer support rep at Robinhood. What kind of support might I need while occasionally placing limit buy and sell orders?
I love that you get on a call with real native speaker in the US with Schwab; that part of customer support has been stellar. I like that they cover international ATM fees too.
I don't care for how they handle security though. I really wish they supported WebAuthn or at least TOTP that didn't require Symantec's proprietary TOPT solution. I wish they supported PGP for messages as well (I know those GMail users are having their financial data read by Google). When I asked about what "SchwabSecure" really is and what sort of encryption they use gave me marketing fluff, even stating "The reason you may not find more detailed information available online which supports this is so that we can prevent criminals from obtaining this information, and using that to get a foothold"--as opposed to my recent evaluation of email providers to see the competition who could provide the MOST transparency about how they set up their security.
This will print out all the information needed. Note the Symantec ID (it looks like VSMT12345678). It is what goes in the "Credential ID" field when adding a new device on Schwab's website.
3. Save the otpauth://... data into data.txt.
4. (Optional) Modify the issue=Symantec parameter to read issue= Charles%20Schwab Also change VIP%20Access:VSMT123456789 to your Schwab online banking username. These are purely aesthetic changes and will only make a difference in the label that shows up in the Google Auth app.
5. Run: qrencode -o qr.png -s 15 < data.txt to generate the QR image (qr.png) from your otpauth data file.
6. Scan qr.png with your TOTP app.
7. Go to Schwab -> Service -> Security Center -> Manage Two-Step Verification -> Add another Security Token and input the Symantec ID from step 3 (it looks like VSMT12345678) and the current rolling TOTP code from your TOTP.
The unlimited ATM fee reimbursement from Charles Schwab is amazing, especially for international travel. My brother just spent 3 years living in Australia and was able to withdraw from Charles Schwab and then deposit into his Australian account with zero fees and a better exchange rate than any other service available to him.
If you are concerned about security, you can just leave a couple of hundred bucks in there for whenever you need cash and push funds to it from your main bank to top it up.
I love Schwab but agree on the security front. They tried to push everyone to use their voice auth for phone verification. I want more security not less lol. I remember several years ago, they didn't support special characters in passwords. Hopefully that has chanced.
>I feel that by having my investments in Robinhood, I'm adding some sort of risk multiplier that has nothing to do with the nature of my investments. It has to do mainly with how amateur-ish their brokerage operation feels.
In the sense that they'll collapse and you'll lose your portfolio, or that they'll be down at a critical time you want to make a trade? For a buy and hold type of investor, the latter isn't really a concern.
I agree 1000% with this. I "recently" switched from RH to ally since I already have a decent chunk of cash there, and I am STILL waiting on my cost-basis to transfer. It has been over 75 days since they transferred my stock and cash, and every time I reach out to customer service they feed me the same canned response that due to volume of transfers it is taking longer than expected and they have no ETA on when my cost-basis will transfer.
This happened to me when I transferred to Schwab. Surprisingly it was Schwab the one that eased my mind. I called them and they put me through the cost basis department which told me that RH basically has to prepare the cost basis manaually and
pass it to them/ They told me that it had been taking a while but that they were indeed receiving the Cost Basis for other customers.
So I just had to wait. Of course this sucks because it blocks you from selling, but it will eventually show up.
Same deal here, switched to Vanguard. After a few weeks I called in to ask about it and they offered to send a letter to RH on my behalf to get that information transferred. Sure enough, about 2 weeks later all my information was in Vanguard!
Beware that Robinhood also miscalculates wash sales, which they've admitted to me. I typically don't care about customer support, as I don't do a lot of trades, but messing up tax forms is a huge no-no for me.
Could you elaborate on what scenarios it would get messed up in? I expect it would happen if you're working across multiple brokerages, but is there any other scenario? It'd be helpful for us to know and watch out for it.
> I always find surprising that Robinhood was able to build such a large business with such mediocre customer support.
Because the interface is much easier to use. Particularly for options, which are dangerously easy to trade with Robinhood compared to their competitors like Think or Swim.
it is misleading really. so many people who didnt understand legged , or options in general got into really bad positions which is hilarious to watch the revolving door
Maybe I’m wrong and there’s a better company that offers this, but the reason I use RH is so that I can trade both cryptos and regular securities out of the same account, with 0-day settlement on trades (without opening a margin account) since every RH account is an implicit margin account.
I also like the instant deposits that scale with account size.
RH’s trading hours for securities is more limited than anyone else, but I don’t find myself trading outside of those hours anyways.
I also don’t like their naive tax accounting and don’t expect them to handle wash sales properly, which are two very big negatives, but I haven’t found a better broker for my main use case.
While I am really glad Robinhood existed back when I started working to introduce me to investing, their amateurish ops (see their outages in the past few years) and customer support (they managed to bungle a position transfer costing me a few hundred bucks) pushed me to more established players. Most of these established players now have low to zero commissions with much better customer support, order execution etc. I doubt any serious investor uses (or should be using!) Robinhood.
Though they did have hiccups in trading peak GME/AMC.
It's refreshing being able to chat, or call a native english speaking call center where they will bend over backwards to help, waive fees, etc. No offense meant to ESL speakers, but I think we've all experienced 'support' that is hard to understand and communicate. I can't even get TCF on the phone.
It's not really an entirely new market, but definitely a "second wave" attempt to capture that market.
Back in the Web 1.0 boom, seemingly dozens of online brokerages (ETrade, Ameritrade, Scottrade, etc) sprang up overnight to fuel easy consumer access to the "meme stocks" of the day (Pets.com, Yahoo, etc).
Those are the new legacy players and I guess Robinhood is the new generation.
I've been a long time critic of RH but you can see the value to their business. They mainly target millenials who are largely shut out of the investment market because of their poor financial situations. Tiny portfolios and game-ified trading is a good way to capture that audience. Millenials won't stay poor forever so RH's customer base is actually quite valuable. A more mature company can either acquire RH for those customers or RH itself can transform into a more stable and reliable operation with a large customer base that will acquire more assets over time.
I don't really buy this argument, since you can sign up at most traditional brokerages for free, with no minimum balance, and zero or almost zero trading fees on most trades. There's absolutely no more barrier to entry than with Robinhood.
Most consumers do not want to pick up the phone these days. I do not trust that an inbound phone number isn't just a spam call. I get concerned that the number I get when I google "schwab support line" will turn out to be a fake line setup on a good looking website designed to harvest personal details.
I strongly suspect that the SaaS/consumer trend of having fewer human interactions will continue. The necessary caveat of this is that many firms will have less developed procedures for managing interesting situations.
They screwed up, but did they deserve the "largest penalty ever?" Established brokerage houses have gotten away with worse and paid less. Sounds an awful lot like another true real-life example of the very same r/WSB David/Goliath narrative the "established" part of the industry wishes it could discredit.
Its so difficult to say what is going on behind closed doors when established brokerage houses get caught(or any brokerage). In many ways it makes perfect sense that an established firm is able to negotiate for more lenient penalties, much like an established lawyer might be able to negotiate for more lenient sentences.
Egregious conduct is (and has been) punished by license revocation or revocation of FINRA membership. It may be the largest monetary fine ever levied but it certainly isn’t the harshest punishment.
12.6 million goes to customers, according to the article.
> Robinhood's resolution with FINRA includes $12.6 million in restitution to thousands of customers and a $57 million penalty, the largest in the regulator's history, and covers a range of issues dating back to September 2016, FINRA said in a statement.
I believe that FINRA keeps its fines and uses it for operating expenses, which are also partially funded by annual fees paid by its members and maybe other funding sources.
Note: This is not related to any activity relating to the gamestop/meme stock trading restrictions earlier this year, and was predominantly for their violations regarding proper trading controls and communications during 2018 to late 2020. This is a rather substantial fine in terms of those violations.
None of these fines (either meme stock fines or systemic failures/price improvement issues) are "substantial". It's not even a slap on the wrist for Robinhood, compared to the money they are making. They are probably clearing profits north of $70M in half a day.
“…and exposed them to excessively risky trading tools such as options”
Oh FFS. That was actually one of positive things that Robinhood did. They could have had some better safeguards for the unlimited loss scenarios to be sure but to lament access to all options is disingenuous at best.
Also important to know FINRA kept the 57 million. They are the SRO but let’s be honest they are the enforcement arm of the SEC.... but the government does not get to keep the fines.
When the "fine" is minuscule relative to profits and the bulk of it goes to a private company / self-regulatory organization (FINRA: [1]), it might be more accurate to label this a "bribe" for plausible deniability...
Gross profits, not net. Their net profit is probably negative, like most growth stage pre-IPO or recently-IPO tech companies. They were looking at IPOing at a $30B valuation. The fine is 0.2% of their anticipated market cap.
FINRA is the industry equivalent of a firm’s Chief Compliance Officer. They’re supposed to identify and correct issues at the expense of the industry rather than wasting the government’s limited resources. FINRA conducts regular exams of all members the way a Compliance Officer will regularly examine all department functions. Whereas the SEC conducts random periodic exams (like an auditor), targeted exams (like an investigator) and occasionally “sweep” exams relating to the topic du jour (usually in preparing to issue to a new rule).
Readit News
I switched to Charles Schwab and just the fact that there's a 24/7 phone number compensates for the lack of simplicity. I used to think that I wanted the simplicity of something like Robinhood. But I have learned to appreciate the complexity of Schwab. The reality is that behind Robinhood's simplicity there's a lack of sophistication and process in their operation.
I commend what they built, but Robinhoood it's too exposed to the cross winds of retail trading and regulatory scrutiny. I feel that by having my investments in Robinhood, I'm adding some sort of risk multiplier that has nothing to do with the nature of my investments. It has to do mainly with how amateur-ish their brokerage operation feels.
You must be new to the tech industry. :-)
1. Solve the easy 80% of the problem.
2. Deploy that "solution" - which would not be considered acceptable in just about any other industry - as widely as possible. Do not offer proper customer support.
3. Take the money you save on not solving the hard parts and not having customer support, and funnel it into marketing, to stimulate growth.
4. Continue until you fail, get acquired, or dominate the market.
5. If anyone asks what kind of outfit you're running, make a sad puppy face and say "scaling is hard!".
I've seen a bunch of (usually smaller or just starting) tech companies win out business because of how responsive their customer support even though their product was inferior.
Robinhood won because it saw an opening in changes in market demands:
- Increasingly lax SEC rules for retail traders.
- Increases in income inequality whereby the poor side of the spectrum has been told they can't have access to the rich's set of investment tools (i.e. millennials with varying degrees)
- Per transaction fees that made day trading appear less lucrative (see point before)
- Competitors with terrible UIs for non professional traders
Part of the reason the ETrade/Schwabs/TD's of the world didn't do what RH did was because it meant deliberately making creating a trading account more difficult. For example - Vanguard almost deliberately makes their service hard to day trader because they don't want to carry that risk profile.
So, this was not a market that was crying for better customer service but one that wanted cheap, easy to use access to investments that were seemingly unattainable previously.
I'm actually more surprised the SEC (or a class action lawsuit) didn't thwart RH turning into a large business when it was much smaller...not the competition.
You can't compare a service like Robinhood (or Coinbase, the like) with a product like Google or Facebook:
1. Unlike these free services, at an exchange, you really are a customer. The business model is that you pay fees for transactions. That's not the same as a free "take it or leave it" situation. As a paying customer, it is far more reasonable and expected to get support.
2. The nature of the support queries are far more serious. This isn't about your Instagram app glitching, this is about money. People unable to access it, transactions not coming through, withdrawal errors, fiat/banking errors. All very serious matters where not only you expect support, you expect urgent support and typically human support.
Now combine the above issues (true support needed, and much of it human support), we add the third and fatal ingredient: user growth. These services grow by at least a few million users per month.
I don't know how many require support, but even a small percentage means you're on a constant hiring spree.
Google and Facebook scale up by just not giving any support. How do you scale up this fast giving real support, so not just an FAQ or chat bot?
This is the standard people have become trained to expect. Google does the same thing. The idea is basically that a certain level of scale, you can completely ignore customer support. There's always new users signing up, and placating any single one is no longer worth your time.
Anyone who does serious trading knows the value of actual 24/7 human customer support, and uses a platform like Schwab or Fidelity. But Robinhood is arbitraging the naivety of the millions of people who've never invested.
Schwab and Fidelity can deliver a good product with good customer service because users pay money for the product and are actually customers.
If you read through the marketing material, you will notice that they use the word people and not individuals or persons or you. "People are at the center of everything we build."
For what is worth, Fidelity customer service is quick and reliable. They've always answered by questions or solved my issues over the phone.
I don't care for how they handle security though. I really wish they supported WebAuthn or at least TOTP that didn't require Symantec's proprietary TOPT solution. I wish they supported PGP for messages as well (I know those GMail users are having their financial data read by Google). When I asked about what "SchwabSecure" really is and what sort of encryption they use gave me marketing fluff, even stating "The reason you may not find more detailed information available online which supports this is so that we can prevent criminals from obtaining this information, and using that to get a foothold"--as opposed to my recent evaluation of email providers to see the competition who could provide the MOST transparency about how they set up their security.
1. install pre-reqs: sudo pip install python-vipaccess && brew install qrencode
2. Run: vipaccess provision -p -t VSMT
This will print out all the information needed. Note the Symantec ID (it looks like VSMT12345678). It is what goes in the "Credential ID" field when adding a new device on Schwab's website.
3. Save the otpauth://... data into data.txt.
4. (Optional) Modify the issue=Symantec parameter to read issue= Charles%20Schwab Also change VIP%20Access:VSMT123456789 to your Schwab online banking username. These are purely aesthetic changes and will only make a difference in the label that shows up in the Google Auth app.
5. Run: qrencode -o qr.png -s 15 < data.txt to generate the QR image (qr.png) from your otpauth data file.
6. Scan qr.png with your TOTP app.
7. Go to Schwab -> Service -> Security Center -> Manage Two-Step Verification -> Add another Security Token and input the Symantec ID from step 3 (it looks like VSMT12345678) and the current rolling TOTP code from your TOTP.
If you are concerned about security, you can just leave a couple of hundred bucks in there for whenever you need cash and push funds to it from your main bank to top it up.
Does anyone support PGP for messages?
Wow! Seriously? How do you feel the same way about the people you work with, if they aren't native speakers?
In the sense that they'll collapse and you'll lose your portfolio, or that they'll be down at a critical time you want to make a trade? For a buy and hold type of investor, the latter isn't really a concern.
I agree 1000% with this. I "recently" switched from RH to ally since I already have a decent chunk of cash there, and I am STILL waiting on my cost-basis to transfer. It has been over 75 days since they transferred my stock and cash, and every time I reach out to customer service they feed me the same canned response that due to volume of transfers it is taking longer than expected and they have no ETA on when my cost-basis will transfer.
So I just had to wait. Of course this sucks because it blocks you from selling, but it will eventually show up.
Because the interface is much easier to use. Particularly for options, which are dangerously easy to trade with Robinhood compared to their competitors like Think or Swim.
I also like the instant deposits that scale with account size.
RH’s trading hours for securities is more limited than anyone else, but I don’t find myself trading outside of those hours anyways.
I also don’t like their naive tax accounting and don’t expect them to handle wash sales properly, which are two very big negatives, but I haven’t found a better broker for my main use case.
Though they did have hiccups in trading peak GME/AMC.
It's refreshing being able to chat, or call a native english speaking call center where they will bend over backwards to help, waive fees, etc. No offense meant to ESL speakers, but I think we've all experienced 'support' that is hard to understand and communicate. I can't even get TCF on the phone.
Back in the Web 1.0 boom, seemingly dozens of online brokerages (ETrade, Ameritrade, Scottrade, etc) sprang up overnight to fuel easy consumer access to the "meme stocks" of the day (Pets.com, Yahoo, etc).
Those are the new legacy players and I guess Robinhood is the new generation.
I strongly suspect that the SaaS/consumer trend of having fewer human interactions will continue. The necessary caveat of this is that many firms will have less developed procedures for managing interesting situations.
Deleted Comment
Yes, and hopefully that penalty record keeps rising dramatically.
> Robinhood's resolution with FINRA includes $12.6 million in restitution to thousands of customers and a $57 million penalty, the largest in the regulator's history, and covers a range of issues dating back to September 2016, FINRA said in a statement.
I believe that FINRA keeps its fines and uses it for operating expenses, which are also partially funded by annual fees paid by its members and maybe other funding sources.
Your assertion is that Robinhood is making $51.1 billion dollars a year in profit?
Yahoo! Finance: https://finance.yahoo.com/news/robinhood-hit-with-record-fin...
Archived version of Reuters story: https://archive.is/NxI0t
Oh FFS. That was actually one of positive things that Robinhood did. They could have had some better safeguards for the unlimited loss scenarios to be sure but to lament access to all options is disingenuous at best.
buncha clueless reddit people yoloing
[1] https://en.wikipedia.org/wiki/Financial_Industry_Regulatory_...
Dead Comment
https://www.reuters.com/business/finance/robinhood-pay-65-ml...