Internet brokerage firms have made great strides in reducing frustrating waiting times over the past 10 months. In part, that's because business has slowed with the sharp downturn in stock prices, so fewer investors are calling.But the stock market's turmoil is changing the customer-service equation.

For some firms, that means cutting service staff as part of an overall effort to reduce costs. Yet at the same time, some online firms are advertising higher levels of customer service to attract shell-shocked investors.

"They are trying to give a white-glove treatment that does close the gap toward financial advice," says Alex Stein, executive vice president of Gomez, a Lincoln research firm that tracks online financial services.

Layoffs and furloughs
On the cost-cutting side, layoffs have hit hard at Ameritrade Holding Corp. The Omaha, firm has made two rounds of cuts since December that shed 549 temporary and full-time positions. All of the cuts have been in customer service, eliminating roughly 30 per cent of the department's total staff - including 11 per cent of its full-timers. Other firms have not been immune.

Charles Schwab Corp, the biggest online brokerage firm, announced a hiring freeze and offered 20-day unpaid furloughs on a volunteer basis, though the company wide moves were not directed only at customer service. A spokesman for the San Francisco firm says it's too soon to tell how staffing levels in that department will be affected.

Still, Ameritrade and Schwab say clients won't feel any reduction in service. Ameritrade can make up for the lost staff with better technology, says Anne Nelson, vice president of marketing and product development.

Two-thirds of calls that once were handled by people now go to an automated phone system that can dole out simple answers that don't require a personal response. Schwab, for its part, is just coming off an aggressive hiring program, begun last year, that added 3,000 people to its customer-service staff, says Greg Gable, a spokesman.

Impact of slower trading
"Firms are staffed to handle close to peak demand," says Gomez's Mr Stein, and with trading volume depressed, there are fewer people needing help. As a result, investors' wait times for customer service throughout the industry now are typically measured in seconds, compared with an hour or more at some firms' worst moments in the past, Mr Stein says.

Of course, firms that make cuts could leave themselves vulnerable to a return to jammed help lines if the market turns around quickly and volume returns. Ms Nelson says Ameritrade is prepared to rebuild its staff and, if necessary, will deploy people temporarily from other departments, such as marketing, into customer service to cover any sudden spikes in demand.

Others seek personalisation
Some firms are doing more to promote customer service. With self-directed investors suddenly questioning their ability to make investment decisions alone, these online brokers are pitching themselves as offering something closer to the personalised service of a full-service firm. Quick & Reilly, a unit of FleetBoston Financial Corp in Boston, advertises with the slogan, "Personally, its the better way," and positions its phone representatives as a resource for answers to investing questions.

(The Wall Street Journal)