David Houle’s post on Sogo Invest and how they have cut commissions by eliminating the middle man sparked my interest, and I was fortunate enough to land an exclusive interview with Sogo Invest President, William Yeh.

My first reaction is that Mr. Yeh is very much in tune with what the every day investor wants in an online trading brokerage platform: low prices, ease of use and great service.

The following is a summarized transcript of our conversation:

Grant: Mr. Yeh, you’ve got a solid background in the brokerage industry with the development of Genesis Securities, LLC and the Laser trading platform.  Tell me a little about the Laser platform.

William: My history is in trading futures, and I believe in utilizing automation and electronics to remove the human hands from trading, making the whole financial process as fluid as possible.  That’s why we created the Laser system.

We developed the Laser trading platform to interact directly with the markets, and in turn we eliminated the need to buy information from a third party.  We get all of our data directly from the NYSE and the NASDAQ.  We also clear our own trades, eliminating yet another third party.

The Laser system was developed for the professional trader, and it has retained a Platinum rating from the NASDAQ.  Other trading platforms such as E*Trade have a Silver rating.

Grant: You’ve got great technology for the professional trader, and you trade between 2-4% of the daily volume on the NASDAQ.  What inspired you to develop Sogo Invest?

William: We really developed Sogo Invest for the simple, every day trader. While the Laser system is used primarily for the professional trader, we are taking that technology and putting into Sogo Invest.

Grant: How can Sogo Invest undercut the rest of the online brokerage markets in terms of commissions and fees?

William: Since we buy our own data directly from the NASDAQ and the NYSE and we clear our own trades, we’ve eliminated many of our third party costs.  We pass these savings directly on to our customer.  We could raise our commissions to $10, $8, or $6, and enjoy a larger profit, but we want to pass these savings on to the customer to get more people to join us, and more importantly stay with us.

The large amount of volume we clear every day also helps keep costs down, based on the economy of scale.

Our price speaks loudly, but service is also key.

Grant: Does Sogo Invest have its own dedicated customer service team, or are you relying on Genesis for that support?

William: Our customer service is well established with Genesis, but Sogo Invest does have it’s own dedicated customer service department. Our customer service staff will answer in four rings or less.

We have created online video tours of many of the processes and features, but you can always call us.  During the last few days since we took Sogo Invest public, the response has been overwhelming, but we didn’t overload our phones. I think this is mostly in part to keeping everything easy and providing good online video tours and support.

Grant: What is your philosophy with Sogo Invest?

William:  I asked my self, “Why do I want to be part of the crowd? There will be another William Yeh that will come along and charge less than the other guy”.  It’s really all about adding value for the people, and the technology opens up frictionless trading.

I believe people should invest for the long term, taking advantage of dollar cost averaging and compounding from the markets.  The ability to invest in fractional shares provides added value to the customer, making it easier to invest what you can afford.

Grant: When will IRA accounts and mutual funds be available?

William:  The majority of people are still interested in mutual funds because ETF’s are so new. We’ll offer mutual funds in the next couple of months, but IRA accounts will come first, within the next month or two, if not sooner.

Grant: Can investors open a margin account?

William:  You can open a margin account right now as a matter of fact.

Grant: What about trading options?

William: We’ll add the ability to trade options in a few months, but IRA accounts will come first.

Grant: Does Sogo Invest provide investors the ability to take advantage of Dividend Re-Investment Programs (DRIP’s)?

William: That option is not in place yet, but it’s not out of the question.  We have the technology to make it happen, it’s just whether or not the people want it.  What ever makes it easier for the people.  If we get a response from the people that they want something, we have it and we’ll make it available immediately.

Grant: Does Sogo Invest have some of the higher end utilities like Level II quotes, real time charts, time and sales, etc?

William:  These utilities will be included in Sogo Invest, and we will not charge for them. I like to give away things for free, and since we developed and own the software, we’ll include it for free. We want to spoil the customer and win their business.  What ever the people want, we will provide it.

Grant: I understand that customers can fund their account through automatic transfer, but can they transfer funds directly from another broker into Sogo Invest?

William: Absolutely.  You just fill out the form and we take care of the rest.

Grant: Will Sogo Invest users have the ability to set stops: limit stops, trailing stops, etc?

William:  We have stops, but they’re more for professional traders and I’m not sure that’s something the simple trader needs or wants. However, if the people want it, we have it.  It’s just whether they want it or not, but we have to keep it easy.

My mantra is that “it has to be so easy my mother can do it!”

Grant: Well that about wraps up all my questions, thank you for your time and good luck with Sogo Invest!

William:  Thank you, Grant, and call or email me any time with questions.

Additional Information:

Sogo Invest Website
Genesis Securities Website
Sogo Invest Press Release (pdf)
Wall Street Journal Article  (pdf)
CNN Money Article
Sogo Invest Comparison

I’ll have more thoughts on Sogo Invest and how they stand up to the rest of the online brokerage market in future posts.

Brokers, Business, Interviews, Investing