Etrade Review - An Online Broker That Isn't Just For Smart Babies

If you never saw an Etrade commercial featuring the smart trading baby, you’re missing out on a treat. However, the baby commercial isn’t the only great thing about Etrade.

Even though Etrade didn’t incorporate until 1996, its concept began 14 years earlier in 1982 when Walter Porter and Bernard Newcomb began PicoTrade. Porter used the profits from that company to begin E-Trade Securities, one of the first online trading companies in 1991.

The company grew and expanded services through the years, while it also changed hands several times in the process. Today, Etrade, now a publicly traded company, offers banking services as well as the original stock trading. Among the banking services offered are credit cards, money markets and CDs, in addition to the traditional checking and savings accounts.

Even though it received many honors from financial magazines and online services such as SmartMoney, Barrons and Money Magazine, it’s more expensive than most online brokerage houses available. In fact, compared to some such as Zecco and TradeKing, it’s relatively costly, but still better than the cost of many other sites. The awards are also for other features besides price, such as trading tools, products and customer service.

Cost of Services

As noted previously in the Etrade review, the cost of trades is higher than many other Internet sites, $9.99 per trade. However, if you are an active trader, the price drops to $7.99 for 150 or more per quarter and for those with over 1,500 trades per quarter, you can call for special pricing. Options have the same schedule per trade but also cost an additional $0.75 per contract. There’s also a half cent per share cost for extended hours trading.

Bonds have a $1 per bond cost for secondary trades but include selling concessions. There is no cost for US treasuries whether secondary or from the auction. Futures contracts are $2.99 per side with some additional fees included such as Man Financial floor charges.

If you have a margin account, the cost of the interest is considerably higher and it would benefit you to check out other sites to find those with lower interest rates. While they aren’t the highest on the net, they are only slightly better than full service brokerage interest rates for option accounts.

The site has some funds that have no load and no transaction fee. Since Etrade receives part of the load on loaded funds, there’s no charge for purchasing or selling these. However, for some unloaded funds, there are transaction fees of $19.99. In those cases, you’d be far better off dealing directly with the company rather than purchasing the funds through Etrade. Broker assisted trades are $45 for funds.

While there are no annual account fees for either IRAs or regular accounts, if you remove money from your Etrade IRA before 59 1/2, you pay an early removal fee of $25—in addition to the government penalties you pay. There are also recharacterization fees for changing a traditional IRA to a Roth and removal of excess contribution fees. The other fees from Etrade are traditional ones, such as returned check fees, that most businesses have.

Products and Services

Etrade offers almost all bank depository products and mortgages in addition to the brokerage account products. It offers a broad spectrum of brokerage products from options to mutual funds. One unique feature of the bank products is the free withdrawals at any ATM. Etrade refunds the costs of the fee charged by other banks. Compared to companies such as JP Morgan Chase, who charge an additional $2.50 besides the fee from the other company, it’s very impressive.

Many of the services are free to Etrade users such as educational videos and live seminars as well as E*Trade Pro, E*Trade Mobile Pro, quickplan for retirement planning and other investing tools. Some of the more advanced services are only available free to traders that are more active.

Platform

As one of the first companies to offer online trading, they know what the customers want at this point and make sure they offer it. They have a user-friendly platform and excellent customer service.

Positives

• Banking products at Etrade are excellent, including the rebate of transaction fees at ATMs.
• They offer mobile trading applications.

• Etrade offers excellent customer service and relatively low trading costs.

Negatives

• Etrade does not offer Forex products.
• The trader with the smaller amount to invest does not fare as well at Etrade as they might at other trading sites.

Conclusion

Even though the price isn’t the lowest, the customer service and many of the extras offered by Etrade make it an excellent online brokerage site. The banking services offered make it convenient, too. Of course, the rebate for ATM fees is probably due to the fact there are no brick and mortar banks, but it’s a good incentive to start banking there as well as do your brokerage transactions too.