Discount brokerage experiences?

June 18, 2008 10:37 AM

I'm interested in both good and bad experiences people here have had with discount brokerages.

Previous questions have touched on this, but they're from a couple of years ago, now, and a lot can change in a company in that time.

This account will be used primarily to trade mutual funds.

There is some chance these assets (about $150k) will be transferred into a managed account within a year. This is in no way certain; I mention it only because things like onerous transfer or account closing fees are things that are relevant information.

Thank you!

posted by small_ruminant to work & money (12 comments total)

You don't "trade" mutual funds, so much as buy them and sit on them for a while.

Beyond that, Scottrade has been good to me, they're friendly, have local offices, and are cheap.

If you need a better short term trading platform, I've had good luck with ThinkOrSwim. They focus on options, but have good stock support too. Their support answers questions very quickly, and they are very helpful. Their software is much nicer at charting and statistics.
posted by cschneid at 11:25 AM on June 18, 2008

Schwab- 4 years and still no problems, issues. Service is excellent. Can't think of anything negative to say about it.
posted by Zambrano at 12:00 PM on June 18, 2008

I like Scottrade fine so far; only downside for me (as long as you're doing all your trading/account management online to avoid extra fees) is that they don't do dividend reinvestment. For trading mutual funds, though, you'll want to look into Firstrade—I was on the fence between them and Scottrade when I was searching for a discount brokerage a few months ago, and I noticed that they had some of the (if not the) lowest mutual fund trade commissions of any brokerage. They also have free dividend reinvestment, and an online trade commission structure that's pretty much identical to Scottrade's bargain-basement prices.

(Ultimately, I went with Scottrade mainly 'cause 1. I didn't plan to trade mutual funds outside my IRA, 2. It's based in St. Louis and has offices close to where I live, 3. Its Money Direct ACH for account funding posts funds to the account faster than Firstrade's ACH, 4. Its Money Direct service, as well as other services, can be set up without sending anything in/printing anything out/attaching a voided check.)
posted by limeonaire at 12:16 PM on June 18, 2008

I've had a great experience with Sharebuilder so far. It allows dividend re-investments, which a lot of discount brokers don't allow. Also, after some experience with the company (if you are interested) they will allow you to trade options as well.
posted by Spyder's Game at 12:43 PM on June 18, 2008

Think or Swim offers three free mutual fund "trades" a month. Love these guys.
posted by fatllama at 12:54 PM on June 18, 2008

Another vote for ThinkorSwim.

You might also look into Interactive Brokers, though the expectations are higher on the client side. They expect you to know what you are doing, where ThinkorSwim will hold your hand.
posted by geoff. at 1:04 PM on June 18, 2008

I currently use three brokerages, and have used a fourth one in the past.

- Etrade: Was fine a few years ago; I closed my account for no particular reason, but they charged a bit more than Ameritrade.
- Ameritrade: Nice website, decent research tools, reports, etc. $10 a trade is pretty good in the discount range. They lost a bunch of customer data about 8 months ago which did *not* make me happy, but they tried making up for it with some free trades and a credit monitoring service. If you plan to keep non-trivial amounts of cash, you need to set up a sweep account to get a tolerable interest rate (and you need 50-100k assets in your account to do that).
- Interactive Brokers: Targeted towards shorter-term trading; they have awesome custom software, access to more products than anyone I know, etc. Commissions are very low, but there's a $10/month fee that gets waived if you rack up more than $30 of commissions. The support is a little on the slow side. Like geoff said, it has higher expectations of its clients, and you are required to attest that you have done something like 10-100 (I forgot) trades of a particular asset class before they let you trade it.
- Zecco. Free. Pays decent interest rate on deposited cash. Worst interface in the universe. Last I checked, there was no way of getting tax forms in an electronic format, which pissed me off. They also sold/gave/leaked the email address I gave them to spammers, though a replacement address I gave them has been clean.

Overall, I would recommend Ameritrade for your purposes, though if the other majors (Scottrade, ETrade, Schwab) look good, they may be better, as they have not had such major data breaches. But if you keep large amounts of cash, make sure you set up a sweep.
posted by bsdfish at 2:49 PM on June 18, 2008

Oh, and a bunch of brokerages have various account opening bonuses. Take advantage of them.

Depending on what mutual funds you want, a direct account with Vanguard may also be good for you; if you are happy with their fund selection (they have some of the best index funds), just go directly to them.
posted by bsdfish at 2:51 PM on June 18, 2008

nthing ThinkOrSwim! I've tried Sharebuilder, Scottrade, and FirsTrade in the past leaving each after they started charging either for mutual fund transactions or annual IRA account maintenance fees. tos has been great ever since - quick to respond to email/phone calls and they seem to be a smaller firm that 'gets it.' Plus, you get a free stuffed monkey when you join!
posted by schwab at 6:17 PM on June 18, 2008

schwab, does ThinkOrSwim charge for reinvesting dividends?

Zambrano- does Schwab charge for reinvesting dividends? What does Schwab charge for trades?

Thank you all! This is exactly the information I was hoping to find out!
posted by small_ruminant at 8:03 PM on June 18, 2008

does ThinkOrSwim charge for reinvesting dividends?

No. At least not on the one fund I currently have.

Further, you can choose between their (TOS's) commission schedule or any other brokers' advertised schedule. Make 40 trades a month and they give you $40 (direct to your account) to cover your internet bill. When you wire in your account, they often refund any fee your previous broker may have charged you to wire-out. Cash transfers to bank accounts are free and fast. Tax-preparation tools are solid. Really nice cross-platform software, plus a web interface. Customer service has been ace whenever I've needed them.

The only negative aspect, I guess, is that after a few months you'll wonder if you've joined a cult and swallowed the cool-aid. Sweet, sweet, cool-aid.
posted by fatllama at 11:55 PM on June 18, 2008

Wow- it turns out that ThinkorSwim won't handle a divorce ordered IRA transfer. Period. I'm shocked. I've never run into this at a mutual fund or brokerage before.
posted by small_ruminant at 10:11 AM on June 23, 2008