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Scottrade Review
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For years, I’ve heard good things about Scottrade (mostly from people defending Scottrade in this guest post) but never tried them. I mostly use E*Trade because of their high yield savings account and TradeKing because of their low commissions. Since I don’t have that much to invest, it doesn’t really benefit me to open up all these broker accounts just to put a few dollars here or there.
However, since Scottrade doesn’t have any account maintenance fees and a low minimum ($500), I thought I’d give them a look to see what the fuss was about.
Commissions
In terms of stock commissions, the rates are competitive but not the best. You’ll pay $7 for internet trades, $17 for phone system trades, and $27 for broker assisted trades. It’s not as cheap as TradeKing where it’s $4.95 for everything but it sure beats the larger brokers like TD Ameritrade or E*Trade, both of which are above $10.
Options commission are less competitive, with internet orders at $7 per trade plus $1.25 per contract. Option exercises and assignments will run you $17. By comparison, many of the best options brokers will charge you less. OptionsHouse will charge you a flat rate of $9.95 and TradeKing charges $4.95 per trade and $0.65 per contract.
One area they do excel in is in mutual funds, for no-load, no-transaction fee funds they will charge you nothing to buy and sell. For no-load funds not in the NTF program, the fee is $17 to buy or sell, cheaper than many other brokers (TD Ameritrade charges you $40!). So if you are looking to trade both, Scottrade’s favorable mutual fund commission structure might be good for you.
Fees
One of the nice things about Scottrade is that they are very inexpensive when it comes to fees. There are no:
- Annual account maintenance
- Inactive account
- Transfer out/account closing
- IRA termination
- Online confirmations and statements
- Dow Jones Real-Time News
- Real-time streaming quotes and charts
- Cost basis accounting
- Incoming/Outgoing DRS (Direct Registration System)
- DWAC (Direct Withdrawal at Custodian)
The two notable “no charge” services they offer are the Transfer out/account closing and the IRA termination fees (or lack thereof). Usually brokers will have transfer out fees to try to keep you from going to another broker. It’s refreshing to see them not charge you a fee to get your own money back!
Awards
For at least the last two years, J.D. Power and Associates has ranked Scottrade the “Highest in Investor Satisfaction with Self-Directed Services.” Outside of that, all of the other awards Scottrade boasts about are employer satisfaction related. While it’s great their employees are happy, it isn’t exactly relevant to us. 
Have you used Scottrade? If so, what is your opinion of them?
{ 19 comments, please add your thoughts now! }
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I “use” Scottrade in the sense that I have an account there. I transferred an account from Wachovia Securities (discount brokerage) a few years ago after Wachovia decided to start charging inactivity fees. No inactivity fees from Scottrade yet, so I’m still happy.
I use Scottrade. Their support has been great and they have a local office about 10 miles from my house. THeir website design isn’t the most intuitive or pretty, but it works fine. Overall I’m very satisifed with them.
I had E*trade years ago and their support was horrible by comparison.
I use Scotttrade and like them. I am a financial planner, and I’ve also recommended them to some of my clients. I’ve also heard a lot of good things back from clients too.
I’ve used Scottrade to buy and sell individual stock. I don’t recommend doing this. Now, I know better. Any way, no complaints here. It’s only $7 a trade, and you don’t have to make a minimum number of trades to get the low price. Unlike many brokers, they don’t nickel and dime you with fees.
I used them in the past, the only reason I switched was that they didn’t offer dividend reinvesting. I do a lot of banking with BofA so I gave their brokerage a chance and am just as satisfied with BofA as I was with Scottrade. The only issue I ever had was that they charged $25 for switching “B” shares for “A” shares when Wrigley did that stock split with B shares (annoying), and wouldn’t transfer them out – BofA has no fee for it, but I couldn’t take advantage because Scottrade wouldn’t transfer them, something about being restricted.
So my only complaint was something that was a once in a blue moon issue. I would be happy to use Scottrade again and would recommend them.
Been with them for about a year now, and things work well. Haven’t used another broker, so I have nothing to compare with though.
I think they make a great “first timers” broker because: 1) they don’t have any/many fees, including fees to transfer out if you don’t like the service, 2) they have local offices all around if you have questions/issues, and 3) they have fairly cheap rates.
I’ve been with Scottrade for several years and I haven’t had any complaints EXCEPT! you can’t buy/sell stocks under $1. When some of the big named stocks took a dive I couldn’t buy them through Scottrade. I was quite bummed and disappointed the first time I submit my order and it gave me a very vague error message.
We do allow the buying and selling of stocks under $1. When buying a stock under $1, it should be placed as a limit order, not a market order. If you have any additional questions feel free to contact your local branch at 800-619-7283. They are always happy to answer any questions you have. Regards, Amber – Scottrade Online PR Specialist
Sometimes, when there’s a lot of volatility with a stock, I can’t buy it through their website. I’m instructed to call a broker for assistance.
Other than that, Scottrade is my friend.
I’ve been a satisfied Scottrade customer for years but my two biggest problems with them are:
1. No Dividend Reinvestment
2. Very Poor rates of return on uninvested cash balances.
I still have an assortment of IRAs with Scottrade but we have recently opened an account with Charles Schwab for our taxable investment account with a linked high-yield savings account.
I recently left Scottrade after having an account there for about 10 years – the reasons? same as pfmoron. They do not allow dividend reinvestment. I think it’s so they can glom another $7 when you buy stocks with your dividends. Also, as I said, I agree with pfmoron, when your dividends are sitting unused in their cash accounts, they pay NOTHING at all for the privilege.
My husband has a Scottrade account and didn’t have a complaint until yesterday. He got a phone call from them because one of his CDs was in a California bank that went out last weekend. The deposit was sizable, but in line with FDIC insurance, so we will get it back. But when you are giving a customer that kind of news, flip and obnoxious aren’t the kinds of tones you want to get from the person speaking to you. “I have some bad news and some good news” is a juvenile way to handle a phone call regarding tens of thousands of dollars. My husband is usually a good natured kind of guy, but in this case, he was not amused.
I have to say I am not surprised about your experience with Scottrade.
Last week they suddenly closed my account without explaining why or notifying me in advance. When I called the person handling the account he couldn’t tell me why. He then put me on the phone with another person that was extremely rude but couldn’t tell me why my account was closed either. All he said was they have the right to close any account after coming to a decision to do so. When asked what I did to bring about the decision he continued to say things like “the committee came to a decision”. He rudely said the decision wouldn’t be reversed and I couldn’t speak to a manager after asking to do so several times. I told him the way the entire situation was handled was very unprofessional but he didn’t care!
It looks like I will bring my business elsewhere but I am very upset at how I was treated at Scottrade! The people in the office are definitely more professional than people without in-person customer contact.
switching over to Trade King. I have been with Scottrade for 3 years as I found myself learning more and becoming a more savvy investor I found Trade King to be much better with lower trades fees 4.95 a trade and only .65 per contract with options. Trade kings also has much better learning tools to help you advance, especially if you want to learn more on options. When I call Scottrade here in Charlotte they always have a I don’t care attitude about helping you advance more as a personal investor. I highley suggest Trade King if you want something better
John- I just opened a Trade King account myself!… Unfortunately, I’m doing it out of necessity…
I still haven’t received an answer from Scottrade regarding why they closed my account and I don’t care to keep my business with them anymore! I’m at a loss and they continue to refuse to give me an answer that makes any type of sense.
Like you, I now feel that Scottrade doesn’t care if they have my accounts that are of decent size and are consistently growing. I suspect something is very wrong has happened at Scottrade!
What really sucks about my Scottrade situation is I don’t know what I did wrong, they won’t tell me what I did wrong, and I can’t make any new trades until I move my accounts. I’ve lost a considerable amount of money on trades I wanted to make in December!!! I also lost a lot of time doing research on other brokerages and setting up my new Trade King account!!!
So it looks like Trade King will get my personal account while I look for the best option for my business account. So far their customer service has been excellent as they usually respond to my emails within 2 hours. Trade King also answers their phones quickly after I call.
Needless to say I am VERY disappointed with Scottrade!!!!!!!!!!!!!
John, We’re sorry to hear that you wish to close your Scottrade account. If there is anything that we can do to retain your business, please let us know as we never like to lose a valued client. When considering whether or not you wish to close your account, please keep in mind that Scottrade does not charge any maintenance, inactivity, monthly, quarterly, or annual fees. You may leave your account open with a zero balance for future funding without incurring any fees or penalties. Regarding the service you received, we’re sorry to hear that that it did not meet your expectations. We would like to hear more about your experiences. Would you e-mail more information to mediarelations (at) scottrade (dot) com?
Kind Regards,
Amber
Online PR Specialist, Scottrade
for a person who is like me (loves index funds and try to stick to them), Schwab seems an awesome bet…no Transaction fee on ETFs and also very low expense ratio….for those funds which have lower expense ratio in Vanguard, I got with them.
Scottrade would not allow me to buy AMFI (Amcore Financial, Inc) today. I attempted to place a LIMIT order, in my unrestricted cash account. I received a message stating that I had to contact a branch office to place the trade. The same event occured a few weeks ago when I attempted to buy CTZN (Citizens First Bancorp, Inc.).
The whole point of trading online is to eliminate the need of talking to the brokers representative. I use a level II quote service, and had been tracking the bid & ask until it hit my buy trigger. It was an anti-climax to say the least when I could not place the trade.
I was in a location that prohibited the use of phones. Scottrade’s restriction prevented me from executing the trade, as I watched the price climb out of my buy range.
I do not understand why Scottrade whould do this. It is my money, and I do not need any “big brother” help or advice to choose my trades. I would be willing to sign a waiver or anything to prevent this from happening again.
Someone elce posted a comment that it may have somthing to do with “lot of volatility with a stock”. Well duh, that is exactly what I am looking for in a trade. Please help me fix this issue! Thank you – John from Michigan
I just remembered one other thing: Scottrade allows me to transfer funds from my bank account, INTO my Scottrade account, but not vice-versa. If I want to pull some money out, I have to wait to get a check in the mail. Why is this?
Even rinky-dink outfits like Sharebuilder let you move money back and forth with ease.