Brokerage Accounts: Thoughts about Etrade

I have an Etrade account and will limit my choices to funds available through Etrade, as long as I continue to use Etrade. Let me start by saying that I did not choose Etrade, but I am satisfied with it. I opened a Discover brokerage account which became a Morgan Stanley account which became a HarrisDirect account which then became an Etrade account. The things I keep an eye on are Fees, Mutual Fund offerings, Services and Tools, and Yields on cash held in the account. This can be a bit tedious since brokerages merge, get bought, and change fees and services constantly (see above), but unlike what the market does, you can control what fees you pay and what services you use by keeping abreast of what the competition is offering and change your brokerage if necessary. If you think about brokerages in this light, one of the most important things to identify before setting up an account is the “Account closing fee.”

Another point- The internet is overflowing with Etrade customer service complaints. I too have had difficult and tedious customer service experiences with Etrade, though like many- I was persistent and ultimately reached someone who helped me more than I thought they would. That said- I would be interested in hearing if other full service brokerages offer a broad range of no-load no-fee mutual funds and if other brokerages have better customer service. Such funds are also referred to as NTF (No Transaction Fee) Funds.

Before I start picking funds, I will look at Fees, Mutual Fund offerings, Services and Tools, and Yields on cash held in the account.


David Jones said...

I had a rough time with Etrade. Though part of my troubles were due to a fault of my own, when I was proactive about correcting the problem it took over a month of back and forth.

Etrade gave me 3 different fax numbers and, after the fact, admitted that one of the fax numbers wasn't a good means of reaching them.

Jouissance said...

I wonder if etrade does not invest the resources it would take to offer good (not great) customer service because it hopes to build a client base quickly and then get bought by a different brokerage.

They certainly invest heavily in advertising...

I also complained about not getting email addresses for the representatives I was speaking with each time I tried to follow up on an issue I had- I called a few times but never reached a rep, always had to leave a message so I used email exclusivley so I had an easy record of each conversation (except the first conversation which led to the issue...).

Anyway- I was told there are FTC regulations regarding direct email with service reps and clients. Sounded fishy to me, but you never know.

And one of the phone numbers in one of the emails I did try and call was not valid- much like you fax incident.

Claude said...

I don't know about that Christopher. If their goal was to be acquired they are doing a pretty shitty job of it. As you noted, there has been alot of consolidation in the financial services industry, especially in the online brokerage department. Many brokers that existed 5 years ago have been rolled into some of the bigger houses. All of the big financial services companies have online brokerage services, and E*Trade has a 10+ billion market cap.

I use Scottrade for my sisters account, it is certainly no frills, but you know what you are getting. As long as you expect E*trade to rip you off/ be shitty in the CR dept. Then it is fine.

Jouissance said...

Hi Claude thanks for commenting- I do not follow your arguement against the possibility that Etrade is simply growing its assets under management with the intent or desire to merge or get bought. I am just speculating- but if my ONLY goal was to sell soon versus build a long term business, I would take all of my customer service budget and dump it into advertising to try and accumulate as many accounts as quickly as possible so that I will be more valuable to a potential buyer in the short term. I do not need to keep the new customers long, just long enough to increase my short term worth.

If I wanted to grow a stable business and keep loyal customers, I woul build solid customer service so that the new accounts I aquire are likely to stay.

Regardless of whether this is their plan, they sure do advertise a lot and they sure do have pretty poor customer service.

Scottrade seems to get better marks for customer service but poor marks for website functionality and availablility (and not just for, but definitley for Macs). You really like it?

Check out this site:


Claude said...

All I'm saying is that if their goal was to be acquired they most likely would have been a long time ago. There has been such massive consolidation in the industry that it seems unlikely to me that they havn't already been the target of an acquisition attempt and declined to be acquired.

I think their main goal is to make money. More customers of course equals more money. I think their internals probably show that the dollars they spend on acquiring new customers more than compensate for the customers they lose due to shitty CR, but I don't feel like reading the K's and Q's to prove that assumption.

Re: Scottrade I don't LOVE it, but it's not like I'm a heavy user. I think it's a very simple, no frills interface. Whenever my sister has called to get a check it takes about a minute.

I had an E*Trade account (when I had money to invest) and got sick of their high transaction costs and shitty customer service and so many hoops to jump through, to trade options for example. So I switched to Scottrade, and was happy for the 9 months or so I used them.

I had my mom switch to E*Trade mainly because she is about as risk-adverse as you can get and they offer good CDs. Also Chase was charging her like 50/ transaction.

Jouissance said...

claude- could you set up a portfolio of no load no fee funds and contribute $100 to each fund once a month on scottrade? I am curious if one could set up a scheme like the one I am proposing using other brokerages.

Claude said...


Correct me if I'm wrong but I believe each fund determines what the minimal subsequent investment is.

However, I did check a couple funds and found several whose subsequent investement was 0 (i.e. whatever you want to throw in it.)

Jouissance said...

Each fund does set its own limit for minimum susequent investments, but... etrade has a minimum of $100 so even if the fund minimum is $50 or $0, through etrade you must add $100.

Also, I found a fund that had a $100 minimum listed on yahoo, which was different than the $500 minimum listed in etrade. So I called etrade and they confirmed I would be able to add $100, if I bought the fund.

This was my bad etrade customer service experience, because I bought the fund and then tried to add $100 and could not and had to talk to many different people before I was allowed to do what I confirmed I would be able to. After 5 months give or take, they set up a special way for me to add $100.

In that time I called the fund company and they confirmed that THEIR minimum was in fact $100.

So the bottom line is that Etrade lists a minimum and what they support is allowing that minimum as long as it is $100 or higher.

Also, the minimum listed on Yahoo changed in that time and no longer reflects what the company confirmed for me directly and what I am able to contribute currently.