Are Higher Fees Justified By Superior Service?
Whether planning for retirement or simply hoping to create extra cash flow, the wide world of investing can be extremely convoluted without help from an experienced broker. Finding the right brokerage firm to help you in these endeavors tends to be equally complicated. You want someone with a great deal of expertise and who offers plenty of options; on the other hand, you need to avoid being subjected to fees that eat away at your profits. The good news is it may be possible to get the best of both worlds.
TD Ameritrade is among the most well known names in the financial sector, bearing an easily recognizable trademark for even those with very limited knowledge of investing. One glance at their lengthy list of features proves you won’t be shortchanged as far as options. These span the full range of their services.
Potential clients may be a bit wary over some of their comparably high fees. Stock trading fees are comparable to those of some competitors but are more than twice those of others. Mutual fund trades are also a bit higher than those of some other firms. These could be well worth their cost if the company’s services live up to their reputation.
Commissions and Fees
The firm operates around a highly structured fee and commission base. Stock trades cost a flat rate of $9.99 with no penalties for larger or smaller than average order sizes, trade amounts, order types or after-hours transactions. Options trade fees are the same but with an additional $.75 per contract.
You won’t be given a minimum funding amount requirement in order to open a typical account with TD Ameritrade, which is not the case with many other top brokerage firms, but some promotional offerings hold slightly different requirements. If you choose electronic funding, there is a $50 minimum while options and margin privileges are only available with funding of $2,000 or more.
Some additional fees are as follows:
- Options Exercise and Assignment Fees – $19.99
- Broker Assisted Trading Fees – $44.99
- Mutual Fund Trade Fees – $49.99
- Interactive Voice Response Trade Fees – $34.99
- Treasury Trade Fee – $25.00
- Forced Margin Sellout Fee – $25.00
- Returned Wire or ACH Fee – $25.00
Margin rates begin at 9 percent for transactions under $25,000 and progressively decrease in increments of .25 percent to transactions of $1,000,000,000 or more, which hold a rate of 7 percent. Bond and CD trades have no fees, and IRA’s have no annual or closing fees. Stock certificate processing and delivery are free, as are domestic and international wires. The company won’t charge you extra for wanting paper statements and confirmations to fall back on, which is a rare find in today’s largely digital format.
TD Ameritrade offers no shortage of research on their various trading options. Global market overviews and research on fixed income securities and exchange traded funds barely scratch the surface. Their in-depth provisions delve into diverse areas of equity and mutual funds, including reports, top 10 holdings and third party ratings. Screeners for stocks, bonds, options, mutual funds and ETF’s are available.
Over the counter bulletin board quotes are offered for those looking to invest in certain new or struggling companies that are unable to be listed on NASDAQ or the NYSE. Pink sheets information and research are available, catering to clients interested in penny stocks for those companies still too small for the common large-scale exchanges.
For those who are new to investing, the company also offers a number of educational resources, such as an investor dictionary and articles and videos on stocks, bonds, ETF’s, mutual funds and options. At least once monthly webinars and live seminars delivered by professional brokers are also offered on these topics. Information on retirement planning and calculators for financial requirements upon retiring are available, as well. Clients also gain access to a moderated online community forum.
Current users have given TD Ameritrade a second-to-none rating for their customer service. Support is available around the clock via phone and email. A live chat option is available, providing support for current and prospective clients alike.
Mobile Trading Capability
With the knowledge that an increasing number of clients are migrating to mobile devices for their online needs, the company has a fully optimized mobile website, as well as iPhone, iPad and Android system apps. Clients can view their accounts and available balances via mobile device; furthermore, actions on their online accounts and mobile accounts sync with one another perfectly.
Clients can chart comparisons in the mobile format just as well as in the traditional online one. Trading stocks and simple options can be done through clients’ mobile devices, and a mobile barcode app is available. Clients can use this tool to scan product barcodes to determine which companies manufacture them.
It seems TD Ameritrade has only a couple of downfalls when it comes to their mobile website.
- The mobile app does not allow clients to display their portfolio and the S & P on the same chart for performance analysis.
- No customizable dashboard is available on the mobile apps.
Aside from these 2 points, clients seem to have no complaints.
Platforms and Tools
The firm offers downloadable desktop and Mac based platforms as well as a web-based option. Their unique platforms, namely thinkorswim and Trade Architect, are well received by clients and have been deemed extremely user friendly. These platforms are backed by a number of useful tools.
As their flagship platform, thinkorswim is geared toward more hardcore investors and offers plenty of in-depth tools and superior functions. Trade Architect is their web-based platform, catering to less serious and less experienced investors. This platform offers the same amounts of customization and functionality as its counterpart, but the data is presented on a simpler level.
One of their available tools is streaming live TV, providing access to CNBC and Bloomberg among other relevant programming. Streaming times and sales of any viewable equity are also available. Their ladder trading tool gives clients a real-time stream of fanned bids and asks, allowing them one-click buying and selling features.
Clients have the ability to choose hot keys for easy trading. Basic option chain views are available, and these can be filtered based on the option strategy in use. Profit and loss charts are offered for determining the exact risks involved when analyzing theoretical options trades. A side-bar is available for clients to view. This can be customized using any combination of several different columns.
The most advanced of investors are catered to while clients who are still new to certain aspects of the investing world are not left out of the mix. In addition to the previously mentioned educational information, a virtual trading tool is also provided. This allows clients to perform simulated trades before risking capital on live ones.
TD Ameritrade offers clients a wide array of trade options, including Forex and Futures trading, which are not available through all brokerage firms. They are one of the very few companies of this nature with no minimum account deposit required and one of only a handful to offer virtual trading to help clients learn to minimize risks. Based on available account features, their offerings are second to none.
Clients rave about the company’s easy to use platforms, as well as their traditional and mobile websites. They have been recognized as the #1 overall broker three years running, including 2014. In addition to this, they have been ranked Best in Class in a number of fields.
- Investment offerings
- Platforms and tools
- Ease of use
- Client education
- Mobile trading
- Active trading
- Options trading
- New investors
- Customer service
Experts and clients have spoken, giving TD Ameritrade an overall rating of 4.5 stars because of their unrivaled offerings for investors. Through education, a diversity of tools and constant support, the firm ensures clients are well equipped to make the most of their investments regardless of skill level or previous experience. Clients can easily use the available tools to advance their knowledge.
The primary complaints from clients revolve around their fees, a field in which the company only received a 1 star rating. Although they are higher than many of their top competitors, these rates could arguably be offset by the company’s lack of minimum deposit requirements. They also offer far more commission free ETF’s than all but one of their competitors; however, a $19.99 short-term trading fee is tacked onto such trades sold within 30 days of their initial purchase. All their fees are stated up front, though. There are no hidden expenses lurking around their services.
The bottom line here is this: you get what you pay for. Ratings indicate TD Ameritrade can’t be beat when it comes to research, educating their clients, offering an extensive selection of trading options, a fully optimized mobile site, plenty of mobile apps and platform tools, and superior customer service whenever it may be needed. Clients readily pay the higher fees to gain access to this type of service and support.