Published by Blain Reinkensmeyer
On Thursday, October 22nd, 2015
Scottrade offers self-direct investors the tools they need to succeed, and for investors seeking guidance, Scottrade’s massive branch office network, which offers reliable and personable relationships, is an easy win.
More than 500 local branch offices; FRIP (Flexible Reinvestment Program), a great spin on DRIP; easy-to-use mobile apps; updated Scottrade ELITE platform.
ScottradeELITE requires $25,000 minimum; weak in-house options capabilities; offers instead the OptionsFirst platform powered by OptionsHouse for advanced options trading.
To cut to the chase: Scottrade lives up to its commercials. The company defines what a broker-client relationship should be, with everything from opening an account to placing a trade or receiving professional guidance being a straightforward and enjoyable experience.
When I opened a new account to conduct my Scottrade review, I knew Scottrade had tough competition and was curious to see how well the broker would perform. The application was a breeze as I filled in information and took advantage of the live chat assistance. Within several hours of completing my application, a Scottrade rep from my local branch office called me, welcoming me to the broker, letting me know where they were located, and asking if I had any questions.
Immediately, I felt I was in good hands and couldn't help but think Scottrade was going to be my new best friend.
Commissions & Fees
Compared to other full-service brokerages, Scottrade is mostly less expensive. Regular stock trades cost $7 compared to the closest pricing competitor, Fidelity, which charges $7.95 per trade. Charles Schwab is next closest with its $8.95 trades. All trades operate under a flat-fee structure, meaning there are no gimmicks or trickery. Pricing is straightforward and simple unless you are trading stocks less than $1 per share, for which the cost is $7, plus .5% of the trade value.
Options trades will set you back $7, plus $1.25, which is more costly than Scottrade’s competitors if you are trading more than a handful of contracts at a time. TD Ameritrade, ETRADE, Fidelity, and Schwab all have higher base commission charges but only charge $.75 per contract instead of Scottrade's $1.25.
Lastly, Scottrade offers a massive selection of mutual funds, more than 14,000 funds in total, so you will not have any trouble finding something that suits your portfolio mix. Mutual fund trades cost only $17 each, the lowest among Scottrade’s competitors. For those who prefer ETFs over mutual funds, Scottrade may disappoint as it does not have a selection of commission-free ETFs. If commission-free ETFs are your thing, then consider Charles Schwab, ETRADE, or TD Ameritrade, as each broker offers more than 100 of them.
Scottrade, which has won our title for Best Overall Client Experience from 2012-2015, offers the most personalized customer service out of any of the full-service brokers I've tested. And considering the competition, this is no small feat. I found Scottrade to be the only online broker that completely leans on its local branch office network. Calling the support phone number on the Scottrade website during market hours elicits a prompt for your zip code, then redirects you automatically to your local branch office.
Within a few rings, I was speaking with a rep from my local branch office. Not only did he know the Scottrade website like the back of his hands, but he had no trouble answering my questions regarding my new account and website. Scottrade's network has 503 local branch offices within the United States, and all operate during standard market hours: 8:30 a.m. to 5 p.m. Monday through Friday.
The only downside of Scottrade's phone support is that it is not 24/7, unlike TD Ameritrade, ETRADE, Fidelity, and Charles Schwab, all of which offer phone support any day, any time. Furthermore, the quality of support can vary greatly depending on the staff of your local branch office. When I originally opened my Scottrade account several years ago, I had no issues with support (see above commentary). However, since expanding our phone testing to incorporate branches from across the country, we have found the quality good overall, but inconsistent.
Phone testing aside, Scottrade shines for its email support. All our tests received responses within eight hours, and the end quality was outstanding. In fact, Scottrade receives nearly perfect scores on every test, a near flawless performance we have not witnessed in five years of conducting annual reviews. Once we compiled the data, it was not a surprise to find Scottrade at the top, finishing No. 1 for email support.
Scottrade's research offering is thorough, covering the major bases well, including fundamental data on insiders, earnings, financials, and even SEC filings from several third-party research providers. Compared to its competitors, third-party research is one area in which Scottrade falls behind, but not by much. Pulling up a quote on Apple (AAPL) offered me reports from three third-party providers: Standard & Poor's, Thomson Reuters, and Second Opinion. While this will more than satisfy the majority of investors, picky clients may still be left craving more (Fidelity, Charles Schwab, and TD Ameritrade all offer at least six).
Navigation through the research area, like the rest of the Scottrade website, was clean and straightforward. Not only does Scottrade have a quick quote box on the top header, but it also has one on the left sidebar and footer bar. You can even place trades from any page, or website for that matter, by popping out the trade ticket bar in the footer – another nice touch. Focusing back on the research section, whether I was pulling up a quote or looking at a stock chart then reading an analyst report, I had no problem finding my way around.
One feature I really enjoyed, which is exclusive to Scottrade clients, was the Scottrade SmartText functionality. SmartText analysis is available for charts, sectors and industries, and earnings. With charts, for example, Scottrade SmartText will quickly analyze any indicator you add and give you an easy-to-understand explanation of what that indicator implies for the stock you are researching. For example, SmartText gave me this breakdown for Google's 13-day moving average, "On Tuesday, GOOG closed below its 13-day moving average. This is generally considered to be an indication of a bearish trend."
Scottrade's research is also thorough for mutual funds. With research provided by Morningstar, my personal provider choice for mutual funds research, Scottrade does not disappoint. Immediately after pulling up a quote for Pimco's Total Return Fund PTTDX, a chart appeared displaying the fund's performance in the past decade compared to intermediate-term bonds and the S&P 500. I then read a synopsis of the fund's strategy, took a look at the Morningstar category ratings, and analyzed the fund's expenses to help me decide whether to buy or not.
Platforms & Tools
Scottrade offers several different platforms: Scottrader Streaming Quotes, Scottrade ELITE, and Scottrade Options First (white-labeled version ofOptionsHouse2.0 platform). Scottrade ELITE requires clients to have at least $25,000 in their account before gaining access.
Scottrader Streaming Quotes is a Java-based application that neither runs in a browser nor operates as a full desktop download. Instead, it loads as a Java app through the web. With easy buttons to open new windows and three customizable layouts, I found the application functionality to be easy to set up and use. Each watch list is drag-and-drop friendly and can have up to 40 securities.
The one major gripe with the Scottrader Streaming Quotes application is that there is no snap window functionality, so aligning any open windows (the trade ticket, charts, top gainers, time and sales box, etc.) to fit into a grid is a bit tedious. My only other criticism would be that the quote screen window does not display the market index returns in large numbers at the top. Instead, they are small items at the bottom and do not include a percentage return for the day. Pickiness aside, Scottrade Streaming Quotes gets the job done.
Scottrade's advanced platform, Scottrade ELITE, is a desktop- based platform designed for active traders seeking detailed functionality beyond what Scottrader Streaming Quotes has to offer. Over the years, Scottrade ELITE became old and outdated, falling behind the rest of the industry in most areas. That all changed in 2014 though, when Scottrade launched a brand-new version of Scottrade ELITE. Completely recoded from the ground up, not only is the new Scottrade ELITE significantly more pleasant on the eyes, but it is easier to use, faster, and has a great foundation for expansion moving forward.
In the summer of 2013, Scottrade released its second-generation iPhone and Android app alongside its first-generation iPad app. With a much cleaner interface and cloud syncing watch lists, the apps are easy to use and, overall, very well built. These new apps propelled Scottrade’s Mobile Trading category score from 3 stars in our 2013 Review to 4 stars in our 2014 and most recent 2015 Review.
Also in 2013, Scottrade introduced an industry-first FRIP (Flexible Reinvestment Program). A FRIP is similar to a DRIP (Dividend Reinvestment Program), except that investors can customize how the dividend is used. Reinvestable dividends can be used to purchase shares in up to five different eligible securities (exceptions include OTCBB stocks). The FRIP is an industry first, and the clients I spoke with love it. Even today in 2015, the FRIP remains an exclusive Scottrade tool.
Finally, in 2014, Scottrade released two new tools. First, the Portfolio Review tool offers a complete breakdown of client portfolios as well as functionality to reassess portfolio allocations. Secondly, Scottrade revealed The Launching Pad, a new community area where current clients can see the latest products under development, share feedback, and help drive innovation. The first product to come out of The Launching Pad was integrating StockTwits as an optional column in watch lists.
Scottrade, with its network of more than 500 branch offices and fantastic email customer support, offers clients a large selection of investments and quality research to make educated investment decisions. While the broker trails its closest competitors in several categories, such as Platforms & Tools and Mobile Trading, the rates are less expensive overall and the broker is pushing forward with innovative products to keep clients wanting more.
The content portion of this Review was completed on February 17th, 2015.
Blain has been involved in the markets for over 13 years, heading StockBrokers.com equity broker research and reviews. His personal blog, StockTrader.com, provides to-the-point daily market recaps to over 17,000 subscribers.
Scottrade is an online broker with a straightforward pricing structure. To access Scottrade's active trader platform, ScottradeELITE, clients must have $25,000 in total assets or make 9 trades over a three month rolling period.
Stock Trades - All stock trades are $7 per trade with no limits on the number of shares traded. For stocks priced under $1, an additional .5% fee of the principal value will be added to the $7 base commission rate.
Options Trades - $7 + $1.25 per contract.
Mutual Funds - Mutual funds cost $17.00 per trade. Additional fees may apply depending on the fund.
International Trading - Scottrade also offers trading services for China through the Chinese version of its website.
All pricing data was obtained from a published web site as of 5/01/2015 and is believed to be accurate, but is not guaranteed. The StockBrokers.com staff is constantly working with its online broker representatives to obtain the latest pricing data. If you believe any data listed above is inaccurate, please contact us using the link at the top of this page. For stock trade rates, advertised pricing is for a standard order size of 500 shares of stock priced at $30 per share. For options orders, an options regulatory fee per contract may apply.