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We rate E*TRADE
Michael Abramowitz
The folks at E*TRADE offer a full symphony of services
to their investors. Generally, we like the tune they're playing,
but we could do without the occasional sour note they sound.
What hurts the company is its commission rates. We
flat-out don't like that it charges a $19.95 commission for a NASDAQ
stock trade. Its $14.95 commission price for New York Stock Exchange
and AMEX trades is nice, but it pales in comparison to rival Ameritrade's
$8 fee and Datek Online's $9.99 service charge for all three stock
exchanges.
In August 1999, E*TRADE announced a new low commission
of $4.95 for people who make 75 trades or more during one quarter.
Day traders rejoice! The rest of us "mom and pop" investors can
loudly boo this feature. You'd need a lot of money lying around
the old laptop to make that many trades.
There was another black mark during our test: E*TRADE
kicked out one of our sell orders. This cost us money -- the price
dropped in the time it took us to resubmit the trade -- and we got
a lower price. Frankly, we weren't amused.
This isn't the first time something like this has
happened. E*TRADE was sued by customers after service outages in
February 1999.
In fairness, we note that E*TRADE isn't the only broker
to suffer from server problems. Ameritrade kicked out our trades
a whopping five times during the first day of our e-brokerage experiment.
Also, outside of our test, Charles Schwab announced a week ago that
its system malfunctioned for an hour during a trading day.
It makes you wonder: If these brokers can't get it
done right now, what happens when Y2K rolls around?
| E*TRADE:
The bottom line |
| Minimum funding on accounts
|
$1,000
|
| Days to receive confirmation
of initial deposit |
10
|
| Commission on
each market order |
$14.95 -- NYSE and Amex trades
|
| $19.95 -- NASDAQ trades |
| $4.95 -- after 75 trades per
quarter |
| Commission on limit orders
|
$19.95 -- all trades
|
| Current balance immediately
available after trade |
No
|
| Number of times system rejected
trade order |
1
|
| Free real time quotes |
Yes
|
Complaints aside, we like E*TRADE's site. Its features
-- including access to Initial Public Offerings of stock -- are
topnotch. However, we have heard customers complain that it's difficult
to gain access to an IPO, and when they get in, the allocations
are typically small. Still, it beats nothing, which is what we had
in the old days -- nine months ago.
We also applaud E*TRADE's $75 sign-on bonus for new
accounts. We'll take free money any day. And three cheers for its
free news, information, checking and online bill paying, and its
offer of 50,000 free United Airlines frequent flier miles for those
who refer a new customer.
And if you're online trading shy ...
And there's another plus: The site offers potential
users a way to sample E*TRADE without becoming a full-fledged customer.
|
E*TRADE report card |
| Performance |
B |
|
Commissions |
B |
| Ease of use |
B |
|
Funding requirements/days to fund account |
B |
| Customer Service
|
A |
|
Intangibles |
A+ |
| Overall |
B+ |
When it comes to funding, E*TRADE had the lowest minimum
balance requirement of the five brokers surveyed -- $1,000. However,
it took the company 10 days to confirm the availability of funds
for trading in our account, four days slower than Datek, but also
four days faster than Fidelity, Schwab and Ameritrade. Not horrible,
but we'd like to see it show up more quickly than that.
As for ease of use, the site is simple and functional.
But we hated it when our trade was kicked out. And we don't like
that E*TRADE doesn't provide a current balance immediately
after a trade is made.
If E*TRADE would bring down the commission rates on
NASDAQ trades and process our trades when we make them, we'd give
it a grade of A. Overall, we like their site. E*TRADE's online parade
merits a B+.
-- Posted: Sept. 10, 1999
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