E-Trade

by · June 10, 2012

E*TRADE is an innovative financial services company offering a full suite of easy-to-use online brokerage, investing and related banking solutions, delivered at a competitive price. We empower individuals to take control of their financial futures by providing the products, tools and services they need to meet their near- and long-term investing goals.

E*TRADE provides these services to customers online and through their network of customer service representatives, investment professionals, and investment advisors – over the phone and-in person at their 28 E*TRADE branches.

Corporate Facts:

  • History: Founded in 1992, went public in 1996
  • Leadership: Steven Freiberg, CEO
  • Employees: 3,000 (as of December 31, 2010)
  • Headquarters: New York City
  • Retail Branches: 28 across the United States

E*TRADE FINANCIAL provides access to a wide range of products and services to help meet virtually any financial need.

Trading & Investing

Investment choices

  • Stocks
  • Options
  • Mutual Funds
  • Bonds
  • IPOs
  • Futures
  • Forex
  • Trade on Margin
  • Extended Hours Trading

Services

  • Move money with Quick Transfer
  • Transfer an Account
  • NEW E*TRADE Mobile Pro
  • Learn about the E*TRADE CompleteTM Protection Guarantee

Retirement & Planning

Accounts

  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • IRA for Minors
  • CompleteTM IRA
  • Small Business Retirement Plans
  • Education Savings
  • Beneficiary IRA

Services

  • Retirement QuickPlan
  • Tax Tools & Tips
  • IRA Tips & Strategies
  • Rollover IRA Checklist
  • Automatic Investing in Mutual Funds
  • Learn about the E*TRADE CompleteTM Protection Guarantee

Banking

Accounts

  • Checking
  • Money Market
  • Savings

Services

  • Online Bill Pay
  • Quick Transfer
  • View Internet Banking Demo
  • Learn about the E*TRADE CompleteTM Protection Guarantee
  • Wireless account access

E*Trade is a pioneer in the discount brokerage market. They’ve been around since 1982, and are arguably the most popular and well known of all online brokers. Over the years they’ve continued to impress the pundits and regularly receive awards in excellence from the major reviewers like Smart Money and Barron’s.

What they offer: $6.95 Trades ($4.95 if you’re an active trader), access to a wide range of mutual funds (7,600+), free education resources, free access to research, 24/7 customer service (and it’s quick), and an easy to use platform.

Advantages

  • Access to foreign markets & a very wide range of investment products.
  • 24 hour phone support.
  • Top notch state of the art Smartphone apps for trading on-the-go.
  • Great research tools.

Fees/Commissions:

  • $6.95 per stock or options trade if you make 150 + trades each quarter.
    • Otherwise you’ll pay $6.95 per trade for stock option and futures trades
    • (plus $0.75 per options contract and plus $1.50 per futures contract).
  • Expect to pay $45 extra for broker assisted trades.
  • $25 per quarter maintenance fees if your account is less than $5,000 or you make less than 2 trades
  • Minimum to open an account is $500 (you must deposit within 60 days of opening an account).
  • $2 per paper statement, $60 for ACAT out.

Trading/Investment Tools:

  • E*Trade is great for being able to customize your own trading platform to suit your needs.
  • Trading platform is intuitive and easy to navigate.
  • Their mobile app tools are also top-of-the-line.
  • On a side note, E*Trade also offers banking services such as high interest savings accounts, checking accounts and mortgage accounts.

Investments Offered:

Probably E*Trade’s biggest strength. They offer one of the widest ranges of foreign and domestic investment products available from online brokers, which is ideal if you want to balance your portfolio with a mix ETFs, mutual funds, stocks, bonds, and fixed income investments.

Ease of Use:

  • E*Trade website and platform in general is very intuitive, user friendly and easy to navigate.
  • Choice between a variety of platforms (web based, desktop, and mobile) allows flexibility to pick the one you like best.

Customer Service/Support:

24/7 phone and email support is responsive, but there is no Live Chat support.

Awards:

  • 5/5 stars from Smartmoney (2010) for Trading Tools, Customer Service and Banking Services.
  • 4/5 stars from Barrons for Long Term Investing Tools and International Trading (2010).
  • E*TRADE Securities ratings for Online Broker by SmartMoney Magazine, May 2011 Broker Survey, based on the following categories: Trading Tools (5 stars), Customer Service (2 stars), Banking Services (4 stars), Mutual Funds & Investment Products (4 stars) and Research (5 stars). E*TRADE overall ranked #6. SmartMoney is a registered trademark, a joint publishing venture between Dow Jones & Company, Inc. and HearstSM Partnership.
  • E*TRADE Securities ratings for Barron’s annual ranking of the Best Online Brokers (March 14, 2011), based on Trade Experience, Trade Technology, Usability, Range of Offerings, Research Amenities, Portfolio Analysis & Reports, Customer Service & Education, and Costs. E*TRADE overall ranked #13.
  • E*TRADE Securities ratings based on the following categories: Web Site Usability (5 stars), Customer Service (5 stars), Research & Tools (4 stars), Costs (3 stars) and Investment Choices (3 stars). E*TRADE overall ranked #3.

E-Trade and subprime

In November 2007 the subprime crisis claimed a new scalp as E-Trade Chief Executive Mitch Caplan said he was stepping down as part of a deal that has private equity firm Citadel injecting $2.55 billion into the troubled firm.

Under the deal, Citdel will end up with about a 20% stake in E-Trade after acquiring its $3 billion asset backed securities portfolio for $800 million and making other investments.

President R. Jarrett Lilien was named acting CEO, while E-Trade searches for a permanent successor. The company will consider Lilien as well as external candidates, the firm said.

Caplan became the latest CEO to be felled by the subprime crisis, following the chief executives of Merrill Lynch & Co. and Citigroup Inc, amid a purge of executives on Wall Street being blamed for losses tied to the crisis.

The deal gives Citadel a nearly 20% stake in E-Trade (US:ETFC) and a seat on the board.

“With the capital infusion and removal of the problem ABS portfolio, E-Trade has essentially bolstered its balance sheet & near-term capital position. We believe that answering near-term fears that E-Trade could not meet regulatory capital requirements is a positive,” Sandler O’Neill analyst Rich Repetto said in a research report.

“The way we look at it is, it is a package deal; we got cash, and in turn for that, Citadel took the asset backed problem from us,” he said. “Citadel is in a position to hold those securities. This was a great transaction for them, because it’s what they do, it was a good deal for us because it’s not what we do.”

He said the firm had several options for the asset-backed portfolio, but determined taking a loss on disposal was the best, because it couldn’t afford to hold them on the balance sheet and take quarterly write-downs indefinitely.

Trying to sell them off over time also was not a pleasant option, Lilien said. “I would say absolutely this is a good thing to do. Having that on our balance sheet was too much of a burden. It was bad for customer confidence beginning to hurt us.