If you are looking for a discount brokerage that has a broader range of offerings than most, you need look no further than Scottrade. Scottrade covers virtually the full spectrum of investing services and does so at a very competitive rate. If you’re looking for a new online broker, this Scottrade review will shed light on some of the things you’ll want to know and be on the lookout for.
Before moving on with the review of Scottrade it’s important to get some context for their offerings. Scottrade began operations 35 years ago in 1980 and is known for offering a flat commission of $7 per trade – which puts them squarely in the middle in terms of other discount brokerages.
Scottrade is also fairly well-known for maintaining the largest branch network in the online brokerage space – offering a little over 500 branch offices throughout the country.
Thanks to their maturity, Scottrade is able to offer a wide array of account types, from the standard brokerage and IRA accounts to trusts, solo 401(k)s, corporate accounts, and investment clubs. They also set themselves apart by offering a full range of banking products. Let’s move on to a more in-depth Scottrade review.
Scottrade is an online broker with a simple pricing structure.
Stock Trades – All stock trades cost $7 per trade with no limits. However, for stocks priced under $1 per share, an additional .5% fee is calculated based on the principal value invested.
Options Trades – $7 + $1.25 per contract.
Mutual Funds – Mutual funds cost $17 per trade. This fee is separate of any commissions or expenses charged by the fund.
Now that we’ve covered a bit of background of Scottrade, following are some of the features that set them apart.
- International Investing. Along with their full investment vehicle spectrum, Scottrade allows for international investing in roughly 20 countries. According to their site, Scottrade allows most of this at the same $7 flat commission. Investing in international equities can add great diversification, but also added risk; make sure you’re aware of that before investing.
- Free streaming quotes. This really does not set Scottrade apart as many discount brokers offer free streaming quotes. That doesn’t discount the nicety of having it though. After taking a few minutes to fill out several forms, you get access to free streaming quotes.
- ScottradeElite. The ScottradeElite platform is an add-on to the standard platform if you have an account value of at least $25,000. The upgraded platform offers additional charting and trading functions.
- Many investment options. This sets Scottrade apart from someone like OptionsHouse. International trading has already been mentioned, but they also offer things like bonds, CDs, and Treasuries just to name a few.
- OptionsFirst. Scottrade is able to offer more in terms of options trading though OptionsFirst in their attempt to offer things you’d find at brokers like TradeStation or OptionsHouse. While you can do basic options trading on the standard platform, if you want to do anything like straddles, spreads or more then you’ll need an OptionsFirst account. It is important to point out this requires a separate approval and login process from the standard Scottrade platform.
- Easy to use platform. The Scottrade platform is relatively easy to use and robust. They offer a full range of free educational offerings and trading/screening tools that will serve most investors well.
Thanks to their maturity, Scottrade has set themselves apart as a quality online broker that is worthy of consideration to most. Some things to like about Scottrade are:
- Commissions. Scottrade offers a very competitive commission schedule at $7 per trade and $1.25 per option contract. That puts them right in the mix with other online brokerages.
- Light on fees. Fees eat away at a portfolio, and Scottrade is cognizant of that. There are no hidden or maintenance fees with Scottrade.
- Mutual Funds. If you like to invest in mutual funds, you can’t go wrong with Scottrade. They offer over 14,000 mutual funds – 3,100 of which are No Transaction Fee Funds (NTF). This is more than any other discount brokerage.
- Branch network. This is a huge selling point for Scottrade. They have over 500 branches nationwide. You can go in to deposit checks into your account, open accounts or ask for assistance. This is great for the person wanting an in-person experience.
- Excellent customer service. Scottrade offers excellent customer service, including phone and live chat support until 1:00 a.m. EST. These are much better hours than many other brokerages in the space.
- Solid research and trading tools. This is where someone like OptionsHouse falls short. Scottrade offers a large number of research and trading tools that are relatively easy to use. For the DIY investor, this can help you formulate and refine your investing strategy.
- Dividend reinvestment, with a twist. This is a relatively new feature Scottrade began offering in June of 2013. Prior to that, they did not offer dividend reinvestment. What they offer now is known as FRIP – or the Flexible Reinvestment Program. Scottrade lets you select up to five holdings in which you can reinvest dividends. This is a nice little feature if there is a specific equity you’d like to build up.
No discount brokerage is perfect, and such is the case with Scottrade. Following are some of the things that hold Scottrade back:
- Higher balance requirements. This is a change Scottrade introduced in late 2014. If you want to open a Scottrade account, you must open with at least $2,500 for non-IRA accounts and $500 for IRA accounts. For those wanting to begin investing with little money, this can be a relatively major detractor. If this is a situation you’re in, you can look at other options like Motif Investing or Etrade that have no or very little in terms of opening balance requirements.
- No commission free ETFs. There are a number of online brokers that offer commission free ETFs – from Vanguard, Fidelity, Schwab, Etrade and more. Scottrade, for some unknown reason, does not offer them. They tout their number of NTF mutual funds – which is good, but those wanting the lower-cost ETF won’t find them at Scottrade. If you don’t invest in ETFs, or do so sparingly, this may not be an issue, but it is a feature they need to add.
- Separate platform for those with higher balances. This is somewhat common, as money speaks, but it is still a drawback. The standard Scottrade platform is robust enough, though it would still be good to offer the additional features of the ScottradeElite platform to all users.
Scottrade Review – The Final Analysis
It can be difficult to choose which online broker to give your business to. There are a myriad of options, all offering a slight difference to the rest of the market space. That being said, Scottrade sits above the fold in brokers to look at if you’re managing your own portfolio.
While there are some things not to like – the lack of commission-free ETFs and higher balance requirement namely, Scottrade offers quality service at a very competitive rate. With the breadth of offerings and service offered by Scottrade, it is possible you could manage the bulk of your investment needs with them and not skip a beat.
As with many other discount brokers, Scottrade offers a promotion for opening a new account. The best promotion they currently offer allows you to receive up to $2,000 cash back on a new account – make sure not to miss out on that if you open an account.
If you're looking for a go-to brokerage to handle all of your investment needs, Scottrade is a worthy candidate at a competitive rate!