Online Brokers Review and Rating: TD Ameritrade

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In January 2006, Ameritrade bought TD Waterhouse, a discount brokerage firm that was founded in 1979. Now the company is viewed as a premium discount broker, phasing in the premium features of Waterhouse gradually. With the merger, Ameritrade customers gained 100 branch offices as well as investment advisors. In turn, TD Waterhouse customers inherited a sophisticated Web-trading platform with the ability to trade from anywhere on the platform.

The company has over 6.3 million client accounts, with assets of $306 billion and its clients execute some 300,000 trades per day. While TD Ameritrade offers products to fit most individual investors, the company's focus is on capturing customers whose accounts are profitable and fairly active, but not quite large enough to warrant great customer service at the full-service firms. With its enhanced features, such as investing advice and portfolio analysis, TD Ameritrade aims to grow this profitable customer niche. The company also stands out from its competition by its wide range of services, including screeners, charting, investment education and online banking.

Some 40% of TD Ameritrade’s stock is owned by Canadian Bank Toronto-Dominion. The firm was recently listed as one of Forbes' Best 400 Big Companies.

Core Services and Fees

TD Ameritrade offers two-tier service - regular investment accounts and Apex trading for fairly active traders-with all trades priced at $9.99 per trade.

Regular accounts: For customers who are investors, making less than five trades per month or with less than $100,000 in their accounts.

Additional benefits: Free cash management services, news and research, real-time balances and access to more than 13,000 mutual funds.

Apex accounts: For customers who average more than five trades per month or keep $100,000 or more in their accounts.

Additional benefits:  Level II quotes, streaming news, Advanced Analyzer stock research/charting/screening tool, strategy testing, market trend identifier and a dedicated service team.

The company offers 24/7 customer service and no client account maintenance fees. TD Ameritrade customers can make trades on the Web, through their PDAs or via telephone.

Market: $9.99
Limit: $9.99
Options: $9.99 + $0.75/contract
Account minimums:    $2,000
Margin Rates: 8.0% -1.50% to +1.25%

Available Investments
TD Ameritrade customers can trade stocks; Treasury, Agency, municipal, corporate, convertible, and zero coupon bonds, as well as mortgage-backed securities, certificates of deposit and unit investment trusts; more than 13,000 mutual funds (about 4,000 with no loads); options; and IPOs. Customers may also establish and trade IRAs at TD Ameritrade.

Non-Core Services
TD Ameritrade offers screening tools for stocks and mutual funds, advisor referrals, analyst research, a newsletter for investors and pre-market and after hours trading. The company also offers cash management, check-writing, direct deposit, ATM/debit cards and dividend reinvestment. The company also has more than 100 local branches, spread throughout the country.

Media Reviews

Kiplinger recently ranked TD Ameritrade number 11 (last place) for a $50,000 account and tied for ninth place for a $500,000 account. The company was lauded for holding down incidental fees on $500,000-plus accounts and for spreading its trades among a variety of market participants. But it was criticized for the high fees associated when buying mutual funds other than no-fee vehicles, for providing no free tax-basis information for under $50,000 clients and for too many clicks when navigating the company's website.

JD Power ranks brokers on a scale of 1-5, with five meaning "among the best." The firm gives TD Ameritrade a three in overall satisfaction, cost and trade execution. But the brokerage only received a two in customer service, website capability, information resources and investment performance.

SmartMoney's ranks all the leading brokerages through five categories on the scale 1 to 5. TD Ameritrade got the following ratings in 2009:
  1. Mutual Funds and Investment Products: 5.
  2. Banking Services: 2.
  3. Trading Tools: 5.
  4. Research Capabilities and Quality: 4
  5. Customer Service: 3.
Barron's detailed review covers 23 online brokers, rating each in eight areas, with pros and cons for each company. TD Ameritrade is ranked in 14th place overall, earning low marks for its trading technology, range of offerings and costs. Barron's notes that TD Ameritrade does have plenty of tools available on its website for the long-term investor.

Consumers Rating
  • Viewpoints - Average Rating 3.5 of 5 (16 votes). 
  • RateItAll – Average Rating 3.3 of 5 (32 votes).
  • Epinions – Average Rating 3.5 of 5 (213 votes).
  • Glassdoor – Average Rating 3.3 of 5 (16 votes).
  • Investors can trade the most commonly-held investments.
  • Offers a wider range of services than the basic- or deep-discount firms.
  • Trading service is appealing to a casual trader.
  • Commissions are higher than at a basic- or deep-discounter.
  • Customer service is considered in the bottom rung, but most analysts expect an improvement as the merger has time to settle.
  • Navigation of website is not very user-friendly.
TD Ameritrade is a hybrid - not quite full-service, but not a deep-discount firm either. The firm's brokerage services primarily appeal to the fairly active investor and trader who has considerable assets, wants a wider array of services than that offered at basic discounters, occasionally likes to visit his broker's office and who does not mind paying a little more in commissions and fees.

Contact Information
1315 W 22nd St
Oak Brook, IL 60523

Phone: 800-454-9272 (Opening New Account)
            800-669-3900 (Customer Support)
            800-368-3668 (International)

Sources and Additional Information:

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