Oops! TD Ameritrade Hacked

TD Ameritrade announced today that it and its 6.3M customers were hacked recently, exposing potentially sensitive information like client SSNs to the hackers. Apparently, the hackers placed a rogue program on TD's network allowing them access to the company's servers.

Protecting data in the online broker world isn't easy, but it's KIND OF important for discount brokers. And TD has compromised client information before, losing a backup data tape containing customer data in 2005 according to the Privacy Rights Clearing House.

The safety of your information is important. Is your discount broker on the list of breaches? As an online investor, make it a point to know.

TD Ameritrade Pitches Straightforward Pricing - Who Cares?

TD Ameritrade is currently running a straightforward trade commissions campaign. My reaction -- who cares? TD Ameritrade has a solid overall offer in the discount broker space. They'd be a good choice for many an online investor. Pitching their straightforward pricing, based on the assumption that clients are having trouble calculating commissions seems like lazy marketing to me. Are hidden fees a problem in the online broker world? Yes. Are hidden commissions, no? I've been wrong before, but I suspect this won't be a wildly successful ad campaign. Look for that dude from Law & Order to be pitching something new soon.

Online Broker eTrade Offers Money For Your Rollover

eTrade is offering investors a cash incentive to roll their IRA into eTrade. The table below shows the offer:

While you have to deposit a lot to get the $500, even $50 free dollars for money that you won't touch for a long time can really add up.However, choosing eTrade simply for this offer isn't wise.There are many reasons eTrade might be an attractive choice among online brokers for an online investor. Determine what's important to you (service, advice, trade commissions...) . Let this be gravy. I like this gravy, however.

Stockbrokers and Subprime Loans

Our site isn't really about looking at online brokers as investments, but there are times we'll comment on certain topics that could be used to formulate investment theses. A topic on every investor's minds these days is the subprime loan mess. If you don't directly own any potentially implicated financials, you've probably noticed the market getting hit hard in the last few weeks.

While several discount brokers are players in the residential mortgage lending space, they remain relatively small players. Also, while you never know until you know that Schwab and eTrade have clean mortgage portfolios, we think it's unlikely these guys will be profoundly affected - either through their lending or their treasury activities. They just didn't play in those markets to the same extent as other institutions. Now, the tricky thing about this emerging mess is that as rates rise, it could affect borrowers without fixed rate loans, who have difficulty paying their mortgage. Such a scenario could impact the portfolio of a discount broker, but then again, mortgage to Schwab is a growing, but small part of its business.

This isn't an endorsement to buy Schwab or Etrade. For many reasons, they might not be suitable investment for you. But remeber when researching investments at the stock level, be sure to never paint each stock with the same brush. Schwab can be lumped as a "financial stock" with Countrywide, but Schwab and Countrywide have totally different businesses.

Discount Broker Review: Scottrade

Today, we review to one of the bigger and better known online brokers - Scottrade. While a part of me has always been turned off by the repeated mimickry of Schwab, from products, offers, and advertisements to CEO Rodger Riney, who is even beginning to eerily resemble Charles Schwab, I do admire how successful this company has been. While privately held, publicly available metrics about Scottrade suggest a steady surge in assets and trades over its life. What they've done is taken Schwab's philosophy and tried to provide most of the same at a slightly lower price. While they are not as comprehensive in their offer as Schwab or Fidelity, for example, they offer good products and service at a fair price. And how can you not admire that?


At Scottrade, you can trade a variety of instruments including stocks, options, etfs, and mutual funds. Like larger discount brokers, it offers basic trading tools as well as those for the advanced trader. Some fairly recent comments posted on the site Broker Review don't paint the trading platforms in a very good light. If you are an active trader, you should read them, but I'd also caution that it wouldn't be terribly difficult to find negative comments about most brokers if I spent enough time seeking them out.

Overall, the Scottrade offer is relatively simple online. Since a recent redesign, there's less overall site density with just four main tabs. There are some nice features like balances on the trade screens that are useful for even less active traders. For active traders, if you don't want to trade through a software application, Scottrade offers a free, web-based application with streaming quotes, charts and news. It's a nice service, especially when it's free.

Scottrade's trading commissions are low. Stock trades are 7.00, while options trades are the same plus 1.25 per contract. There are lots of no load mutual funds with no mutual fund fees. Scottrade fees are competitive and there no inactivity fees.

Another big plus for Scottrade is it's 301 national branch offices (again, eerily similar in number to Schwab). At $7 trade, it's still nice to know you have a lot of options to find a human being when you need one.

In summary, Scottrade is kind of the vanilla ice cream of the stockbroker world. It doesn't have the greatest tools, the widest variety of products, the lowest commissions, but it's solid across the board and, for most self-directed investors, would be a fine place to put your money.

E*Trade to Launch International Market Access

E*Trade is launching international trading beginning in July. Investors will be able to buy and sell international stocks (in foreign currency) in Canada, France, Germany, Hong Kong, Japan and the UK.

While some active traders/insomniacs/foreign born U.S. residents will be really excited by this new development, it's probably a lot easier to simply buy an international mutual fund. In our humble opinion, this is a great example of financial service firms habit of "performance chasing". Whenever an asset class (stocks, International etc.) or sector (think tech bubble) has been hot for a few years, the industry rolls out lots of new products to allow people to invest in it. Unfortunately this is generally the worst time to get in.

In this case E*Trade even uses the recent rise in international stock markets to plug investing in them - of course including the standard disclaimer "Past performance is not an indication of future results" in the fine print.

TD Ameritrade Brokerage Promotional Offer

Just keeping tabs on the special offers out there. TD Ameritrade is currently running a good promotion for new clients. Customers funding a brokerage account (not retirement accounts) with $25,000 or more will receive $100 cash plus free trades for 45 days. Accounts funded with over $2,000 but under $25,000 just get the free trades - not the cash.

You'll have to act fast - the offer expires June 30. Note - it's only equity trades, and they must be executed online.

It's about as attractive as Fidelity's recent promotion in partnership with United airlines that we wrote about in May. Our general thought on these offers is that it's nice to pick up the bonuses (miles, cash, free trades) - but ultimately it's not that much money. That said - if you are thinking about switching firms or opening a new account, you should look for promotional offers at your top choices - may as well pick up the bonus. Check back with us - we'll do some of the legwork for you.