TD Ameritrade is one of the largest online brokerages, with 6.6 million funded customer accounts and client assets worth over $650 billion. It has gone through several evolutions within the financial arena, but ultimately became TD Ameritrade in 2006 when it acquired TD Waterhouse USA and TD Financial Group.
TD Ameritrade’s prices are slightly higher than average among the big online stock trading brands, but TD Ameritrade really shines through with impressive extras that more than make up for the higher price. Its breadth of investment services, robust (and free) investor research and education, choices in trading platforms, and 24/7 customer service will be appealing to both beginner and advanced traders.
TD Ameritrade Details
|Price – Stock Trades||$9.99|
|Costs & Fees||Options: $9.99 + $0.75 contract
Mutual Fund Trades: $20.00
Broker Assisted Trades: $44.99
Account Fee: $0
Inactivity Fee: $0
Minimum Account balance: $0
|Misc. Fees||$0.00 Bond Trade Fee
$25.00 Treasury Trade Fee
$0.00 CD Trade Fee
$34.99 IVR Trade Fee
$0.00 IRA Annual Fee
$0.00 IRA Closure Fee
$25.00 Forced Margin Sellout Fee
$25.00 Returned ACH Fee
$25.00 Returned Wire Fee
$0.00 Stock Certificate Processing Fee
$500.00 Stock Certificate Delivery Fee
$0.00 Paper Statement Fee
$0.00 Paper Confirmation Fee
$25.00 Domestic Wire Fee
$25.00 International Wire Fee
|Account Types||Full service brokerage (stocks, bonds, CDs, 401K, other fixed income assets)
7,284 Mutual Funds (Load); 5,560 (No-Load); 3,547 (NTF)
No Fee IRAs
|Best For||Beginner investors and advanced investors
Research and data
|Not For||Price-sensitive investors
Investors looking for a customizable platform
|Margins||8.75% under $24,999.99
8.50% $25,000.00 to 49,999.99
7.50% $50,000.00 to $99,999.99
7.25% $100,000.00 to $249,999.99
7.00% $250,000.00 to $499,999.99
7.00% $500,000.00 to $999,999.99
6.25% above $1,000,000.00
|Services||24/7 by phone, email, live chat|
|Branches||106 locations in 32 states; see the branch locator|
Desktop (Windows & Mac)
|Standout Features||Auto Investing
Charting – Display Corporate Events
22 Charting & Drawing Tools
Charting – Notes
Level 2 Quotes – Stocks
Level 2 Quotes – Options
Option Chains – Streaming Real-time
Option Analysis – P&L Charts
Stock Alerts Delivery – Email, Sound, text
Streaming Time & Sales
Trade Hot Keys
Watchlists – Streaming Real-time Quotes
|Awards||#1 for Long Term Investing (Barron’s 2016 Online Broker Review)
#1 for Usability (Barron’s 2016 Online Broker Review)
#1 for Amenities and Research (Barron’s 2016 Online Broker Review)<
#1 for Novices (Barron’s 2016 Online Broker Review)
Gold winner for news and research, investor education, online help (Corporate Insight 2015)
- Costs and More: TD Ameritrade offers $9.99 + $0.75 contract. It also offers a $9.99 Options base fee + $0.75 contract. Mutual funds are $49.99 and broker-assisted trades are $44.99. Non-active traders only interested in mutual funds or new traders who need broker-assistance will not like these prices. If you’re a self-learner or have a little knowledge under your belt, and you want to play around with more than just mutual funds without any hand-holding, TD Ameritrade will charge slightly more, but it knocks the competition out of the water.
- Learning Curve: It’s easy. New users might be slightly off put by the vast amount of functions and tools available in its platform, but after a few test drives, it’s easy to figure out. TD Ameritrade makes regular updates and overhauls on its platform, adding more and more features and user-friendly functions each year.
- The Platforms: TD Ameritrade uses Thinkorswim, one of the best trading technologies in the industry – it was voted #1 trading platform by Barron’s. The details are plentiful which may be an initial turn off to new users, and it isn’t customizable, which may be a turn off to advanced users. Beyond this, it’s a stellar technology that has everything any type of trader would need.
- Stock Trading Tools: The platform comes loaded with Command Center 2.0, Market Motion Detector, Pattern Matcher, QuoteScope, and Strategy Desk – all tools that will help streamline the trading process and make things easier, especially for new customers unfamiliar with online stock trading.
- Education Center: TD Ameritrade created its Education Center in 2014, and it has been expanding ever since. It’s free, and most of it can be accessed even if you don’t have a TD Ameritrade account. New users can browse topics from portfolio management to retirement planning. There’s all the info anybody would ever need on stocks, bonds, ETFs, Options, Futures, and taxes, all in easy-to-access blogs, publications, courses, videos, and webcasts.
TD Ameritrade’s Claim
TD Ameritrade acknowledges it has higher prices than several of its competitors ($7.95 with Fidelity, $6.95 with Merrill Edge, $4.95 with Ally Invest), but that’s because it can. Old users stay with TD Ameritrade and new users regularly sign up with this online broker not only because of its reputable name, but because of its broad investment options, user-friendly technology, impeccable research and education libraries, and $0 minimum deposit.
Is it True?
Yes. Even though TD Ameritrade isn’t the most cost-friendly online brokerage in the industry, the company makes up for it with its wide array of offerings, robust technology, and solid 24/7 customer service. The company’s prices are on par with E*Trade, but is still more expensive than some of the other brands out there, like Merrill Edge, Fidelity, and Ally Invest. E*Trade requires a minimum $500 deposit where TD Ameritrade doesn’t, but TD Ameritrade’s Mutual Fund prices ($49.99) and broker-assisted trades ($44.99) are some of the highest in the industry. E*Trade offers the lowest price for mutual fund trading ($19.99 and $17.00, respectively), but require hefty minimum deposits to join ($500 and $2,500, respectively).
Nevertheless, and as I have said before, don’t let the $0 minimum deposit feature be the sole reason for signing up with any online stock broker. You’re going to have to deposit something, so usually beginner to intermediate investors will deposit between $500-2,500 anyway to make any sort of substantial trade.
New consumers may be unaware that there are cheaper services out there – but not by that much, and especially considering those cheaper brokerages won’t have as good of tutorials or user-friendly platforms that new traders absolutely need. TD Ameritrade has actually been pretty good at filling the gaps where other online stock brokers fall short – it’s just a little more expensive. TD Ameritrade knows this, and its customers don’t seem to mind paying more for the service.
It’s difficult to find any real downsides with TD Ameritrade. The entire platform would give both new investors and seasoned traders a great, all-around experience. Users have free access to a high volume of investor education and research, real-time market reports and data, and its flagship platform, Thinkorswim, is considered the best in the industry. The only negative aspect I could really find with the dashboard platform is that it is not customizable like some of the platforms offered by other online stock traders. Upon closer inspection, I found no customizable options for their mobile apps either, which might be annoying to more seasoned investors who want to customize items in the dashboard or on their smart phones. However, I do find this an extremely small price to pay for the overwhelmingly positive experience, tools, and service TD Ameritrade offers.
TD Ameritrade acquired Thinkorswim back in 2009 when Thinkorswim was a small, unknown, standalone broker that had developed a very robust and impressive trading platform geared for advanced users. TD Ameritrade ultimately paid $606 million to acquire that technology. It has since given the company a competitive edge in the industry; this platform is arguably the reason TD Ameritrade attracts every level of investor.
Thinkorswim is run as a desktop application and has dozens of charts that stream real-time market data, 300+ customizable technical studies (the highest of all the online stock brokers), and is embedded with CNBC TV, heat-mapping, stock scanners, back testing, and a virtual trading platform – a beloved feature for new users who can experience what it’s like to trade without losing a penny. Thinkorswim is very well known in the industry and it is considered one of the best technologies traders can get their hands on today – it’s super easy to use and every feature and tool it has is available with nothing more than a click.
- E*TRADE: $0 trade fee; $0 minimum deposit. E*Trade is largely recognized by its humorous television commercials, and while it is not the most affordable, it markets to a large audience and therefore maintains a valuable customer-oriented presence.
- Merrill Edge: $6.95 flat fee trade plan; $0 minimum deposit. Owned by Bank of America since 2010, Merrill Edge is affordable and would be beneficial for those who already have various BoA accounts.
- Ally Invest: $4.95 flat fee trade plan; $0 minimum deposit. Ally Invest has gone through several evolutions since its formation in 2005. It has now emerged as a formidable competitor with affordable rates that are attractive to new investors.
TD Ameritrade is going to charge you $9.99 + 0.75 per contract for your trade. In some cases, this is double the price than many of its industry competitors (for example, Ally Invest offers a $4.95 flat free trade plan with a $0 minimum deposit). Customers are turning to TD Ameritrade because it offers everything all of the other major online stock brokerages offer, as well all the things each one tends to be lacking on. This could be anything from its investor education, user-friendly platform, or 24/7 customer service. Where each major online stock broker lacks, TD Ameritrade seems to pick up the slack – and customers don’t seem to mind paying extra for that.
Cheaper (or Free!) Alternatives
E*Trade charges $0 trade fee and has a $0 minimum deposit. While TD Ameritrade doesn’t require a minimum deposit, its prices are not as competitive in mutual funds ($49.99) or broker-assisted fees ($44.99) with E*Trade ($19.99 and $25.00, respectively). Ally Invest doesn’t require a minimum deposit and only charges $9.95 for mutual fund trades, $9.95 for Options, and $20.00 for broker assisted trades. So there are cheaper alternatives, certainly, and those will be good for customers who only care about the hard numbers. These cheaper options might appeal to seasoned investors who don’t regularly utilize customer service, the bells and whistles of the platform and apps, investor education, or those who just want to make the cheapest possible online trades.
What Others Are Saying
- TD Ameritrade settled with customers in 2011 after a 2007 hack that compromised most of its customers’ names, Social Security numbers, dates of birth, addresses, phone numbers, and trading activity.
- CNN reported that in 2009, TD Ameritrade settled a lawsuit alleging it had marketed auction rate securities as short-term investments and included a $456 million payment and the buyback of the securities, compensating investors for losses.
- PR Newswire announced on September 8th that a new technology, Financial Media Exchange (FMeX), will be joining TD Ameritrade.
- On September 1, 2016, The Street reported on a TD Ameritrade study that asked Millennials about their favorite stocks (spoiler: they were pricey and risky).
The Bottom Line
TD Ameritrade may cost a little more than its competitors, but most users find the superior services it offers worth it. Customers stay with the company and new users gravitate toward TD Ameritrade each year because it has a reputable name, strong trading platform that’s incredibly easy to use, an impressive knowledge and research base, and 24/7 customer service.