E*TRADE Review: Is It Still the Best in the Business In 2023?
E*TRADE has developed a reputation for being one of the most innovative investment brokers in the industry. Now that it’s a part of Morgan Stanley, the company offers more than ever. It has low fees, a generous sign up bonus, the widest selection of investment options and retirement accounts, as well as banking services with checking and high interest savings.
If you like to trade mutual funds, you’re an active options trader, or you have a large portfolio, there’s even more to like about E*TRADE.
Commissions & Fees - 10
Customer Service - 10
Ease of Use - 9
Tools & Resources - 8
Investment Opportunities - 10
Accounts Available - 10
E*TRADE Pros & Cons
Who Is E*TRADE For?
Historically one of the smaller investment brokers, E*TRADE has steadily expanded their product options and lowered their pricing to better compete – and sometimes outcompete – with larger brokers. The fact that the company is now owned by Morgan Stanley has only strengthened the service.
Due to its low fees and outstanding trading platform, E*TRADE is good for most investors. However it seems best suited for active options traders, who get the benefit of lower pricing on options trading. And since they offer more than 4,000 no-transaction fee mutual funds, it’s also an excellent choice for mutual fund investors.
Larger investors will also see a major benefit with E*TRADE, since it offers a very generous new account sign-up bonus, wealth management services, and banking services through Morgan Stanley Private Bank. That comes complete with high interest savings and a line of credit against your investments.
The self-employed will find plenty to like with E*TRADE as well. The company offers the full range of self-employed retirement plans, including profit-sharing plans.
However, investors with smaller accounts might not reap quite the same rewards with E*TRADE. They don’t offer fractional shares, which is an important strategy for investors who want to diversify across different companies and ETFs with a smaller buy-in. The $500 minimum requirement for the Core Portfolios robo-advisor may also be steep for some small investors.
|Mutual Funds||4,000+ no-transaction-fee (NTF) mutual funds|
|Investment Types||Stocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, Cryptocurrencies, Futures|
|Broker Assisted Trade||$25 + regular fees and commissions|
|Customer Service||By phone, 24/7, or by regular mail + 30 local branches|
What Makes E*TRADE Great?
Well, lots of things, as it turns out. If you're an technical analysis buff, an active options trader or an owner or a small business, you'll find lots to rave about with E*TRADE. Here's why.
Power E*TRADE Platform
The Power E*TRADE platform is one of the top trading platforms in the industry. It’s highly user-friendly, and gives you access to abundant resources and tools. The platform is available for both desktop and mobile app use.
Power E*TRADE comes with technical pattern recognition, earnings move analyzer, risk/reward probabilities, custom and preset scans, multiple charts, exit planning, and paper trading (see below).
Discounted Options Trading
E*TRADE is well known for its superior options trading platform. This is particularly true for active traders, who get the benefit of a reduced fee structure. Options are commission-free, but if you make at least 30 trades per quarter, the per contract fee drops to $0.50, from $0.65. Normally, these fees can add up for an active trader.
Meanwhile, the Power E*TRADE platform has a strong orientation toward options. The platform offers more than 100 technical studies and more than 30 drawing tools to help you trade more profitably. It also offers risk analysis tools that translate options Greeks into plain English.
Learn more>> Trading Options vs. Stocks
Mutual Fund Investing
Offering more than 4,000 no-transaction fee mutual funds, E*TRADE is an excellent broker fo mutual funds since it's easy to avoid trading fees that many other brokers charge.
But be aware that they do impose an early redemption fee of $49.99 if you buy no-transaction fee funds then sell them within 90 days.
Offers All Self-Employed Retirement Plans
Many brokers offer only traditional and Roth IRAs. But E*TRADE offers basic IRAs, plus more specialized retirement plans for the self-employed.
- The SIMPLE IRA for businesses with 100 or fewer employees
- SEP IRA plans, which allow you to contribute up to 25% of your net business income
- Profit Sharing Plans enabling you to make tax sheltered contributions up to $61,000
Individual (“Solo”) 401(k) plans, complete with both traditional and Roth 401(k) contributions.
You can set up any of these plans if you're a self-employed sole practitioner, or if you have employees.
Power E*TRADE Paper Trading
Power E*TRADE Paper Trading is a tool available on the Power E*TRADE platform. It’s particularly valuable for options trading, enabling you to test potential maximum profit and loss, breakeven levels, earnings and dividend dates, and to test trading strategies without risking any money.
Learn more>> Paper Trading: Experience Investing Without an Actual Risk
Cryptocurrency Futures Trading
Like most traditional investment brokers, E*TRADE doesn't offer trading directly in cryptocurrencies. But they do offer cryptocurrency futures trading, which will give you at least limited access to the asset class.
E*TRADE also gives you the ability to invest in crypto related companies and funds. They offer a total of 30, including the following:
Again, you need to use a crypto exchange like Crypto.com if you want to purchase crypto directly. And various investment apps like Public have also branched into crypto, taking the edge over E*TRADE.
However, more passive investors might find that E*TRADE's support for various crypto-based ETFs is enough to diversify their portfolios.
Related>> What Is the Grayscale Bitcoin Trust? And Should You Invest in It?
E*TRADE Sign-Up Bonuses
E*TRADE offers a very generous broker bonus structure, starting with a $50 cash credit for opening a new account and depositing at least $5,000. Like most broker bonuses, it’s a tiered plan, and goes as high as $3,500 in credit.
Both taxable brokerage accounts and retirement accounts are eligible for the bonus. You must fund your new account within 60 days of opening. The bonus will be based on the amount of deposits made from external accounts within 60 days, then paid within seven business days thereafter.
Morgan Stanley Private Bank
As a subsidiary of Morgan Stanley, E*TRADE offers investors access to banking services with Morgan Stanley Private Bank. That includes a checking account with no monthly fees, a premium high-yield savings account currently paying 1.40% APY on balances up to $500,000, and a line of credit to borrow against your investments.
What are E*TRADE’s Drawbacks?
Despite its range of features and lucrative sign-up bonus, E*TRADE has severa downsides you should consider before opening an account.
No Fractional Shares
E*TRADE doesn’t permit buying and selling of fractional shares with self-directed trading. Fractional shares are limited to reinvestment of dividends for the purchase of additional shares in the issuing company. This will limit investors to purchasing whole stock prices only.
The lack of fractional shares trading may not be a problem for investors with larger portfolios. But it will definitely be a limiting issue for those with smaller balances.
For example, an investor with a $200 account balance will be limited to the purchase of shares in four companies with an average share price of $50 each. If fractional shares were permitted, the investor could spread his or her investments across 20 companies by buying a slice of each, rather than paying for the entire stock price.
Fractional shares availability also makes it easier for investors to grow their accounts through dollar-cost averaging of contributions. For example, a $100 addition can be spread across multiple stocks or funds, rather than limited to the purchase of one or two shares.
More on Fractional Shares>>What Is Fractional Share Investing?
High Core Portfolios Robo-Advisor Fees
E*TRADE’s Core Portfolios robo-advisor fee is a little above the average for the industry, at 0.30% per year. By contrast, Betterment and Wealthfront, two of the top robo-advisors in the industry, charge 0.25% per year. M1 Finance and Charles Schwab Intelligent Portfolios charge no annual advisory fee.
It's nice that E*TRADE still offers a robo-advisor since this isn't a given for brokers. But in our opinion, you're better off using a standalone robo-advisor at this time than sticking with E*TRADE Core Portfolios.
High Blend Portfolios Wealth Management Fees
The fee situation with the Blend Portfolios wealth management program is mixed. The fee structure, tiered between 0.90% for the first $100,000, then falling to a low of 0.65% on balances greater than $1 million, is admittedly better than the 1% to 2% charged by traditional, human guided wealth managers.
But it’s quite a bit higher than Empower, which starts at 0.79% on portfolios up to $3 million, dropping all the way to 0.49% on balances above $10 million.
E*TRADE Pricing & Fees
E*TRADE is a commission-free broker, so you can trade ETFs and stocks without paying trading fees. However, customers pay various trading fees for other secuities, and there are also potential account fees and management fees to consider.
- Stocks/ETF Trades: $0
- OTC Stock Trades: $6.95, or $4.95 with 30+ trades per quarter
- Options Trades: $0 + $0.65/contract, or $0.50/contract with 30+ trades per quarter
- Mutual Funds: 4,000+ no-fee funds, otherwise $19.99; early redemption fee of $49.99 on no-load, no-transaction fee funds held less than 90 days
- Broker Assisted Trades: $25 + regular fees and commissions
- Bonds & Treasuries: $0 US Treasuries; secondary trades $1 per bond ($10 per trade minimum/$250 per trade maximum)
- Futures: $1.50 per contract, per side + fees; $2.50 per contract, per side + fees for cryptocurrency futures
- Annual Advisory Fee: 0.30%
Annual Advisory Fee:
- First $100,000 – 0.90%
- Next $150,000 – 0.80%
- Next $250,000 – 0.75%
- Next $500,000 – 0.70%
- Next $1 million and above – 0.65%
Fixed Income Portfolios
Annual Advisory Fee:
- First $1 million – 0.45%
- Next $2 million – 0.40%
- Next $1 million and above – 0.35%
- IRA Premature Distributions: $25
Is E*TRADE Safe & Secure?
E*TRADE securities is a member of the SIPC, which protects your account with up to $500,000 for securities ($250,000 for cash only.) This means your investments are safe at E*TRADE, and it follows the same security measures and insurance practices as other major brokerrs.
How to Contact E*TRADE
E*TRADE customer service is available by phone (800-387-2331), 24 hours a day, seven days per week.
The company can be contacted by mail at the following address:
E*TRADE Securities LLC
PO Box 484
Jersey City, NJ 07303 – 0484
They also offer over 30 branches across the country, if human-to-human interaction is your style.
E*TRADE is one of the leading brokers for several good reasons. It has a powerful trading platform, competitive options trading fees, and a range of account types. Plus, it boasts one of the highest broker sign-up bonuses on the market right now.
However, several E*TRADE alternatives might be up your alley depending on the assets you invest in most:
Both Ally and TD Ameritrade are competitive, full-service brokers you can consider if E*TRADE isn't for you. Ally has many excellent banking offerings as well, including a great high-yield savings account. As for TD Ameritrade, it has great customer service and a wealth of research offerings for both new and experienced investors.
Investment apps like Robinhood are also worth considering if you want commission-free options trading and to dabble in crypto. Although this app isn't nearly as robust as E*TRADE's desktop trading platform.
E*TRADE is an excellent choice for most investors, but especially active options traders, mutual fund investors, and investors with large portfolios. They offer reduced trading fees for active options traders, and several thousand no-transaction fee mutual funds.
Large investors will appreciate the ability to take advantage of both self-directed investing and wealth management portfolios, along with banking services from Morgan Stanley. That includes high interest savings and a line of credit against your investment portfolio.
And virtually all investors will appreciate E*TRADE’s award-winning trading platform and 24/7 customer service.
If E*TRADE has a weakness, it’s that it may not be the best choice for investors with smaller amounts of money to invest. That’s because they don’t offer fractional share investing and also because they require a minimum of $500 to participate in their robo-advisor service. Plus, the robo-advisor is pricier than many competitors.
But for most other investors, E*TRADE is one of the best in the business.