Loyal3 is a new online brokerage that offers an interesting twist on the traditional brokerage account: no fees for certain preselected stocks.
At Loyal3 they allow users to invest with only a certain selection companies’ stock without paying any commissions. The other great part is that they allow customers
to buy fractional shares of a stock.
This article will go over the signup process, website layout, available stocks to pick from, other features, and Loyal3 hidden fees. Afterwards it will
tie everything together with a summary. Is Loyal3 a good brokerage firm for investors? Keep reading to find out.
Loyal3’s signup process is relatively straightforward. They ask the standard questions in a very quick and easy signup form. In order
to register an account, investors will have to buy at least $10 of stock at one of the available companies. When compared to other brokers out there,
this is a very low price point to open an account, though there are plenty of firms with
no minimum to open a brokerage account.
After selecting the initial company and amount a new customer wants to invest, all they have to do is review their order, click submit, and they have an account! Immediately after account creation the new user is taken to the main account overview page.
Loyal3’s website layout is very modern and clean. They utilize lots of white with some blue and grey, similar to many other companies. Their
website doesn’t have very many functions outside of viewing account performance and picking new investments. While this is understandable
since those are the two main purposes of the site, Loyal3 lacks many of the research and information services that other brokers provide.
Seeing as they’re a new company, hopefully they will add more features in the future.
The best part of the website is their account overview page. This page, pictured above, shows the recent transaction history of an account along with any investments. Unfortunately, this page lacks any performance charts to show the performance history. It looks like investors will have to keep track of that on their own for the time being.
With this being said, the main page does still deliver a pretty great user experience. The colors are pleasing, the website is responsive, and
the account overview page is very helpful for learning more about the account. There are still areas that need to be built and hopefully
it will be done as the company grows.
Available Stock Options
The stock selection is how Loyal3 makes no-cost investing possible. They offer a total of 70 stocks for customers to invest in. A great perk of investing at Loyal3 is that they allow investors to buy fractional shares of a stock. Normally, if stock ABC is valued at $100 per share, but a user only has $10, they would have to wait until they came up with the other $90. By allowing users to buy fractional shares, the same customer can go over to Loyal3 and buy 10% of 1 share of ABC for the same $10. This way, they don’t have to worry about buying the full share.
While no transaction fees are incredible, and almost unheard of from online brokers, the lack of available options is unfortunate. By not allowing users to diversify themselves further, they are opening them up to more risk. For this reason, it seems as if Loyal3 best serves as a secondary account for investors that would like to trade commission free.
One unique feature is that Loyal3 allows their customers to get emails when there is a new IPO or follow-on that they are offering on their platform. At a high level, IPOs and follow-ons are terms for when a company first allows their stock to be purchased by the public. This is a very interesting angle; allowing investors to purchase some newly public stock (commission free) will certainly keep people coming back for more. It’s important to keep in mind that IPOs are historically very risky investments, and should be approached with caution.
As mentioned above, Loyal3 does not provide very much information about the stocks that can be invested in. Clicking on the “Read a description of ____” link only shows a paragraph about what the company does with a little history. Any additional research will need to be done outside of the Loyal3 website. It’s very surprising they don’t even have previous years’ performance available for customers to look at. Hopefully this is something that they are planning on changing in the future.
Loyal3 really does offer a platform with no fees. There are no fees to sell, trade, or transfer shares. There is also no maintenance fee. All in all, there are no financial obstacles to investing with Loyal3 whatsoever.
While there are no fees, Loyal3 doesn’t offer that much to make up for it. While the website is nice and no fees is awesome, using it will complicate an investor’s portfolio by adding an additional account.
Loyal3 has a great premise: let people buy the stocks they love commission free. Unfortunately, they haven’t built up a large enough pool of stocks to allow
investors to do so while staying diversified. Because of this, investors should almost certainly have at least one other
investment account so they can diversify
their assets. This extra complication definitely hurts Loyal3 in the long run.
And the final point of our Loyal3 review is that their website lacks most of the features found at other online investing sites. Things like investing in mutual funds, ETF's, and options; research tools;
performance graphs; trading platforms and educational resources investors will need to find elsewhere.
reviewed by Brokerage-Review.com on