Is Ally Invest a Scam?
If you’re wondering if Ally Invest is a legitimate broker, you have come to the right place. We have done the research, and here is the answer:
Is Ally Invest Safe?
Ally Invest is a member of FINRA. This is the brokerage industry’s rule maker and watchdog. It
oversees the conduct of member firms, investigates complaints, and issues sanctions when
necessary.
Ally Invest’s FINRA number is 136131. Ally Invest also has an investment-advisory service that has its own FINRA number. It is 170301.
According to BrokerCheck, the self-directed arm of Ally Invest (#136131) has been registered with FINRA since 2005. This registration actually started with TradeKing.
Besides FINRA oversight, Ally Invest is also regulated by the
Securities and Exchange Commission (SEC). This is the federal government’s securities regulator. Ally Invest’s SEC number is 8-66982. The investment advisor’s number is 801-79305.
The SEC provides another layer of safety by promulgating rules and enforcing them on brokerage firms.
FINRA and the SEC only regulate securities trading. Ally Invest also has a forex business. This branch of the company is regulated by the National Futures Association. Ally’s NFA membership ID is 0408077.
Ally Invest Clearing Firm
Ally Invest uses Apex Clearing Corporation as its clearing firm for trades of securities. This means Apex handles all the bureaucracy associated with trades and makes sure that clients have the correct securities and amounts in their accounts. Apex is a well-known company in the industry. It provides services for many other broker-dealers.
Apex’s FINRA number is 13071. Its SEC number is 8-23522.
Is Ally Invest SIPC/FDIC Insured?
On top of all the regulatory oversight, Ally Invest also has insurance for its securities accounts.
This protection helps to safeguard the securities in Ally Invest accounts. Market prices themselves
are not guaranteed, but the number of shares is, up to program limits. Forex accounts do not have
this protection.
The first line of insurance for securities accounts is through SIPC. This is a
Congressionally-mandated organization that
protects brokerage accounts up to $500,000. Half of this amount can be applied to a free cash balance.
Through its partnership with Apex Clearing, Ally Invest has a supplemental insurance policy that can be used after SIPC coverage has been exhausted. This auxiliary policy provides protection up to $37.5 million per customer with a $900,000 maximum for cash. There is a $150 million house limit. This secondary policy is through Lloyd’s of London.
Ally Invest Better Business Bureau
Ally Invest has a profile at the Better Business Bureau. So does its parent company Ally Financial and sister company Ally Bank.
The Ally Invest profile shows a rating of 1.13 stars out of a possible 5 based on 38 reviews. Although the rating itself is very low, this is probably due to a small sample size composed mostly of upset customers.
Ally Invest has a BBB rating of F, the lowest possible grade. BBB’s rating is based on complaints received from the public and how likely the business is to interact with customers. Other factors that could affect the score include time in business, government actions known to BBB, and how transparent BBB believes the business to be.
Ally Invest is not BBB accredited. This could be for several reasons. A business does not need to be BBB accredited to have a profile, and businesses often do not seek accreditation.
Top Competitors
Is Ally Invest a Safe and Legitimate Judgment
Ally Invest is definitely a legitimate brokerage firm operating in the United States. Ally Invest
is definitely not a scam. Multiple regulations and insurance policies are in place to protect
investors, although all forms of investing contain inherent risks that are not avoidable at any
brokerage firm. Ally Invest is as safe as they come.
Ally Invest Review
Having seen that Ally Invest is a legitimate brokerage firm, it’s time to take a detailed look at what exactly the company has to offer its customers.
Investments Choices
Ally Invest offers both self-directed accounts and portfolio management. The latter service comes in robo and traditional formats with varying fee schedules.
Traders who would rather pay no annual fees at all and don’t need any advice can open a variety of self-directed accounts, including education, retirement, and custodial accounts. Available assets inside these accounts include:
- Option contracts
- Stocks, including OTC instruments
- Forex and precious metals (in a separate account)
- Bonds and other fixed-income securities
- Mutual funds
- Closed-end funds
- Exchange-traded funds
Assets missing at Ally Invest include futures contracts, warrants, cryptocurrencies, and securities on foreign exchanges.
Website Trading
The Ally Invest website isn’t very appealing to the eye, but it does have some decent trading tools on it. During our probing, we found the trade bar at the bottom of the site to be especially useful. It can submit orders for both equities and options. Available trade types include:
- Market
- Market on close
- Limit
- Stop
- Stop limit
There are discrete buttons for buy to cover and sell short. The order ticket is duplicated on a web page just in case you don’t want to use the trade bar. This page has integrated option spreads like butterflies and straddles.
And then there’s LIVE. This is Ally’s browser platform. Decent charting will be found here. Resources include indicators and tons of drawing tools. Examples include:
- Speedline
- Timecycle
- Gannfan
The same order ticket from the website appears on LIVE, although option spreads aren’t available. There are some good derivative tools, though, like profit-loss diagrams and a probability calculator.
Mobile Apps
Ally Invest customers can use one of three apps (yes, three). The first one is for securities trading, and the other two are for forex trading.
The currency apps offer a lot of trading and research power. There are graphs with technical studies, dealing boxes with color-coded trade buttons, watchlists, and news articles on currencies. One of the apps is an in-house app, and the other is from MetaTrader. Ally’s app is designed only for phones, while the MetaTrader 4 app can be used on tablets.
For securities trading, Ally Invest customers use the Ally Bank app. There are some decent trading tools on the platform. The trade ticket has 4 order types (market on close is missing), and there’s an options ticket with spreads integrated. A chart on the mobile app can be rotated horizontally, and there are a few tools like comparisons and indicators.
Because this is the Ally Bank app, there are a lot of cash management tools, including Zelle transfers, mobile check deposit, ATM finder, and bill pay.
Desktop Software
Self-directed securities traders at Ally Invest who don’t find the software they need with the mobile app or browser system can use Quotestream. This is an advanced desktop platform with many tools, some of which aren’t available on any other platform at Ally. Highlights include:
- Earnings calendar
- Waterfall ticker
- Heatmap
- Time & sales numbers
Ally Invest does require at least 30 trades per quarter to gain access to Quotestream (review), the one major downside here.
Customer Support
Ally Invest has customer service reps on the phone around the clock. There is a second phone number for customers who are temporarily outside the United States.
For issues that can wait, there is a service e-mail address (support@invest.ally.com). Finally, the browser platform has a human chat tool. There is no robo chat on any platform.
From here, it pretty much goes downhill. The brokerage firm has no branch locations, which causes us to question the company’s wealth management program. And the website doesn’t have internal messaging.
Pricing Schedule
Self-directed accounts at Ally Invest have no on-going fees and pay no commissions on trades of stocks, closed-end funds, and exchange-traded funds if they are priced at $2.00 or higher. Equities with market prices below that level come with a $4.95 base commission plus a 1¢ surcharge per share.
There is also a per-contract fee of 50¢ on option trades, but there are no fees for assignments or exercises.
Every mutual fund at Ally Invest has no transaction fee.
Ally Invest’s automated account service is free with a large cash position or 0.30% per year with a small cash position. The traditional wealth management package varies from 75 to 85 basis points annually but comes with a dedicated financial advisor.
Margin Borrowing
Ally Invest offers both cash and margin accounts. A cash account can be upgraded to margin online (hover over the My Accounts tab and select Margin/Option Level under the Settings sub-menu).
Once an account is classified as a margin account, it can only be downgraded over the phone or through the service e-mail address. Any account flagged as a pattern-day trading account cannot be downgraded.
Ally mostly follows industry standards for margin requirements. It does not permit opening short positions on stocks priced below $5.
Margin rates at Ally Invest start at 12.5% for small balances and reach 8% for debits above $1 million.
Security Research
The Ally Invest website has resources for investment education and security research. There are screeners for options, stocks, mutual funds, and ETFs underneath the Quotes & Research tab on the website.
During our testing of the stock screener, we found it easy to use. There are about 30 search criteria that can be added to the few that are included on the default engine. Examples of searchable criteria include:
- 5-year dividend yield average
- Current payout ratio
- Bollinger Band Bandwidth
- Industry
Stock profiles come with free pdf reports from CFRA. These reports include trade recommendations with price targets. There are trade recommendations from other analysts (courtesy of Factset) but no reports.
Miscellaneous Services
Extended Hours Trading: Pre-market and after-hours trading are available at Ally Invest at no additional cost.
DRIP Availability: Ally Invest clients can sign up for dividend reinvesting for stocks, ETFs, and mutual funds. There’s no charge for the service.
Fractional Shares: Partial-share trading is only possible with mutual funds at Ally Invest.
Recurring Mutual Fund Purchases: Not available, either.
Individual Retirement Accounts: Only Roth and Traditional accounts are available. Ally Invest does have a $25 IRA termination fee.
Cash Management Features: A no-fee account with Ally Bank can easily be linked to an Ally Invest account.
Recommendations
Mutual Funds: Every mutual fund at Ally Invest has either a load or a transaction fee, which is a big turnoff. We would go with Schwab, who has several thousand funds with neither.
Retirement Savers and Long-Term Investors: Ally Invest’s loads and transaction fees on its mutual funds cause us to balk. Its IRA closeout fees are strike two. We would suggest Fidelity, who does a better job at eliminating fees. Plus, it has more account types and retirement resources on its website.
Beginning Investors: A free robo account at Ally Invest would be a good decision.
Small Accounts: Ally Invest requires a whopping $100,000 to enroll in its wealth management service, so that is completely off limits. Ally’s robo service has a $100 requirement. The company’s self-directed accounts have no minimum and no fees.
ETF and Stock Trading: Ally Invest is a decent broker for stock and ETF trading with LIVE or Quotestream. A step up would be Webull, who offers an even better desktop platform and fractional-share trading.
Ally Invest Review Final Judgement
Ally Invest is a legitimate brokerage firm and it does perform very well in most areas.
Forex traders and robo investors especially can find good deals here.
Ally Invest Detailed Review
For more information about the company's online trading accounts, take a look at
Ally Invest Review.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
|