Is E*Trade Safe?
E*Trade is one of the most well-known online brokers. Even though E*Trade is a popular name, some might still wonder if it is trustworthy or if it's risky to use their services. We will address these concerns and review E*Trade’s fees, trading platforms, research tools, and more.
E*Trade started about 40 years ago and claims to have completed the first online trade for a retail investor. Many people know E*Trade from their famous baby commercials during the Super Bowl. In the investment community, E*Trade is highly regarded for its effective and easy-to-use trading tools.
In 2020, Morgan Stanley acquired E*Trade in a deal worth about $13 billion. E*Trade continues to operate under its own name with the same website and tools under Morgan Stanley’s ownership. In 2019, before the acquisition, E*Trade handled over 291,000 customer trades daily, had over 7.2 million accounts, and generated nearly $3 billion in revenue.
E*Trade Better Business Bureau (BBB)
The Better Business Bureau is a common place to check a company's credibility. E*Trade has a profile there but isn't BBB accredited. This just means they haven't paid for BBB accreditation, which is optional.
E*Trade has 53 customer reviews on BBB with a 1.09 out of 5-star rating and 426 complaints closed in the last three years. Given the millions of E*Trade customers, these numbers represent only a small fraction of their user base.
Is E*Trade Legitimate?
E*Trade is definitely a legitimate broker. It is subject to strict oversight from regulatory bodies to ensure it operates fairly and legally. Being in the financial industry and handling people's money means E*Trade must adhere to numerous regulations.
Regulators like the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), and the U.S. Financial Crimes Enforcement Network (FinCEN) monitor E*Trade’s activities. E*Trade also provides financial statements on its website that show its assets and liabilities.
Is E*Trade a Scam?
E*Trade is registered with both FINRA and the SEC. E*Trade’s FINRA ID is 29106 and its SEC ID is 8-44112. On E*Trade’s FINRA profile, there are 226 disclosures, including regulatory and arbitration events. You can see a detailed report on E*Trade’s FINRA profile online.
Is E*Trade Insured?
E*Trade brokerage accounts are insured by the Securities Investor Protection Corporation (SIPC) up to $500,000, which includes up to $250,000 in cash. SIPC insurance protects your investments if E*Trade fails financially.
Bank accounts through E*Trade at Morgan Stanley Private Bank are insured by the FDIC from $250,000 to $500,000, depending on the account type. FDIC insurance protects your cash if the bank fails.
E*Trade also offers sweep accounts that move your cash to different banks where it’s FDIC insured, offering up to $500,000 in protection. Additionally, E*Trade provides extra insurance beyond SIPC coverage with a total policy limit of $1 billion.
Is E*Trade Secure?
E*Trade uses many measures to protect your accounts and personal information. They comply with SEC regulations that require them to keep customer investments separate from the company’s assets.
E*Trade also promises to cover any losses in your account from unauthorized access with their Complete Protection Guarantee. They promise not to sell your personal data to marketers.
E*Trade’s security measures include dedicated fraud protection teams, firewalls, and data encryption. They offer optional security features like two-factor authentication and security alerts via text or email.
Top Rated Brokers
Is E*Trade a Scam or Legitimate? The Verdict.
Clearly, E*Trade is a legitimate broker. It operates under strict regulations and takes customer security very seriously. With strong insurance policies and robust safety measures, E*Trade maintains a reputable position in the brokerage industry.
Account Types
E*Trade offers non-retirement brokerage accounts, IRAs, custodian accounts, Coverdell accounts, IRAs for minors, professionally managed accounts, small business retirement accounts, checking accounts, and savings accounts. E*Trade also offers margin accounts and futures trading accounts, each requiring additional approval to open.
E*Trade has recently changed its selection of professionally managed accounts since being acquired by Morgan Stanley. E*Trade’s main managed account offering is now called Core Portfolios. A Core Portfolios account is a personalized, diversified portfolio of ETFs selected, monitored, and automatically rebalanced by E*Trade’s investing technology. The account has a $500 minimum balance amount to enroll and an annual flat fee of 0.30% of the account value.
An offering that E*Trade has newly implemented, is a fully comprehensive wealth management program that includes customizable managed account solutions and working with a Morgan Stanley Financial Advisor. To access this offering, you need to first request to speak with an advisor through E*Trade’s website.
Investment Products
E*Trade’s investment products lineup includes stocks, ETFs, mutual funds, options, futures, options on futures, bonds, CDs, and IPOs. E*Trade offers trading in US exchange-listed stocks, OTC US stocks, and OTC foreign stocks. E*Trade offers over 6,500 different mutual funds including a large selection of no-transaction-fee funds.
E*Trade’s futures products include agriculture, metals, interest rates, equity index, and more. E*Trade is currently among the large brokerage firms that haven’t yet capitalized on offering trading directly in cryptocurrency. The good news is that you can trade Bitcoin and Ethereum cryptocurrency futures on E*Trade.
Two unique investment products offered by E*Trade are prebuilt mutual fund portfolios and prebuilt ETF portfolios - each curated by E*Trade’s investment analysts. Both prebuilt portfolio products have 4 different investment strategies to choose from: aggressive, moderate, conservative, and income. The prebuilt ETF portfolios have a $2,500 investment minimum and the prebuilt mutual fund portfolios have a $500 investment minimum.
Pricing & Commissions
You can trade stocks, ETFs, and options commission-free on E*Trade. Commission-free stock trades apply to online trades of US exchange-listed stocks. For trades of OTC stocks, E*Trade charges a $6.95 commission for customers who place less than 30 trades per quarter and $4.95 per trade for customers who place more than 30 trades per quarter.
For options trades, E*Trade charges $0.65 per contract for traders who place less than 30 trades per quarter and $0.50 per contract for traders who place more than 30 trades per quarter. E*Trade offers a unique “Dime Buyback Program” that allows you to buy-to-close short options worth $0.10 or less with no options contract fee.
E*Trade allows online trading in U.S. treasuries commission-free at auction and on the secondary market. For all other bonds, E*Trade charges $1 per bond for secondary trades placed online. E*Trade sells bonds from its own inventory and charges a markup/markdown automatically included in the price of the bond when acting as principal.
E*Trade charges a commission of $1.50 per contract for futures trades, excluding cryptocurrency futures which have a commission of $2.50 per contract. E*Trade’s margin borrowing interest rates are on the higher side compared to its competitors. Its’ published margin rates start at 13.20% for borrowing less than $10,000 and progressively decrease to 11.20% for borrowing between $250,000-$499,999.99.
Banking Services
After its acquisition by Morgan Stanley, E*Trade now offers a suite of banking services through Morgan Stanley Private Bank. The Premium Savings account has no minimum initial deposit required, no monthly fee, and offers 3.50% APY on all balances. The account has to be funded within 30 days of opening in order to stay open.
The Max-Rate Checking account offers unlimited ATM withdrawal fee refunds, an APY of 0.05% on all balances, and a $15 monthly fee that can be waived by meeting certain requirements. E*Trade also offers home loans and lines of credit that allow you to borrow against your eligible brokerage accounts with a combined balance of $50,000 or more.
Website
E*Trade’s website is beginner-friendly, aesthetically pleasing, and easy to navigate. The website provides everything you need to place trades, research investments, track your portfolio, manage your accounts, and more. The “Markets & Ideas” section of the website contains some amazing features and research tools.
On the “Markets & Ideas" section of the website, you can find screeners for stocks, ETFs, mutual funds, options, and bonds. You can also find overview pages for US Markets and Global Markets that provide a comprehensive overview of key things happening and to know in the markets. One of E*Trade’s unique research tools on its website is the “Thematic Investing” page. The page shows different investing themes such as “Clean energy”, “Hedging with gold”, and “Artificial Intelligence” that you can click on and see a list of ETFs that relate to that theme.
Power E*Trade Review
For active traders or serious investors looking for more advanced features and tools, E*Trade offers a web-based platform called, Power E*Trade. The Power E*Trade platform is free to use for all customers and doesn’t require any downloads. Power E*Trade offers a customizable layout as well as customizable charts with drawing tools and technical indicators.
A unique feature of Power E*Trade is the TradeLab tool. The TradeLab tool allows you to build a strategy of hypothetical stock and options trades, then generates and displays analytical data about your strategy including a risk profile, upcoming events to watch out for, and risk metrics. Another unique feature of the platform is the ability to place trades by clicking on areas of a chart.
Mobile App
E*Trade has two different mobile apps: the E*Trade mobile app and the Power E*Trade mobile app. The standard E*Trade mobile app is well-designed and comes with everything that you would expect in order to be able to monitor your investments, place trades, and do research all on the go. The trading screen on the app is very straightforward and easy to use.
The Power E*Trade app is a mobile version of the Power E*Trade web platform. The app has more advanced charting features and more powerful research tools than the standard E*Trade app. Two unique features of the Power E*Trade app are paper trading and futures trading.
E*Trade Review Conclusion
E*Trade claims to be the pioneer of online retail trading and is now, 40 years later, still going strong today. Morgan Stanley’s acquisition of E*Trade has opened up some incredible new services that E*Trade now offers and has allowed E*Trade to continue offering its competitive commissions and pricing. Overall, E*Trade is a great broker for all levels of investors and traders.
Open E*Trade Account
Visit Etrade Website
Updated on 6/28/2024.
Paul Johnson is a Licensed Stockbroker with 7+ years of experience in the financial services industry. Paul enjoys teaching about investing and writing about financial topics. He is a husband and father of twin boys.
|