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Scottrade Review: Get Up To $2,000 Cash Back!

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I write this Scottrade review as someone who has managed my personal investments with them for about three years. Not only that, but I dealt extensively with Scottrade extensively during my days in the online brokerage industry and always had a good experience with them. Through both of these experiences, I’ve come to believe that Scottrade is one of the better online brokerages out there. In light of that I thought I would do a Scottrade review to go over some of the ins and outs of Scottrade and why you might want to consider them if you’re looking for a new online brokerage to manage your investing.

As I mentioned above, I worked for about five years in the online brokerage industry and have seen first hand how investors are hindered when they end up with a brokerage that doesn’t meet their investing needs. It’s my desire with this Scottrade review to help you see if they, or some other brokerage, might be the right fit for you.

 

Related: If you’re looking for another online brokerage possibility, check out my Etrade review.

 

If you do a quick internet search for online brokerages you’ll see that there are dozens, if not hundreds, of them to choose from. You have cheaper brokerages that offer little service and are only a means to place stock trades on one end and you have bigger brokerages on the other end that offer a full range of services including possible advisory services.

Scottrade is squarely in the middle of those two extremes and provides a solid trading platform at a good value. Scottrade first started in 1980 and has since grown into a branch network of over 500 branches nationwide. They are well known for their $7 flat unlimited trades and are commonly recognized by outfits such as J.D. Power as one of the best online brokerages to do business with. With that in mind, let’s get on with a review of Scottrade to see how they measure up against other online brokerages.

Scottrade Features

 

The trading platform: The Scottrade platform is very intuitive and user friendly. If you’re looking to place stock trades they’re a flat $7 whether you place the trade online or using their trusty phone app. If you place the trade through a broker the commission is a flat $32. If you look at the spectrum of major online brokerages out there, the commission at Scottrade is definitely on the more competitive end and a good value.

Scottrade

Streaming Quotes: Many online brokerages charge for access to streaming quotes; that is not the case with Scottrade. Streaming quotes are free the day you open the account and fill out a few short forms. Other brokerages either charge for this service or require that you do a certain number of trades per quarter or year to receive it. This is a huge benefit to having a Scottrade account as you can invest using real-time data as opposed to quotes that could be delayed by up to 20 minutes.

ScottradeElite: This is a service offered if you fund your account with more than $25,000. The benefit behind ScottradeElite is that it gives you access to increased charting, trading functions and trading tools. This may not be of benefit if you’re a buy and hold type of investor, but is great for those who are more active traders.

Scottrade

OptionsFirst: This is Scottrade’s answer to investors who want more advanced options trading. While not for everyone, options can be a great tool to further diversify your investing strategy. I have not used this service, as I do my options investing through OptionsHousethough I have heard great things about it. Please do keep in mind that you do generally pay more for an options trade, and with Scottrade you add an additional $1.25 per contract on top of the flat $7 stock commission.

Advantages of Scottrade

 

Minimal Fees: Beyond the $7 flat trade price for stocks there is very little in terms of fees. There are no hidden fees, which I am a huge fan of and the account opening requirement is a very reasonable $2,500 for non-retirement accounts and no minimum opening balance for retirement accounts. The commission price is very competitive in light of other brokerages, especially when you take the value you receive into consideration.

Customer Service: My experience with Scottrade has been second to none. They have over 500 branches and the times I have visited our local branch their staff have been very helpful. On top of this they offer an instant chat feature on their website that not all online brokerages do. Having three little ones running around I have found this to be invaluable as I can ask my questions without having to deal with the noise our kids like to create when I am on the phone.

Many Investment Options: In addition to being able to invest in stocks, they offer many other options including fixed income, mutual funds, and banking products. Their mutual fund offering has over 14,500 options of which over 3,000 do not carry a transaction fee…which is more than many other online brokerages. If you’re looking for an online brokerage which allows you to handle your mutual fund investing as well, Scottrade is likely going to be one of the first ones you’ll want to look at so you can keep your portfolio streamlined.

Research and Trading Tools: If you’re looking for free online courses or would like to use a stock screener they have a solid offering. I’ve used a fair share of Scottrade’s trading and research tools and they hold their own with what I’ve seen from other brokerages. Comparing their screener tools to others I have used in the past, the screeners at Scottrade win hands down in terms of ease of use.

Disadvantages of Scottrade

 

No Dividend Reinvestment Program: Many investors that have dividend paying stocks like to have them reinvested to buy additional shares of stock. For some reason Scottrade does not offer this, though there are rumors they might in the future. If you do want to reinvest the dividends you then need to pay a commission to buy the additional shares.

***Update as of June 25, 2013 – Scottrade has introduced a unique Flexible Reinvestment Program. This does not allow you to reinvest into partial shares, but pools cash from dividends to buy additional shares of up to five eligible securities at a time. There is no commission charge for this at all. They allow you to pick specific stocks to have dividends reinvested towards, which I think is a great feature. I love that they have added this as I invest in several high dividend paying stocks through Scottrade and it allows me to add more to the given holdings as opposed to having the cash sit there doing nothing.

Scottrade review – my take

 

I believe for the right person, Scottrade could be a great fit for their investing needs as they offer value, great customer service and solid tools to use. That said, there are a number of good online brokerages to choose from and you need to choose one that best meets your needs.

I like Scottrade because they’re a brokerage that I can manage virtually all of our investing needs with as they have so many offerings. If do choose to open a Scottrade account, keep an eye out for promotions as they have several ones to consider. Their standby promotion is refunding up to $100 in transfer fees, with the current favorite being up to $2,000 for consolidating outside brokerage accounts and bringing them to Scottrade.

 

 

Summary
Reviewer
John Schmoll
Review Date
Reviewed Item
Scottrade
Author Rating
5
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I'm the founder of Frugal Rules, a Dad, husband and veteran of the financial services industry. I'm passionate about helping people learn from my mistakes so that they can enjoy the freedom that comes from living frugally. I'm also a freelance writer, and would love to help out if you have the need. If you're wanting to grow your blog, check out my blog coaching services to see how I can help you take your site to the next level.

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46 Comments

  • Back in college, my best friend opened up a Scottrade account. I was going to but didn’t because they lacked many no-fee mutual funds. It’s good to see that they’ve added quite a bit now.
    Jon @ MoneySmartGuides recently posted…Is Now The Time To Buy A Home?My Profile

  • I also liked Scottrade. Very easy to setup and low fees.
    Greg@ClubThrifty recently posted…Having Kids: Is It Worth It?My Profile

  • I used to use Scottrade but switched to Fidelity since all my work stuff is set up through them. I may go back to Scottrade and compare the two (haven’t used Scottrade in years), but I honestly don’t trade that much so I don’t see a huge incentive in switching at this time, or even really looking into which one is the “best” site to use.
    DC @ Young Adult Money recently posted…Organizing and Leveraging Resources is one of the Keys to Success in Business and LifeMy Profile

  • Jose says:

    I have several online accounts and helped my wife start an IRA with Scottrade a few years ago. Overall I like them and place them pretty high on list of online accounts. I use TDA for all my research though (even though I don’t do a lot of active trading with them). I’ve found their research tool to be the friendliest and easiest to use.
    Jose recently posted…Envelope Budgeting – A Quick Introduction and Tour – Plus A Video!My Profile

    • John says:

      I’ll keep my thoughts about TDA to myself. ;). That said, I would put Scottrade up there as well. They have some good tools and have stuff both for the novice as well as the experienced investor.

  • Thanks for the in-depth review here, John. I’ve been considering Scottrade as we ponder investment strategies. It’s nice to have such thorough info about them. If we do decide to open an account, I’ll definitely use your affiliate link!
    Laurie @thefrugalfarmer recently posted…Good Marketing: A Key Component to Any Successful BusinessMy Profile

    • John says:

      Not a problem Laurie, thank you! I’ve found that it can be pretty difficult to get good unbiased reviews, especially online. Many of the brokerages just want to sell to you and not give you a solid breakdown of what they offer versus the others.

  • pauline says:

    just voted, good luck!
    pauline recently posted…Borrowing against your home, is it wise?My Profile

  • AverageJoe says:

    We use Scottrade for my son’s stock account. It’s intuitive and the services are user friendly. I’ve never tried it for an entire comprehensive portfolio, but the trading platform is as good as any I’ve used (I’ve used Schwab, ETrade, Fidelity and TDAmeritrade too).
    AverageJoe recently posted…How Colors Affect Your Investment DecisionsMy Profile

    • John says:

      I would agree Joe, that it is very intuitive and user friendly. I’ve used a number of the other online players and would rank it at or near the top for that very thing.

  • Thanks for the review. One of my goals for this year is to identify a second brokerage, and this gives me a nice idea of ScottTrade.

    The limited options functionality is a little bit of a turnoff for me as I’m starting to get much more into options trading as a way to boost returns.
    My Financial Independence Journey recently posted…Recent Transactions – Lots of StuffMy Profile

    • John says:

      Not a problem MFIJ! I like to find balanced, unbiased reviews of brokerages and that’s what I was hoping for here.

      I agree, the limited options availability was a turnoff to m at first. I have started doing a bit more of that myself and really like it. So, I opened an Options House account for my Rollover and can do spread level trading in it. It helps me get around that and would have probably had two brokerages anyway so I could trade if one system were down.

  • Nice review John. I have been looking at Scottrade for some time and this might have just pushed me over the fence.

    PS. I wish I didn’t have to go against you in the Money Madness and it looks like you are killing me. I don’t mind losing to you John!
    Grayson @ Debt RoundUp recently posted…Should I Invest or Pay Off Student Loans First?My Profile

    • John says:

      Thanks Grayson! Working in this industry for years I have always found it’s difficult to get reasoned and balanced reviews.

      I agree, I saw that I was going against you and wished it were not so. That said, it looks like it’s gotten closer. I would not mind losing to you at all either.

  • Hi John,
    Thanks for providing this information. I have only used Ameritrade which was later bought out to form TDAmeritrade. I thought about switching to Scottrade when I had the funds to invest because they were slightly cheaper than what I was paying but I was wondering if the tools would be the same, better or worse.
    Alan@escapingmydebt recently posted…Save Money in Your BathroomMy Profile

    • John says:

      Not a problem Alan, it’s my pleasure. I’ll leave my personal feelings about TDA out of this…that said, I would say that Scottrade definitely does very well matched up against TDA in terms of tools and offerings. Not to mention they’re 30% lower in price.

  • John, good detailed review!

    I have no experience with Scottrade, can anyone weigh in on how it stacks up against Optionshouse?
    Jacob@CashCowCouple recently posted…Why You Probably Can’t Afford a DogMy Profile

    • John says:

      Thanks Jacob! It’s funny you mention OH. I have an account with them as well and will be doing a review on them next month. They have much different offerings and is not for everyone. I like the price and the fact that I can do more advanced options trading with it. For us, our Scottrade account is more of our buy and hold for long term place and OH is where I do more of our trading.

      • Dave says:

        Hi John,

        Does Scotttrade charge you inactivity fees like e-trade does, I am told?

        Thanks

        • John says:

          Thanks for stopping by Dave! To my knowledge, Scottrade does not charge an inactivity fee. We’ve had multiple accounts with them for about two years now and we’ve not been charged one. I’ve gone over their site pretty extensively and have seen nothing about an inactivity fee. Those that do generally hide it pretty well, but have seen nothing from Scottrade.

  • Once you get through this series, I’ll probably be switching from etrade. It seems that they don’t really have much going for them compared to other discount brokerages.
    Edward Antrobus recently posted…21 Ways to Create a Sales Stampede on the Internet: Book ReviewMy Profile

    • John says:

      I’ve heard some of the same things about E-Trade. I have never personally had an account with them, but have had a lot of experience with their platform and tools. I’ll be interested to see how long they stick around after some of their poor choices a few years ago. Their biggest investor just left and sold all their stake last month, which does not bode well.

  • I have been looking for an inexpensive brokerage that I could refer people to. I currently use Schwab, but only because I have had an account with them forever. i will have to check out Scottrade. Thanks!
    Deacon @ Well Kept Wallet recently posted…Broken Dryer – Craigslist to the RescueMy Profile

    • John says:

      Schwab is good and are definitely one of the big boys on the block. I think for value that Scottrade can definitely hold their own.

  • Brian says:

    I wanted to use Scottrade, but no DRIP option really killed it for me. You add on top of that the discounted prices I get on Sharebuilder for being a Costco member and Sharebuilders won out. I don’t think Scottrade is a bad platform, and if they allow you to DRIP then I might consider then again.

    • John says:

      Yea, I know. That is a fairly big one to overcome if reinvesting is important to you as an investor. I really do not understand why they don’t offer it, but I am hoping they will in the future.

  • Justin says:

    John, because of our debt, I have no real investments other than my wife’s 401(k). However, once I have that kicked we’ll be opening IRA accounts. I was wondering if you were considering anything for good firms for retirement accounts.
    I’ve had a hard time finding a review that I trust and thought.
    Good review BTW
    Justin recently posted…Financial Perspective: Bill Gates and the $100 BillMy Profile

    • John says:

      I can completely understand that situation Justin. I agree that it can be difficult to find good, unbiased and reasoned reviews. If you go online to search for them then you just get sold to. I think any of the major ones like Schwab, Vanguard, Scottrade all have good value and different offerings. At the end of the day you need to find one that fits your needs and gives you the value you need.

  • Good review! I will look to start investing later this year once I finish paying off my debt. Scottstrade look like an ideal brokerage
    Kevin Watts @Graduatingfromdebt recently posted…Applying for a student loan post debt settlement – Are you at a risky state?My Profile

  • I’ve used Scottrade for years and enjoy their platform. We have a local branch about 10 minutes from where I live and every time I’ve had to go there, I’ve received great customer service. It’s things like that that keep me sticking with them. I really do not like it when businesses don’t get it and treat customers poorly.

    • John says:

      That’s great to hear Brian! I have had the same experience with their branch staff and that really seals the deal for me. That and the fact that I do not get something sold to me every time I talk to them.

  • I’ve only used Vanguard because my IRA is already there. I certainly have not been a frequent trader, but probably should compare more brokerage services to see if I’m in the right place.
    Kim@Eyesonthedollar recently posted…We Flipped a House!-Part 2, Renovating a Distressed PropertyMy Profile

    • John says:

      Vanguard is good and have heard fairly good things about them. Comparison is good, but if you’re happy where you’re at then that’s what counts in the long run.

  • Interesting, Scott, especially for limited option trading. Great post.

  • CashRebel says:

    Thus far, I’ve only passively invested with Vanguard mutual funds but I’d like to get a little bit of money into a few stocks. I know there are a few brokerages that are a little bit cheaper, but would you say that Scott Trade is cheap enough and the other one may not offer as competitive of a service?
    CashRebel recently posted…Stop Acting Rich by Thomas Stanley: A Cash Rebel ReviewMy Profile

    • John says:

      In terms of price and value I would definitely say that Scottrade holds it own very well. There are cheaper options out there, but many of them do not offer the breadth of value and services that Scottrade does.

  • I loved Scottrade for years and ultimately had to part ways with them because they didn’t have a dividend reinvestment program. Now I am with Fidelity.
    Brick By Brick Investing | Marvin recently posted…How To Use Trailing StopsMy Profile

    • John says:

      I certainly understand that Marvin. I am really hoping they do start offering it in the near future, especially as we start investing for our little ones. I think they miss out on a lot of potential clients due to that one very issue.

  • Jim says:

    Great comprehensive post John! Its a bummer they dont have an dividend reinvestment program, I guess they just give you the cash payout which I assumes goes back in your account, or do they send you a check? I am looking to open an account for my self-directed IRA, once I get it set up, so Scottrade is certainly a front-runner!! Thanks for this great post!
    Jim recently posted…Health Insurance And You: What Obamacare Means For Maternity CoverageMy Profile

    • John says:

      Thanks so much Jim! I agree, it does suck that they do not offer a DRIP program, but overall they’re still very good. In terms of how the cash dividend is handled…it goes into a money market which is attached to the IRA and not sent to you. Of course, the rate is abysmal so you do not earn a whole lot. I usually allow the dividends to build up and then purchase something else or just wait for a potential pullback on something and then buy a little more with my money. :)

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