About eTrade Brokerage
ETrade Financial Corporation is a financial services company whose major business is providing online discount brokerage services to investors who self-direct their portfolios. Those investors can execute buy and sell orders for a variety of securities either by electronic trading or by telephone. ETrade also offers basic loan and deposit products like savings and checking accounts, money market accounts, certificates of deposit and its own credit card.
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History
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William A. Porter and Bernard A. Newcomb founded eTrade Securities, Inc. in 1991, with money they made from TradePlus Inc. which they started about ten years earlier. After several failed attempts to grow through merger, in 2005 eTrade Financial acquired Harrisdirect from Bank of Montreal and Brown Co., a discount brokerage firm owned by JP Morgan. Stung by the subprime mortgage crisis, eTrade's book value shrank by more than half and rumors suggested that it would file for bankruptcy. In early 2008, it named Donald Layton its new CEO under whose leadership eTrade's business has been stabilized.
Function
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Essentially, an online brokerage companies like eTrade have replaced traditional stock brokerages for many people who want to control their investments while reducing the amount of commission per transaction. While eTrade began by offering low-cost fees without providing research to its customers, now it offers some of the most useful information available.
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Benefits
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If you are self-directing your investments, eTrade will provide you with robust research that enables you to choose the right investments while charging far less per each transaction than you would pay a traditional broker. Furthermore, eTrade provides you with government-guaranteed protection of both your investments through SIPC and your cash deposits through FDIC. Furthermore, eTrade makes it possible to trade investments remotely through Power eTrade, a program available on your Blackberry PDA.
Time Frame
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You will pay $6.99 commission on stock transactions and $.75 per option contract if you make 500 or more trades per month. On the other hand, if you make a minimum of 10 trades per month, or you maintain a balance in excess of $50,000, you will pay $9.99 for each stock trade. You must requalify for these rates by making 30 or more trades each calendar quarter. The most that a customer of eTrade will pay for each transaction is $12.99.
Misconceptions
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Most people believe that by making the switch from a traditional brokerage firm to eTrade, they will receive no personal guidance regarding their investments and that eTrade has no physical presence. ETrade has offices within driving distance of over 90 percent of its customers where they provide them with personal service and advice. In addition, an eTrade customer can contact a representative by telephone and online with questions or for investment advice. No additional fees are charged for this level of personal service.
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