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How Does Zecco Compare to TradeKing and ShareBuilder?

by Ryan Guina

Note: TradeKing and Zecco have announced a merger in the fall of 2012. The merger should take place over the next few months and the merged company will be under the TradeKing name. The functions and prices of these firms should remain the same, and they should be able to combine their assets for more advanced trading tools. Here is our full TradeKing review which covers the features offered at TradeKing.

Zecco Trading was one of the most popular online stock brokerages when they launched several years ago. They offered free stock trades, and thousands of new customers opened a new brokerage account with Zecco. But as the economy changed, so did Zecco Trading’s ability to offer free stock trades. They made their money by earning interest on the cash held in customer accounts. This was a good business plan when interest rates were hovering around 4 and 5%. But then the interest rates dropped to the 1% range, and Zecco could no longer offer free trades to everyone. They eventually limited the free trades to those who met certain requirements, such as a minimum account balance or number of trades per month. All other trades were still a reasonable $4.95 per trade, which was still low enough to rate among the industry leaders in price.

Why Zecco is so attractive

Zecco Trading ToolsZecco’s pricing structure is among the best on the industry. On top of Zecco’s pricing structure you have a fairly robust trading platform with free investing tools, an education platform, and a large community of Zecco users who share information and tutorials in forums and blogs within Zecco’s pages. There is a lot of value packed into an inexpensive stock trading platform. I wrote a review of Zecco.com that further explains some of the pros and cons of Zecco.com.

But is Zecco now the best option for discount brokeragesEven with all of the good things going for Zecco.com, the new pricing platform has leveled the playing field. TradeKing and ShareBuilder are now much more competitive in pricing when compared to Zecco. If you reference back to the Zecco review you will see that Zecco was able to offer free trades in part through premium features. Almost all of the features are available for free through TradeKing.

Comparing Zecco to TradeKing

I am going to use an example of a casual trader – someone who is using an online discount brokerage to make a few trades per month or systematically purchase ETFs or other equities. Unless you have $25,000 in your account or make 25 trades per month, then you will be paying full price for trades with Zecco.com. If you meet the free trade requirement, Zecco may still be the most cost effective option.

Open a TradeKing account todayZecco vs. TradeKing. Equity trades at Zecco and TradeKing are the same, both ringing in at $4.95. The difference comes with the extras – Zecco charges $50 a year for their GainsKeeper tool, which tracks your realized and unrealized gains – it’s a great tool for maximizing your tax strategy as you go. TradeKing features the Maxit Tax Manager which does the same thing, but is free. Zecco also boasts a host of other premium features, many of which require a subscription. Most of these aren’t very expensive for what you get, but similar tools can be found for free at places like TradeKing.

TradeKing will pay you to switch brokerages. On top of this, TradeKing will pay you up to $150 to move your brokerage account assets to your new TradeKing account. TradeKing also offers promotions and signup bonuses at least once per year. Here are more details about TradeKing’s asset transfer offer:

tradeking-150-transfer-offer

TradeKing New Account Transfer Reimbursement

Why switch to TradeKing from Zecco? TradeKing offers all the features that Zecco offers, but doesn’t charge you extra for them. TradeKing has a robust trading platform, great community, and one of the best investment training resources on the web – all for free. Here is a full TradeKing review for more information.

Comparing Zecco to ShareBuilder

Making the same assumptions of a casual investor, here is how Zecco compares to ShareBuilder:

ShareBuilder- Welcome pageZecco vs. ShareBuilder. ShareBuilder is another popular discount brokerage firm. ShareBuilder’s business model is to get their investors to systematically invest their money through automatic purchases. ShareBuilder wants you to build wealth through Dollar Cost Averaging and growing your shares through reinvesting dividends. ShareBuilder offers the option of purchasing partial shares and setting up automatic DRIPs (dividend reinvestments). You can do DRIPs with Zecco, however, you cannot purchase partial shares, which means you may have some loose change after every quarterly dividend payment. ShareBuilder uses every cent toward growing your wealth. Here is a full ShareBuilder review.

Cost of investing with ShareBuilder. ShareBuilder’s pricing structure is geared toward systematic investors. Scheduled purchases can be had for a little as $2-$4 each (based on number of scheduled purchases per month). Real time trades are $9.95. Like Zecco, ShareBuilder offers a few premium features which require a subscription. If you use Zecco for buying ETFs or other equities on a regular basis, you may find that ShareBuilder just became a more attractive option in terms of price.

Why switch to ShareBuilder from Zecco? ShareBuilder offers inexpensive trades to the systematic investor looking to grow their wealth through dollar cost averaging and dividend reinvesting. The ability to purchase and reinvest in partial shares is extremely attractive to dividend investors looking to maximize the growth of their dividend stocks. The pricing structure is also a very attractive alternative.

Zecco is still a great discount brokerage

I’m not saying you should leave Zecco – far from it. I believe they have a solid trading platform and an attractive pricing structure. But the playing field has been leveled and it is by their own doing. It never hurts to shop around – you may find a brokerage that is better suited for your needs.


Published or updated October 29, 2012.
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{ 16 comments… read them below or add one }

1 frugalcpa

Great breakdown! When I have money to invest, I need to refer back to this to help me decide which online service to use. In the past I invested through Edward Jones, but I’m definitely going to bypass the middleman going forward.

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2 Brad

Quit messing w/ these Bullsh*t “discount brokerage” firms and move to a real brokerage like Interactive Brokers or ThinkOrSwim who charge far less per transaction and you can truly manage your portfolio.

I trade with TOS and get $1 equity trades, $1.25 options, $2.50 futures. They have an oustanding software platform you can download or you can manage it online like rest of the companies out there. In addition, you get an internet rebate with 40 trades, 3 free mutual fund trades if that’s your thing, they cover $100 ACAT fees if transferring, etc., etc.

E-mail me if you need more info or a referral.

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3 Joe

I signed up with interactive brokers and they said they’re not running any promotions where they cover a ACAT fee

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4 Ryan

frugalcpa: If you know what you are doing, you can save a lot of money by eliminating the middle man. A professional advisor can benefit you though, because they will know certain things you won’t – such as allocation, tax laws, different places to invest, etc.

Just be careful you don’t let them sell you something you don’t need! ;-)

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5 Ryan

Brad: Thanks for the info. I have not had much exposure to TOS, which is why I did not mention them.

Am I missing something regarding the fees? You mentioned you pay $1 equity trades, but the TOS price sheet states that shares are $0.015 per share, with a $5 minimum, a $10 flat rate.

Per Share Commission*
$.015 per share ($5.00 minimum)
OR
Flat Fee Trading**
$9.95 per trade (market or limit orders; 5,000 shares maximum)

There are other good benefits at TOS – the three free mutual fund trades per month is nice, as are a few other features.

I guess I’m just curious to hear more info.

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6 Steve

Thanks for the comparisons. I just opened a Sharebuilder account for a $90 bonus through costco. As I don’t really have any extra money to invest right now, I will most likely wait until TradeKing does some sort of bonus. The comparisons were very helpful though.

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7 Ryan

Thanks, Steve. From what I understand, TradeKing usually does a giveaway offer about once a year. They did it in October and November of last year, so it may be awhile before they do it again. but I agree with waiting. No need to open an account that you won’t use! :)

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8 Chad

Why nobody talks about sogotrade? This is still the best website for only 3 dollars a trade/option. Sogotrade is not as good as tradeking, but it’s better than zecco. OK! zecco’s used to have a good interface, but its no good now due to a new change that makes it a little bit confusing. Sogotrade web interface is not really good, but you can get used to it because if you trade a lot like me. Sogotrade is not a nobody like zecco, it comes from a big broker and not a broken bank underinvestigation by the us gov. Tradeking requires little document to open an account there, but it has a fun interface. At the end, all cheap one line trade brokers are fast. Choose the one that you like. I chose Sogotrade!

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9 Ryan

Chad: I have never used SoGoTrade, which is why I cannot compare them to TradeKing, Zecco, or ShareBuilder – three online brokerage accounts I have used before.

Zecco received so much attention and press because they offered free trades to virtually everyone – though that is not the case anymore. Of the three I mentioned, TradeKing is my favorite because of the interface, free tools and education, and the low prices.

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10 Alan

I am in the process of closing my TradeKing and Zecco accounts. I don’t believe the $5 you save trading with them is work the lack of services.

There were a couple things that really bothered me with TradeKing. A wire transfer is cash money. However, if you wire money into TradeKing, and then need to get part of it back, they will not let you take out your money until after 10 days have passed from the time they received your wire. They are simply holding onto your clear cash to float your money and that is pretty crappy of them to do that. The second thing that I didn’t know when I opened my account with them is that they do not let you margin the leveraged ETF shares. That was a big surprise and a deal breaker for me. That is what lead to the surprise of them holding onto my cash that I wired to them for 1o days until I could get it back! That is crazy and for that policy alone I would not trade with them ever again.

If you really must save $5 per trade over better options, and you are going to decide between TradeKing and Zecco, I’d say TradeKing is the better choice of the two evils. Zecco is really bare bones; no pre or after hours trading allowed, no way to trade on mobile platforms, no service after hours, and a poor trading platform without any advanced order entry options. For example, you can’t enter an order triggers order with Zecco. (Say you want to automatically put in a stop order once your buy order is filled, you can’t do that with Zecco.) I had a bad experience trading a very leveraged ETF on 4x margin where the system would not let me enter my stop order. It could have been very serious if the market moved against me while I repeatedly tried to get the system to accept my order.

I’ve moved both my Zecco and TradeKing accounts over to TD Waterhouse. They charge $10 instead of about $5 that TradeKing and Zecco charges. If $5 per trade is going to make or break you, I don’t think you should be trading. I suggest you download the ThinkorSwim software (free) and check it out. It will blow you away. You can paper trade with a $100,000 account to try out the trading platform. For me the advanced real time streaming charts and advanced order capabilities at TD Waterhouse is way worth the extra $5 a trade. I’m really surprised the ThinkorSwim software is free. It blows away the streaming charts at TradeKing. At TradeKing you have to have a minimum of 25 trades per month to use their real time streaming charts. Try ThinkorSwim, you’ll love it. I run it with dual monitors and it gives me a very nice package of charts, news, and very advanced trade entry options. ThinkorSwim was the #1 rated internet broker and they have now merged with TD Waterhouse which was the #1 rated discount broker. Can’t go wrong with that combo.

I was drawn to the lower commissions at Zecco and then moved to TradeKing because of the extremely limited trading platform at Zecco. But it quickly became apparent that you get what you pay for and the extra $5 a trade at TD Ameritrade is well worth it for all the free tools, advanced orders, and real time streaming charts you get. With them you can even put in orders like “If the DOW falls by 3% buy TZA at market.”

PS – Just saw the post from Brad. TOS stands for ThinkorSwim. I agree 100% with him. Zecco and TradeKing is really amateur hour stuff.

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11 Dan

Just read your post alan,

Why not just have a tdameritrade/TOS account with a small amount of money in it so that you can use all the free tools. Tdameritrade has no yearly fees. Then use tradeking for your actual trades.

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12 Ryan

That’s a great idea, Dan. I can see why some people would prefer not to do that – for example, if they don’t trade often or prefer to have as few open accounts as possible. But otherwise this idea could save money in the long run.

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13 Sim

another thing that makes tradeking more attractive than zecco because they have a full fledged iphone and blackberry app. something thats going to be more & more of an utmost necessity in coming days .. very less brokerages in the same price range has that.. something very notable… seriously thinking about moving to tradeking from zecco..

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14 Ryan

Sim, I moved from Zecco to TradeKing. The individual trades are slightly more expensive, but not enough that it made a difference for me. I prefer TradeKing’s tools and interface. That said, investing is a very personal matter, and both companies offer investors a great product and a ton of value. I can’t imagine what it would have cost to get these types of tools 5 or 10 years ago (if they even could have been done!).

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15 Jtrader

I disagree. In my opinion there are 3 things that matter in todays competitive ‘daytrading’ or ‘swingtrading’ world.
1) Customer Service
2) low costs (low commissions with no fees, hidden or otherwise)
3) fast execution.

From the moment I opened my account at Lightspeed the customer service has been outstanding. The customer service rep, Jhoel, responded (and continues to respond) to every email, usually within minutes! Not only that, but I believe he is ‘assigned’ to my account. This means that I don’t have to explain or re-explain the issue to a new customer service rep each time. He is polite, knowledgeable and efficient. This means you have a rep who works with you in an ongoing basis, understands issues and develops a rapport with the customer. This should be an industry standard and Lightspeed does this for free. Yes, Web Trader IS a no frills platform, but there are also NO fees of any kind except the occasional SEC fee (to date I have paid just 5 cents on some transactions!) – no ‘maintenance’ fees, no ‘minimum trades per quarter’ (inactivity) fees, no platform fees, only a small minimum balance is required to avoid any fees (I think $5000?) and no BS! They also charge $3 per trade. Hello? I am an active trader, sometimes I don’t trade for a week or two, other times when conditions are ripe I may make 20 trades in 1 day. The fact that there is no pressure to trade (no fees at ALL) as well as some of the lowest per trade costs makes this a no brainer. I make appx 1000 trades a year, so lets do simple math. If I go with a company that calls itself a discount broker with no inactivity, maintenance or other fees like Firstrade for example (which also has no kind of fees, but has the WORST customer service I’ve ever seen, and lousy executions), they charge ‘ONLY’ 6.95 per trade. This means at year’s end I would spend $6,950 in commission with them, and pay only $3,000 with Lightspeed. This is simple math; a savings of $3950 a year, or over $329 per month, and if I trade more, I will save even more. That’s untaxed money added to your net profit.

As far as the ACH, I have been able to transfer in money with no problem, and while I am in the middle of setting up the ACH withdrawal (I mailed in their form), it can be done if you simply mail in the form and follow the instructions provided. I have not actually done an ACH withdrawal yet, but based on my experience with customer service (which in my experience has been the BEST I have ever experienced at any broker, and I’ve been with a few), I’m sure it will be no problem. By the way, did I mention they even have a live chat with operators who can see your account and answer questions in LIVE TIME? Yes Web Trader doesn’t have flashy graphics, and I think they need to improve by making a real time balance and begin pre/after hours trading abilities, but if I want flashy graphics I’ll play video games. If your a grown up and want to have REAL customer service, some of the lowest rates on trades, fast execution and a way to make it easier to make money, I recommend Lightspeed WebTrader and the team of people over there!

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16 Alok

Thanks for the review. I just received a letter from Zecco starting that Zecco and TradeKing are merging. Zecco is becoming TradeKing on December 7, 2012. So I guess if anyone was trying to decide between them, might as well just sign up for TradeKing.

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