Zecco Review: Free Online Stock Trading

Published 5/24/09 (Modified 3/22/11)
By MoneyBlueBook

Special Promo Offer: 10 Free Stock Trades Every Month With Zecco.com

I decided to open a Zecco.com free trading account a few years ago back - at a time when the deep discount brokerage was still offering free online trades with no catches and no account minimums. Since then, the company has undergone numerous changes and developments of its free trading policy, not to mention weathered quite a bit of critical commentary and press regarding its underlying free trade business model. I think it's time I conducted a Zecco broker review and evaluated my Zecco trading experience as it currently stands. While I still use Zecco Trading and recommend it as a top online broker for individual stocks and exchange traded funds (ETF) to this day, due to some notable drawbacks, I have not yet made it my primary all in one broker account. But due to the attention that Zecco continues to receive among personal finance blog readers and new entrants to stock market investing, the low cost brokerage provider is worth a close review.

In case you were wondering, Zecco.com's rather unusual name is actually derived from the phrase - "Zero Commission Cost". The company is a low cost online brokerage that burst onto the discount broker scene several years ago vowing to change the brokerage landscape forever, while touting its unique offer of free monthly stock trades with no hidden catches or gimmicks. To this day, the Zecco Trading firm still does indeed offer zero-cost and commission free trades on stocks and ETF's for both market and limit orders, albeit now with account minimum requirements. But at its heyday and for quite some time, Zecco seemed to show up on the radars of every financial website and finance blogger's list of the best online stock brokers.

When it comes to low cost trading, it's frankly hard to do any better than an offer involving free stock trades. With aggressive marketing and promotion of its free monthly trades, Zecco has always greatly appealed to low cost seekers and active traders looking for the ultimate way to cheaply trade and invest in the stock market. But as a victim of its own success and popularity, the early years saw performance of Zecco's online trading platform greatly plagued by slowdowns and loading issues due to surging online customer demands and the technological limitations of its trading platform. Presently, the company is reportedly working to revamp its online investment website, improve its much to desired customer service, and retool its business model to comport better with the realities of today's market. Since its initial web 1.0 beginnings, Zecco has made many���� improvements and innovative enhancements, such as adding an online Zecco trading community for like minded investors to share investment tips and swap portfolio building advice, as well as greatly adding to its exclusive online library of educational materials. Much publicity (both good and bad) continues to surround Zecco's dubious decision to utilize and promote its collection of financial educational videos with the hosting assistance of the company's rather attractive and seductively alluring band of Zecco Sirens. While Zecco has probably not improved its credibility among serious investors with its use of extremely attractive girls to host its Zecco marketing material, this obviously gimmicky approach probably has helped them earn more than a few new customers (translation: sex sells).

Free Online Stock Trades and Low Commissions With Zecco.com

Despite any of its possible shortcomings, Zecco stands as the king of the low cost brokerages with its unique offer of free monthly trading privileges for those who satisfy certain account minimum requirements. Previously in the recent past, Zecco account holders received 10 free trades per month if they maintained a minimum balance of $2,500. Do to the difficult economy and realities of financial circumstance, free Zecco trades are now limited to account holders who maintain at least a minimum balance of $25,000 in their trading accounts, or make at least 25 online broker trades per month. For savvy savers, it's worth to note that even after the allotment of free trades are exceeded, stock trades are still only a mere $4.50 per trade. Even if one failed to meet the $25,000 minimum to qualify for free monthly trades, Zecco is still one of the deepest discounters around in terms of cost per trade. Option trades with Zecco are also priced very low - currently just $4.50 per trade and $0.50 per contract. Mutual fund trades are tabbed at $10.00 each.

Those who don't trade frequently will be pleased to know that with ordinary individual accounts, there are no account minimums or hidden inactivity fees to contend with. While, there is a $30 annual fee for retirement accounts like Roth IRA's and traditional IRA's, one ought to evaluate this cost in light of the greater potential savings one will receive from the free monthly stock trading privileges. For such a low cost and cheap pricing structure, Zecco Trading packs a pretty competitive package with its arsenal of respectable trading tools, investment research materials, and large social media community of like minded users and investors. But as with all seemingly great offers, one has to wonder - what's the catch with Zecco.com? If Zecco's free stock trades are so great, why isn't everyone and their uncle kicking down doors to become a Zecco customer?

According to Zecco sources and based on my personal observation, the catch with the free monthly Zecco trade offer is simply that the account customer must either maintain a minimum balance of $25,000 in their account or trade at least 25 times every month to continuously qualify. Furthermore, the free trading offer only nets you a total of 10 free trades per month. It's not like you are reaping a huge windfall of unlimited stock trades. With ordinary Zecco equity trades priced at a low $4.50 per trade to begin with, the monthly cost savings associated with the free trading promotion isn't exactly substantial or exceedingly astounding. However, for ordinary consumers looking for a way to invest on the cheap, every little savings helps in the long run. Zecco's automatic free trade offer is genuine and real - you just have to be aware that qualification����requires you to meet certain conditions every month.

The other possible catch or limitation with Zecco involves its recent struggles with customer service response. Due to the crushing weight of its own success, the broker has been working feverishly to improve its customer service reputation and overcome the growing pains of keeping up with heavy demand for its free trades. Along with customer service issues, Zecco also has limitation issues in regards to advanced trading tools and premium research access - features that full service and bigger online trading sites offer, but Zecco does not. But as always in life, you get what you pay for. Those who don't mind paying a bit more for the peace of mind that established customer service brings may want to look into other popular discount brokerage alternatives like TradeKing, a consistent winner of numerous online accolades for its outstanding customer service year in and year out (read my TradeKing review to learn more). At���� just $4.95 per trade for TradeKing compared to Zecco's $4.50 per trade, both are actually quite comparable in terms of price.

Is Zecco.com A Scam, Or Is It A Legitimate Online Broker?

What started out as an extremely liberal free stock trading offer by Zecco has morphed a bit over the years. Originally, the company built its brokerage firm on the premise that it could sustain its free stock trading model off of the interest rates and margins that it earned from customer accounts. But with interest rates at historical lows due to the recession and American brokerage customers trading less and less these days due to lingering market uncertainty, Zecco has had to alter the terms of its basic marketing pitch to meet the demands of reality. However, though qualification minimums for the free stock trading offer have been increased, Zecco has staunchly stuck by its cornerstone free stock trading feature, raising the collective eyebrows of many who perpetually wonder how the company continues to offer free trades for customers and still manage to make money and stay viable. As such, Zecco.com's practice continues to raise little red flags among the skeptics. But supporters simply note that the company is still in its growth phase and sustains itself through regular injections of stable venture capital funding, which has continued to be forthcoming. For the foreseeable future at least, it seems Zecco is relatively stable and has settled into a marketing niche of sorts (although I suspect further tweaks in its promotional terms and conditions in the coming years).

Those wondering if their money is safe with Zecco will be pleased to know that Zecco is indeed a registered member of the Financial Industry Regulatory Authority (FINRA), the largest independent regulator for all securities firms doing business in the United States. It's also a card carrying member of the Securities Investor Protection Corporation (SIPC), which insures and protects brokerage account customers and securities investors from financial harm in the event of a catastrophic broker dealer failure. The SIPC is the brokerage account equivalent of FDIC insurance, which protects bank based deposits. While investors are not insured for potential loss due to ordinary price fluctuations in the stock market, Zecco.com's status as a bona-fide SIPC member protects account holders from loss in the event Zecco goes bankrupt or goes out of business. In the event Zecco Trading fails, the SIPC provides insurance coverage up to a maximum of $500,000 of the customer's net equity balance, including up to $100,000 in cash. Excess SIPC insurance coverage of Zecco customer investment assets is also additionally provided through the Lloyds of London insurance company. Thus, the answer to the question of whether Zecco.com is a scam - is no. Your portfolio money is safe with Zecco.

Zecco Trading/Research Tools and Customer Service Review

The first thing you'll notice with Zecco.com's online trading interface is that the company is absolutely in love with the color pink - bright neon pink in particular. Despite this very questionable color palette choice on the surface, internally, Zecco offers a pretty robust trading platform with all of the basic investment bells and whistles you'd expect from your run of the mill discount broker. Overall, the Zecco Trading interface is pretty straight forward and fairly intuitive to use. Equity trades are made under the Trading Center tab where customers access their Account Overview and investment options, as well as receive their real time quotes and trades on market price, opening price, highs and lows, volumes, and price changes.

In terms of investment options, Zecco gives investors the opportunity to purchase individual stocks, ETF's, index funds, mutual funds, and options, for both limit and market orders. At this time, Zecco does not offer access to Treasuries, bonds, or CD deposits. Individual retirement accounts like Roth IRA's and traditional IRA's are available to Zecco customers (although note the $30 annual fee to manage IRA's). Zecco does offer dividend reinvestment but currently only permits whole share purchases - leftover dividend payments unable to purchase a whole share are deposited into your account as cash. Idle cash for Zecco accounts can be swept into a money market sweep account for higher interest rate yields, however customers need to affirmatively request this feature to enable it.

Unlike a few of the other deep discount brokerages in the market today, Zecco also offers a currency trading feature via its Zecco Forex trading platform. This is a nice bonus trading perk for those seeking a consolidated one stop shopping source for their diversified trading needs.

In terms of investment research, stock trading analysis, and financial education, Zecco provides users free online access to most of the basic investment research sources that you'd expect from low cost brokers. There are a variety of premium tools available, but many of the premium research and online analysis tools are only available via extra monthly or annual fee subscriptions. My recommendation is to utilize Zecco for trading purposes only due to its extremely low cost perks for individual stock and ETF trades. However, get your stock and fund research elsewhere. Zecco's educational videos for beginners are amusingly worth looking into however. If not just to admire or gawk at the rather gratuitous Zecco ladies that host the Zecco video shows, they are somewhat educational and informative, particularly for newbies to the world of investing. If the Zecco Sirens don't answer your introductory investment questions, you may want to visit the ZeccoShare Community online forum���� for answers or some socially assisted enlightenment. There is wide berth of information and active stock market discussions going on in the ZeccoShare Community forums, groups, and blogs. Surprisingly, I found the ZeccoShare forums to be remarkably free of pumpers and dumpers - spammers trying to spread misinformation to affect stock price movements. The same can't be said for other popular stock market forums like Google or Yahoo Finance's message boards.

Zecco's weak point centers around its somewhat infamous customer service reputation. Most of the online complaints and negative reviews you'll read about focus on the broker company's customer service reputation. Due to its rapid explosion in growth, the company has not devoted sufficient resources to improving its customer service, although I will concede, it is gradually improving. During my years as a Zecco customer, I have only had a handful of customer service interactions with Zecco and during those times, I've never really encountered any substantial problems worth remarking on. However, I'm sure there are plenty of Zecco customers with strong viewpoints willing to share their thoughts (both positive and negative). Zecco offers e-mail informational support and telephone customer support through its toll free line at (877) 700-7862. The company is currently pushing out a new live chat support feature but the online tool seems to be still in the troubleshooting phase at the time of this writing.

Zecco's New Online Broker Account Opening Process

As is the case with most online brokerages these days, the Zecco new account opening process is remarkably quick and efficient. The Zecco online application for new trading accounts is pretty straightforward and easy to follow. Be prepared to enter all of your personal information, including notations about your employment details, stock trading experience, and investment goals. These details are all pretty standard fare with brokerage account registrations nowadays.

In terms of new account funding, you can start up your Zecco Trading account with a check, money transfer, or via a recommended ACH transaction through your existing bank account. Those that want to fund their new Zecco account via an electronic ACH transfer from their bank account will need to undergo the customary two small deposits verification test. The deposit verification process ensures proper ownership of the transferring bank account and greatly expedites future ACH fund transfers from the same account. The bank account link up process takes 2-3 days, but it's worth it.

Overall, Zecco is a pretty competitively priced discount broker ideal for individual stock and ETF traders and investors. Even without its offer of free stock trades, Zecco remains one of the cheapest deep discount online stock brokerages out there today. Although frankly, if you are willing to pay a tad more in the way of commissions and fees for a more advanced and highly rated platform, I'd recommend either TradeKing or ING Share Builder (remember to take advantage of ShareBuilder promo codes for new account bonuses). But if low cost trading is your game and you seek an online community to bounce stock ideas off of, discount broker Zecco is worth a look.