One of my hidden fetishes is to test-drive various financial services that can be found on the web. From financial management tools to low cost brokerages, you name it, I’ve probably heard of it or have tried it.

Having said that, my personal information is most likely riddled across the Internet by now, being just a few missteps away from identity theft hell. Thankfully I’m penniless, so the most they can steal from me is my sexy name, job prospect at the Department of Defense, and future livelihood.

I first learn about Zecco.com when they first launched back in 2006. Figuring they have had a year or more to mature their service, I signed up for a Zecco brokerage account about half a year ago. Or at least I thought I did.

Essentially, I filled out all my information, submit my account application and then… nothing happened. An email told me that I should get a follow-up email when my account is approved and open, but it never came.

Figuring they’re sorting things out on their end, I quickly forgot about my application, as the last thing on my mind was yet another online account I’d have to deal with.

So months later, I started to receive marketing and service related emails from Zecco, notifying me of new features, policy changes, etc. I guess my account was opened after all.

Just as I was about to lose interest in using the account, I received an email telling me that if I deposit and fund my account with $2,500, I would receive a $100 bonus. Never one to turn away free money (cheap ass alert), I quickly shoot off an email to customer service to inquire about my account status and trading key. Within a business day, I received a reply and was off to setting up my Zecco trading account.

Zecco Trading Brokerage Account

  • 10 free stock trade each month for account balance of $2,500 or more.
  • $4.50 each for additional trade per month, and for accounts with less than $2,500.
  • No inactivity fee, no account minimum.
  • No-load mutual fund at $10 per trade (online).
  • Free ACH. Additional fees information can be found here.

The interesting thing about Zecco is that it’s two entity being served on one website. There’s the Zecco.com web portal, which handles the blogs, community forums, and social aspect; and then there’s Zecco Trading, the low-cost brokerage firm based in Ontario, CA that handles the brokerage accounts (back-end served by Penson Financial Services).

You’ll find this to be most evident in the community forum, where members often ask question related to Zecco Trading services, rates, and policies. The poor moderators often can’t answer user questions due to understandable regulatory and legal issues — quite a customer service mess when you try to mend an active online community with regulated financial services.

To be clear, this review will focus on the Zecco Trading brokerage account, not the social investing community aspect of Zecco.com.

Interface, Trading, and Depositing

Although not the prettiest or easiest of interfaces, Zecco Trading has improved a bit since launch. In fact, during the course of my account usage, they’ve revamped the ACH page to make depositing and transferring of funds much easier and more intuitive. Initial setup of a link account was a bit hard to figure out, but should be much easier and straightforward now with the interface ramp-up. Transfer was fast and cleared within 1-2 business day (although I believe initial deposit takes 5-10 business days to clear).

Not being an active trader, I can’t provide too many insight on the trade and quote system. Zecco claims the industry standard of 30 second for order handling, and my limit orders were executed fast within seconds of reaching their limit. There’s no Level II quotes of course, and no streaming quotes, so to get the latest real-time quote you’ll need to re-click the quote button. Modifying an order also seems to take awhile, so you’re probably better off canceling the old order and inputting in a new order. If any of this matters to you, then Zecco is probably not right for you (at least, as a primary trade account anyway).

Each trade executed will result in a paper statement being mailed, detailing the transaction. A fairly standard practice, but it appears there’s no option to turn the paper trail off or have users sign for electronic delivery of notifications and statements (an easy way to reduce cost for them so it should be a no-brainer, most likely something they’ll implement eventually). [Update on this below].

I made a few trades to give the service a test, and it was definitely refreshing to buy stocks without having to price in the commission charges (SEC fees are still there, of course). My last trade was an incredibly exciting one, a semi-short term treasury bond ETF (iShare SHY), to balance out my other ridiculously allocated portfolios.

This last trade highlights one good reason to have a Zecco Trading account: with trade commission out of the way, buying a lump amount of low expense ratio index or bond ETFs can be quite attractive — especially for retirement accounts such as IRAs.

Customer Service and Information Finding

One of the things that I hate the most is having to dig through a website just to find standard information. Things such as money market sweep account rate and their accompanied prospectus should not be difficult to find. It seems that Zecco would rather constantly point you to contact their customer service via email or phone, instead of having all the information in an easy to find location in the first place.

Having said that, all my instances of emailing customer service were without issues. I first emailed customer service about how I can setup my trading key, and was greeted with a prompt clear reply on how to get setup. Other emails about rates, minimums, forms were also replied with a timely and informative matter. This isn’t the case for other people on the web, so I was either lucky or others were unlucky.

Random Margin Calls and Outages

Give us your money or Vito will get ya.

Talk about a deal killer. Before I even started actively making trades on my Zecco account, I received an email from Zecco Trading’s margin department, issuing me a maintenances margin call. For those that don’t know, a maintenance margin call generally occurs when your margin account value has dropped to such a value that your equity percentage fell below the minimum maintenance requirement. Basically, you borrowed money to buy stocks and your stocks dropped too much in value, now the broker is asking you to fund more money into your account or your assets will be liquidated and you’ll be sh*t out of luck.

Now, because of the generic name of the “From” line, I immediately thought that one of my brokerage account was compromised and someone went on a stock buying spree, as most of my accounts only had $15.36 available in cash (enough for four meals at In-n-Out).

Well, Cap, good old buddy, I thought to myself. This is what you get for having trillions of accounts — you’re bound to get screwed over one of these days.

Upon further reading of the email, I realized that the email was from Zecco, my recently funded account that I haven’t even executed a trade in yet. Thinking it to be an error, I logged into my Zecco Trading account to double check, and sure enough my account was still at its normal value.

Minutes later, I received another email from customer service, notifying me that they’d like to “recall” the margin call message. I guess it’s their way of saying, “Sorry, looks like we sent an alarming email to the wrong person. Our bad!”

A quick Google search reveals that I wasn’t the only one to receive such an email (and not just on that particular day). An instance of a customer service rep “fat finger” frequently hitting the wrong button? Whatever the case, projecting the image that you may not know how much we have in our account is never a comforting factor.

Besides the random margin call email, I also experienced a random website outage during weekday trading hours. Just a few weeks ago, Zecco’s site was down from unknown reasons. Upon visiting the site, I was greeted with a message that a “scheduled upgrade” was in progress. A scheduled upgrade on a Monday morning at 11 AM EST? Right…

The outage of course didn’t affect me as I don’t actively trade, but the downtime wasn’t acceptable either for an online-based brokerage.

Free Trade is Attractive but Service Quality is Questionable

It’s hard to recommend a Zecco Trading account to anyone, given my experience, but the fact of the matter is, the free trades are for real and do work. I can see a two types of users having this account:

  • Someone that knows exactly what they’re getting into, and will utilize the 10 free trades to supplement their other online brokerages.
  • A light long-term investor who needs the occasional trade and will never need more than the 10 free trades per month.

If I didn’t receive the mistaken margin call, and if the interfaces were more user friendly, I can easily recommend a Zecco Trading account as a potential IRA choice. For a retirement account, being able to make commission free trades makes many low-cost ETF much more attractive, especially if you can’t make large lump sum purchases. You can potentially have a very diversified portfolio for very little initial funding!

Zecco has had awhile to polish up their service since launch, but it seems that they’re expanding faster than they can service their current customers properly. Their initial offering of 40 free trades per month with no minimum balance required was indeed very attractive, but the change to only 10 trades per month with a minimum balance seems to have jaded quite a few people.

The website has been revamped quite a few times, they are offering more tools for their users, and it appears customer service is getting better and better. They have raised much more capital in recent months, so they certainly have the assets to improve their service and product, provided they hire the right people to execute. Still, I’ve been seeing their advertisement much more frequently on top-tier news/finances websites recently, so whether or not they’re spending their fund at the right places, and whether or not the business model is sustainable is something that remains to be seen.

Pros:

  • Sure it’s not 40 free trade anymore, but 10 free trade is still 10 free trade.
  • Fast customer service email reply (for me anyway).
  • A nice community forum with smart members and moderators.
  • Free trade / low commission makes various ETFs an attractive offer.

Cons:

  • Seemingly unreliable and unpolished
  • Numerous customer service complaint on web
  • Difficult to find proper information on website
  • May change amount of free trade per month again or require higher account balance.

Update on Paper Statements:

Funny thing. After I finished writing this review, I found out through browsing my blog feed that Zecco has now “allowed” their users the option of electronic statement and trade notification. It’s not too much of a choice though, as Zecco will start charging users $1.50 per trade confirmation and $2 per paper statement after May 30th.

I’m assuming they sent out the new changes and extra fees notice via email, but for whatever reason I didn’t get the notice. Still not sure why they didn’t limit cost and headache in the first place by having electronic delivery as an available default option.

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