Ally Invest Review – Too Discounted of a Broker?

Ally Invest is a firm you are going to hear a lot about if you are looking into discount brokers. But are they all they say they are? I’ve prepared this Ally Invest review to answer that question – and potentially save you a great deal of money and heartache. There is a ton of hype about how low their commissions are, how cool their trading apps are and how valuable their free learning resources are (including live webinars, video tutorials and options playbook). They claim to be the premier discount broker for experienced and novice traders alike. Do they deliver? Is there a catch? Where are the cobwebs and skeletons? Let’s explore together.

Pricing

The firm opened it’s doors in 2005 and has built a reputation for offering ultra low rates. In 2012, Ally Invest and Zecco (another large discount house) merged and have maintained a very low rate structure. They charge $4.95 for a stock trade and if you trade options they tack on another 65 cents per contract. These are the prices no matter if you enter a market order, a stop or stop limit. It’s important to point out that the $4.95 price is “all you can eat”. It’s not a tiered system that looks good at first and then turns out to be very expensive. You pay $4.95 for as many stocks as you like without any restrictions. Simple. Clean. Inexpensive. Nice. (If you trade stocks that are priced below $2.00 per share, Ally Invest will tack on another penny per share for the entire order.

So if you trade penny stocks, this could be pricey. They also offer over 8000 mutual funds. Most are no-loads and the cost is $9.95 to buy and another $9.95 to sell. For loaded funds, you don’t pay a commission but you do pay a load. Bonds are a bit pricey to buy. They charge $4.95 per bond. That means if you buy 100 bonds, you’re going to be charged $495 clams. Expensive. CDs are a little more reasonable. The commission is $24.95 per CD.) Let’s see how they stack up against the competition on pricing for stock trades: As you can see, Ally Invest is the least expensive discount broker among the major players. Now, let’s look at the cost for options trading. You can see that it doesn’t matter if you trade a small number of contracts or a large number of contracts. Ally Investis going to save you a good amount of cabbage compared to the competition if you trade options. It might be time to open a Ally Invest account.

Other Costs

You will incur an inactivity charge of $50 if the total of all your accounts at Ally Invest is less than $2500 AND you haven’t placed any commission-charged trades within the past 12 months. So this charge is super easy to avoid. The only other charges you have to worry about are IRA termination fees. They charge you a total of $100 if you transfer your IRA out to another brokerage firm. That isn’t so peachy if you ask me but let’s continue anyway. It’s not a deal breaker but it is a negative. I don’t like that at all.

Customer Service

Ally Invest hangs its hat on great customer service. That’s wasn’t something I expected but I found their service to be outstanding. When I called (with my list of 15 questions) the young man answered me fully, completely and professionally. They answered my call in less than 9 seconds. Me likey.

But don’t take my word for their great service. They’ve also got the awards to prove it. They’ve been rated #1 in customer service in 2010 through 2012 by Smart Money and in Broker Surveys too. They are available 8 am through 6 pm EST Monday through Friday. Plus, if need be, you can easily talk to brokers who know their stuff. This comes in handy if you have questions about how to trade. This is especially important if you are an options or margin trader.

If you prefer, you can use live online chat but this is also limited to 8 am to 6 pm EST Monday through Friday. Frankly, I don’t know why anyone would prefer live chat over talking to a human being but maybe that’s because I am old fashioned. Let’s keep going.

Here’s something novel and very refreshing. When it comes to email, their goal is to respond to within 2 hours during normal business hours and 24 hours during the weekend. I appreciate the respect.

Managing Your Account

The client interface is really a snap and I like that. You can easily access your account summary snapshot showing your balances, outstanding orders, current holdings and transactions. You can also expand on any of those tabs and view them in much greater detail.

When it comes to keeping track of your taxes, Ally Invest provides their Maxit Tax Manager. This gives you real-time analysis and easy to understand tax reporting. It even suggests trades that will help you reduce your tax liability. That’s what I call service.

You can also review realized and unrealized gains when ever you like. Of course they provide all cost basis and on-demand 1099’s among many other reports to make your life as easy as possible. You can download these reports or export them into your accounting software or excel. You can also grant your tax preparation person access to these reports so you won’t have to waste time playing monkey in the middle. That’s slick.

Trading

Trading is super easy. Just a click of your mouse and you can buy,sell, exchange stocks, ETF’s, over 8000 mutual funds. You can even execute your trades one hour before the market opens or one hour after the market closes with extended market hours.

And Ally Invest does one thing I’ve never seen any other broker do. They actually guarantee that your order will be filled at the National Best Bid of Offer – or better. That means you don’t have to worry about paying too much for your shares or selling them too low. You are going to get the best price possible.

In my mind, this is fantastic. One of the most important factors in selecting an online broker is how well they execute your trades. It’s great to save a few bucks on commissions, but what good is it if you lose several hundred dollars (or more) when it comes to execution? Ally Invest takes care of that problem for you once and for all. This is a huge benefit.
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As you can see, the options online trading screen is just as easy. The options trading screens auto-populate making it easy for newbies and advanced traders alike. You can trade complex options trades such as covered calls, protective puts, spreads, strangles, butterflies, combos, condors and collars. You want options? Ally Invest can provide the platform.

They also have a great fixed income platform that allows you to search for just the right bond that meets your criteria. Ally Invest gives you access to Corporate Bonds, Government Agencies, Municipals, Strips & Zero. You can purchase new issues as well as shop for inventory. If you need more assistance, it’s no problem. You can speak with a fixed-income expert to ask any question you like. Finally,clients have access to attractive rates on CD’s as well.

Auto Trading Anyone?

If you want to enjoy steep discount trading and not have to do any work, Ally Invest has you covered. They have a unique auto trade feature. When you activate this and align your account with newsletters on their list, they will automatically execute any order that is suggested by that newsletter. They do this when the recommendations are made – without you having to do a thing. The list of newsletters is pretty sparse right now but the site suggests that you contact them if you would like to add your newsletter to the list. Open minded. I like it.

Mobile Apps

Ally Invest takes care of you if you go mobile. You can track your watch lists, your positions, get quotes and execute orders anytime, anywhere. They have released apps for both the iPad and Blackberry. They are releasing their apps for Android and iPad in the coming months. Stay tuned.

Quotes and Research

Most discount brokers offer pretty good research and Ally Invest is no different. You can quickly get a snapshot of what is happening in the market – real time. According to the site, you’ll see charts of the “major indices and market stats like most active securities, performance by sector and even a current market commentary from the Ally Invest Trader Network.” Thoughtful.

You can set up watch lists and get news on just about any stock that piques your interest. You can review quotes, trading history and how this stock has performed compared to other companies in it’s industry. You can dig deeper and get info on the market cap, short interest, profits, management, per-share data and a lot more.

Interested in looking at the books? No problem. Ally Invest will show you profit margins, earnings data, sales, employee details, return on equity, earnings forecast and consensus analyst recommendations and insider activity etc. Is there information you want they don’t offer? I don’t think so.

To help you make smarter investment decisions, Ally Invest offers you standard quotes (15 minute delay) and streaming quotes. There is no charge either way.

Need some trading ideas? Why not tap into Ally Invest’s many free high-quality tools. They have a full suite of free technical analysis tools provided by Recognia. This tool can recognize chart patterns, forecast pricing and email you whenever a signal you set up is fired.

If options are your thing, they offer an options pricing calculator and profitability calculator. These will help you make much smarter options trades. And as if this weren’t enough, check out their profit and loss calculator. This little gem will help you understand the potentail gain or loss for a given trade before you place it

And if you stick with stocks, funds and ETFs, Ally Invest hasn’t forgotten about you. They provide wonderful screeners (pre-defined or fully customizable) to help you track down the best security to fit your needs.

Opening Your Account

If you have an individual, joint, custodial account,Traditional IRA, Roth or IRA Rollover you can open an account online in about 3 minutes. You can open up just about any other kind of account you like but you’ll have to sign some documents and either email them in or use snail mail.

When you transfer your account to Ally Invest, you old broker may get fussy and charge you a transfer fee. That’s alright. Ally Invest will will reimburse you up to $150 if Mr. Old Grumpy Pants Broker goes that route. Also, Ally Invest will take care of your wire fees (up to $25) when you initially open your account with at least $5,000.

As a bonus, you can apply for check writing privileges if your account exceeds $10,000. They do charge you $50 a year for this but at least it’s available.

One of the great things about Ally Invest is that they don’t have any account minimums on most accounts. In fact, the only time you have to worry about an account minimum is if you use margin. If that’s the case you must start off with at least $2000 to satisfy Federal regulations.

Education & Support

Ally Invest boasts a strong commitment to helping it’s clients become better traders. And it looks like they mean it. They offer a host of live webinars, over 80 on-demand videos, a tax center and an “options playbook” which breaks down options trading into understandable pieces.

If you want to bounce your ideas off of other experienced traders, plug into the Trader Network. This is basically a forum where you can ask questions and join in the conversation with other people trying to perfect their trading skills too. Get insights from novices and pros alike – and share your own thoughts. On this network many traders post their trades and the reason they made them. Can you think of a better way to learn? This is a unique benefit that I’ve yet to find at any other discount broker. I think this is extremely valuable.

Conclusion

I really only have two and a half complaints about Ally Invest. The first is about access. If you want to speak to them, you can only do so from 8am to 6pm EST Monday through Friday. I understand that they are super inexpensive and they have to cut costs. Personally, I’d prefer to pay a little more in exchange for greater access. But if you don’t need that extra support and prefer to save the dough, this may not be a problem for you.

My second beef is with the retirement account closing fees. Not a fan. It makes no sense to me because it doesn’t cost them anything to close an account. Why should there be a charge? I don’t like it when any firm does this to clients so I’d prefer that Ally Invest not do this either.

The last half-complaint is about fees. I don’t like the bond trading costs and I don’t like the $50 charge for check writing. It just bugs me. I also was not crazy about the costs to buy mutual funds.

Complaints by Users

Every business has its fans and its detractors and Ally Invest is no different. I did find a few complaints when I went into various forums to search them out. But those grievances were very minor and could have easily been leveled against any firm. Nobody is perfect. Frankly, among the few complaints I did find, I am pretty sure they were “operator error” anyway. Bottom line, I concluded that because there were so few substantial complaints, the market is giving this firm the “thumbs up”.

What I Like About Ally Invest

• Trading – The trading tools are very easy to use. And when it comes to trading options, these guys have it figured out. It’s very easy to buy and sell simple or complex options.
• Education – I love the depth of resources Ally Invest offers. The Learning Center will give you all the background you need with articles, videos, MP3’s and live webinars. And the Trader Network is a resource that could make all the difference to you as trader. As I said, the idea of being part of a forum to discuss what people are actually trading and why provides the kind of learning that can be priceless. You can connect with other experienced traders, network with others, share ideas and learn.
• Maxi Tax Manager is a wonderful tool that will help you keep track of your tax gains and losses. This will save you hours and frustration when it comes to tax time.
• Pricing – I personally do not think it’s wise to select your brokerage based on commissions alone. But costs are important. And Ally Invest beats the other serious brokerage firms hands down with its simple $4.95 commission. End of story.
• Guarantees – When I discovered that Ally Invest guarantees that you’ll get the National Best Bid price for your trades, I just about flipped. This is truly a unique and valuable benefit. Also, I like the fact that the accounts are insured up to $25 million through the SIPC.

Bottom Line

If you trade individual stocks I think Ally Invest is a fabulous resource. They are super inexpensive, they guarantee great pricing and they offer amazing learning resources and networks to really help you improve your trading skills. I don’t think any other broker has that capacity. If you are trade stocks, give it a try.

You can open an account without funding it and there are no minimum account levels. Once you open an account you can get in under the hood and really take a look around to see if they are a good fit for you or not. If it turns out not to be a good fit, just send them an email and ask them to close the account. No harm. No foul. No cost. If I was a big options trader however, I would go with OptionsHouse instead for reasons I explain in my review of that firm. And if I bought and sold mutual funds, I would open an account at Scottrade.

• Open a Ally Invest account