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[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]
What is Zecco?
Zecco is a discount stock brokerage firm which was launched with a big bang last year. They promised to offer $0 stock trades! Initially there was a minimum account requirement of $2500 which was later slashed to zero. Things were really looking promising.
Inception & Gaining Experience
Zecco is now more than a year old. In the past year, several readers have inquired whether Zecco was a good choice for small investors. Even though the free trades were enticing, we stayed away from Zecco for the following reasons:
Zecco was launched officially on 9th October, 2006. However it was actually born on 4th July, 2006. Heartiest congratulations to Zecco on its first anniversary!
A year down the road, it would be worthwhile to see where Zecco stands now.
Currently, Zecco is offering 10 FREE trades per month. Thereafter the cost of each trade is $4.50. It is to be noted that we need to maintain a minimum balance of $25,000 OR 25 or more trades per month to qualify for the FREE trades. Else the cost is $4.50 per trade.
Analysis
We pondered over this change and asked ourselves: Is Zecco practicing a bait and switch strategy? Honestly we believe that Zecco is not doing so! The reasons behind our belief are:
It would be interesting to know how our esteemed readers feel about this change in Zecco's pricing policy. Do you feel cheated? Or, did you anticipate a similar change and had realistic expectations? Are you planning to switch your brokerage? If yes where to? We invite you to freely voice your opinions.
See Also: $75 Referral Bonus from Zecco's Refer a Friend Program
Zecco is a discount stock brokerage firm which was launched with a big bang last year. They promised to offer $0 stock trades! Initially there was a minimum account requirement of $2500 which was later slashed to zero. Things were really looking promising.
Inception & Gaining Experience
Zecco is now more than a year old. In the past year, several readers have inquired whether Zecco was a good choice for small investors. Even though the free trades were enticing, we stayed away from Zecco for the following reasons:
- Being a new entrant in the brokerage industry Zecco lacked experience. We felt that we would be comfortable with Zecco once it has gained some maturity.
- Many of us have had painful experiences while trying out newly released software packages. Most of them are not bug free. In a similar manner, the wise would wait for technical issues related to Zecco's software tools and trading platforms to stabilize before entrusting one's portfolio with them.
- Another important question that we contemplated upon was about the longevity of the free trade offer. How long could Zecco sustain itself with its current business model? A walk down the memory lane reminds us of another brokerage company named Freetrade. As the name suggests, they offered free trades. But not for long. Ameritrade acquired them and currently they have been re-branded as Izone. The trades are no longer FREE at Izone.
Zecco was launched officially on 9th October, 2006. However it was actually born on 4th July, 2006. Heartiest congratulations to Zecco on its first anniversary!
A year down the road, it would be worthwhile to see where Zecco stands now.
- As a brokerage company it has definitely matured. Moreover, a few veterans from the industry (whom Zecco has successfully hired) have definitely lent their wisdom and experience to it.
Zecco has quite effectively pioneered, integrated and leveraged the power of social networking with trading. ZeccoShare is an active community where users can share and discuss their real Zecco trades and portfolios (excluding volume / dollar amounts), blog about investing, and participate in forums on a variety of topics.
- In the mean time, another big change has slowly crept in. You guessed it! FREE trades are almost over.
Currently, Zecco is offering 10 FREE trades per month. Thereafter the cost of each trade is $4.50. It is to be noted that we need to maintain a minimum balance of $25,000 OR 25 or more trades per month to qualify for the FREE trades. Else the cost is $4.50 per trade.
Analysis
We pondered over this change and asked ourselves: Is Zecco practicing a bait and switch strategy? Honestly we believe that Zecco is not doing so! The reasons behind our belief are:
- The tech boom and bust has shown us that bright ideas with no real revenue fail miserably. To run a successful business, there should be sufficient real earnings. In that light, it is quite clear that Zecco's initial promise of FREE trades for all was NOT sustainable in the long run.
- The chat transcripts of Zecco's CEO also express the reason behind Zecco's gradual movement out of the free trading policy. Zecco's own clientèle wants better customer support. The cost of providing good customer service is quite high these days. Zecco would need a better cash flow to do so. And thus, it has raised the bar on free trades.
- All is not lost for long term investors like us who employ a buy-and-hold strategy. For us, Zecco is still effectively FREE! We do not need more than 120 trades a year (10 FREE trades a month) to do index investing. On second thoughts, we feel that 40 trades per annum should be sufficient! Else there might be too many movements in the portfolio which in turn will raise its management fees.
- We admit that this rate change might seem unfair to active traders. But so far as our knowledge goes, Zecco's trading fees are still the lowest in the brokerage industry. That does provide some consolation!
It would be interesting to know how our esteemed readers feel about this change in Zecco's pricing policy. Do you feel cheated? Or, did you anticipate a similar change and had realistic expectations? Are you planning to switch your brokerage? If yes where to? We invite you to freely voice your opinions.
See Also: $75 Referral Bonus from Zecco's Refer a Friend Program
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