Why TD Ameritrade Is Bad

Why TD Ameritrade Is Bad

TD Ameritrade is, of course, one of the best trading brokers in the US. Over the past thirty-seven years, the company that initially started as First Omaha Securities has worked pretty hard to build a solid reputation for itself. 

So, why is TD Ameritrade bad? To this day, there are some shortcomings in TD Ameritrade’s services that prevent them from providing full satisfaction to all of their customers. First of all, TD Ameritrade does not provide for cryptocurrency trading on their platform. Also, there have been reports of sloppy customer service, and they do not allow customers to purchase fractional shares. 

Today, TD Ameritrade is one of the most recommended and most trusted stock trading brokers around. However, no service can be 100% perfect, and we have seen some customers express some dissatisfaction with TD Ameritrade’s services.

Of course, there are some more reasons. However, before I provide a detailed explanation for all the above-mentioned reasons, I would like to also point out that TD Ameritrade is not all that bad. Here’s why I think so:

Advantages to TD Ameritrade

Like I mentioned earlier, TD Ameritrade is one of the most recommended brokers around. Some experts advise beginners to begin trading with TD Ameritrade, and it is also a good broker for expert traders. TD Ameritrade does deserve a lot of accolades. The service provides many free tools, superb research, and different trading platforms to fit different styles.

Also, with TD Ameritrade, there are no account minimums. This means you can begin trading with any amount. You do not have to put in up to a specific figure to qualify to use TD Ameritrade’s services. 

Having said all that, let’s get into some rightful criticism.  

Why TD Ameritrade is Bad

With all the accolades TD Ameritrade gets, new investors might be tempted to rush into creating an account with the broker. However, remember it is always important to carefully cover the services they offer. Here are a few why you might not want to create a trading account with TD Ameritrade.  

  • No Cryptocurrency Trading: These days, cryptocurrency is one of the most profitable and popular ways to invest. You might have even seen or heard of someone who has already made some profit trading cryptocurrency. However, TD Ameritrade users cannot trade cryptocurrency with a TD Ameritrade account. 

The broker does not offer any services to assist users with cryptocurrency trading. There are some other traditional investment vehicles available that track the prices of particular cryptocurrencies. However, you still cannot actually purchase or hold any cryptocurrency with TD Ameritrade. 

Hence, if you are looking to go into trading cryptocurrency as part of your investments, TD Ameritrade should not be your first-choice broker. 

  • No Fractional Shares: Fractional shares are parts of a whole single share, for instance, ¼ of a share. They could even be as small as one-tenth of the single share. Fractional shares are cheaper than whole shares since an investor or trade purchasing one-tenth of a share would only pay one-tenth of the price for the whole share.

Fractional shares are designed to help investors diversify assets, even when they have just a small amount of money. $100 could buy you fractional shares in 10 different companies, and at the same time, you might not be able to purchase a whole share of some companies with $100.

Unfortunately, TD Ameritrade, as a broker, does not allow its users to purchase fractional shares. This could be detrimental, especially to investors who are still just looking to test the waters. There’s no minimum amount required for an account, but to purchase whole shares, you might need to invest a significant amount to have a well-diversified portfolio.  

  • Poor Customer Service: There are so many reviews online that are very unkind to TD Ameritrade’s customer service. Although I have never tried using TD Ameritrade, so I personally have not experienced this. From the look of things, almost nine out of every ten TD Ameritrade customers who have bothered to leave a review online were not pleased with the customer service experience. 

Most users describe very long waiting times on the phone. Besides, after eventually speaking with a customer service representative, the problem is either left unresolved or takes an even longer time to be resolved. 

  • Fees: TD Ameritrade advertises itself as a free service. TD Ameritrade ads would tell you the company charges $0.00 commissions, no platform fees, and no data fees. While this is true to an extent, most users begin to use the service thinking this is the whole truth and then complain of hidden charges later. 

TD Ameritrade’s $0 commissions apply only to U.S. exchange-listed stocks, ETFs, and options. And options traders still attract a contract fee of $0.65. Also, securities purchased with TD Ameritrade’s Interactive Voice Response phone system and broker-assisted stocks carry commission charges. 

  • Platform Outages: Recently, there has been a lot of platform outages reported with TD Ameritrade. At times, these outages or glitches are only experienced by a lot of the platform users at the same time. At other times, individuals on the platform experience problems with their own service.

As a stock trader or investor, there are times when you would need o move very fast in the market. A platform with a significant number of reported outages might not be the best choice. 

Conclusion

TD Ameritrade is generally a great broker, but as I am sure you must have realized by now, their service still requires a lot of work to make them great for all investors.

Customer Service reviews are bad. Users have to painfully wait for long periods before they can get a representative to speak with. The issues brought up might then still be left unresolved.

Besides, you cannot purchase fractional shares with TD Ameritrade. This gives the impression that the broker might not even care about encouraging investors looking to start small. 

My Recommendation?

TD Ameritrade’s research gives you great information. However, you do not necessarily have to execute your trades on the platform. I would recommend using M1 finance, an innovative no-commission broker that allows you to invest in fractional shares. 


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Coinbase. I've started allocating a small amount of assets to the growing crypto space and Coinbase has just been a breeze to use. Once you register, make sure to also open a Coinbase Pro account to buy crypto at the lowest fees on the market (just 0.1%!).

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