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Zecco downsizes its free services. No more 40 free trades per month. October 1, 2007

Posted by deminvest in Internet stocks, investment, investment strategies, low cost, stocks, zecco.
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This morning I got from Zecco a E-mail in “marketing correct” language. In Proletarian language I translated it so:

1) zecco’s Website sucks. That is something you know. We at zecco know it too

2) We will reduce your monthly free trades from 40 to 10. We do it because doing so we should be able to find the money to make a usable website.

3) If you aren’t rich and have less than $2.500 balance you GET NO FREE TRADES!

Here is the letter in “marketing correct” language:

Important News About Your Free Stock Trades

Free trading is here to stay. Our mission today is the same as it was a year ago; to level the playing field for the self-directed investor. If you’re like the majority of our customers (and over 98% of online investors), you trade less than 10 times per month, much less than the 40 free trades we now offer. You are, however, clamoring for more sophisticated trading functionality and the superior customer service you deserve. We hear you and we’re adjusting our offer to get you more of what you need.

Beginning next year, each qualified account will get 10 free stock trades per month. Additional trades cost only $4.50, a deal we think is hard to beat. If you have more than one account of the same type (individual, joint, Rollover IRA, Traditional IRA, and Roth IRA), you’ll get free trades in the first account of that type.

Minimum Balance

Equity Trades

Options Trades

$2,500 or above

10 free trades/month,
$4.50 thereafter

$4.50 per trade
+
50 cents per contract

Below $2,500

$4.50 per trade

Instead of paying for free trades you may not use, we’re investing that money in the tools and functionality that you will. Over the coming months you can expect:

  • Significant investments in the number of service representatives and training.
  • Addition of 3 and 4 legged options strategies so you can trade butterflies, condors, and more.
  • Release of a sophisticated options analytics platform.
  • Access to ZeccoShare, the ground-breaking investor social network at zecco.com. Independent of Zecco Trading, ZeccoShare lets you share your brokerage holdings, trade history and performance anonymously, and view the same of others. Now, you can debate stocks with other investors and know that they are putting their money where their mouth is.

And much more, including fantastic new premium services at a typically fantastic Zecco price:

  • Streaming quotes, news and charts.
  • Tax planning and performance tools powered by GainsKeeper®.

No changes to the trade commissions until January 1, 2008

For your accounts applied for or opened before 12:01AM PST, October 1, 2007 you’ll continue to get 40 free trades a month, 10 free trades a day and pay $3.50 each additional trade until December 31, 2007. For options trades, you’ll pay $3.50 per trade plus 60 cents per contract till then. The new commissions kick in January 1, 2008. If you apply for or open a new account on/after 12:01AM PST, October 1, 2007, your new account gets the new deal from the start.

For more details, visit: www.zecco.com/trading/newofferfaq

We’re proud to offer you what we believe to be the best deal in the industry. Thank you very much for your business. Your support of Zecco Trading has helped us to transform the online brokerage industry and bring free stock trading to tens of thousands of investors just like you. We will constantly strive to give you the best value in the business.

Regards,

signature
Stephen Oliveira
President
Zecco Trading
P.O. Box 4328
Ontario, CA 91761″

Comments»

1. deminvest - October 1, 2007

My answer to Steve’s mail:

“Steven,

why don’t you save on paper and stamps instead of reducing free trades from 40 to 10?

You keep sending me a paper letter for every trade. It is useless. Nobody really wants that paper.”

2. We, The People, said: “NO to commissions!” We got free trading now: « Democratic Investments by the people for the people - October 1, 2007

[…] 40 free trades [this is changing] per month at zecco.com […]

3. Lucas - October 3, 2007

Zecco started out like most gas stations do. They build it all fancy, it is an exciting looking addition on the block, and they have the price low and undercut everyone else. People flock there, some get in the habit of going, and then they sell gas and cigarettes and whatever at the exact same price as the others.
If the company is taking away free trades that people don’t use, then how can that create more money for improving service?

4. deminvest - October 4, 2007

Yea Lucas. Often company Executive earn so much money, that they consider us, who have normal pay, dumb people.
They talk to us like they would talk to little children ready to believe whatever they say.

I liked the idea behind Zecco. Only I think they chose the wrong President.

When this Stephen Oliveira tries to convince us that Zecco can create money by taking away services we don’t use, he is taking us for fool.

My opinion is that he is the fool. He chose wrong technology (ASP), he let the technician build an hardly usable website. He build up the worst community on the Internet. He could have done things right spending the same amount.

What really drives me crazy are the useless snail-mail letters and the expensive stamps. Zecco sends me a letter for each transaction. I directly trow it in the trash!

5. withheld - October 6, 2007

Thy canceled someones account who contacted them about the new policy. Guess you can’t give feedback. Some people feel this is bait and switch. I think others just wish they were grandfathered in but maybe they aren’t getting many people to sign up to cover them. What would be nice is one small change in their new policy. To lower the min rate to get free trades, even if it is reduced from 40 to 10 free trades. Just a thought that would save a good portion of their user base. their rating on the BBB ois rated at F.

6. Deminvest - October 6, 2007

I was wondering what the meant by “minimum balance” 2500
I was wondering:
Is “Balance” the cash balance you have on zecco, or is it the total holdings, adding cash to all your stocks value?

Fortunately by “the Balance” they mean total holdings. This has been answered on zecco forums.

After the initial rage, I must admit that my expenses will remain unchanged to zero, because I never made more than 5 transactions in a month and because my total holdings balance on zecco is around $5000.

7. Kevin - October 12, 2007

I think the change is good for the company in the long run (and me since they are holding my shares). The price change gets people who are actually interested in having a Zecco account open one. You are not going to have someone open an account buy a share or two and never come back. People can still do this but they have to pay $4.50 for each trade. By putting a $2,500 minimum to get free trades they will get people who are actually serious.

As for dropping from 40 trades to 10 trades. How many trades do people really need? I think 10 trades is sufficient. People, especially new investors, see this 40 free trades per month and go overboard and start to make investing decisions on how many trades they have and not on the actual company. These investors will quickly be labeled as day trades and now they need a ton of money in their account to make a trade.

Since Zecco does not make money on the sale of trades their incentive is to offer the fewest amount but still get enough people to join that they get some clicks on the ads. They also need to offer free ones so that they can make some interest off of your idle cash.

I think 10 free trades per month with a minimum balance of $2500 is a better business model than 40 free trades per month with no minimum balance. Now if they can make more money and upgrade their crappy site and customer service then I will be happy!

8. roher - October 12, 2007

Kevin, they “upgrade their crappy site and customer service” so well that now zecco.com is down. During trading hours!

9. Kevin - October 12, 2007

It is not down on my end.

10. anon - October 16, 2007

that is really disappointing. I am someone just starting out and felt zecco would help me build. I guess not. I sure do not have 2500 to put in right off. Or 4.50 a trade to throw away.

11. deminvest - October 17, 2007

Anon, I am so sorry. They are so stupid.

They could get an early stage customer like you, who could learn about investing and could grow with Zecco.

Instead they waste money sending me a letter with a $0.9 stamp for every trade, that is free for me. Not only that. They also send me a monthly activity review with $0.9 stamp.

HEY Zecco people… DO YOU READ ME? I DON’T WANT THOSE PAPER STATEMENTS! Use the money you save from my stamps to give free trades to anon and to starting investors like anon!

12. thanksbutnothanks - October 29, 2007

zecco really does blow… come Jan 2008 when all the cuts in service and price hikes become active, I am gone.

13. deminvest - October 29, 2007

thanksbutnothanks,
maybe you will calm down like I did… After all at zecco I still find the best conditions on the market… And after all I never made more than 10 transactions every month… So I refunded my zecco account with $4000 more…

What really scares me is the fact that maybe at zecco they are having financial problems that made them change the conditions… I am afraid this move won’t solve those problems and that there may be further restrictions…

thanksbutnothanks, please stay with zecco. They are not managing the company well, they make mistakes, but if they fail, we’ll never have commission free trades again!

I hate and love zecco. But I will support them and I hope they succeed with their free trades vision. I already saved about $400 of commissions thanks to zecco and those commissions are into additional shares that I would not have been able to buy and are worth about $ 550 more already… If zecco did not exist I’d be $550 poorer

14. unzecco - November 20, 2007

I signed up for an account on zecco, now I’m leaving before I even begin. An earlier poster hit it straight on the mark:

“If the company is taking away free trades that people don’t use, then how can that create more money for improving service”

They are con artists. I don’t like being ripped off with BS like that. I’d rather pay an honest $7 to Scottrade than $4.50 to con artists.

15. deminvest - November 22, 2007

unzecco, I complain a lot about zecco, but I continue enjoying my free trades.

I never traded more than the new limit of 10 monthly, my trades were performed very fast and at the right price, so I don’t yet see why we should waste $7 on every trade on Scottrade.

10 free trades at $7 are worth $70 a month and $840 a year. For a small investor like this money is important. I don’t see why I should give it to Scott. Sorry Scott 🙂

16. TJP - November 27, 2007

40 free trades a month is extremely hard to manage when you’re a growing brokerage company. Since most people don’t make more than a couple trades per month, why not reduce the pricing structure to provide more professional features like the full service brokerages? Until Zecco eliminates the free trading benefits altogether, I still support their efforts in leveling the playing field.

17. deminvest - November 27, 2007

TJP, they should save money on the stupid stamps they stick on useless letters they keep sending me.

18. deminvest - November 28, 2007

There will probably be good news and service improvement: Zecco was funded $25 Millions more today

19. Thomas Chaves - December 7, 2007

A agree with what everyone in here is saying. But at the same time, I refuse to accept the statement that, “ZECCO SUCKS!”

All of you complaining that they are taking away 75% of your FREE trades have (and still are) using Zecco instead of TD America, E-Trade, Scott, etc. The fact that an online broker offers anything for free is pretty impressive.

A lack of a minimum balance for free trading is a major selling point for first-time and inexperienced traders. If I were running Zecco, I would establish a six month introductory phase for all new members, allowing them ten free trades and waive any minimum requirement fees. That way, they snorkel the surface of the trading pond without having to take the full plunge. I can tell you first hand that the free trades a zero balance requirement was what got me started. I am now $300 short of the $2500 requirement and still be entitled to my 10 free trades.

The website could definitely use a facelift. It lacks the intuitive feel that many other trade and stock-related websites out there are offering.

I’ll be the first to admit that I am saddened by Zecco’s depletion of free trades, but I am certainly hopeful for Zecco’s future. They will have a lot more capital to invest into itself, ultimately benefiting us.

Let’s stop complaining about why “Zecco sucks” and voice constructive feedback amongst ourselves and to Zecco employees.

-Thomas

20. deminvest - December 8, 2007

Thomas, thank you for your positive attitude! We all need it.
I am actually getting used to zecco and I also have great hopes because of the fresh Capital injection by Ventures

21. Al - December 10, 2007

I was looking forward to signing up with Zecco.com today as a result of the advertising I saw (40 free trades per month) a while back and was rather disappointed to see the old BAIT AND SWITCH tactics at work.

OUT OF PRINCIPLE ALONE I would never sign up or even work for a company that attempts to play their customers for fools. If I had signed up then I would have definitely withdrawn my account by now on news of the switch.

Even if the new deal is not half bad as it stands today, theres still no integrity or honesty in Zecco management as a result of the switch tactics. Who knows what other cons will be implemented and/or executed in the future. I hate cons and thats the reason I post here.

I would have much more respect for a company that could openly admit they were losing money on the previous plan than to say that 98% of our traders trade less than 10 per month as an explanation for the switch. AFTER-ALL PEOPLE DO MAKE MISTAKES AND WE ARE ALL HUMAN but theres no logic in saying 98%, for if that were true then the 2% that do trade between 10 and 40 per month can’t possibly be hurting the bottom line all that much. Come clean at least instead of playing everyone who did sign up on the 40 trade deal for a fool.

22. deminvest - December 10, 2007

Al, you’re 100% right. At zecco they made many mistakes and they took us for fool. Still I think that free trading is a wonderful idea. Even if the people making this idea real are not very fair and not very smart, still the idea is worth my support.

I am very angry, but I still continue to put money on my zecco account and to take my 10 free monthly trades. As a matter of principle I will keep my previous trading account and I will NEVER give a single cent to zecco as commission. If one month I’ll need to make the eleventh trade, I’ll do it on my old account. If they try to get commissions from me, I quit them.

Anyway I’m sure things will get better with the fresh Capital injection by Ventures

23. beentheredonethat - February 18, 2008

They will need every penny of that fresh cash infusion in order to survive the coming slowdown. Zecco makes money on margin balances not trades. That has always been their model. Stripped down bottom of the barrel services and functionality all the while making money by promoting you to trade on margin, which in my opinion is unethical and immoral.

When the market continues to head south over the next 18 mos, the poor Zecco customers that have been buying on margin will be blown out of their accts, go broke and Zecco in turn will falter and be another forgotten name in the discount brokerage game i.e Brokerage America. They just can’t compete in this enviroment. Bad timing for a bad platform and hacks for management.

I give Zecco 2 yrs max before whats left of thier accts are bought by Ameritrade or E*Trade.

24. Deminvest - February 19, 2008

In my opinion Zecco’s customers are small traders like me. Whoever invests heavily can find more professional free trading at Bank of America. People who invest few thousand dollars can hardly go broke.

Also I wouldn’t be so sure that markets will continue going down in the next 18 months. If you are sure about negative markets, you can invests in ETFs for shorters and become rich: https://deminvest.wordpress.com/2007/06/14/6-etf-to-go-short-i-wont-bet-against-the-market-but-useful-reference-just-in-case/

25. Nat - September 12, 2008

Zecco holds money for 5 days when you transfer from your bank
So that you can’t trade when I want to…what’s the point of having account with them…SAD

26. deminvest - February 3, 2009

They changed their rules again. Now you need to have $25000 on youe account to enjoy free trading.

Bye zecco:

https://deminvest.wordpress.com/2009/01/31/zecco-no-more-zero-cost-commission-and-no-more-my-online-trading-site/


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