ZeccoShare Opens its Doors to All Investors, Broker Future Still Remains Gloomy
Most investors know about Zecco by now, the $0 commission online stock broker. Well, their ZeccoShare community which is in Beta testing has now officially opened its doors to all current members of Zecco and anyone else who wants to participate.
I find this funny because ZeccoShare was originally open to ONLY Zecco members that had an open trading account as well. There was an “advantage” to being exclusive many thought, and it is very apparent that advantage no longer exists (I assume TradeKing will realize this eventually as well).
Now all 70,000+ Zecco members have access to ZeccoShare and with non Zecco users allowed to join, is a very positive move.
Motley Fool CAPS powering ZeccoShare?
When taking a closer look at the email sent out by Zecco they showed some examples of member portfolios to find that Motley Fool CAPS ratings were being used next to the stocks.
Very interesting strategy because indirectly Motley Fool CAPS is a competitor for ZeccoShare. Yes, Motley Fool CAPS doesn’t have backed portfolio trading data for your accounts, but still I find irony in the fact ZeccoShare is a user driven community for investment ideas powered by another user driven community for investment ideas… hmm…
Zecco’s Gloomy Future Remains
I am happy that ZeccoShare has made this move to open to the public, but still I remain skeptical about Zecco as a company. They say they don’t spend money on online advertising yet you see them competing over major key terms right alongside Etrade, Scottrade, and TD Ameritrade. They recently changed their commission structure and starting January 1st, 2008 any account with under $2,500 has to pay $4.50 per trade. To top this all off they have a community run with ratings from a competitive community.
If you are new to the socially driven investment community gig, first off Covestor is arguably the best place for proving your skills (read my full review) for many reasons but mainly because you can import data from ANY broker, not just one. Secondly, sites like Motley Fool CAPS and more recently the MarketWatch Community are in the ballgame and they are both fantastic.
I will be the first to stay live on a blog that I think ZeccoShare is destined for failure. It simply cannot compete with sites like Covestor in the long run. I also remain extremely skeptical about Zecco as a company. They are burning cash like crazy on online advertising and have already announced moving away from $0 trades for many clients. I don’t see a sustainable business model long term.
What do you think? Do you use ZeccoShare or Zecco as your broker? I am curious to hear your feedback and thoughts on this “revolutionary” broker.
I too am skeptical over a company that can offer $0 trades. I think that they’re hard pressed to find enough online ad income that meets their expenses.
I think they also pay a referral fee for affiliates.
FT
Is Zecco a direct access broker? If it isn’t I think the money you save on commisions is pointless, you will end up losing more money on slippage.
What do you mean by direct access broker? Meaning they have direct access to sending orders directly to the floor or something to do with order routing?
I have Zecco. The new change not only requires you to have 2.5k in your account for free trades, but it also has lowered the # of free trades from 40 to 10 for new members and old members after Jan. I don’t know how their financials are, but one thing that is weird is that they seem to be making money from each trade. If I put in a limit order for say $140 and the stock is trading around there, it will execute my order at the $140 limit. But when I get a quote for the stock right after, I see that the last trade was below my limit price. Moreover, the ask is below the limit price as well! This could be a one time fluke, however the same thing has happened on many occasions. Which makes me think its best to use limit prices only for limits below the actual price. Also my friend recently put a limit order over night and even though the stock opened lower, he still got the trade filled at his limit. Other than that, Zecco isn’t half bad, but I don’t think its for everyone.
I’ve actually never used their site for research though, nor have I used their community tools.
Zecco said that most of their customers only do 10 shares a month, so they now giving 10 free trade a month +4.50 per after that, but what I don’t understand that if most of their customers only make 10 trades, then how are they going to make any money.
So obviously they were just lying, being shady, or something. I don’t know where this company is going.
I’m no expert on the topic of direct access brokers but I think if you have a direct access broker your market orders are filled much faster. From my understanding Zecco is not a direct access broker so your order gets routed somewhere else and then filled. For active trades this can make a huge difference in their P&L.
Maybe you should do some research and write a post on it
Instead of hiring a new writer you should just hire me to think of article ideas 
Here’s what Investopedia has to say about it http://www.investopedia.com/terms/d/directaccessbroker.asp
Another great post idea! You are on a role Bubs
No problem if you ever need any ideas let me know.
to sia
I had same “problem” like you had
I plased sell order at 38 but it got filled at 38,56
I trade options more than anything and Zecco still has some of the cheapest contract fees out there. One thing that has bothered me though is the fact that now my trading platform is full of advertising. Before they changed their fee structure, the platform, although ugly, was clean of advertising. Now I can’t even check my account records without some sort of advertisement. I’m looking to switch to another platform that’s options friendly and about the same in terms of fee structure.
Zecco is a phenom in the means of changing the way stock brokerages work. However, I am with Scottrade and LOVE the streamling live quotes, I just simply cant wait 15 minutes for an updated on the ticker.
Don’t you think that Zecco’s change in commission rates is a sign of their long term sustainability?
Offering free stock trades to ALL customers was a way to get their foot into the door, so to speak.
Now that Zecco maintains a fairly loyal customer base and has over a year of company experience, they can transition to a more sustainable business model.
The brokerage industry is a cash cow because every working adult on this planet needs to invest for their later days.
Zecco caters to a niche market, and has provided them with adequate service so far.
So I disagree with your prediction of failure. Zecco doesn’t have to become TD Ameritrade to earn an economic profit in my opinion.