Ally vs E*trade 2020: Which Online Brokerage is Better for Beginners?

Ally vs E*trade

In this Ally vs E*Trade comparison, we dive into the pros and cons of each broker, explain how they differ, and depending on your needs — show which platform is right for you.

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Comparing these two brokers comes down to trade experience and educational resources, as both offer commission-free stock trades, ETFs, and options. Ally Invest appeals to new investors and experienced traders with its low-cost options contracts, and it offers complete forex trading, automated portfolio management, and a variety of free technical analysis tools.

E*Trade has been the low-cost online broker for many years, but it became more competitive after dropping all commission fees. With several platforms, mobile apps, and excellent research tools, E*Trade is a great option for beginner investors and active traders alike.

Ally vs E*Trade – Quick Comparison 

Both Ally Invest and E*Trade are considered low-cost brokerages, but E*Trade’s been around a lot longer and may offer more educational resources to beginner investors. Here are some highlights from our comparison and review:

Pros and Cons of E*Trade: 

  •  Tools and educational content for beginner and advanced investors with actual courses from Morningstar
  •  $0 commission fees on stocks, ETFs, and mutual funds
  •  Over 4,400 no-transaction-fee mutual funds, $19.99 for all others
  •  Multiple platforms including E*Trade Web, E*Trade Pro, and Power*Trade for active investors
  •  $0.65 per contract for options or $0.50 per contract for higher volume traders
  •  Easy-to-use free mobile apps that include charting, intuitive trade ordering, and screener tools
  •  E*Trade Core Portfolios offers a low-cost robo-advisor with a 0.30% management fee

Pros and Cons of Ally:

  •  $0 commissions on stocks, ETFs, and options
  •  No account minimums for brokerage, $500 deposit for Ally Managed Portfolios (robo-advisor)
  •  Responsive and intuitive InvestLIVE browser platform with robust research tools and charting
  •  Ally Forex offers one of the best forex trader apps available
  •  No NTF mutual funds, investors pay $9.99 per mutual fund trade plus any additional costs

Fees and Commissions

Both brokerages offer commission-free trades on stocks, ETFs, and options. However, they take a different approach to options contracts.

With Ally Invest, options traders will love the flat rate of $0.50 per contract. While you can get this rate with E*Trade, you have to make a minimum of 30 trades per quarter to lower your rate from $0.65 per contract to $0.50 per contract.

E*TRADE commissions, rates, and fees
E*Trade’s pricing and fees, which include a flat rate of $0.65 per options contract.

There are no account minimums for either of these brokerages, and Ally Invest only charges a $50 full outgoing transfer fee, which is lower than E*Trade’s $75 transfer out fee and $25 partial out fee.

There are thousands of mutual funds to trade with E*Trade, including 4,400 no-transaction-fee (NTF) funds. All others cost $19.99. This is a great advantage over Ally Invest, which offers no NTF funds. All mutual funds cost $9.999 per trade for no-load funds. Fees also vary if they have a sales load.

Winner: These low-cost brokerages are neck and neck with fees and commissions, but E*Trade pulls out ahead with NTF mutual funds.

Investment Selection

Since 1982, E*Trade has been building its brokerage to include the best investment selections. It has vetted its investment choices and included the most popular, as well as some risky ones, such as Bitcoin futures.

However, Ally Invest wants to offer the same investment selections as a full-service brokerage. Is the relatively new brokerage able to compete?

With E*Trade, you have the following investment selections:

  •  Stocks
  •  Bonds
  •  Mutual funds
  •  ETFs
  •  Options
  •  Futures (including Bitcoin futures)

With Ally Invest, the following investment selections are available:

  •  Stocks
  •  Bonds
  •  Mutual funds
  •  ETFs
  •  Options
  •  Forex

Unfortunately, E*Trade discontinued forex trading. However, Ally does not offer future contracts or any kind of cryptocurrency trading.

The one advantage for E*Trade customers is their selection of NTF mutual funds, which cost nothing. Ally Invest simply does not have any NTF mutual funds and a very low selection of funds in general. This is part of the reason why E*Trade made our list of the top stock brokers available.

Winner: E*Trade wins here mainly for its futures and mutual funds options. While forex may be important to you, Ally Invest may not be the best place to choose in comparison to CMC Markets and Dukascopy, although they have just launched the Ally Forex App to allow forex trading on mobile.

Trade Experience

It’s hard to compete against an older brokerage like E*Trade in this area. With a variety of platforms for every type of investor, E*Trade has a bit more to offer than Ally Invest. However, Ally makes it quick and easy to place trades.

Trading with E*Trade

There are three trading platforms available with E*Trade, excluding their corresponding mobile apps. These include E*Trade Web, ETrade Pro, and Power E*Trade. For quick access and research tools on the go, you can access E*Trade Web through your desktop or mobile browser. It’s incredibly intuitive and has all of the research tools you want to see in a full-service brokerage.

E*Trade Pro is a smart desktop platform that allows you to trade expertly on your computer with an impressive array of idea-inspiring tools, such as Strategy Scanner. There are also multiple back-testing capabilities.

Screenshot of Power Etrade Platform Page
E*Trade’s Power E*Trade platform provides users with an impressive number of tools and trading capabilities.

For active, experienced traders, Power E*trade is the best options trading machine, as it was acquired from OptionsHouse. This gave more tools to options traders who wanted more real-time streaming data, technical studies, and drawing tools. There are also streamlined trade tickets, trading ladders, and options chains views available with Power E*Trade. For a deeper dive, feel free to check out our comprehensive E*Trade review.

In terms of trade execution quality, E*Trade may be fast, but its average price improvement percentage is not as good as many others. It ranges around 93% in comparison to Charles Schwab’s 95%.

Trading with Ally Invest

With Ally, you only have access to a web-based platform and mobile apps. However, the HTML5, responsive InvestLIVE platform is quite fast and easy-to-use from your browser.

You can instantly see real-time quotes streaming and customize your display to have everything at your fingertips, allowing you to pace news feeds, portfolio holdings, watchlists, and other items in your dashboard.

One of the unique features of InvestLIVE is the ability to do bulk order entries that allow you to create a “trade basket” and add several individual trades at the same time. In addition, tax lots for a position you are holding can be changed from your account default even after the trade has been executed.

Trade execution quality is a bit poor for Ally Invest though. The company does publish reports on price improvement and their percentages are all lower than average.

Winner: It’s definitely easy to use either of these brokerages, but you’ll get more out of E*Trade’s desktop and mobile apps than with Ally Invest.

Education, Research, and Robo-Advisors

The educational offering with E*Trade have been built over three decades. However, Ally Invest does offer some stock screeners and some stock education tools.

Education and Research with E*Trade

All types of investors can benefit from E*Trade’s educational courses, tools, and screeners. There are so many opportunities for research, whether you are using online investing courses from Morningstar or accessing their socially responsible investment guide.

Screenshot of Etrade Knowledge Page
E*Trade offers a number of educational resources including webinars and instructional videos.

There are a few hundred videos and webinars related to technical analysis, stock trends, options trading, portfolio diversification, retirement, and many other topics.

E*Trade has a powerful charting engine that uses data from Chart IQ, which utilizes HTML5, responsive charting. You can easily pan and zoom, and there are technical analysis options from Recognia. There are 119 technical indicators and 32 drawing tools included.

Can You Invest with a Robo-Advisor with E*Trade

You can invest with E*Trade Core Portfolios to access automated investment and robo-advisor management with daily automatic rebalancing and tax-loss harvesting. E*Trade charges a 0.30 percent management fee annually, and you can invest with just $500.

Not sure what a robo-advisor is? We assure you they’re not as strange as they sound — learn more about robo-advisors here.

Education: Is Ally Invest good for beginners?

Ally Invest does its best to offer screeners and research tools. Most casual investors will not mind that Ally only has two screener tools.

Ally Invest Retirement Education Page
Ally Invest offers a retirement planning tool to financially prepare for your future.

One of these tools hooks you into 80 technical and fundamental data points, while the other lets you back-test any investment strategy. You can also find screeners for mutual funds and fixed income.

Charting tools include 33 years of history, and you can check out stock overview pages to see CFRA reports and Lipper scorecards. For options traders, you get a little something more with the Strategy Workbench, which shows your current trades and potential trades with included risk assessment.

While the investment tools and education are limited with Ally Invest, the brokerage does plan to offer more analysis features soon.

Does Ally Invest Have a Robo-Advisor?

Investors can sign up for Ally Invest Managed Portfolios to access the robo-advisor tool. You can begin investing with as little as $500, and your management fee is 0.30% just like with E*Trade. For more on its features and benefits, take a look at our Ally Invest review where we give the platform an impressive 9/10.

If you keep 30 percent of your portfolio in cash, this fee is waived. However, it’s pretty basic and does not offer tax-loss harvesting or automatic rebalancing.

Winner: E*Trade has a huge educational and research platform, but some of the information is outdated or not popular to use. Ally Invest focuses on the most popular tools, but it still doesn’t match the robust educational courses and webinars that E*Trade offers to investors.

Mobile and New Trade Tech

E*Trade has developed multiple mobile apps to correspond to their web and desktop platforms. You can use E*Trade Web, Power E*Trade, and E*Trade Pro on your phone for free.

You can easily manage your account, make complex trades, check out screeners, and even look at multi-leg option spreads. It’s also available for the Apple Watch.

Screenshot of Power ETrade App Download Page
The Power E*Trade app allows users to trade directly from a smart phone.

Power E*Trade is definitely the superior mobile app of the bunch. You can customize everything, including options chains, charts, and streaming quotes. You can also trade in complex strategies and access future orders within the future ladders.

Ally Invest has two mobile apps, including Ally Mobile and Ally Forex. The main app is pretty basic but allows for most trade types. You can set up watchlists, customizable news feed, portfolio management, and some stock overview pages.

As a proprietary app for forex trading, Ally Forex is a standout feature for the brand.

Winner: E*Trade offers more tools with their mobile apps, but both platforms are easy to use. Ally Forex is a great tool for on-the-go forex traders.

Frequently Asked Questions: E*Trade and Ally

Is E*Trade or Ally best for retirement?

E*Trade is definitely better than Ally Invest in this category simply because of its NTF mutual fund selection and account types. You can also find more retirement calculators and planning education tools. Ally Invest simply does not offer the same tools that passive and active investors would need to set up a sound and diversified portfolio like with E*Trade.

What brokerage offers better customer support: E*Trade or Ally

Both of these brokerages offer 24/7 customer support with live chat, email, and phone support. However, Ally Invest does not have in-branch support like E*Trade, which offers 30 different locations.

Here are some further details:

E*Trade Customer Support

It’s easy to get in touch with E*Trade’s customer support. The best option is through their 24/7 live chat feature. The chat window opens up promptly and connects you to a customer representative, and you speak to a real human, not a bot. On the phone, E*Trade provided fast answers. The representative took the time to answer all questions and provided links to ensure that we had follow-up resources.

Ally Invest Customer Support

While you need an account to get questions answered, you always speak to a human whether you use the 24/7 live chat feature or email support. With phone support, you can connect to a US-based customer representative. Our call was answered within 5 minutes, but it took the representative several minutes to answer the question and provide additional links. In the end, we felt that the live chat service provided better support than phone.

Which is Better – E*Trade or Ally?

We think E*Trade is the better platform due to its robust Power E*trade tools and educational courses.

Ally Invest targets beginner and active investors with its simple platform and low-cost options. If you’re an options trader, you probably have seen that they offer a pretty low per contract rate at $0.50, but investors suffer on the lack of tools and research capabilities.

E*Trade has been around forever and offers a variety of different tools and educational resources. We like that E*Trade has multiple apps dedicated to casual and active investors, and while the brokerage does not have forex trading, you can access NTF mutual funds and get higher trade execution quality than with Ally Invest.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (protechcap.com).