ShareBuilder Review

Section 1: Web Site Functionality Rank

Navigation
ShareBuilder doesn't have as many bells and whistles as many of their major competitors so you will learn your way around very quickly. It's a pretty stripped down site with few sections to browse, so once you're inside, navigation is easy. This may be convenient for those that only want to use a discount brokerage for trading but the lack of features and tools is disappointing to traders that have experienced the robust research and analysis available at other major discount brokerages.

We only found one major issue with navigation but luckily, it doesn't affect ShareBuilder clients, only prospective clients. ING purchased ShareBuilder early this year, and one of their first moves was to modify the “pitch” page. The ShareBuilder “pitch” page is now a circular pushy headache with multiple (and we mean MULTIPLE) links to the new member application page. This is not the kind of sales approach we expected from a company as respected as ING. This leaves a bad taste in the mouths of first-time visitors who are just trying to learn about ShareBuilder before deciding which discount brokerage to choose.

Dependability
ShareBuilder is a dependable site, we didn't find any complaints about crashes, glitches or extended downtimes and we didn't experience any problems during our review. We were actually a little surprised, companies usually face problems during an acquisition but ING and ShareBuilder seem to be handling the transition very smoothly.

Customization
ShareBuilder offers very little in the way of account related customization features. You can do a little bit with your portfolio summary screen but what you see is what you get for the rest of the site.

The design is very nice, as are the tutorials and layout of the various research tools but none of them offer much in the way of customization. ING excels at personalizing the client experience so we expect this to change as their level of input at ShareBuilder increases.

Trade Execution
ShareBuilder doesn't state any trade guarantee and we found several complaints about slow and sometimes inaccurate execution. The most common complaint came from traders watching real-time quotes through a third-party site and trading at ShareBuilder. The price they see and the execution price are often inconsistent.

ShareBuilder caters to dollar-cost-averagers so it's no surprise that they fall short of the market in the short-term and real-time trading categories. Still, this is an area for improvement if they want to compete with the major brokerages, they are currently lagging the competition.

Section 2: Trading Costs and Fees Rank

Intuitive Commission Structure?
The commission structure is why ShareBuilder did not make our “Top Ten” list in the 2008 rankings. The pricing and advertising is confusing and misleading. Many new clients are attracted to ShareBuilder because of the “$4 trade”. Sadly, very few clients actually get to experience the $4 trade, this is only available if you sign up for “automatic investing”.

So what is the automatic investing program? Automatic investing means that you set up your account to make weekly or monthly automatic stock purchases. The investor has zero flexibility, they are not able to choose the day of week to buy or even to set any kind of limit order. ShareBuilder makes all of these automatic trades once per week, all at the same time, and all at the current market price. Supposedly this system is designed to encourage dollar-cost-averaging. Even the strictest dollar cost averager is going to want some flexibility in his/her trading and certainly wouldn't be happy about weekly transaction costs either.

When we questioned this sales tactic, a rep explained to us that ShareBuilder makes it very clear in their advertisements that the $4 trades are only for the automatic investing program… However, it definitely wasn't clearly stated on the ad we saw when we did a google search for ShareBuilder. The sponsored link at the top of the page only states “Buy Stocks for $4. No Minimums.” That was the whole advertisement, there was no mention of conditions or the automatic investing program.

The final nail in the coffin for “automatic trading” and the $4 trade is that, if you agree to the inflexible automatic investing program, that only means you can BUY for $4, when you sell you will pay $9.95 per transaction. We felt this was misleading. ShareBuilder will not be in our top ten in any future rankings until they straighten out and clarify their pricing structure and advertising.

Minimum to Open an Account
No minimum required to open an account.

Stocks

Basic Trading (the Free Program)
Internet Trades = $9.95 per trade.
Interactive Voice System = $29.95 per trade.
Broker Assisted = $29.95 per trade.
Automatic Trading Program = $4.00 per automated trade.*

Standard Trading ($12 monthly Fee)
Internet Trades = $9.95 per trade.
Interactive Voice System = $29.95 per trade.
Broker Assisted = $29.95 per trade.
Automatic Trading Program = $2.00 per automated trade.*

Advantage Trading ($20 monthly Fee)
Internet Trades = $9.95 per trade.
Interactive Voice System = $29.95 per trade.
Broker Assisted = $29.95 per trade.
Automatic Trading Program = $1.00 per automated trade.*

* Make sure you're thinking in terms of transaction costs if you sign up for the automatic trading program. If you're buying small lots of stock frequently, the fees can add up very quickly. Also remember that, even if you make zero automatic trades in any given month, you will still have to pay the monthly fee.

Options
Internet Trades = $9.95 per trade + $1.00 per contract
Interactive Voice System = $29.95 per trade + $1.00 per contract.
Broker Assisted = $29.95 per trade + $1.00 per contract.

Mutual Funds
No-Load No-Fee Funds = Free. (20 available, all ING Funds)
No-Load Funds = None available.
Load and Fee Funds = None available.

Tip: Avoid any funds with loads or fees. With the vast selection of no-load no-fee offered by many of today's online brokerages, there's no reason to ever pay them!

Treasuries & Bonds
Treasuries, Bonds and CDs = Not available.

Rates & Fees

Margin Rates:

Interest Paid on Cash (Sweep): 1.82%
Checking Available? No
Paper Statements: $5 per month
Electronic Statements: Free
Wires: $30

Section 3: Customer Service Rank

Phone Reps
The customer service hours are comparable to the major online brokerage houses, ShareBuilder has phone reps available from 8AM to 9PM EST Monday – Friday. Their phone system is solid, we didn't experience any disconnects and you won't have to deal with the multiple transfer headaches common at so many large companies.

ShareBuilder has very good customer service, we experienced zero wait time during our test calls and the reps were each friendly and helpful. The only drawback that we could find was that you are only speaking to a service rep, you will not be speaking to brokers or planners so they can't answer any advanced investing questions without help.

While you'll never have to wait to talk to a rep when you call in, if you ask anything other than basic questions, you will be placed on hold while they research. Even so, they still managed to keep the hold times to a minimum and every rep was patient with our many (MANY) questions.

Online Support
There is no live chat available, but the FAQ's are useful and well organize. You can find answers to any basic investing or website functionality questions. This is one of the better FAQ sections we saw during our review.

Advanced Support (Options, Funds, Bonds, etc.)
ShareBuilder has limited support for options trading, but you won't find the fund, bond, or advanced planning specialists that are available at some of the higher end sites. The option specialist we spoke with was friendly and helpful but had trouble walking us through an Iron Condor trade on the SPX index (one of our test questions for option specialists).

Section 4: Research Tools & Investing Information Rank

Market Research & Analysis Tools
When you compare ShareBuilder to competitors in the research category they come up short. They have some talented graphic designers, the tutorials and tools look great but none of them have much horsepower.

We were also disappointed that ShareBuilder boldly tout their research tools and reports even though most of them come from the most generic source available. The Street.com provides most of ShareBuilder's research and analysis data. Their info isn't bad, but it's available at every major brokerage house so you're not exactly getting timely or cutting edge information.

ShareBuilder has been around for 10+ years, and it seems like they would have developed much more than their current meager research and analysis offerings. Hopefully now that they have backing of ING, they can outsource for some great investing and research tools since they don't appear to be inclined to develop any in-house.

Portfolio Builder
This is one of the tools that ShareBuilder sells the hardest. Each simulation spits out a bland combination of investments heavily weighted with ETFs. We're all for ETFs at Money-and-Investing.com, but the Portfolio Builder always seems to spit out similar generic portfolios regardless of the investing style you're trying to follow.

ETF investing is a great strategy, but if you're going to offer a Portfolio suggestion tool it should be much more robust. Users should be a able to select from a broad and complex range of categories and criteria and the results should be based on an individual's risk tolerance, strategy and long-term goals rather than a one-size-fits-all portfolio.

“What If” You Had Invested?
We liked the “What If” tool, it's somewhat unique because it takes an innovative approach to paper trading. Rather than doing real-time trades you can simulate historical trades and even compare stocks, funds or ETFs. You can also choose to dollar cost average, reinvest dividends, or compare to an index for your simulations.

This is our favorite tool on the site, you can learn a lot about whatever investment you're researching in a very short span of time and, surprisingly, we didn't see this anywhere else during our review. You may be thinking that historical performance isn't a great indicator, but the “What If” tool's dollar-cost averaging options, dividend reinvestment simulations and comparisons to benchmarks are spectacularly educational. We couldn't determine whether or not this is a new tool, but if it is, ShareBuilder is definitely moving in the right direction.

Level II Quotes & Streaming Data
Both are available

Section 5: Perks Rank

Fractional Share Trading
This service is not unique to ShareBuilder, and their price per trade is higher than competitors for fractional transactions. However, this is still a very attractive feature for investors with small portfolios and for dollar-cost-averagers.

Fractional traders can buy whatever stock they want rather than only ones with lower share prices. Want to invest $200 in Berkshire Hathaway which goes for $133,600 per share? No problem, ShareBuilder can do it, you'll own 0.0015 shares which is more Berkshire than most non-fractional traders will ever be able to buy.

Current Specials
New Accounts: New customers will have access to all features of the websites plus 20 free automated trades (note that this doesn't mean 20 free trades, regular trades are still $9.95, this is only related to the automatic investing program referenced above).

High Volume Discounts
None available.

Section 6: Product Offerings

Retirement Accounts: IRAs and Roth IRAs
Education: Custodial and Education Savings Accounts
Managed Accounts: Not available
Specialty Accounts: Not available

Section 7: Security

SIPC Member
Yes. SIPC protects securities in your account up to $500,000.

Firewall Secured and Fraud Protection
Yes. All of the major sites have dependable security. They can't afford to make mistakes, they wouldn't survive a year if they gained a reputation for mishandling money or for lax security.