Suretrade
Encyclopedia
SURETRADE was a Bristol
, Rhode Island
–based investment firm created in 1997 as one of the first online brokers of the dot com era. Before being absorbed by Fleet Boston's Quick & Reilly in 2001, the Rhode Island firm grew to having over 350,000 customers and nearly $2 billion in assets.
In an October 1999 Fortune (magazine)
article SURETRADE's president, Donato A. Montanaro
claimed that they were rated the #1 broker for aggressive traders and the #2 broker for beginning investors. The firm was a division of Quick & Reilly a traditional discount broker who served clients over the phone and in retail branches.
Online brokerages like SURETRADE were considered 'deep discount' brokers and an alternative to full service firms like Merrill Lynch who charged more costly commissions based on the number of shares traded. Established 'discount' brokers like Charles Schwab
typically charged commissions higher commissions than the less than $10 per trade charged by the 'deep discount' firms. By paying less in commissions to the new breed of online brokerages, customers could lower their cost basis and keep more of their trading profits. The online order entry system empowered the self-directed investor with a higher degree of control and speed over their trade executions compared to executing a trade manually by calling a full service stock broker.
In addition to a rising stock market that created favorable conditions for a new breed of 'day traders', SURETRADE's growth was fueled by nearly a hundred million dollars in TV and Internet advertising which generated new accounts and familiarity with the SURETRADE brand.
Discount stock brokerage behemoths Charles Schwab
and Fidelity
took notice of the online brokerages success and soon changed their commission structures to a flat, albeit higher, fee structure. Full service leader Merrill Lynch
rolled out a Merrill Lynch Direct online brokerage in 1999.This was widely viewed as an effort to stem the tide of assets being transferred to the online brokerages. Many investors felt comfortable making some trades without the advice of a personal broker.
The ascent of the online brokerages was cut short by the burst of the dot-com bubble
of 2000-2001, when values of many of the most heavily traded NASDAQ
stocks plummeted. At this point Quick & Reilly had been acquired by FleetBoston Financial, who tolerated SURETRADE when it was profitable. However, in the wake of the dot-com crash, 'Dot-com company
' and 'day trading
' were popularly viewed as causes of the NASDAQ's melt-down. In shuttering the SURETRADE brand in 2001 FleetBoston sought to disassociate itself from these controversial labels which were seen to be at odds with responsible finance. They folded SURETRADE's operations and accounts into Quick & Reilly. Customers who stayed eventually became clients of Bank of America Securities in the 2004 acquisition of FleetBoston.
While the original online brokers faded from the landscape in the early 21st century, their legacy of radically lowering costs and empowering individual investors with online education and financial tools continues to be dominant driver of customer satisfaction in the investment industry.
Bristol
Bristol is a city, unitary authority area and ceremonial county in South West England, with an estimated population of 433,100 for the unitary authority in 2009, and a surrounding Larger Urban Zone with an estimated 1,070,000 residents in 2007...
, Rhode Island
Rhode Island
The state of Rhode Island and Providence Plantations, more commonly referred to as Rhode Island , is a state in the New England region of the United States. It is the smallest U.S. state by area...
–based investment firm created in 1997 as one of the first online brokers of the dot com era. Before being absorbed by Fleet Boston's Quick & Reilly in 2001, the Rhode Island firm grew to having over 350,000 customers and nearly $2 billion in assets.
History
SURETRADE's rapid rise was fueled by a radical business model at the time – no retail branches and a $7.95 flat fee per trade commissions for trades executed through their Internet trading platform. They were one of a new breed of online only brokerage firms such as Datek, Ameritrade, E*Trade and DLJDirect that sought to democratize access to the stock market by charging low, flat fee commissions and delivering customer service exclusively through online and toll free phone channels.In an October 1999 Fortune (magazine)
Fortune (magazine)
Fortune is a global business magazine published by Time Inc. Founded by Henry Luce in 1930, the publishing business, consisting of Time, Life, Fortune, and Sports Illustrated, grew to become Time Warner. In turn, AOL grew as it acquired Time Warner in 2000 when Time Warner was the world's largest...
article SURETRADE's president, Donato A. Montanaro
Donato A. Montanaro
Donato Montanaro is Chairman & CEO of online brokerage firm TradeKing, which he co-founded in December 2005. He also helped found online brokerage SureTrade, a subsidiary of Quick & Reilly that was acquired by Fleet Financial Group, now FleetBoston Financial....
claimed that they were rated the #1 broker for aggressive traders and the #2 broker for beginning investors. The firm was a division of Quick & Reilly a traditional discount broker who served clients over the phone and in retail branches.
Online brokerages like SURETRADE were considered 'deep discount' brokers and an alternative to full service firms like Merrill Lynch who charged more costly commissions based on the number of shares traded. Established 'discount' brokers like Charles Schwab
Charles Schwab
Charles Schwab may refer to:*Charles M. Schwab , American steel magnate*Charles R. Schwab , founder of the eponymous brokerage*Charles Schwab Corp., an American based brokerage firm...
typically charged commissions higher commissions than the less than $10 per trade charged by the 'deep discount' firms. By paying less in commissions to the new breed of online brokerages, customers could lower their cost basis and keep more of their trading profits. The online order entry system empowered the self-directed investor with a higher degree of control and speed over their trade executions compared to executing a trade manually by calling a full service stock broker.
In addition to a rising stock market that created favorable conditions for a new breed of 'day traders', SURETRADE's growth was fueled by nearly a hundred million dollars in TV and Internet advertising which generated new accounts and familiarity with the SURETRADE brand.
Discount stock brokerage behemoths Charles Schwab
Charles Schwab
Charles Schwab may refer to:*Charles M. Schwab , American steel magnate*Charles R. Schwab , founder of the eponymous brokerage*Charles Schwab Corp., an American based brokerage firm...
and Fidelity
Fidelity
"Fidelity" is the quality of being faithful or loyal. Its original meaning regarded duty to a lord or a king, in a broader sense than the related concept of fealty. Both derive from the Latin word fidēlis, meaning "faithful or loyal"....
took notice of the online brokerages success and soon changed their commission structures to a flat, albeit higher, fee structure. Full service leader Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
rolled out a Merrill Lynch Direct online brokerage in 1999.This was widely viewed as an effort to stem the tide of assets being transferred to the online brokerages. Many investors felt comfortable making some trades without the advice of a personal broker.
The ascent of the online brokerages was cut short by the burst of the dot-com bubble
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
of 2000-2001, when values of many of the most heavily traded NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
stocks plummeted. At this point Quick & Reilly had been acquired by FleetBoston Financial, who tolerated SURETRADE when it was profitable. However, in the wake of the dot-com crash, 'Dot-com company
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
' and 'day trading
Day trading
Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions are usually closed before the market close for the trading day...
' were popularly viewed as causes of the NASDAQ's melt-down. In shuttering the SURETRADE brand in 2001 FleetBoston sought to disassociate itself from these controversial labels which were seen to be at odds with responsible finance. They folded SURETRADE's operations and accounts into Quick & Reilly. Customers who stayed eventually became clients of Bank of America Securities in the 2004 acquisition of FleetBoston.
While the original online brokers faded from the landscape in the early 21st century, their legacy of radically lowering costs and empowering individual investors with online education and financial tools continues to be dominant driver of customer satisfaction in the investment industry.