Hoorah. I’ve finally joined TD Ameritrade. It was a ‘journey’, but there were some surprises along the way. I think it’s useful to describe the warts and all process I went through so I could start investing with the American juggernaut from Nebraska.

In the beginning

The first step was easy. I went to their website, clicked on open an account and selected the individual option. This took me to a lovely form I had to complete. The form had a few questions about your personal details, country of birth, employment status and source of funds. There was nothing outrageous, unlike a job application with NZ Post.

It took me about 10 minutes to complete the form. I was rapt when I saw my account number on the final screen. I thought that was the end of it. Hallelujah.  It turns out I was wrong. Very wrong.

Going old school – copy, print and snail mail

My joy in seeing my account number was very short-lived. I quickly realised that what I thought was the last stage was only the end of the first stage. I was required to send the following by post or fax to TD Ameritrade:

  • My application form that I just completed (obviously)
  • A photocopy of my passport
  • A recent bank account statement
  • A W-8BEN form

What is a W-8BEN? Nope, this isn’t the name of R2D2 and C-3PO’s long-lost love child. It’s an American tax form for foreigners. Thankfully, it’s easy enough to fill out (well, for most people anyway).

Feeling confident I had everything done, I sent off all the paperwork by courier. Unfortunately, a week later, I received an email from them. Apparently, the name on my bank statement didn’t match the name on my account application form. It only had my initial, not my first name (i.e. ‘G’, not ‘Geoff’). I also forgot to put my IRD number on my W-8BEN form. B*gger!  What a tool.

I quickly did my W-8Ben form again and printed off a power bill that had my name on it. I also made sure the reference number was written on every page as requested. I sent the documentation away by courier again.

After a week, I rang TD Ameritrade and asked for my account details, which the customer service rep from Omaha gave after some sheep jokes. I was overjoyed. Not with the sheep jokes – I now had my own US brokerage account. Whoop whoop!

The initial experience once I had my account

When I first logged into TD Ameritrade, I wasn’t disappointed. The level of thought that’s gone into their platform is obvious.

I could tell that they target all sorts of investors – beginners, experts, mums, dads, youngsters, long-term investors, etc. They even have two digital platforms – one for long-term investors, which you can access by the web and a mobile app, and another called ‘Think or Swim’ for day trading, which isn’t for me. I have an impulsive and addictive personality. There would be more carnage than a stoat in a chook house if I started that.

I got curious about what information they provide on shares compared to my previous provider – Hatch Invest. I searched on a couple of holdings I had.

Straight away I noticed many more things they offer. This includes news feeds, stop loss for your trades, dividend reinvestment plans,  research reports,  and earnings dates – the works.  They even had information on social media signals on the share. They’ve cleverly aggregated a lot of content, which makes investing much easier.

I also checked out what investments I could access. I discovered that with TD Ameritrade, you can invest in shares, ETFs, individual bonds and mutual funds (what we call managed funds). There are over 11,000 plus shares and 2,300 plus ETFs alone at TD Ameritrade. What’s more, the cost of buying stocks and ETFs is $0 per trade. But you already knew that, right?

The screening tools that TD Ameritrade provides for ETFs, shares, mutual funds and bonds also stood out for me. There are different screening tools for each type of investment.  These allow you to get into the nitty-gritty of your search.  The screening tools are great in the sense that they help manage the huge number of choices they provide for investors, as does their educational resources, which are also impressive. The breadth and depth of the educational content they’ve provided is a great asset.  If that’s how American investment providers educate and empower investors, I can see why America has a much higher rate of direct share ownership than New Zealand!

Wait – there’s no fractional investing

I soon noticed that TD Ameritrade, unlike Hatch, Stake or Sharesis, does not offer fractional investing. Fractional investing is basically investing in parts of a share (i.e. ½ or ¼). The absence of this feature is something investors with a low account balance need to consider if they’re interested in starting an account.

No fractional shares was NOT a showstopper for me, though. The many features and thousands of choices they offer had me hooked. Without hesitation, I withdrew my funds from Hatch, which went into my Kiwibank account after a few days.

The great Kiwibank transfer

I was dreading the wire transfer to my brokerage account. I was expecting it to be challenging, but it really wasn’t.

I had to complete a form from Kiwibank, which I then had to scan and email. Kiwibank rang me the day after I sent it. I suspect the size of the transfer had something to do with their call. It was a big amount. They were very helpful. They’re used to helping Kiwis transfer their dosh to TD Ameritrade – when I asked about this, they told me they get them each week. Kiwibank was also kind enough to offer to set TD Ameritrade up on my internet banking. No more forms again!  How sad.

Perhaps surprisingly, my money was transferred to my brokerage account overnight by Kiwibank at a cost of $25. It was much faster to transfer to TD Ameritrade via Kiwibank than it was for me to transfer from Kiwibank to my Hatch account when I was invested with them. Go figure. I would have thought it would’ve been the other way around since Hatch is part of KiwiBank.

The verdict

To be blunt, the sign-up process is better with Hatch than TD Ameritrade. Sharesis and Hatch have done a magnificent job here. Sending forms by snail mail the Nebraskan way isn’t my idea of fun.

Yet, it would be short-sighted to judge a book by its cover.  The customer experience once you’re at TD Ameritrade is far more advanced than anything homegrown by a long way. TD Ameritrade is a massive beast. A giant. They have 11 million customers globally with USD 1 trillion in client funds. Their scale means they can do many cool things for investors at a low cost, and can provide investment choices that some Kiwis can only dream about.

Want to know more?

I’ve compiled some tips and traps in getting started with Td Ameritrade based on my experience.  I made some mistakes here that I want to share with others.

The above is my opinion. It is not intended to act as personal financial advice. It does not take into you account your financial objectives, situation and needs. It is strongly recommended you financial seek from an Authorised Financial Adviser before you make a decision.