I am Being Forced to Leave My Favorite Online Discount Brokers

I am Being Forced to Leave My Favorite Online Discount Brokers

I was pretty annoyed when I received notice at work that I had to shut all investment accounts that were not with very specific broker dealers.  The list did not include my largely ignored account with Tradeking nor my favorite account, Sharebuilder which houses my Perpetual Income Machine.  As a reminder for everyone, I work in the financial services industry so there is literally nothing I can do short of quitting, and that isn’t happening. The reasons for the change in policy are not relevant for the purposes of this post it is what it is.  The purpose of this post is to list my broker options and my eventual decision.

I am allowed to transfer all my accounts to:

  • Charles Schwab
  • E-Trade
  • Fidelity
  • Merrill Lynch
  • Morgan Stanley
  • Scottrade
  • TD Ameritrade
  • T.Rowe.Price
  • UBS
  • Wachovia

We can eliminate a few of the options as they do not have an online discount broker and I am not looking to hire an advisor/pay for an advisor.

  • Charles Schwab
  • E-Trade
  • Fidelity
  • Merrill Lynch
  • Morgan Stanley
  • Scottrade
  • TD Ameritrade
  • T.Rowe.Price
  • UBS
  • Wachovia

This leaves us with 6 choices.

Choosing my Online Broker

The reason I loved ShareBuilder was the 12 automatic trades I received per month for $12 – it was perfect for my 6 holdings (2 automatic purchases per month), however, it seems that set up is not anywhere to be found in the remaining choices.  So the first thing I am looking for are the freebies associated with each online broker and their price per trade, and the second thing will be taking suggestions from my readers.

Free Investment Options With Online Brokers and Prices

Charles Schwab

You can invest in Schwab ETFs and One Source Funds for free (looks like there are 12 or so).  Otherwise price per trade is $8.95/trade.

E-Trade

If you perform less than 150 trades per quarter the price is $9.99/trade very high in my opinion.  They also have 1,100 no load mutual funds.

Fidelity

Fidelity trades are $7.95/trade, offer 30 Free ETFs to choose from and over 1,400 no-load mutual funds.

ScotTrade

ScotTrade has $7 trades, a handful of free ETFs, and no-load Mutual Funds.

TD AmeriTrade

TD Ameritrade has $10 trades but has over 100 ETFs that are commission free.  A lot of these ETFs are even in the Vanguard world which from what I read online means lower fees, but I have never really researched the topic.

T.Rowe.Price

I had to dig around but it seems that if I don’t complete 30 trades per year (most likely will, but no guarantees) it will cost me $19.95/trade.  The Wife has her Roth IRA with them through no-load mutual funds, but since I may be investing in individual stocks there is no way this can be a contender.

My Problem with the Online Broker Choices

My huge problem with the choices that I have is that I was paying next to nothing for 12 trades per month, the cost averaged out to a $1/trade.  I am not sure I can justify the continuance of my dividend fund at the current rate of $150-$300/month.  I will be getting killed in fees…especially at $10/trade! I would have $120 in fees to cover $150 in equity trades lol.  Alternatively, I am thinking I can build an income portfolio from commission free ETFs and No-Load Funds.

Generally, I am the kind of person who painstakingly analyzes the choices, and I could really use some help.

 

Readers: I really could use some help with this decision…anyone?  Who does everyone use? Do you buy individual stocks? If so, do you DCA or just purchase large lots?

28 Responses to I am Being Forced to Leave My Favorite Online Discount Brokers

  1. I’m sorry but I just can’t focus on your main point (and I’ve never used any of your options, so I can’t be of any help).

    How does your employer even know what broker you use, much less have the ability to tell you who you can and can’t use?

    • That’s ok Kev…I could never color in between the lines either, what fun would that be? lol

      I work in the financial services industry and as such my employer is a little bit more involved in my financial/investing life than I’d like. The Trade off? My bills get paid lol

      • I work in the financial services industry as well (on the IT side) and I’ve never even heard of this.

        I would hate to give up my sharebuilder account!

        • I am pretty upset about giving up the sharebuilder account. Our IT guy (who I call IT, not sure if he likes it or not) doesn’t have to jump through the hoops either

  2. I am with Schwab, Vanguard and Fidelity. I do most of my stock trades with Schwab, however I do very few trades. In terms of service, they are all good. Schwab is more conveniently closer to home.

  3. I have been thrilled with Schwab. Great service and investment options. Plus, I moved my cash to their online bank and it is a great total package.

      • Yes, I closed my ING accounts and use Schwab exclusively. They give you a check book (free) and as of today you can make “camera deposits” with the Android app. They also refund other bank’s ATM fees automatically.

  4. I’m so glad I didn’t accept a full time position with Scottrade now. I would have had to do the same. But they are pretty lenient with not making you move your IRA or an account that would charge too many fees. I guess I would go with Scottrade because I used to work there and I know they have the best customer service :) and no fees. (outside of trading).

    • Latisha,

      I am a bit confused. You are glad you didn’t take a job with Scottrade because they may have made you have your account there, but then you recommend them?

      I am going to assume you didn’t actually read the post but just wanted to comment anyway.

      Notwithstanding, you are glad you didn’t take a job with Scottrade because they may have made you jump through hoops on an account you can only save $5k in per year (i.e. the IRA)….ummm what are you making elsewhere?

      Again this may have been you just wanting to comment without actually adding to the convo.

      • Sorry, I guess that is a little confusing. I did read the post :) I just rush my thoughts out sometimes.

        I’m glad I am not working with Scottrade because I would have had to move all of my accounts to Scottrade. I have an IRA account that I enjoy 2.99 trades in and it makes saving for retirement even better. I also have a personal account with Scottrade for my personal trades.

        But if I had accepted a position with them, they would have made me move all of my accounts to them, and I would have lost out on the benefit of 2.99 trades.

        But since you DO have to move your accounts, I would recommend Scottrade.

        I hope that makes sense now.

        • One more thing. Even though you can only save 5k a year in an IRA, you can still trade as much as you like with the funds that are in there and 2.99 is better than 7 bucks every time.

  5. All are good choices, personally I’ve been with Schwab since I was a teenager.

    They are a great company, but all of the ones above are actually pretty good too.

  6. Taking the “non-point” a step further, understanding the SEC is mandating these changes, I’m curious… are you aware of what the actual rationale for the choices is? I mean, do some brokers adhere to a certain requirement and others don’t? And what is that requirement? Just curious.

    • The SEC/FINRA answer was to the question why could they force me to do anything…the answer as to “why?” is so compliance doesn’t have to keep track of paper statements to review…these options allow them to electronically monitor me.

      Now tell me who I should go with!!

  7. I am a Scottrade fan too, and have been for a long time. Out of all the companies, they would be my first choice, especially since you trade stocks, and Fidelity would be my second (they are great for funds and ETFs).

  8. Hmm, is there any way to do some creative accounting so that your dividends can be reinvested efficiently?

    Example: Could you hold dividends in cash for annual, instead of semi-annual, transactions? Maybe you could combine them with rebalancing, so to knock out two birds with one stone. I don’t know, it’s a bummer either way.

    I hope that if I ever get into finance (want to, but also want freedom–something that isn’t found in most finance careers) I won’t have my interactivebrokers account taken away. They have spectacular option trade commissions.

    If the premium is more than $.10 per option, it’s $.70 a contract. From $.05 up to $.10 they’re $.50 a contract. And less than $.05 an option you pay only $.25 per contract. I haven’t found anything better in a broker, although they tend to have higher than average minimum requirements.

    The minimum is $10,000 for individual investors. $5k for IRAs. But those 21 or younger can hop on (and presumably get grandfathered in) for $3k minimum investment.

  9. Sorry to hear that.

    I use sharebuilder myself, and it’s great. To be honest, though, I don’t really make full use of what Sharebuilder has to offer. I’d probably go with Schwab on that list, but that’s just me.

    To answer your question to readers, rather than dollar-cost-average, I buy stocks in lots worth a couple thousand dollars, so as long as trades are below $10 or so, I keep trading fees to a minimum. Sharebuilder on the other hand is great for a portfolio of almost any size, so it’s a shame to have to leave.

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