Brokerage Fees

[Helez]

Does anybody else think that $50 per transaction is a bit much? This always serves to deter me from actually opening an account. I know that there are many brokers out there with substantially smaller fees, but this is unfortunately my only option, due to the fact that I am only allowed to go through my employer.

Does anybody have any advice on other possible alternative investments? I've got some excess liquid assets sitting in a MMA, and it's killing me watching the interest rates fall on it.

[megacorp-firee]

No, if I were the broker ... yes if you are the investor.
Go find a discount broker. It's sub $10 per transaction.
At Schwab, I believe the pedestrian rate is $12 (if you want to go with a 'bigger' name).
DON'T pay $50 per trans unless .... hmmm I can't think of a reason why you would

Is this a 401K? why are you locked into 50 buck transactions?
If it were me and that is my only alternative then I would save up and do 2 transactions per year ... or something like that. Doing it each payday could be prohibitively expensive.

You should lobby your HR guys to get a better brokerage deal for the employees... I wouldn't be surprised if (brokerage sweetheart deal) it is someones BIL.

Good luck ... sounds like rock and hard place to me

[brewer12345]

If all you can do is go through your employer, then you are stuck. I'd try to trade as little as possible (ETFs and mutual funds would be it).

[FUEGO]

I'm regulated by virtue of a family member working for an I bank. We had a choice of 3 companies to hold our brokerage account (one of which was the employer, the other two fidelity and schwab). However, I am still able to buy mutual funds directly from fund sponsors. So Vanguard is an option for me as long as I don't own a brokerage account there. Maybe check into this?

I think there is one set of regulations promulgated by the regulatory bodies (NASD/FINRA?) for regulated individuals, and then all investment firms/brokerages/I banks have their own set of compliance rules that their employees have to follow that are more strict than the regulatory bodies regulations. Your company may have figured out that they can force all employee investing to be done with them in the name of "compliance". Ie - huge profit center.

If you are stuck paying the $50 per trade and can't get reasonable mutual funds for no transaction fee, just keep trading costs to a minimum. Maybe save your funds and buy shares of one ETF once a quarter.

[Helez]

Fuego, you've pretty much hit it on the head. I'm a registered representative, so I hold licenses which means I'm heavily regulated by FINRA, NYSE, and SEC. I work for a broker/dealer, so all brokerage accounts were required to be transferred to them. I've been denied permission to start new accounts with any other broker/dealers such as Schwab. My immediate family was obviously thrilled with the restrictions placed on them by my choice of employment in the financial sector

Our 401K is through Fidelity, but our selection is seriously lacking. There are no transaction fees there, but I don't see myself changing my allocation very often. Thanks for everyone's advice so far

[FUEGO]

Helez,

Yes it is kind of a crappy position to be in. There are times when I'd like to make a quick buck on a couple of arbitrage plays, but I can't buy and resell within 30 days due to the compliance rules set by DW's employer.

From what you have said so far, I can't tell whether you are prohibited from from opening up non-brokerage investment accounts at other firms (such as Vanguard). DW's employer never told us that we could hold vanguard funds at vanguard until I specifically asked about it. Then they said it was ok to hold funds outside of the approved brokerages as long as it was held at the firm that runs the fund. Is this an option for you?

[Helez]

Fuego,

Thanks for the heads up on the Vanguard example...one of my coworkers suggested that this is probably true. I'm now in the process of trying to get comprehensive info from my compliance department on restrictions/guidelines.

[saluki9]

Ask your compliance officer for a 407 letter (Vanguard will require this on firm stationary). You should have no trouble opening a mutual fund only account at Vanguard if that's what you want.

[Tulsaboyw]

I do drip invesitng nearly exclusively now...and excluding the intial shares (startup of a new drip) I pay zero in fees/costs/charges.

The initial fee/shares/etc cost can be high.. as much as $25/per.

But once the intial is done my cost is zero (other than the cost of the share itself).

Ive done this for 10 years.

[saluki9]

Originally Posted by Tulsaboyw

I do drip invesitng nearly exclusively now...and excluding the intial shares (startup of a new drip) I pay zero in fees/costs/charges.

The initial fee/shares/etc cost can be high.. as much as $25/per.

But once the intial is done my cost is zero (other than the cost of the share itself).

Ive done this for 10 years.

That doesn't help you if you're licensed. Most firms will not allow you to buy individual securities with another firm.

Most decent places will give you an exemption for mutual funds.

[Helez]

saluki9,

Thanks for the heads up on setting up a fund. And you're right, my employer does not allow third party transactions with another firm...all trading needs to be in-house.

[Tulsaboyw]

Drip

[Tulsaboyw]

Drip investing is buying the stock directly from the company and not thru a broker.

The only requirement is being the real owner of the stock (not via a brokerage) and having enough initial shares.

Some require just 1 share, others $1000 worth of shares to be 'initial shares'.

Been doing for a while, and passed the 50/50 point 5 years ago.
50% in brokerage, 50% in Drips. Am now 75% DRIP, 25% brokerage
That 25% is soley IRA (TRAD & ROTH) only now.

There are drip funds but I dont bother with them.

[saluki9]

Originally Posted by Tulsaboyw

Drip investing is buying the stock directly from the company and not thru a broker.

The only requirement is being the real owner of the stock (not via a brokerage) and having enough initial shares.

Some require just 1 share, others $1000 worth of shares to be 'initial shares'.

Been doing for a while, and passed the 50/50 point 5 years ago.
50% in brokerage, 50% in Drips. Am now 75% DRIP, 25% brokerage
That 25% is soley IRA (TRAD & ROTH) only now.

There are drip funds but I dont bother with them.

I think we've already clarified that the OP works for a registered firm. When you work in the securities firm for a broker dealer you generally are not allowed to make any trades outside that broker dealer. It doesn't matter if it's a drip or whatever.

[Tulsaboyw]

Oops thanks for the clarification.

I was reading the stuff from the perspective of a customer/investor.
True enough

I read the above as if it was his brother who was the licensed broker ...not him.

I certainly wouldnt waste time investing via a brokerage where my licensed brother worked, if said limits were placed on me.

My own brother works as a licensed broker too, and I have yet to have any of the limiations mentioned.

But I never have invested via him (except for a personal loan years ago).
Likely never will.

[bongo2]

Originally Posted by Helez

My immediate family was obviously thrilled with the restrictions placed on them by my choice of employment in the financial sector

I'm curious about this reference to "immediate family." I can see this restriction extending to spouses, but does it extend further? That doesn't seem enforceable.

[Texas Proud]

Originally Posted by bongo2

I'm curious about this reference to "immediate family." I can see this restriction extending to spouses, but does it extend further? That doesn't seem enforceable.

I agree.... I can tell you that if any of my brothers and sisters were licensed... I would ignore THEIR restrictions... heck, I didn't sign up for that...

I did work at a big bank in the trust dept... they had some restrictions on trading and such, but almost everybody ignored them...

Being a broker might be different...

[CyclingInvestor]

My last 8 years before retirement were for a broker-dealer that only had corporate
accounts, no individuals. We could invest in any mutual funds, but all stock trades
had to be through their designated broker (Schwab), who immediately reported all
trades back to our compliance department to check against client accounts for
frontrunning or violation of internal trading rules like 30 day minimum holding
periods, etc.

[Tulsaboyw]

I would assume its his immediate.
More of a company limitation than SeC or gov reg.

I know its no such limitation on me, even if I invested via brother.
(I just asked him recently via instant msg).

He told me that only he is limited, not his family nor his spouse unless she invests via him thru his brokerage..

Way I see it, it comes down to if you invest via a releative who is licensed, you might suffer limitations, which I would never any such limitations in my investing which is one of many reasons I would never invest via a family member (brokerage wise).

Though me and this same brother did share cost in land buying we did for investing... and it had nothing to do with his brokerage.

And this is only limited if he uses $$ that is inside the brokerage.
(It isnt, its $$ he had elsewhere before he went to work there).


My brother did say that there are a handful of limitations that are no longer relevant that many brokers tend to follow despite the fact that some of his limitations went away years ago.