WellsTrade? (Question for Asset Allocators Using ETF's)

[CoolChange]

For those of you who are asset allocators primarily using ETF's but not with WellsTrade (with their 100 free trades per yer), why aren't you using WellsTrade?

For those of you using WellsTrade, I would appreciate any feedback, insight, etc. (whether positive or negative) that you can provide.

The reason I ask: I currently have accounts (both tax deferred and taxable) at more of the other major discount brokers than I would like to admit; and, I am planning to start consolidating this year to simplify my life a bit. WellsTrade seems like the obvious choice for me; but, I have no personal experience with them. So, I am soliciting your advice.

My current plan, unless those of you with more experience/expertice persuade me otherwise, is to transfer as many of my taxable holdings as possible in-kind to WellsTrade where I can sell the individual stocks, actively managed funds, etc. that no longer fit my investing philosophy without paying a commission or continue to hold the securities that do still fit without tax consequences. I do have plenty of capital losses to offset any gains incurred with funds which WellsTrade does not accept. I am not as concerned about like-kind transfers from/to taxdefered accounts since most of these are old 401(k) accounts without transaction fees but, which I need to be out of because of the limitted choices, high fees, etc.

I do realize the subject of best discount broker has been covered here before; but, I hope you will allow me to ask this specific question without taking too much offense or giving me too much grief.

Thank you very much.

 

[Gotadimple]

For those of you who are asset allocators primarily using ETF's but not with WellsTrade (with their 100 free trades per yer), why aren't you using WellsTrade?

Perhaps I am reading too much into your situation.

Asset allocation often implies a buy and hold philosophy, with occasional readjustment. I understand the need you have to keep your trading costs low as you consolidate.

What's your plan after that? Will you be actively trading or just sitting with your defined allocation?

Rita

 

[CoolChange]

Rita,

My long term plan, once I have unwound my current unwieldy/nutty/testosterone inspired situation, is to rebalance periodically (probably every 14-18 months) which will involve some buying and selling of ETF's in both my taxable and tax deferred accounts. I am still interested in keeping my trading cost low since I will probably slice and dice a bit more than normal wich will result in a few more trades during rebalancing periods.

Thank you again.

 

[LOL!]

WellsTrade and the PMA relationship is simply one of the best things going in terms of service and cost. I was customer before the trades were free. The checking account is superb as well with free everything. Our WF accounts are the workhorses for our finances.

When we transfered funds and investments into WellsTrade "in-kind", they actually kept all our transaction history with those investments.

One can find all kinds of positive reviews of WF over at Bogleheads Investing Advice and Info Not only do you get free trades on stocks, but also free trades on mutual funds including Vanguard funds. That makes WF even better than Vanguard itself.

One thing I would like WF to have is real-time level II quotes. I keep my TDAmeritrade account just so I can use their trading platform to buy/sell in my WF account.

If you have specific questions, send me a PM or ask here, but you are on the right track to use WF if you can keep $25K in assets there.

 

[dex]

Where does WellsTrade make their money? Spreads?

 

[LOL!]

Probably not spreads. I've gotten excellent execution on more than one hundred trades in the last couple of years. I've used mostly limit orders, but also a few market orders and have noticed no funny business. Furthermore, it's hard to see how spreads would apply to buying Vanguard mutual funds which are traded at NAV.

Like other discount brokers, they don't pay much on the cash sweep interest.

Also WF has full-service financial advisors which apparently many people use. One of the 15 local WF branches in my area is staffed with more folks than the local TDAmeritrade, Fidelity and Schwab offices combined. They won't talk to us "free-trades" folks though which is just as well.

But once WF has the software going, it doesn't really cost them anything for each new account.

 

[growing_older]

There will likely not be too many trades if all you do is rebalance occasionally, but if you are still contributing regular weekly or monthly amounts, the free trades can keep the transation costs of accumulating positions down as well.

 

[CoolChange]

growing_older,

You noted an important piece of information that I neglected included in my original post: I am currently accumulating. And, in fact, hope to continue accumulation for a few years via independent consulting engagements even after retiring (on my own terms or otherwise) from my current W2 position as long as my technical skills are in sufficient demand.

Thanks again.

 

[LOL!]

If you have a taxable account, then tax-loss harvesting can use up free trades as well. In the past 12 months, I switched from VEU to VEA to VEU to VEA and back to VEU. Ditto for ETFs in other asset classes.

 

[figner]

I've used WellsTrade for slightly over a year now. It seems to be a good deal if you have the 25K needed for the PMA account / free trades. I too am in accumulation mode, and use the free trades to tax loss harvest as well as DCA smaller amounts than I usually would if I had to pay commissions per trade.

The only annoying thing I've found so far:

You have to sign up for their WF checking in order to become a PMA customer. But I only use the checking acct to transfer money in/out electronically from my other accounts. (I keep a primary checking account at another bank which pays better interest.) A couple months ago, my WF checking disappeared from the online account listing. I called in, and a rep finally figured out the checking acct had gone dormant because there had been no activity for a year. Well that can't be right, I told him, since I'd just transferred money into it a couple months ago. Apparently electronic transactions don't qualify as 'activity'. It has to be a check or debit transaction to keep the account active. So once a year I'll have to write a check to myself or something. The rep was able to reactivate my checking acct in 3 business days, and assured me my PMA status was safe. But it was a bit unnerving to get WF brokerage statements that no longer said they were part of a PMA account. So far it seems to be resolved with no further issues.

 

[CoolChange]

Thank you all for the replies.

LOL! and figner, thank you for sharing actual WF experience. The checking account warning from figner will almost certainly save me from a panic in about a year.

 

[clifp]

After looking at Wells Trade website again. I think if I was starting from scratch, I'd seriously consider Wells Trade.

In my case, I am not sure I'd save any money. First I "only" do about 50-60 transactions a year (although last year I hit close to 90 in all of my accounts). The majority of those are the writing of covered call or put, which aren't covered by the 100 free trades and are more expensive at Wells than at Schwab. Pure stock/ETF trade are only about 25-30 a year, so I'd only save $250 moving all my stock purchases to Wells

I think Schwab offers a better and wider variety of research and more sophisticated trading platform (Level 2 quotes etc.) as well as access to alternative investments, inexpensive bond trades, and wider selection of mutual funds..

Finally in normal times the Schwab/Vanguard/Fidelity money funds pay 1 to 2% higher interest rates than the Wells Fargo checking accounts on $25,000 that equals $250-$500 which makes up for a lot of the money you save in commissions.

 

[dumadum]

Finally in normal times the Schwab/Vanguard/Fidelity money funds pay 1 to 2% higher interest rates than the Wells Fargo checking accounts on $25,000 that equals $250-$500 which makes up for a lot of the money you save in commissions.

To get the free trades all you have to do is have a PMA checking account with WF. This ensures that all the wellstrade accounts that are linked to the PMA account get 100 free trades.

PMA accounts do have a monthly fee of $25 which is waived if you have more than 25k of balance at WF ( checking , savings , wellstrade, 10% of your mortgage etc )

This is different from BOA , i think you confused BOA with WF, which requires you to maintain 25k in deposit account to get the 360 ( 30*12 ) free trades a year.

And finally not sure if have schwab,fidelity & VG have lowered their commisions in such a drastic manner that you can equate $250-$500 to 100 trades with them.

 

[dbr]

I don't use WellsTrade because I use a broker which has produced excellent service over a long time and which does not exact enough cost for the trading I do to manage ETF's to worry about the difference.

 

[DblDoc]

I'd use Wells instead of Scottrade if I didn't have a past history banking with Wells and will no longer deal with them.

DD

 

[figner]

Finally in normal times the Schwab/Vanguard/Fidelity money funds pay 1 to 2% higher interest rates than the Wells Fargo checking accounts on $25,000 that equals $250-$500 which makes up for a lot of the money you save in commissions.

Just to confirm what dumadum said - you don't have to put $25,000 in your WF checking account. $25,000 total in all your WF PMA accounts including investment accounts (for example IRA, Roth, and taxable brokerage account at WF) is the requirement to waive account fees.

 

[clifp]

Ok so if had $1,000 in a Wells Fargo checking and had $24,000 in the brokerage account. There would be no fee?

 

[figner]

Ok so if had $1,000 in a Wells Fargo checking and had $24,000 in the brokerage account. There would be no fee?

I believe that's correct. I only keep about $10 in my WF checking most of the time, but over $25,000 total in the other WF accounts. No fees, 100 free trades (per account I think) a year. Of course, it would be best to confirm this with Wells Fargo before opening any accounts if that's your intention.

 

[LOL!]

Ok so if had $1,000 in a Wells Fargo checking and had $24,000 in the brokerage account. There would be no fee?

Correct. But I wouldn't cut it that close.

 

[dumadum]

2009 Smart Money Survey

The survey is out and wellstrade gets a bad rating for high commissions, though there is a mention of the 100 free trades and link to the PMA account

Here is the link for the article SmartMoney's 2009 Broker Survey at SmartMoney.com

 

[LOL!]

Of course, WF gets a bad rap. And it's all because of the commissions which no one pays anyways. A year ago Barron's (or some other place) did a rating based on "a typical account with $50,000 in investments" where they also trashed WF because of the commissions. It was highly ironic because the premise of $50K was ignored.

Also WF has no trading tools whatsoever, so it deserved 1-star in that column. I use my TD Ameritrade account for the trading tools, then place the actual trade for free in my WF account. However, WF does have trivial specific share identification when selling shares and it has trivial import of all your trades into TurboTax. Both of these criteria are very important when managing taxes, but I'm not sure if the ratings give a hint about them.