Would you switch brokerages? (Regional bank to Fidelity)

[terminator]

I was just curious whether other people would switch. I've always used the brokerage service of my bank (which a couple years ago was bought by a large midwestern regional bank). They've always done a decent job. Their online trades are $29.95. Not unreasonable but I see that I could get $8 trades with Fidelity and it seems most people here like Fidelity. Between all of our accounts (one for each family member and a couple IRAs) I probably anticipate making 20 trades (purchases and a few sales to diversify/rebalance) per year. So, 20 x $22 = $440. Would you switch to save that? My first thought was that it wasn't worth the hassle, but over the next 50 years that's $22k before considering inflation or re-investment of that money.

I figured I would open a small account at Fidelity and try them out first, but after entering info the online application system told me it was unavailable yesterday and today and when I tried to send them an e-mail through their web site to ask about it I got another error message. So, I don't know if they are having system problems, but it's not confidence-inspiring. Anyway have others done this switch and found it worthwhile?

 

[Brat]

YEARS ago I switched to Fidelity from one of the main-line brokerage houses. Don't regret it a minute. The have our IRAs and a very modest brokerage account. Some of their analysis tools are a bit basic for my taste but they are improving.

If you are a mutual fund only investor Vanguard may be suitable, but if you have stock & mutual funds Fidelity may be a better fit.

I have not had any problems with the Fidelity website. Glitches can be the result of your isp or Internet provider. With the 'know your client' rules established after 9/11 it may be that you can't do all of your initial account paperwork on line any more. Fidelity has a number of customer service centers across the country.. if one is convenient it would be worth a stop.

 

[wabmester]

If you are a mutual fund only investor Vanguard may be suitable, but if you have stock & mutual funds Fidelity may be a better fit.

Vanguard offers brokerage services. Admiral accounts get 12 free trades per year, and no-fee treasury bond purchases at auction.

 

[Corporateburnout]

I have been using Fidelity brokerage for a few years they also have my 401k. I have had no problem with their website which I consider very user friendly and easy to use. Try connecting with a different browser or contact their knowledgeable customer service reps.

 

[LOL!]

When Ameritrade bought TDWaterhouse, they severed the relationship with TDWaterhouse Bank which was our bank. So we went with WellsFargo for banking and brokerage. We left funds at TDAmeritrade, but we do not add any money there. WF has $3 trades for us, good linkage to their free checking account and free online banking. The $3 is even for mutual funds not in their NTF network. Also WF has beat my limit price for every limit order I entered; TDAmeritrade just gave me the limit price. WF also uses a decent money market fund for their cash sweep account.

So would I switch brokerages? I did switch after a fashion, but I didn't go to Fidelity. I still have investments at TDA and use them to read S&P's The Outlook online instead of going to the library.

I do not need a local brick&mortar bank (TDWBank has no local offices), but I do like to be able to walk into a brokerage to have a real person take care of my stock share donations to charity. So TDAmeritrade has a local office as well as offices for Schwab, Scottrade, Fidelity within a block of each other. There are lots of WF banks in my locale with WF within walking distance.

Anyways there is no reason to pay $30 a trade ... even if you do just a few a year. If you have $250K with WF in various accounts, the first 50 trades a year a FREE, plus you get the decent cash-sweep interest.

As for research at a brokerage, for me it means nothing. One can get all the free research on the web they want. Brokerages have nothing extra as far as I can tell.

 

[cute fuzzy bunny]

A piece of advice from a former frequent trader. The price charged to do a trade isnt even worth looking at if the brokerage is making money off you through the spread. Some of the more expensive brokerages will get you a better price on both ends and save you the price of the trade and then some. There is no free lunch.

If you're not buying or selling at market, its not that big of a deal.

Read this for some examples: http://www.investorhome.com/daytrade/spread.htm

 

[LOL!]

I completely agree with the spread making money for the brokerage. I would guess that's how some of these free brokerages like zecco make money.

With WF I was concerned about that, hence my use of limit orders sometimes. I used my TDAmeritrade account and the realtime level II quotes to watch my order entered from WF. I must say that WF did right by me when I bought high volume ETFs without a limit price and when I bought/sold with individual stocks limit orders.

Of course, if you are buying mutual funds, everybody gets the end-of-day NAV and there is really no issue.

 

[terminator]

Thanks for the info. How would I be able to tell whether I'm getting shaved on the spread? How can I determine whether Fidelity would be better or worse on the spread than my current broker?

 

[Jake46]

I have been with Fidelity since 1998. I have a brokerage account, IRAs and a cash management account. I have watched Fidelity's services gradualy improve over the years and am satisfied. One of the things I enjoy about Fidelity is the ability to "Chat with a Rep" on live chat. The reps. are generally very helpful, especially on technical issues. DW has her IRAs (no brokerage account) with Vanguard and is satisfied.
Jake46

 

[cute fuzzy bunny]

Thanks for the info. How would I be able to tell whether I'm getting shaved on the spread? How can I determine whether Fidelity would be better or worse on the spread than my current broker?

About the only way to compare would be to execute two simultaneous identical trades with two different brokers and see what you get. You could do some real time monitoring with a bloomberg terminal and compare what you got for a buy/sell price vs where the spread was floating.

Paying more for a trade wont guarantee you anything, but I can all but assure you that the el cheapo guys are making their money somewhere and aside from playing with your float their only good source is taking it out of your trade, probably at both ends.

That having been said, I was an idiot and did a market buy using one of my free vanguard trades and they didnt get me a very good price, in fact what I got was the high end of the 'ask' for the 15 minutes before and after my trade. There was some downside movement and I thought the market order would give me a little something extra. Incorrectamundo. A limit order on that one for a price I could have gotten would have saved me about $180-190.

Pretty expensive "free" trade...

 

[FinanceDude]

About the only way to compare would be to execute two simultaneous identical trades with two different brokers and see what you get. You could do some real time monitoring with a bloomberg terminal and compare what you got for a buy/sell price vs where the spread was floating.

Paying more for a trade wont guarantee you anything, but I can all but assure you that the el cheapo guys are making their money somewhere and aside from playing with your float their only good source is taking it out of your trade, probably at both ends.

That having been said, I was an idiot and did a market buy using one of my free vanguard trades and they didnt get me a very good price, in fact what I got was the high end of the 'ask' for the 15 minutes before and after my trade. There was some downside movement and I thought the market order would give me a little something extra. Incorrectamundo. A limit order on that one for a price I could have gotten would have saved me about $180-190.

Pretty expensive "free" trade...

Is that kind of stuff still going on? I know the online guys like Ameritrade and Etrade had a bunch of lawsuits about this during the tech wreck.

I remember I was working at a regional broker that owned two seats on the exchange, and I was getting executions for my clients at an 1/8 - 1/4 point better than the guys online..............

 

[cute fuzzy bunny]

Of course it goes on and theres nothing illegal about it, as far as I know. The really big guys with the sub $15 trade fees are also probably carrying shares of thickly traded issues they get at the low end of the ask range and then handing them to buyers at the high end of the range.

Unless you're getting identification of the actual seller of the security lot you've bought, you probably wouldnt even know.

 

[FinanceDude]

Of course it goes on and theres nothing illegal about it, as far as I know. The really big guys with the sub $15 trade fees are also probably carrying shares of thickly traded issues they get at the low end of the ask range and then handing them to buyers at the high end of the range.

Unless you're getting identification of the actual seller of the security lot you've bought, you probably wouldnt even know.

Wonder if the mutuals get whipsawed a little bit once in awhile...............

 

[cute fuzzy bunny]

Probably, but they make it up in the volume...or just roll it into the trading fees that nobody sees anyhow

 

[terminator]

I came across this while trying to get an answer:

http://ria.fidelity.com/execution_quality_statistics.html

It says that their average effective spread is two cents. If that's the case (I know, "lies, damn lies and statistics"), they'd still be cheaper for me on almost all of my trades since I'm usually buying 200 - 500 shares at a time.

I did go ahead and open a Roth IRA with them to check them out. Their website puts my current bank's site to shame.

 

[cute fuzzy bunny]

I dont want to belabor the point too much, but what they're saying is that their execution prices match a number generated from a consolidated calculation of all market makers and all available exchanges.

Its still completely possible that a better price could have been had or that money was made off the spread; it may be a long way between an imputed average number and the cheapest (or most expensive) available.

The point is, going from a broker that charges $20 to one that charges $10 is probably not cutting your actual net trading costs in half. But on the other hand, it might be. And you'll probably never know.