Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
This was a rather strange sentence: "Buying Scottrade could enable TD Ameritrade to reduce costs by eliminating redundant back-office systems, while bringing in new customers, he said."
The simplest interpretation is that what was meant was that the combined entity could save costs by settling on one of the legacy systems and tossing the other. But that wouldn't be eliminating redundant systems at TDAmeritrade, which is how the quote literally reads.
Another possibility, while similar, would have TDAmeritrade elimintating its own redundancy. I don't know how fully ThinkOrSwim has been integrated into TDAmeritrade, but TDA could eliminate that redundancy by tossing its system and taking Scottrade's.
Whatever they do (assuming this acquisition happens), watch out for glitches. Barron's wrote in 2011 about TDA's 2009 acquisition of ThinkOrSwim in Hiccups in TD's Latest Acquisition: "We've covered quite a few consolidations among online brokerages. Some went extremely well, some were disasters. " http://www.barrons.com/articles/SB50001424052702303545104576524570860463438
Not to beat a dead horse, but one of the most notorious integrations of financial institutions was Wells Fargo's acquisition of First Interstate (can't WF do anything right?):
"In its haste to eliminate redundancies in the two organizations' branch networks, back-office systems and staffing, Wells Fargo had touched off a chain reaction of operational glitches and customer-service embarrassments. These caused cost overruns, serious damage to the bank's historically strong reputation and brand name and, worst of all, market share declines, which are very difficult to reverse." http://www.institutionalinvestor.com/article.aspx?articleID=1027771
As a legacy ThinkorSwimmer, the idea of TD dumping Thinkorswim does not resonate well with me. It's a great cross-platform analytic/trading platform.
The only glaring hole in ToS-TDA is that Gainskeeper STILL doesn't show up correctly in the ToS platform. I need to go into the website to get accurate positional P/L data.
That's not the case for all funds they offer. Some funds have a long holding time or TF, but having the range of funds/classes available in this supermarket is well-worth it, imho.
"Please note: No-transaction fee (NTF) funds (except ProFunds and Rydex) held 180 days or less are subject to a Short-Term Redemption fee, which is a flat fee of $49.99."
I disagree that 180 day holding period is an impediment to a fund investor. In addition, TDA has one of the largest lists of NTF ETFs (30 day holding period).
I may have to go back to ETrade. It has some NTF Funds. How hard is a brokerage transfer? I checked all my Scottrade holdings are NTF at E*Trade. Anyone use E*Trade?
VF - not sure if you're reading this correctly. Years ago, TDA had no NTF funds, plus a high transaction fee; the combo meant I didn't even take a look at them.
But that was years ago. These days, it's got a very respectable stable of NTF funds. Though I would go elsewhere for TF funds (e.g. Scottrade $17, E*Trade $20, or Fidelity with $5 to add shares to an existing position).
Both ETrade and TDAmeritrade rubbed me off awful. Scottrade was my savior. E*Trade seems to be good fit as far as NTF offerings with Scottrade. It will be good for me from that perspective.
My bigger problem is I have a Scottrade IRA and so does my wife. I think I will moves those to Vanguard.
I freaking didn't need this right now! Busy doing college visits. !@#$%^&*
Stupid Question - Can I simply open separate brokerage account at Charles Schwab?
I have most of my accounts at E*TRADE as a legacy BrownCo customer and have been pretty happy with the collection of NTF funds they have. Customer service seems to be the main issue. For years I dealt with a guy who was great. He got things done, he went to bat for me when I needed or wanted something like making Grandeur Peak Emerging Markets fund available quickly after launch, and he always followed up on questions I had.
More recently it's the opposite and I find customer service much more stressful because not only are more of the answers bad answers for me, which has to be expected sometimes, but I have to chase after them more for answers. Sometimes they've provided answers that seem more like they just want to be done with my question and move on to the next one rather than actually trying to make the customer experience better- even if the answer isn't what I might hope for.
Though I would go elsewhere for TF funds (e.g. Scottrade $17, E*Trade $20, or Fidelity with $5 to add shares to an existing position).
@msf, is your comment about Fido pricing when adding to an existing position their general approach? I can't find that anywhere on their website or in my account documents. I have a small account at Fido and have always avoided TF funds because I mostly like to add to positions over time, but if the $50 fee was just on the first purchase and each additional purchase was only $5 I might reconsider in some cases.
First, one would be crazy to pay commission for Mutual Funds. So that is not criteria for me. ALso as a BrownCo customer I had to endure e*trade. They kept botching up my mutual fund trades. Then their customer service was arrogant. When I closed my account and then they called me back to ask why, I told them to go and hear all the calls I made.
Like is the case with upcoming election, most times in life you have to pick the best of the worst. So my choices are E*Trade and TDA.
TDA I had because of Datek takeover. TDA guys are just nincompoops. If I had to pick between TDA and WFC, I might pick TDA. Hopefully my life does not suck that much.
Firstrade I had tried but wasn't too impressed with them. Too many mistakes in their NTF line up of funds - NTF but not, and vice versa.
So E*Trade is at the top of the s***list.
PS - TradeKing. Anyone use them? They do have NTF lineup but I can't seem to find information on their website about which funds are NTF.
Like I said above, I already have Schwab. I also asked if I can open another account at Schwab. Now that was a bad question.
The reason I have multiple brokerage accounts is to spread my risks. I am a very paranoid person. Imagine if I only had account with Wellstrade.
I have portfolios at Vanguard, Fidelity, Schwab, Merrill and Scottrade at this time. That's why I own close to 50 funds. I guess I could own 40 funds. The point is not to own 50 funds with two accounts at 1 brokerage.
TRP brokerage NTF offerings are scarce and I use it for managing inlaws money so don't want to mix things. I do have IRA at TRP and Scottrade. I could transfer IRA to Schwab.
TradeKing sucks I just found out.
So I have one fund BPRRX at Scottrade that I will lose since it is closed to new investors. Others I could either sell, or maybe some of them include in other portfolios if I really need.
Scottrade was so good to me. Is there any chance Scottrade will stay as a unit of TDA? Or maybe Scottrade brand has better name and TDA will assimilate into Scottrade and the latter's back-end systems (sic) are retained. Freakin' headache!!!
So I have one fund BPRRX at Scottrade that I will lose since it is closed to new investors.
You could do an ACAT transfer of your BPRRX shares to another brokerage before closing out your Scottrade account. It appears that transferring out part of your account is free at Scottrade, but they'll charge you $75 if you transfer out virtually your whole account (i.e. if you leave less than their $2500 min).
At this time, my hope is Schwab or E*Trade buy Scottrade. Fund account transfers are a nightmare. I would rather sell on announcement and re-buy at new brokerage if TDA ends up buying Scottrade.
Hope there is some time to react when the news comes.
I have been at Scottrade since around 2003/4. I thought they were top notch and especially my local branch manager. But was on the line today with various reps from Fidelity. I will be transferring my IRA Monday and then later my taxable. It's not like I have some huge account but as a bonus they will be are adding $3750 to my account. Brokerage transfer bonuses are something I was naive about. Apparently some play this game on an annual basis back and forth between a few firms out there to reap these bonuses.
I don't see why you couldn't open additional accounts at Schwab.
Yeah, but the point of having portfolios at different brokerages is my paranoia one will go belly up and CEO will take my money and run. So does not help to have two accounts at Schwab.
My IRA can go to Schwab. Taxable account I need to find new brokerage. Or E*Trade and vice versa. Anyways, maybe much ado over nothing.
I hope this is not a rumor. Scottrade will most definitely lose clients who may not be as patient as I am.
@Junkster - can you tell me how Fidelity is providing $3,750 to your account? I'm currently in the process of transferring a rollover IRA to them and transferring a taxable account to them as well.
I know there offer commission free trades (but no discount for TF mutual fund purchases).
I would like to know more and speak with them again.
Bonuses on brokerage transfers seem to be this decade's version of the 1990's checks for switching long distance companies (MCI->Sprint->AT&T->MCI->...)
Here's a third party page that points you at various Fidelity promotions (like the cable company, Fidelity doesn't seem to want to make its "best price" easy to get): https://investorjunkie.com/11001/fidelity-promotions/
The highest lump sum cash offer I've seen from any brokerage (for under $250K transferred) is $1K, so I too am curious about a $3K+ offer.
@DavidV - TDAmeritrade seems to offer various different terms depending on whom you work through. In my case, my account is an HSA with a credit union having a brokerage option. I found that even with HSAs, the TDA terms vary depending on the HSA provider. I suspect they have also different arrangements with different 401k plans that offer brokerage windows.
@Junkster - can you tell me how Fidelity is providing $3,750 to your account? I'm currently in the process of transferring a rollover IRA to them and transferring a taxable account to them as well.
I know there offer commission free trades (but no discount for TF mutual fund purchases).
I would like to know more and speak with them again.
Below is the definitive thread on brokerage transfer bonuses. As for Fidelity they offer $2500 for a transfer of a million dollars. If you transfer more, you can bargain with them for more of a bonus. Free trades are of no interest to me. I was originally told my bonus would be just for transferring my IRA. But now found out it will be for transferring both my IRA and small taxable account from Scottrade. They will prorate the $3750 among the two accounts based on their sizes. As for how this bonus is handled (contribution, capital gain, taxes, etc, and other matters) see below.
When Junkster wrote about a modest account, I didn't realize that what he meant was that the account owner was being modest. Nice job, and congratulations on getting that bonus.
While I feel that Fidelity is one of the best places going in terms of breadth of offerings, pricing, and service, I find they exaggerate a bit when it comes to dealing with groups having unique needs. Three personal examples:
- The linked article mentions HSAs. Fidelity offers HSAs to employees through their workplace, but doesn't offer HSAs to those unique individuals who hold HSAs independently. (Fidelity says it get lots of requests for HSAs, and it says it it is working on it, but it has been saying that for years.)
- I've written about funding a non-resident alien's US college education (a rather unusual need). Fidelity's response was basically - call around our various departments and figure it out for yourself.
- Years ago, I asked Fidelity for a bonus to bring an IRA to them, ironically from WF. As an alternative, I asked Fidelity to simply cover the transfer charge. Fidelity refused, saying it couldn't for tax reasons. See Junkster's boglehead thread for how this can be handled cleanly. So Fidelity lost out, Merrill Edge won, I got BofA credit cards with better rewards than Fidelity's Visa, and Fidelity lost a second time.
Fidelity handles "unique" needs that it has figured are worth its while, i.e. needs with a sizeable market, not "unique" at all.
Comments
http://www.bloomberg.com/news/articles/2016-09-28/brokerage-scottrade-said-to-work-with-adviser-on-possible-sale
"Buying Scottrade could enable TD Ameritrade to reduce costs by eliminating redundant back-office systems, while bringing in new customers, he said."
The simplest interpretation is that what was meant was that the combined entity could save costs by settling on one of the legacy systems and tossing the other. But that wouldn't be eliminating redundant systems at TDAmeritrade, which is how the quote literally reads.
Another possibility, while similar, would have TDAmeritrade elimintating its own redundancy. I don't know how fully ThinkOrSwim has been integrated into TDAmeritrade, but TDA could eliminate that redundancy by tossing its system and taking Scottrade's.
Whatever they do (assuming this acquisition happens), watch out for glitches. Barron's wrote in 2011 about TDA's 2009 acquisition of ThinkOrSwim in Hiccups in TD's Latest Acquisition: "We've covered quite a few consolidations among online brokerages. Some went extremely well, some were disasters. "
http://www.barrons.com/articles/SB50001424052702303545104576524570860463438
Not to beat a dead horse, but one of the most notorious integrations of financial institutions was Wells Fargo's acquisition of First Interstate (can't WF do anything right?):
"In its haste to eliminate redundancies in the two organizations' branch networks, back-office systems and staffing, Wells Fargo had touched off a chain reaction of operational glitches and customer-service embarrassments. These caused cost overruns, serious damage to the bank's historically strong reputation and brand name and, worst of all, market share declines, which are very difficult to reverse."
http://www.institutionalinvestor.com/article.aspx?articleID=1027771
The only glaring hole in ToS-TDA is that Gainskeeper STILL doesn't show up correctly in the ToS platform. I need to go into the website to get accurate positional P/L data.
That's not the case for all funds they offer. Some funds have a long holding time or TF, but having the range of funds/classes available in this supermarket is well-worth it, imho.
"Please note: No-transaction fee (NTF) funds (except ProFunds and Rydex) held 180 days or less are subject to a Short-Term Redemption fee, which is a flat fee of $49.99."
I disagree that 180 day holding period is an impediment to a fund investor. In addition, TDA has one of the largest lists of NTF ETFs (30 day holding period).
TDAmeritrade also has special accounts with different terms. For instance, here are my terms (90 day holding period, $25 TF funds):
https://www.tdameritrade.com/retail-en_us/resources/pdf/SDPS1009.pdf
But that was years ago. These days, it's got a very respectable stable of NTF funds. Though I would go elsewhere for TF funds (e.g. Scottrade $17, E*Trade $20, or Fidelity with $5 to add shares to an existing position).
My bigger problem is I have a Scottrade IRA and so does my wife. I think I will moves those to Vanguard.
I freaking didn't need this right now! Busy doing college visits. !@#$%^&*
Stupid Question - Can I simply open separate brokerage account at Charles Schwab?
More recently it's the opposite and I find customer service much more stressful because not only are more of the answers bad answers for me, which has to be expected sometimes, but I have to chase after them more for answers. Sometimes they've provided answers that seem more like they just want to be done with my question and move on to the next one rather than actually trying to make the customer experience better- even if the answer isn't what I might hope for. @msf, is your comment about Fido pricing when adding to an existing position their general approach? I can't find that anywhere on their website or in my account documents. I have a small account at Fido and have always avoided TF funds because I mostly like to add to positions over time, but if the $50 fee was just on the first purchase and each additional purchase was only $5 I might reconsider in some cases.
https://www.fidelity.com/cash-management/automatic-investments
See footnote: "After the initial investment, a $5 fee is charged per automatic investment into a FundsNetwork transaction fee fund."
You have to schedule at least two purchases, but the system allows you to cancel at any time, so you can cancel after you've made one purchase.
https://www.fidelity.com/customer-service/automatic-investments-faqs
http://socialize.morningstar.com/NewSocialize/forums/t/346014.aspx
Like is the case with upcoming election, most times in life you have to pick the best of the worst. So my choices are E*Trade and TDA.
TDA I had because of Datek takeover. TDA guys are just nincompoops. If I had to pick between TDA and WFC, I might pick TDA. Hopefully my life does not suck that much.
Firstrade I had tried but wasn't too impressed with them. Too many mistakes in their NTF line up of funds - NTF but not, and vice versa.
So E*Trade is at the top of the s***list.
PS - TradeKing. Anyone use them? They do have NTF lineup but I can't seem to find information on their website about which funds are NTF.
The reason I have multiple brokerage accounts is to spread my risks. I am a very paranoid person. Imagine if I only had account with Wellstrade.
I have portfolios at Vanguard, Fidelity, Schwab, Merrill and Scottrade at this time. That's why I own close to 50 funds. I guess I could own 40 funds. The point is not to own 50 funds with two accounts at 1 brokerage.
TRP brokerage NTF offerings are scarce and I use it for managing inlaws money so don't want to mix things. I do have IRA at TRP and Scottrade. I could transfer IRA to Schwab.
TradeKing sucks I just found out.
So I have one fund BPRRX at Scottrade that I will lose since it is closed to new investors. Others I could either sell, or maybe some of them include in other portfolios if I really need.
Scottrade was so good to me. Is there any chance Scottrade will stay as a unit of TDA? Or maybe Scottrade brand has better name and TDA will assimilate into Scottrade and the latter's back-end systems (sic) are retained. Freakin' headache!!!
See footnote 9 in Scottrade's fee schedule:
https://www.scottrade.com/documents/alt/CommissionsandFees.pdf
More generally, various brokerages' outgoing transfer fees:
http://www.brokerage-review.com/findbroker/acat-account-transfer-fees.aspx
Hope there is some time to react when the news comes.
My IRA can go to Schwab. Taxable account I need to find new brokerage. Or E*Trade and vice versa. Anyways, maybe much ado over nothing.
I hope this is not a rumor. Scottrade will most definitely lose clients who may not be as patient as I am.
I know there offer commission free trades (but no discount for TF mutual fund purchases).
I would like to know more and speak with them again.
Here's a third party page that points you at various Fidelity promotions (like the cable company, Fidelity doesn't seem to want to make its "best price" easy to get):
https://investorjunkie.com/11001/fidelity-promotions/
The link to a Fidelity cash offer points here: https://rewards.fidelity.com/offers/friendsandfamilyoffer1
The highest lump sum cash offer I've seen from any brokerage (for under $250K transferred) is $1K, so I too am curious about a $3K+ offer.
@DavidV - TDAmeritrade seems to offer various different terms depending on whom you work through. In my case, my account is an HSA with a credit union having a brokerage option. I found that even with HSAs, the TDA terms vary depending on the HSA provider. I suspect they have also different arrangements with different 401k plans that offer brokerage windows.
https://www.bogleheads.org/forum/viewtopic.php?t=196884
http://www.plansponsor.com/Fidelity-Finds-Individuals-Have-Unique-Financial-Wellness-Needs/
While I feel that Fidelity is one of the best places going in terms of breadth of offerings, pricing, and service, I find they exaggerate a bit when it comes to dealing with groups having unique needs. Three personal examples:
- The linked article mentions HSAs. Fidelity offers HSAs to employees through their workplace, but doesn't offer HSAs to those unique individuals who hold HSAs independently. (Fidelity says it get lots of requests for HSAs, and it says it it is working on it, but it has been saying that for years.)
- I've written about funding a non-resident alien's US college education (a rather unusual need). Fidelity's response was basically - call around our various departments and figure it out for yourself.
- Years ago, I asked Fidelity for a bonus to bring an IRA to them, ironically from WF. As an alternative, I asked Fidelity to simply cover the transfer charge. Fidelity refused, saying it couldn't for tax reasons. See Junkster's boglehead thread for how this can be handled cleanly. So Fidelity lost out, Merrill Edge won, I got BofA credit cards with better rewards than Fidelity's Visa, and Fidelity lost a second time.
Fidelity handles "unique" needs that it has figured are worth its while, i.e. needs with a sizeable market, not "unique" at all.