BofA-Merrill Lynch, Raymond James Join The Commission-Cutting Wars

Ted

FYI: (This Is A Follow-Up Article.)

Welcome to the commission-free trading era.

Bank of America and Raymond James announced commission-free trading programs of their own today, following similar announcements in recent weeks by Fidelity, TD Ameritrade, E*Trade and Schwab.


Raymond James announced that it is eliminating transaction costs for all stock, ETF and option trades for registered investment advisors within its Investment Advisors Division, according to a CNBC report. The decision will only impact fee-based accounts offered by advisors, who were paying $8 to $10 per trade.

In a similar move, Bank of America announced that any customer in its retail banking loyalty program will now get unlimited free trades for stocks, options and ETFs via its Merrill Edge online platform.
Regards,
Ted
https://www.fa-mag.com/news/following-the-pack--bank-of-america--raymond-james-drop-some-trading-fees-52275.html?print

msf

What that text describes as a "similar move" for BofA falls short of matching other brokerages.

First, as noted above and made more explicit later in the article, its Merrill Edge platform attaches strings to "free":

self-directed clients not enrolled in Bank of America or Merrill Lynch loyalty programs will now pay a flat $2.95 rate for all stock and ETF trades.

You have to dump $20K into BofA/Merrill and open/maintain a checking account at BofA to get those free trades. Since 87% of "member" trades were already free, Merrill isn't really offering much here. It had been behind in lowering commissions ($6.95 vs. $4.95 elsewhere), and it's still behind ($2.95 without jumping through hoops vs. $0 elsewhere).

Second, while trades in options may be free, exercising an options contract will still cost you $2.95. Unlike say, TD Ameritrade or Fidelity, where there are no fees to exercise options.

davidrmoran

Dunno if it was the first of the major outfits to offer no-charge stock and etf trading when one's aggregated dollars hit a certain not terribly high level (I think so, but am not positive); but years ago one could have some tens of thou at BoA / Merrill, and the same amount at Fido, and trading at the former was free and trading at the latter was not.

But now that Fido is mostly the same, I may be abandoning Merrill and moving almost everything back to Fido, leaving enough not to incur BoA fees. Will report.

msf

Banks with discount brokerage arms started giving their banking customers limited free trades at least as far back as 2005. That was when Wells Fargo linked free trades to PMA (relationship checking) bank accounts. It even included free mutual fund trades.

WellsTrade lowered its min to $25K in 2007, after BofA's discount brokerage arm started offering 30 free stock trades/mo in 2006. That was even before BofA bought the Merrill name and rebranded its discount brokerage.

Until earlier this year, when BofA lowered its requirement to $20K, it had required at least a $50K combined balance and registration in its Preferred Rewards program to get free trades.

Banks have been playing these games for decades. In the 90s, I held $5K of a T. Rowe Price fund (NTF but with an added 12b-1 fee) at Citicorp Investment Services to get "free" Citibank services. I currently take advantage of the BofA game, using it to boost the bank's credit card cash rebates.

If a tie-in still works for you, that's great; I'm using one myself. But they are bank driven and qualitatively different from free, no strings attached trades. IMHO representing them as "a similar move" is deceptive. It would be as if you couldn't get free trades at TD Ameritrade without a TD Bank account and tens of thousands of dollars invested.