I am a 77 year old retiree and not a sophisticated investor. Had my selfdirected IRA for many years with Scottrade and it will transferred to TDA on February 23, 2018. TDA has “hundreds” while E*trade offers “thousands” of funds, but without an account in either company I cannot find out which ones they are. TDA charges $50.- for a transaction fee funds while I paid $17.- at Scottrade and don’t know what other fees may apply. I wonder if I would be best off with Vanguard which is known for low fees. I already have 3 Vanguard Funds and one Vanguard ETF. I also have one fund each from Fidelity, T Rowe Price, Oakmark, Mairs&Power and a James Fund. I am grateful for any advice I can get.
Comments
As for the transaction fee funds at TD Ameritrade that would benefit me being a shorter term holder as TDAmeritade doesn’t additionally charge a fee for selling their transaction fee funds. Albeit, they do on their non transaction fee funds held less than six months. Scottrade charged a fee on their NTF funds only if sold before three months.
My advice would be to just sit tight and see how things go once TD is in charge. One of my concerns is I hold a fund that isn’t available at TD. So how will be that handled when I try to exit.
TDA (it says that it offers 12,841 funds, 11,596 open to new investors):
https://research.tdameritrade.com/grid/public/screener/mutualfunds/screener.asp?method=new
E*Trade (9156 funds, 8581 open to new investors):
https://www.etrade.wallst.com/Research/Screener/MutualFund/
Fidelity: (12,228 funds [you have to check the "include closed fund" box], 11,001 open to new investors)
https://www.fidelity.com/fund-screener/evaluator.shtml#!&ntf=N&expand=$FundFamily
The number of funds offered doesn't matter much - lots of obscure, lousy funds inflate these figures. What matters is whether they have a solid selection of good funds and whether they carry the funds you own or want to own.
I like Fidelity, because their service is excellent, they charge nothing to sell any fund, and once you own a fund that they charge a transaction fee (TF) to buy , you can buy additional shares for just $5 per purchase (but you have to go through some tricks to do this). There are other reasons why I like Fidelity, but that's a good start.
I've used TDA (in fact, we still have $0.01 in an account there - don't ask). Until recently they had a great lineup of no-transaction-fee ETFs. A few months ago, they started charging transaction fees to trade all the Vanguard ETFs, and many of the iShare ETFs. In their place, TDA added loads of high cost, less well known ETFs. So their ETF numbers look good (hundreds of no fee ETFs now), but the actual offerings are poorer. A good example of why number of funds doesn't tell the whole story. We found TDA fine for mutual funds, but nothing special.
Often (this applies to Junkster, too) a brokerage will be able to hold a fund it doesn't offer for purchase, and you can even reinvest dividends and sell shares there. You just can't buy more. But not always - on rare occasions they'll be unable to even transfer in shares.
"As for the transaction fee funds at TD Ameritrade that would benefit me being a shorter term holder as TDAmeritade doesn’t additionally charge a fee for selling their transaction fee funds."
How is one able to take advantage of such? I thought one would need to pay another fee to sell the fund in question?
You may want to look into this offer for Scottrade account holders from Schwab - https://www.schwab.com/public/schwab/nn/tradeoffer.html
Also according to the Scottrade to Ameritrade transition hub - https://welcome.tdameritrade.com/ The fees for transaction fee mutual fund purchases will remain the same.
This is somewhat old (2012) but I think still accurate, from Forbes:
"But because Schwab now only charges investors a transaction fee when they buy a fee-fund, Schwab is actually cheaper ‘round-trip’ than TD Ameritrade, for example. TD Ameritrade has a $49.95 transaction fee, but because it charges investors on both the buy and the sell, the ‘round-trip’ cost of buying and selling a fee fund is nearly $100."
https://www.forbes.com/sites/investor/2012/03/05/fund-trading-costs-the-abcs-of-transaction-fees/
With Fidelity charging $49.95 to buy most TF funds, no short term trading fee on TF funds and no charge to sell, Fidelity's short term round trips are even cheaper than at Schwab ($76 to buy) or Scottrade.
https://www.fidelity.com/mutual-funds/all-mutual-funds/fees
Take a look at page 5 of the Account Handbook that's linked to on the welcome page:
Under "Top things to know now"
"Your commissions will remain the same. You'll continue to enjoy the same equity, options, and transaction fee mutual fund commission rates that you do now."
The short video at the top of the page says the same thing.
Next, that handbook is not the "Scottrade to Ameritrade handbook" but the standard Ameritrade handbook. So it makes sense that it would say 49.99 for no-load transaction fee funds, which is the standard Ameritrade price.
They say luck is a big element in the success equation. Part of the reason my account is seven figures to the better over the past 25 years of buy and hold in the S@P was I lucked upon those two brokerage firms at just the right time in the 90s. I am a big believer in the Luck Factor!
TDA did a poor job of documenting changes. Look at the info it gives for bank transition: "Scottrade Bank was acquired by TD Bank, N.A. and moving forward all bank services will be provided by TD Bank, N.A. ... There are no changes you need to worry about."
This is dead wrong, and I've never seen a bank acquisition that did not say clearly and explicitly that you need to worry about exceeding FDIC limits, because now there's only one bank where you may have deposits, not two (in case you were also a TDA customer).
So in the case of conflicting statements (here's your account handbook, and your fees won't change), I'd ask rather than hope for the best.
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Here's the best indication I've been able to find that TF fees will remain the same ($17). It's in the notice to RIAs using Scottrade:
"Commission rates will remain the same for your current Scottrade® Advisor Services accounts. All accounts that transition to TD Ameritrade Institutional will receive the same equity, option, and transaction fee mutual fund commission rates"
Here's the Scottrade® Advisor Services fee schedule, including $17 for TF funds.
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FWIW, here's a TDA PR statement from a year ago: "With our pending acquisition of Scottrade on the horizon, we have a unique opportunity to enhance that experience even further with lower pricing for all of our clients."
That's when TDA announced that it was lowering its equitypricing to $6.95/trade, matching Scottrade's. This is the way I read their transition page verbiage - that they'd already sync'd the commissions (as much as they were going to), and so Scottrade customers would continue to benefit from low commissions, the equity commissions. TDA also lowered its option prices at the same time, to almost match Scottrade's. The same $6.95, but 75c/contract as opposed to 70c/contract at Scottrade.
What about funds that are different classes at Scottrade and TDA?
Scottrade has PMZIX and TDA has PMZDX, increase of 0.40% in expenses. There are many of these funds with higher expenses at TDA.
At TDA, they withhold 1 day interest payment on mutual funds- they settle on T+1, but they don't start paying interest until T+2. I have never seen this before.
TDA has lots of different fee schedules written up - the standard retail one (no maintenance fee, 180 day short term NTF fee), one HSA I had (briefly) with a maintenance fee, another HSA schedule with lower than standard fees, etc. I was concerned since TDA had not provided a separate price sheet for transitioned accounts, it pointed to a document with its standard fees, and it was coy about pricing.
The only actual number it put in writing was for equities, which at $6.95 it described as "low". These days, that's 40% higher than Schwab, Fidelity, or Ally (Trade King), and more than double Firstrade . $6.95 isn't a lot, but calling it low is PR.
I hope they'll also honor the Scottrade90 day period for short term NTF trading (instead of requiring you to hold funds for 180 days).
I dont use Scottrade but left TDAmeritrade as I thought their customer service was spotty.
Fidelity is a good compromise. lots of funds most of the ones you would want with good customer service and huge base
Vanguard ( where I also have accounts) is an acquired taste. Your fees will depend on how big your accounts are. With more than $500,000 fee only mutual funds are only $8
There are some funds at Vanguard almost unavaliable elsewhere but not many. Their entire platform is designed for people who dont do much trading, buy into the index philosophy and don't buy more than the occasional stock. It can be irritating if you want decent charting, in depth research and quick customer service
I transferred part of my IRA account to Schwab while left part of it with Scottrade that will allow me to have access to the lower cost transaction fee funds. Scottrade allows partial transfers for free as well.
If you are interested in no transaction fee mutual funds, I don't think anyone on the planet has more options than Schwab and they have lower initial minimums than TDA on a number of funds.
In your account, has TDA honored the Scottrade 90 day period for short term NTF trading (instead of requiring you to hold funds for 180 days)?
By February 16 I must notify them if I want to transfer my account free of cost to another company otherwise there is a $75 charge. So I have another three weeks to decide and I will as good as I can research all the suggestions you people kindly provided.
See Brokerage Commissions & Fees (this pdf was modified last June, so I assume it's current, unless someone has a newer fee schedule). Specifically, footnote 5: The $49 fee is consistent with what Junkster wrote above: At Scottrade " If I sell within three months I am charged $66". That's the $17 commission (for the TF fund sale) plus the $49.00 short term trading fee.
I understand from your reply - that in your TDA account - mutual fund investments of less than 180 days - will be charged $66 ($17+$49 redemption fee)?
However, I have also noticed that one advantage of TDA accounts is that recurring investments in TF mutual funds can be executed with not fees ($0).
The further investment at 0 cost seems to be unique among brokerages. If someone else offers such, I would like to hear about it. Scottrade's 2 dollar per further transactions was not bad either.
These programs work well for their designed use - periodic investments of modest amounts. They don't work so well as a way to circumvent transaction fees for individual transactions. They generally require multiple purchases before you can cancel (Fidelity is the exception) and they generally still charge you money to sell shares (Fidelity and Schwab being exceptions here).