WellsTrade, open brokerage now?

[Jay69]

At this point we do not need a Brokerage account but will most likely in 2-3 years.

For those who have PMA with Wells Fargo they are changing the PMA program April 1st and the free trades will be gone.

We have most everything under WellsTrade now and it’s nice and simple. I could open a Brokerage Account before April and toss a few bucks in as a place holder so to speak, but I question if it’s worth it? Would be no cost to speak of except for my time.

The flip side is to open at Vanguard in 2-3 years or whatever looks good at the time.

Thoughts?

[billern]

I was thinking about opening a traditional IRA now and funding it for 2012 to qualify for the free trades going forward (right now I have a rollover IRA, a Roth IRA, and taxable account with Wells). The only downside to that is that Wells has a fairly hefty account closure fee that applies to retirement accounts.

I'd just make sure they don't close it out due to inactivity. Buy a share of a stock or ETF.

[retiredjg]

For those who have PMA with Wells Fargo they are changing the PMA program April 1st and the free trades will be gone.

It was such a good deal. I wondered when this would happen.

If opening a brokerage account before April allows you to keep free trades in all future accounts, I'd probably do it if you see a future need for it and don't mind whatever you have to do to get it.

If all you want is Vanguard funds or ETFs, I wouldn't bother. You don't need a WT brokerage account for that.

[Jay69]

If all you want is Vanguard funds or ETFs, I wouldn't bother. You don't need a WT brokerage account for that.

The above is one thing that has me on the fence.

I'm liking every thing togather right now, its a tough call.

[Jay69]

I was thinking about opening a traditional IRA now and funding it for 2012 to qualify for the free trades going forward (right now I have a rollover IRA, a Roth IRA, and taxable account with Wells). The only downside to that is that Wells has a fairly hefty account closure fee that applies to retirement accounts.

I'd just make sure they don't close it out due to inactivity. Buy a share of a stock or ETF.

My plan was to toss in $500-1000 and buy an S&P500 etf/fund

[Easy Rhino]

a) you still need to hit the minimum aggregate PMA balance in order to get avoid the PMA fee.
b) Wells Fargo may eventually 'ungrandfather' PMA people. If you wouldn't be using it for a few years, it may not be relevant by then.

[livesoft]

I tossed a few bucks at Vanguard just to get Voyager status, so I see no reason for someone who is already using WellsTrade/PMA not to open a brokerage account with some money. OTOH, you would probably get free trades if you opened this summer because you would be grandfathered anyways.

One issue would be the account closure fee. You would hate to have a fee of about $100 to close an account with just $500 in it.

[Default User BR]

At this point we do not need a Brokerage account but will most likely in 2-3 years.

For those who have PMA with Wells Fargo they are changing the PMA program April 1st and the free trades will be gone.

If you already have the necessary balances to waive the PMA monthly fee, then sure. As an ETF investor, I ended up leaving WF for bonus offers elsewhere.


Brian

[Jay69]

One issue would be the account closure fee. You would hate to have a fee of about $100 to close an account with just $500 in it.

I think about this as well. Only out I could see if they take away the free trades I may have a good chance of a 0 $ exit fee. It would be worth the gamble. On the other hand could just leave it open forever with $500!

[Calm Man]

If all you want is Vanguard funds or ETFs, I wouldn't bother. You don't need a WT brokerage account for that.

The above is one thing that has me on the fence.

I'm liking every thing togather right now, its a tough call.

I wouldn't open any brokerage account anywhere. I happen to have one at Vanguard by default when I opened a Vanguard advantage account. I did use it to write checks years ago but now write checks from my bank as I don't like to mix my investment and checking accounts. I have never used the brokerage account. THhe advantage of not having one is that you will never be tempted to do anything other than use mutual funds. ETFs from Vanguard offer nothing over admiral shares (although a few funds have ETFs and not admiral shares) and require you to have to actively place bids to ge3t shares as opposed to just buying at the price Vanguard gives for a mutual fund at 4 PM.

[retiredjg]

About your future "need" for a brokerage account, you might take a look at T.D. Ameritrade's long list of no transaction fee ETFs. It's a nice list of iShares (Blackrock), Vanguard, and Invesco ETFs. If it still exists when your need actually arises, maybe it would work for you.

[nisiprius]

At this point we do not need a Brokerage account but will most likely in 2-3 years.

For those who have PMA with Wells Fargo they are changing the PMA program April 1st and the free trades will be gone.

In short, it was a teaser deal. There are two possible reactions:

a) Say "this is a company that seduces customers and then abandons them. This is a reason not to trust them, and to prefer a company that seems to have a history of consistent policies."

b) Say "I shall rush into the arms of this company, even knowing the heartbreak that lies ahead."

If you join up now, do you get it in writing that you get free trades for life? Do you even get it in writing that the free trades you get when you join have no expiry date? I'll bet not. In fact I'll bet the fine print says they can change anything they want to at any time.

[Confused]

b) Wells Fargo may eventually 'ungrandfather' PMA people.

I haven't run into this problem yet. I have a really old checking account with Wells Fargo that they don't offer anymore. It pretty much gets me free money orders, cashier's checks, and other things with no limit, as long as I transfer $100 out of the account every month and into a savings account. I sat down with a banker recently, to switch to the PMA, and he told me not to do it if I thought I'd ever need to downgrade out of PMA because I would lose this awesome checking account and never get it back.

I declined to make the switch to PMA, but I did convert my savings account to a high-yield - instead of 0.01%, we're getting 0.2%.

[Default User BR]

In short, it was a teaser deal.

I would have to strongly protest deeming a deal that lasted at least 5-1/2 years as a "teaser", especially as all they are doing for now is to stop offering it to new customers. They are offering a less-good deal for them, and gave plenty of notice to allow those on the fence to decide to jump in.

a) Say "this is a company that seduces customers and then abandons them. This is a reason not to trust them, and to prefer a company that seems to have a history of consistent policies."

Again, no customers have been abandoned at this time.


Brian

[Toons]

If all you want is Vanguard funds or ETFs, I wouldn't bother. You don't need a WT brokerage account for that.

The above is one thing that has me on the fence.

I'm liking every thing togather right now, its a tough call.

I wouldn't open any brokerage account anywhere. I happen to have one at Vanguard by default when I opened a Vanguard advantage account. I did use it to write checks years ago but now write checks from my bank as I don't like to mix my investment and checking accounts. I have never used the brokerage account. THhe advantage of not having one is that you will never be tempted to do anything other than use mutual funds. ETFs from Vanguard offer nothing over admiral shares (although a few funds have ETFs and not admiral shares) and require you to have to actively place bids to ge3t shares as opposed to just buying at the price Vanguard gives for a mutual fund at 4 PM.

+1 , I agree,very well said,keep it simple

[tfb]

At low commission rates for Bogleheads who don't trade much, free trades are not worth as much as signup bonuses. If you are going to open a new account, you might as well open one with a firm that pays you.

[Default User BR]

At low commission rates for Bogleheads who don't trade much, free trades are not worth as much as signup bonuses. If you are going to open a new account, you might as well open one with a firm that pays you.

That's kind of what I concluded. I left WF for TD Ameritrade for the bonuses. As most of my portfolio was ETFs, and all but a couple were on the TDA NTF list, I didn't even lose much flexibility.

Subsequent to that, I moved out of TDA to ETrade, Schwab, and Fidelity to collect more bonuses and a few months free transaction. I figure even if you have to pay a few commissions after the free period expires it's peanuts compared to the bonus amount. This works best when you have significant assets, as the work of moving is about the same. Collecting a $1000 bonus takes about as much time and effort as $100.


Brian

[Sbashore]

I'm an existing PMA customer with Wells Trade. I hold all my investments in Vanguard ETF's. I'd just as soon be with Vanguard. Even though I have a lot of free trades available, I don't use them much.

[tj-longterm]

If opening a brokerage account before April allows you to keep free trades in all future accounts, I'd probably do it if you see a future need for it and don't mind whatever you have to do to get it.

Wells specifically told me that only my existing accounts would be eligible and not new ones (and were encouraging me to open new ones before the deadline)

[Default User BR]

I'm an existing PMA customer with Wells Trade. I hold all my investments in Vanguard ETF's. I'd just as soon be with Vanguard. Even though I have a lot of free trades available, I don't use them much.

Presumably you have significant assets (or the PMA wouldn't make much sense). A move to TD Ameritrade for the bonus and NTF ETFs might be in order.


Brian

[Sbashore]

I'm an existing PMA customer with Wells Trade. I hold all my investments in Vanguard ETF's. I'd just as soon be with Vanguard. Even though I have a lot of free trades available, I don't use them much.

Presumably you have significant assets (or the PMA wouldn't make much sense). A move to TD Ameritrade for the bonus and NTF ETFs might be in order.


Brian

Thanks I'll check that out.

[Cash]

At low commission rates for Bogleheads who don't trade much, free trades are not worth as much as signup bonuses. If you are going to open a new account, you might as well open one with a firm that pays you.

That's kind of what I concluded. I left WF for TD Ameritrade for the bonuses. As most of my portfolio was ETFs, and all but a couple were on the TDA NTF list, I didn't even lose much flexibility.

Subsequent to that, I moved out of TDA to ETrade, Schwab, and Fidelity to collect more bonuses and a few months free transaction. I figure even if you have to pay a few commissions after the free period expires it's peanuts compared to the bonus amount. This works best when you have significant assets, as the work of moving is about the same. Collecting a $1000 bonus takes about as much time and effort as $100.


Brian

I hadn't really considered brokerage bonus chasing, but it seems simple enough to transfer in kind, and tfb makes a good point about the bonuses outweighing free trades. Did your transfers involve a taxable account? The biggest impediment for me would be the potential loss of tax lot information.

[tfb]

Did your transfers involve a taxable account? The biggest impediment for me would be the potential loss of tax lot information.

The cost basis followed the transfer from WFA to TDA in a few days. Worst case you re-enter the lots yourself. Be sure to print the lots info before the transfer if you don't have the records yourself already.

[Cash]

Good idea. Thanks!

[Default User BR]

I hadn't really considered brokerage bonus chasing, but it seems simple enough to transfer in kind, and tfb makes a good point about the bonuses outweighing free trades. Did your transfers involve a taxable account? The biggest impediment for me would be the potential loss of tax lot information.

Some taxable, some Roth. As these were all uncovered shares, for the taxable account I downloaded a tax lot breakdown in CSV format before the transfer. That way if the information didn't transfer (it can take a while) I would have it and could send it to the new custodian.

I calculated that the shift to ETrade took about one hour total time, and only that long because there was a small money-market fund that couldn't transfer in-kind. I had to go to TDA and get them to sell it without charging me a transaction fee.


Brian

[Cash]

One last question. TFB's article noted:

"If the bonus is paid into a taxable account, it will be taxable. If it’s paid into an IRA, it counts as interest earned in the account; it doesn’t count toward your annual contribution limit."

If I'm transferring a combination of IRA and taxable money, can I instruct them (I'm thinking specifically of TD Ameritrade) to credit the bonus to my IRA and not taxable account?

[tfb]

If I'm transferring a combination of IRA and taxable money, can I instruct them (I'm thinking specifically of TD Ameritrade) to credit the bonus to my IRA and not taxable account?

You can try, but unlikely. Bonus crediting is automated. As soon as assets arrive, the computer credits the bonus. Once credited, it's yours, taxable in the taxable account. Pulling it out and putting it in Roth will count as your contribution.