Brokerage firms and bonuses discussion

Brokerage firms and bonuses discussion
0

#1

Found the brokerage bonuses threads at FWF immensely valuable, so hopefully this thread can serve to carry on the discussion.

“Brokerage Bonuses ($600 +) for new funding” archived at archive.org and archive.is

Quoting the top/intro post from ProfessorEd:

There are a number of brokerage offers out there that provide bonuses for new accounts, and there are already threads discussing the Schwab and Ameritrade offers. However, there are others. Several of these require opening accounts in the hundreds of thousands. Since many lack this much money, they will be forced to decide which are worth doing. Unlike deals that involve only some time, when one is investing these sums, one likes to know the experience of others and whether there are any potentially expensive problems with any of these.

Thus, there seems a need for a single thread where these are listed and people can discuss the comparative merits of them.

Below are some I know of (I started with the list of brokerage deals at http://thefinancebuff.com and want to give them credit. They put some of the bigger ones in a nice table format, and provide links. (Although we are past the deadlines stated, I have discovered virtually all have been extended and are still in effect.) There is another list at http://www.maximizingmoney.com/online-trading-accounts-and-investment-brokerages/

If there is someone who was watched these offers for a while, it might be nice to know how often they are made, or extended. Many firms put short deadlines on their offers to motivate you to act now, but seem to keep extending the offer, or periodically make similar ones.

Is there any scope for “churning” in which you take an offer and then later repeat the offer?

Here are some general comments.

Offers of this type are attractive for the total money received. Positions have to be held somewhere, so why not where they can give you an extra $600 or so. The money is not really locked up, since you can take it out (and not get the bonus).

Any of the major brokerage firms provide a way to buy and sell Apple, Ford, the major exchange traded funds, bonds, and mutual funds, and there are not gigantic differences between them in what you can do and at what costs. However, with large sums of money involved, small percentage differences in returns, or fees, or details like returns on idle funds, or how fast they transfer assets in can have a significant impact.

For instance, the Schwab offer seems to require you to keep your money with Schwab brokerage, and does not provide for you to invest idle funds in Schwab bank, for a slightly higher return. (all of .15% in checking, and .25% in saving), much less move it out to a Credit union for a few days of higher interest.

If only enough funds or positions are moved to qualify for a bonus, one may have the trouble of having two (or more accounts),but one can try out another firm. One may discover advantages that lead one to stay with them, or move all of you funds. Over several years the benefits of the new firm could be worth several times the bonus (and of course, you may suffer disadvantages that exceed the bonus, if there are either costs in shifting the assets, or unanticipated problems with the new firm).

Some of the considerations include: How much return will be lost when the funds are tied up during the transfer? CREF tells me transfers should take 5 - 7 days for IRA’s. Firms will often close your positions out, and then hold the cash for a few days, and then mail the other firm the check. Your funds are likely to be out of the market for at least a few days. Just to illustrate the money that can be involved, if you believe you can earn 10% per year in stocks (a historical possibility) and are thinking of moving $250,000, this is $68.49 per day, and if you are out of the market for 7 days, this is $479.45, which is most of a $600 bonus. If you then try to bring the money back, there would be a similar cost. This makes some of these deals no longer look so attractive.

If you can transfer positions without fees, this may not be a problem. However, many IRA’s are in propriety funds which cannot be transferred. You may find out that the retail funds in a brokerage IRA are more expensive than the proprietary funds in some other plans. When large sums are involved, you should look closely at annual expenses.

Are there any adverse tax consequences? If you find you have to convert funds to cash for an easy transfer, this can create a capital gain, and possibly prevent you from receiving the long term capital gains rate.

, What will be the cost in time and money of learning new brokerage firm’s procedures? An active trader will be attracted by the offer of a large number of free trades, but if unfamiliarity leads you to make mistakes, it could cost you more than the value of the trades.

There may be hidden costs to closing accounts. Years ago I opened several accounts for bonuses, and found account closing fees that were inadequately disclosed.

Are you gaining or losing any valuable investment opportunities that are available only through certain firms (margin borrowing at better rates, the opportunity to trade Schwab ETF funds for no commission, etc.).

For instance, I have substantial money in the CREF Real Estate Fund, and currently if you take money out, they will not let you buy back in if your total position is over $150,000. I have found this a rather nice investment vehicle, and losing several years earnings from it could easily outweigh any small bonus from moving part of the investment elsewhere.


The Nanny Broker thread
Adjusting Bases for Non Dividend Distribution
#2

ive been transferring my ira’s between etrade ameritrade and Merrill. once or twice a year. too much of a hassle with taxable accounts.


#3

I don’t do this as a specific strategy, but I often move assets around and you can get pretty nice bonuses if the sums are large enough. I was promised $2500 for one move and $10,000 for another, although admittedly both have not been paid yet and looks like will require followup on my part - one posted for $500 instead, and the big one hasn’t at all and they’re looking into it. Admittedly the latter is not a clear case since the receiving brokerage didn’t take about 20% of the transfer due to some complications about one particular asset they didn’t want, so I may not have met the requirements (yet).

Edit: the $2500 one posted, I just didn’t notice.


#4

Very impressive, may I ask which brokerage and what transferred amount was promised the $10k? $2 million?

I’ve found TDA, Etrade, and Merrill more amenable to higher, unadvertised matches


#5

They were proportional - $1M for the $2500, $4M for the $10K. The bigger one was specially negotiated - i think the advertised tiers stop at $1M usually, but they are willing to work with you if you’ll move more. I’ve had good luck with promotional offers from Etrade, Scottrade, and TDA.


#6

Scottrade Promos, $2500 for $1M and proportionally smaller amounts down to $200 at $50k. 1 year hold.

make a qualifying deposit or transfer into a new or existing Scottrade account by 12/1/17.*


#7

Fidelity did away with cash bonuses a few months back but brought some of them back for transfers of $1mm+. I don’t believe these are public yet.


#8

Did they report the bonus on your 1099, thus making it taxable?


#9

Can’t speak specifically to xerty’s case but in general it’s REQUIRED by the institution to report it on 1099 for non-retirement dollars over $600 and not reportable for IRAs in any amount.

Some firms will credit your accounts pro-rata based on the way the funds come in. (Ex. a $1000 bonus will be split $250/$750 respectively if you bring in $125k in non-retirement and $375k in retirement dollars).


#10

Yep, have encountered this exact case a few times. Several years ago, I called up Merrill to verify as I was awaiting my 1099, and they said the $600 wouldn’t be reported


#11

In all the cases I recall, it was reported as you’d expect. Sometimes on a 1099-MISC, sometimes on the brokerage 1099 somewhere similar.


#12

I am flattered that the threat I started was useful.
It is a shame that the long post I just made at FW appears inaccessible.

I am finding that negotiating more than $2500 for a million appears not to get proportionately higher offers which is a shame since managing multiple accounts is time consuming. $10,000 for 4 million (or better)
would be nice if anyone knows how to get it.

Merrill seems to have a limit of $3500 per person and they say the best would be another $600 for 1.2 million.


#13

Thanks.

A phone call produced: $1,000 is $2500 $2.5 million $3500 5 million $5,000 plus fees


#14

You heard it here first folks. Promise you that this isn’t going to be on any of the blogs yet. Fragiledeals already bringing you exclusive content :wink:

Edit: Spelling


#15

From further talks with Fidelity I learned their decision to stop giving bonuses was based on concern about the new DOL regulations mentioning “fiduciary duty.” When trump indicated he would not push this this, they went back (or their lawyers got less cautious).

If this is correct, it reduces the worry that these may disappear. You might have more confidence in such strategies as bring a million to Ameritrade this calendar year, and another at the beginning of 2018.

If you are willing to make frequent transfers, your criteria might be annual rate of return rather than the percentage you get from a one time transfer.


#16

Still holding out hope as I was waiting to open a Fidelity account until they gave a decent bonus. Otherwise my Fidelity Rewards credit card cashback will just sit there untouched. It’s not much (a few hundred bucks) but I am stubborn in waiting until they give me miles or cash to open an account.


#17

All you gotta do is ask. Are the bonuses mentioned above enough incentive?


#18

I was planning on small ball ($25-50k) not the mid six to seven figures like you mention. Should I call or message them?


#19

Ah. Doesn’t hurt to call but you probably won’t get more than just a few trades at most for those amounts. If you’re dealing with Fidelity, just ask for a “Brokerage Sales Consultant”


#20

I’m hoping Schwab opens up bonuses again as I was planning on getting their debit card anyways. Looks like there was a $500 for $100k one in the past, but the best public offer right now seems to be just a $100 referral.