Schwab latest promo
| Net deposit | Cash Bonus Award |
|---|---|
| $50,000–$99,999 | $200 |
| $100,000–$249,999 | $300 |
| $250,000–$499,999 | $600 |
| $500,000–$999,999 | $1,200 |
| $1,000,000 or more | $2,500 |
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With commissions now zero at most of the major brokerages, what will be the likelihood of deposit bonuses like we’ve seen in the past?
If you see ten troubles coming down the road, you can be sure that nine will run into the ditch before they reach you.
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With free commission common I called two bank firms with brokerages. Both CITI and PNC are retaining their commissions. PNC still has promotions for new money, but only if you are starting a managed account (with fees).
I have avoided commissions on reinvesting dividends by having them automatically reinvested, but I notice that this results in lots of small positions of a few hundred dollars. If you want to liquidate them to lot by lot, to optimize taxes (selling lots with loses), the commissions add up quickly.
As I read it Ameritrade has the most generous promotions for new money (see https://www.tdameritrade.com/offer/for90days/index.html) for taxable accounts, so I may move out of these firms into it.
Their representative tell me that if the money for a taxable account is coming from another brokerage firm, there is another $300 for bringing in $250,000 making the total $1300, plus a reimbursement of any fees.
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I also suspect there will be fewer opportunities for bonuses from switching funds between brokers.
Besides the obvious expectations that loss of commission revenues will making attracting new funds less attractive, there is speculation about firm such as Ameritrade or E*Trade merging, and this reducing the total number of firms. See Should Advisors Rebate Revenue-Sharing Payments? | Barron's.
Since I first started a thread on brokerage rebates, firms such as Scottrade, and Capital One investing, have disappeared, leaving fewer competitors.
Many others have stopped making such offers.
It may be asked what difference does it make if there will be fewer offers. If you contemplate moving your money after the required holding period for is over, you need to ask will there be opportunities in the future you plan to take advantage of. If there will be you would evaluate firms on the annual returns, rather than the absolute value of the bonuses.
Firms with short holding periods such as Chase (three months), or E*Trade (six months) look better than those with the more traditional one year required holding periods.
For instance, with $25,000 to move the Chase You Invest program with about a 3 month holding period yields $200 . This is .8% of the money invested, but it adds 3.2% to your annual return if you could find another firm with such terms.
The reduction in the number of firms actively bidding may make it harder to repeatedly moved between firms. Not so long ago one could move $1,000,000 every year picking up an extra $2500 each time without returning to the same firm.
Now one might have to return to the same relatively quickly, and some one may notice that you moved the funds out quickly after the required holding period and decline to give a new bonus.
One other implication is that if there are bonuses out there one had been planning on taking advantage of, it may be wise to act now before they were discontinued. Till recently, one might see a deadline, and safely presume it would be extended, or a new offer would be made soon.
New offers might be even more attractive based on ones that had recently been offered.
Now, I suspect some managements are looking at the smaller revenue streams, and deciding not to extend new offers, or to make them less attractive.
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Not exactly related to bonuses, but here’s a good article on the major brokerages and how their business models have shifted towards AUM-related profits (advisory services, fees on their own investment products, screwing you on cash interest) rather than a transactional, commission-based business model.
As such, I think asset gathering will be an increasingly important priority for brokerages, not just bigger ones like Schwab (to further their business) but for smaller ones like TDA or E*TRADE (who might be moving their business in that direction, or aiming to be acquired by someone who values that).
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The may be some profitable opportunities available through deals offered through banks.
Chase has a $1,000 offer for opening a Sapphire Banking relationship with at least $75,000 and includes “You Invest” funds in it. See https://dannydealguru.com/2019/09/27/chase-sapphire-banking-1000-bonus/
Chase is offering a $2,000 bonus for bringing in $250,000 for their Private Client banking and investing it in qualifying banking and investment products, and holding for at least 3 months. The joker is that unlike some firms that offer asset holding at no charge (such As Ameritrade, Schwab, E*Trade etc.) their qualifying products exclude the low cost You Invest ones. The have a 1.25% annual feel on everything.Thus, a quarter million in assets would cost you $781 as a minimum per quarter (and I suspect you might end up paying more than this in fees). This might leave some profit potential from moving assets in and then out.
The time investment might be relatively high since they seem to require a personal meeting with the client which would probably be time consuming. Some might learn something useful from this process and their suggestions.
Their wording states it is only open to existing customers who wish to upgrade. It might be possible to take advantage of a $300 or other offer to open a new checking account, become a customer, and then upgrade to private client status.
In talking to PNC I discovered they also had promotions for managed accounts, but a similar level of fees.
I recently became aware of a TDA promotion, but it could be too late to take advantage of it now:
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After a very time consuming unsuccessful attempt to open a Chase Sapphire account on line from a Money Hustler link,(their computer eventually says it cannot handle it, and requests you to start over) for the $1,000 bonus, I requested the coupon with the idea of going to a branch.
The coupon is explicit that IRA’s do not count and said " Eligible Accounts: personal checking, savings and/or J.P. Morgan investment accounts (You Invest Brokerage and accounts opened in a Chase branch and serviced by a J.P. Morgan Private Client Advisor or Financial Advisor)." The reference to a Financial advisor suggests that these accounts would be managed accounts with a higher fee.
There may be some profit potential here since they require only $75,000 and that the funds be there for only three months (after which you presumably could downgrade to a regular You Invest account).
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You can use a regular You Invest account to qualify for the $1,000 bonus. This is what I am doing. Just waiting out the 90 days.
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Etrade - $100 for depositing $5,000. The funds do need to stay there for 12 months, so it only nets 2%. But, you should be able to put that $5k into a CD paying 1.5%+ (Etrade doesnt let you explore CD options without an open account), yielding a nice total return for the term.
Of course, the downside is it’s a home for only $5k, and only for one year.
Extended. Now you have up to 11/22 to deposit your assets.
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Their offers are more generous than other firms it appears.
I took advantage of an offer for a quarter million and noted the first $500 showed up when I had met the criteria for $100,000 and the second $500 when the remainder of the securities arrived.
The redemption procedure is a little odd is that when you meet the condition they direct you to a site where you can pick from merchandise or cash deposited to your account.
Note that " *Offer is not valid for IRAs, tax-exempt accounts, TD Ameritrade Institutional accounts, certain trust accounts, corporate accounts, partnerships, LLCs, or other client-representative accounts.
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Might be time to get any last TDA offers before you get stuck with Schwab.
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There is better offer (referred to by scanchain above) which is extended.
If this merger goes through, and one is eligible for bonuses from moving between the firms, it might pay to take advantage of the offers. A Schwab client might wish to move to Ameritrade, expecting to end up back at Schwab, but richer by their bonus. An Ameritrade customer might want to transfer to Schwab, figuring he will end up there, but would be richer by the bonus.
I believe antitrust considerations will prevent the firms from agreeing not to poach each other’s customers before the merger. Announced promotions excluding the other firm would be unlikely. Although apparently illegal, I could imagine word being passed to representatives not to offer bonuses for funds coming from the other firm where the representative have flexibility.
Given the size of the two firms, management could realize that a signficant part of any funds moving in response to a bonus offer would come from the other firm, and would be funds they would end up with in either case. The rational response to this might be not to offer promotions during the interim period.
If both Schwab and Ameritrade reduce promotions, other big firms such as E-Trade might drop promotions or reduce them.
However, as a data point, when Scottrade was taken over by Ameritrade, they had promotions almost up to the last moment. However, when Capital One sold their accounts to E*Trade, outgoing transfers were blocked for a short period, which prevented me from completing an asset transfer to another firm.
Thus, if someone is thinking of moving accounts for bonuses, it wuld seem wise to do it now.
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How does this work? The TDAM website says for example:
**Qualified net new assets between $50,000 and $99,999.99 are eligible to receive your choice of cash, select products, or gift cards valued at $200 and a $100 cash bonus if you transfer to TD Ameritrade;
Does this mean you can get $200 + $100 in cash for this example?
Yes, you get to choose whether you want cash or gifts (goods). If you choose cash, the total will be $300.
I remember seeing the offer extended to 12/6, but I just checked the link and it says you need to complete the transfer by 11/22. Now it is too late to get on.
Doh! That is a good offer. I will check tomorrow to see it they extended.
If the offer is not extended, the offer I linked above says:
Offer valid for one new Individual, Joint, or IRA TD Ameritrade account opened by 12/31/2019 and funded within 60 calendar days of account opening.
The current round of TDA offers expire tomorrow, and there should be new ones out sometime next week. I’ll post what I find out then.