Wells Fargo Joins Race to Zero Commissions
Wells Fargo Advisors on Tuesday threw in the towel on charging commissions to investors who use its WellsTrade online and mobile discount brokerage service, following a horde of competitors who have introduced free stock trading in the past two months.
The zero-commission program applies to most stock and ETF trades. WellsTrade continues to charge $35 per trade for penny stocks and mutual funds, and $25 for stock and ETF trades placed by telephone through an agent of the bank, according to the firm’s website.
Bank of America on Monday said it had expanded free stock, ETF and options trading to all Merrill Edge self-directed trading accounts, after initially lifting commissions in October only for “preferred rewards” clients who use other bank products and services.
Discount trading firm Interactive Brokers kicked off the zero-commission phenomenon in October, and was quickly followed by Charles Schwab Corp., Fidelity Investments and other rivals.
The new policy signals a core change in the model of discount brokerage firms from volume-dependent commission machines to traditional banks that profit by paying a lot less for investors’ cash that is swept into deposit accounts than they make from lending or otherwise investing the money.
Wells Fargo Advisors, which caters to investors across the wealth spectrum, currently pays 0.05% to 0.20% interest on cash that is swept from brokerage into bank deposit accounts. (The higher rate is for accounts with at least $20 million, and quickly falls to 0.09% between $10 million and $19.9 million of assets.)
A Wells Fargo spokeswoman declined to say how many customers use WellsTrade, which is marketed primarily to bank customers.
“We know do-it-yourself trading is one of several ways investors manage their money,” Jim Hays, president of Wells Fargo Advisors, said in a prepared statement. “We believe Wells Fargo Advisors is well positioned to serve clients who value the convenience of online investing, or a full-service relationship with a financial advisor, or who desire a holistic relationship that offers both.”