RIA Reaction to Zero Commissions: Smiles, Skepticism - Barron's

The inexorable competition to lower trading fees has reached its logical conclusion, with Charles Schwab, TD Ameritrade and E*Trade this week all slashing commissions on stocks, ETFs and options to zero.

Newsletter Sign-up

Although RIAs say zero commissions are good for them and their clients, they’re also greeting the news with a grain of salt, reports WealthManagement.com.

In addition to dropping commissions for retail clients, Schwab and TD Ameritrade cancelled them for its RIA custodial clients. E*Trade serves as a bank custodian for its advisors and previously did not charge them per-trade commissions; the latest price war means no change for its RIA relationships.

“I think it’s fantastic for our clients, and by extension, for us,” Greg Friedman, CEO of Private Ocean, which custodies with Schwab, tells WealthManagement.com. “It lowers the overall cost to the client, and I think that’s great.”

But advisors are also wondering how brokerage/custodians will make up for the lost commission revenue. Among their questions: Will they introduce a basis-point fee after clients hit a certain number of trades? And will clients’ trading execution suffer because custodians are receiving payments for order flows?

--Ross Snel

Let's block ads! (Why?)

Business - Latest - Google News
October 04, 2019 at 04:06AM
https://ift.tt/31LrhuH

RIA Reaction to Zero Commissions: Smiles, Skepticism - Barron's
Business - Latest - Google News
https://ift.tt/2Rx7A4Y

Bagikan Berita Ini