Fidelity quietly imposes an ETF 60-day fee that makes RIAs with trading strategies seethe
Mike Durbin says that Fidelity still has net trading costs on iShares that are pretty unbeatable
Jim McGuire
I believe it is only time that Schwab would impose such fees themselves. Be nice to hear how Schwab feels about RIAs frequently trading their free ETFs but never hold them longer than a day or so. Since their compensation is derived from the ETF providers paying Schwab a certain basis points, and considering there is no such thing as a “free” trade, is Schwab happy to see their free ETFs being bought than sold in a week? I think it would be nice for RIABiz to inquire with Schwab and ask that question: “How will your you receive income from the ETF manufacturers paying you a basis points fee if the advisory firm purchases and sells your free ETF lineup within a short-time span and doesn’t hold them for the long-term?”
I believe this is a major point Schwab should publicly address. If they are OK with quick in’s-out’s for their free ETF lineup, they should publicly make that statement otherwise, I think Advisors should be wary of the lack of specifics mentioned in these types of trading circumstances. Seems to be the ultimate “bait and switch.”
If I were choosing to custody with such a firm, I would expect to receive in writing that now or in the future, they will not impose such early redemption fees. If they aren’t willing to do so, you have your answer.
Elmer Rich III
Fidelity is built on the Peter Lynch business model/marketing positioning – We are the best active managers so we make the decisions. Of course, active, proprietary management is the highest profit margin in financial services. Incredible profit margins, in fact.
This rule just follows the Fidelity proprietary model.
Brooke Southall
Jim,
Thanks for the good analytic question here. It seems reasonable to ask, though it’s generally not the type of question that gets answered in much detail by the big providers. Still, even a no-comment says something and if we were fully alert, we would have thought to ask.
I wonder (truly and not facetiously) how many RIAs frequently trade ETFs within the two-month window.
Barron’s just came out with an article blasting advisors for wanting cheap trades. http://blogs.barrons.com/focusonfunds/2013/03/15/does-your-adviser-fear-fidelitys-redemption-fee-maybe-fear-your-adviser-instead/
But it seems advisors get blamed coming and going. If they buy and hold they are considered sitting pigeons to the 2008-like events and if they trade, they are market timers.
Brooke
Related Moves
Fidelity Investments loses Kathleen Murphy who largely caught up Fido to Schwab (near $4T) on the retail side by reversing net promoter scores
The 'no whining allowed' leader of the Boston giant's retail business, who oversaw $2 trillion in net new assets, was ready to exit but hung in through a year dominated by COVID-19 challenges
January 23, 2021 at 2:02 AM
Fidelity Institutional looks like a big TAMP after Mike Durbin removes last internal walls between products and advisors after 'meteoric' 2019 leap; two Fido RIA sales legends depart amid the shift
Rich Policastro and Tom Valverde are out after Fidelity Custody & Clearing assets leap to $2.6 trillion AUA, restructuring gets the credit -- and so restructuring gets extended.
March 13, 2020 at 10:36 PM
Mark Tibergien sets up Ben Harrison to challenge Schwabitrade with a $150 million cut to Pershing's minimum and millions more to develop Veo-busting technology
The CEO suite hand-off in Jersey City pulls a trigger on a plan to bypass Fidelity's and eventually Schwab's custody units by luring disaffected RIAs.
March 11, 2020 at 7:58 AM
TD Ameritrade's board suddenly pushes out Tim Hockey after his big misread of RIAs; Tom Bradley name-dropped as successor
The CEO broke the TD promise never to compete with RIAs, took it back and got sent packing
July 23, 2019 at 4:30 AM
See more related moves
TD Ameritrade
Asset Custodian
Top Executive: Tom Nally