Author Topic: Brokerage Hacking Anyone?  (Read 4854 times)

Shane

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Brokerage Hacking Anyone?
« on: April 11, 2016, 02:07:01 AM »
Has anyone tried opening a brokerage account to get the bonuses some of them offer for new accounts? It seems like a good deal, but I'm wondering if there are any downsides I'm not aware of?

TDAmeritrade is offering bonuses for opening a new account:
  • $300 cash if you open an account with >/= $100K
  • $600 cash if you open an account with >/= $250K
  • $1200 cash if you open an account with >/= $500K
  • $2500 cash if you open an account with >/= $1MM

TDAmeritrade offers commission free trading of a list of ~100+ ETFs, including VTI, which is the only one I'm interested in buying.

If I don't trade in my account, just dump all of my money at one time into VTI, for which TDAmeritrade charges no commissions, how will they make money off of my account? Wouldn't my account be more of a liability for TDAmeritrade than anything else?

It just seems too good to be true. Am I missing something? When I talked to one of TDAmeritrade's people on the phone he asked me about my IRAs. He wanted to know what TDAmeritrade could do to convince me to transfer my IRAs over to TDAmeritrade as well. I told him that my IRAs were all invested in VTSAX at Vanguard and that if I moved them over to TDAmeritrade, I wouldn't be "trading." I told him I'd just buy VTI, for free, and let the accounts ride. But he still kept encouraging me to move my money over to TDAmeritrade. What am I missing? Why would TDAmeritrade want my "business?" It doesn't make sense to me...

money_bunny

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Re: Brokerage Hacking Anyone?
« Reply #1 on: April 11, 2016, 06:07:40 AM »
There is typically a fee to change brokers. It's non trivial. I think I paid 50 dollars to get out of TradeKing/Zecco and move to Vanguard. Something to think about when trying to game 200 dollars out of a company.

They want your business because then they can sell you services. Someone with 1MM in the bank, also probably has a big mortgage to refi and good credit at jumbo rates, also spends much more money per year probably on credit cards where they get a 3% merchant fee and so on. They also can put your contact information for their "Advisors" to call and pitch you.

Also I wonder what the actual distribution of accounts with that much money in them is? Vanguard posts some of their stats yearly about that.

It's the other end of the spectrum with "Free checking" being a way to get people in so that they can be nickel and dimed for fees and to be sold to.

J.Milly

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Re: Brokerage Hacking Anyone?
« Reply #2 on: April 11, 2016, 09:47:52 AM »
Eh for a million it's only like .25%, is it worth the effort of moving everything over for a quarter point? Probably not for me, and if you're only around the 100k mark the 300$ doesn't really help a huge deal! Now if this was bundled with other goodies on the personal banking side then we might be talking.

forummm

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Re: Brokerage Hacking Anyone?
« Reply #3 on: April 11, 2016, 10:18:42 AM »
  • $2500 cash if you open an account with >/= $1MM

One problem is that I don't have a million bucks. But if I did it would be in index funds and I wouldn't take it out just to grab a relatively small bonus. I used to be all about getting free stuff in exchange for hassle. But my tolerance has declined a lot as my wealth has grown. And I'd be worried about that small chance that my money got lost somewhere on the way.

Shane

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Re: Brokerage Hacking Anyone?
« Reply #4 on: April 11, 2016, 05:28:46 PM »
Yeah, I don't know if the incentives would be enough to make it worth it for me to move my money out of a brokerage I was already in and happy with their services.

In our case, we're selling our house, and the sale is scheduled to close in a couple weeks, which means I need to find a home for $600K pretty soon. Until just recently, I always assumed I'd just put the money at Vanguard where we already have our IRAs, but for some reason Vanguard is refusing to allow us to designate a beneficiary on a joint taxable account. WTF? I talked with a Vanguard rep on the phone, and he couldn't really explain why Vanguard refuses to do that, but he confirmed that they wouldn't do it for us...

All I want to do is dump the money into VTSAX, so it seems kind of dumb for Vanguard to not be willing accommodate my wishes, but I guess they have a right to make whatever rules they like.

When I called up TDAmeritrade, their rep was like, "Sure, you want a joint taxable TOD account with a beneficiary, no problem, and by the way, we'll give you $1200 cash bonus for opening the account." I read through the fine print on the deal, and it looks like accepting the 1200 bucks will lock me into TDAmeritrade for 1 year. If I decide to close the account before one year, then they may require that I repay the opening bonus money. I'm not planning on moving the money within a year, so that shouldn't really make a difference in my case. After one year, if I close the account and move the money to another brokerage, I'll have to pay a $75 fee, but that's not much compared to the $1200 I'll get for opening the account.

VTI is on the list of 100+ commission free ETFs that I can buy and sell as much as I want without paying a fee. TDAmeritrade doesn't seem to be the only brokerage that has a bunch of ETFs they allow you to trade for no commissions. Does anyone know what's up with that? How can they afford to do that? Is that just to entice customers in and then once they get hooked on trading they start paying the fees?

TDAmeritrade does seem to be hoping to convince me to become a frequent trader. In addition to the $1200 they're going to give me to open the account, I also get 300 free trades during the first 60 days. So, clearly, they're hoping to get me hooked into day trading or whatever. I clearly told the rep on the phone that I was only planning on making one "trade" on my account when I first opened it. I told him I was planning on putting all $600K into VTI and let it ride for the next 100 years.  :)

Vagabond76

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Re: Brokerage Hacking Anyone?
« Reply #5 on: April 11, 2016, 05:41:26 PM »
What am I missing? Why would TDAmeritrade want my "business?" It doesn't make sense to me...

(1) There is a chance you will buy other products. You can't buy them if you have no account.

(2) Even if you buy nothing else, TD Ameritrade can still loan your shares of VTI to short sellers.

(3) I have no doubt, but also no evidence, that TD Ameritrade gets a kickback for offering commission-free ETFs.

tonysemail

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Re: Brokerage Hacking Anyone?
« Reply #6 on: April 11, 2016, 05:46:04 PM »
a timely post for me.  I'm also under contract to sell an investment property and trying to decide whether it's worth having a separate account vs depositing a lump sum to vanguard.
schwab and fidelity also have a similar $2500 bonus for 1 mil deposit offer.
I'd be interested in hearing if others have had success getting a larger bonus than $2500.

all these brokerages have financial advisers who market their products and services.
I imagine they are counting on upselling you in the future.

Shane

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Re: Brokerage Hacking Anyone?
« Reply #7 on: April 11, 2016, 05:50:03 PM »
What am I missing? Why would TDAmeritrade want my "business?" It doesn't make sense to me...

(1) There is a chance you will buy other products. You can't buy them if you have no account.

(2) Even if you buy nothing else, TD Ameritrade can still loan your shares of VTI to short sellers.

(3) I have no doubt, but also no evidence, that TD Ameritrade gets a kickback for offering commission-free ETFs.

That's kinda what I figured too, but, again, I have no evidence to back it up.

forummm

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Re: Brokerage Hacking Anyone?
« Reply #8 on: April 11, 2016, 06:27:50 PM »
Until just recently, I always assumed I'd just put the money at Vanguard where we already have our IRAs, but for some reason Vanguard is refusing to allow us to designate a beneficiary on a joint taxable account. WTF? I talked with a Vanguard rep on the phone, and he couldn't really explain why Vanguard refuses to do that, but he confirmed that they wouldn't do it for us...

All I want to do is dump the money into VTSAX, so it seems kind of dumb for Vanguard to not be willing accommodate my wishes, but I guess they have a right to make whatever rules they like.


Maybe try calling back and see if you can talk to a different person. Maybe they were confused. If the next person says the same thing and can't explain it, ask to talk to a supervisor. Just out of curiosity if nothing else.

Paul der Krake

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Re: Brokerage Hacking Anyone?
« Reply #9 on: April 11, 2016, 07:13:14 PM »
Fidelity has a bunch of offers for various airline miles. I would totally invest a windfall there and grab the free money.

Shane

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Re: Brokerage Hacking Anyone?
« Reply #10 on: April 11, 2016, 08:46:03 PM »
Until just recently, I always assumed I'd just put the money at Vanguard where we already have our IRAs, but for some reason Vanguard is refusing to allow us to designate a beneficiary on a joint taxable account. WTF? I talked with a Vanguard rep on the phone, and he couldn't really explain why Vanguard refuses to do that, but he confirmed that they wouldn't do it for us...

All I want to do is dump the money into VTSAX, so it seems kind of dumb for Vanguard to not be willing accommodate my wishes, but I guess they have a right to make whatever rules they like.


Maybe try calling back and see if you can talk to a different person. Maybe they were confused. If the next person says the same thing and can't explain it, ask to talk to a supervisor. Just out of curiosity if nothing else.

Your suggestion makes perfect sense, and I thought of calling back and talking with a supervisor as well, but then I found out that I could get a $1200 bonus for opening an account at TDAmeritrade or Fidelity, so now it seems kind of dumb to pass up the free money.