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Looking for a Cheap Broker? WellsTrade is not the Answer

March 1, 2013
Brokers, Investing
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If you’ve been thinking of making the switch to WellsTrade, you may want to reconsider. Beginning April 1, Wells Fargo will no longer provide 100 commission-free trades to anyone opening a WellsTrade account linked to a PMA Premier checking account.

Accounts opened before April 1 will have the free-trade policy grandfathered in, but new customers won’t be as lucky.

However, if you are a current WellsTrade customer, or were considering making the switch, Merrill Edge might be the better brokerage account for you. They provide 30 free online trades per month so long as you maintain $25,000 in cash in your account, plus you still get all the great features you’d expect from WellsTrade:

  • Asset classes: You can trade stocks, options, bonds, and mutual funds.
  • Service and Support: 24/7 customer service, broker-assisted trading and physical branches.
  • Data: Free research and streaming data.
  • Accessibility: Check writing services and debit card available.

You may be thinking that since WellsTrade provides all these great features, you might as well open an account before April 1 in order to receive the free trades.  However, Merrill Edge provides some benefits that WellsTrade simply can’t match:

  • Cheaper prices: If you manage to use up all your free trades, Merrill Edge charges $6.95 per stock trade and $6.95 + $0.75 per contract for options. How does WellsTrade compare? $8.95 per stock trade and $9.95 + $1.00 per options contract.
  • Lower margin rates: Merrill Edge’s maximum margin rate is 8.625% versus WellsTrade’s 9.125%.
  • No account fees: If your balance drops below $50,000 for some reason, Wells Fargo will charge a $30 monthly service fee.
  • Advanced analysis platform: Merrill Edge MarketPro is available to anyone customer that makes at least 15 trades per quarter or maintains $50,000 in their account.

Now, you may be thinking that Merrill Edge sounds great, but you can’t afford to keep $25,000 in cash right now. Well, if you want to keep all the great features mentioned above, the best option is going to be Scottrade. It’s just $6.95 per stock trade, and an extra $20 if you decide you’d like to talk to a broker. And how’s the platform? You get real-time data and charting in a customizable package.

Of course, maybe you don’t need all the bells and whistles in your brokerage account. You want a good price and a great promotion. OptionsHouse offers both with a $4.95 charge per trade and commission-free trading for your first 60 days (with promotion code 60FREE and $5,000 account balance. Maximum 100 trades). There are also no account fees or inactivity charges.

Frankly, every one of these accounts is trustworthy and is going to provide comparable execution services. So you, as a customer, simply need to decide which account features you want and how much you’re willing to pay for a trade. Does WellsTrade’s customer service justify paying twice the price in commissions? Does it seem fair that they charge you an “account maintenance” fee simply for holding your money? Or do you want more from your broker (for a fraction of the cost)?