We are pleased to share that starting today, November 4th, Fidelity will no longer charge commissions for online equities, ETF‘s and options trades*. This move makes investing in individual securities even more economical versus mutual funds that layer on additional fees.
At first read, we celebrate the move by Fidelity and other discount brokerage firms to lower trading costs for clients. As your financial adviser, we are continually looking at the value we provide our clients, including a focus on managing the cost of investing. However, the move to zero commissions begs the question we are sure you are asking yourself right now, “how will they get paid?”
At McRae Capital Management we preach the importance of transparency. Our fee structure is simple to understand and it aligns our mutual interests. We try to hold our custodians to the same ideals. Unfortunately, in the world of investing that is not always simple. As an example, Charles Schwab makes sizable profits by paying below-market interest rates in its core sweep money market account. This is a practice that Fidelity has not participated in and one main reason why we choose to custody your assets with Fidelity.
This is a very fluid situation and unfortunately one we do not think ends here. We have been in discussions with our representatives from Fidelity to better understand how zero commissions impacts the products and services they will provide to clients moving forward. We will continue to discuss with Fidelity to make sure our clients are getting the products and service they deserve at a reasonable price. But for the time being, we can all enjoy a world of zero commissions!
We will continue to keep clients appraised of future developments as they occur.
* The online $0 commission rate does not apply to clients not enrolled in eDelivery, large block transactions (10,000+ shares), and international F-Ticker and multicurrency orders (excluding Canadian electronic F-ticker orders). Options trades will be subject to the standard $.65 per-contract fee. Additional charges apply for orders requiring broker assistance or special handling including equities with a shortened settlement.
