Fidelity and Schwab one-two $4.95 price punch staggers industry with execs willing to go 'far, far, far further'

As the Boston and San Francisco giants forgo hundreds of millions in profits in play-for-market-share in higher-margin businesses -- like advice

Author Brooke Southall March 2, 2017 at 8:03 PM

3 Comments

Ram Subramaniam : This move will strengthen our leadership position

Chip Roame

Timothy Welsh

Walter Bettinger

Abby Johnson

Joe Martinetto

Fidelity

Tiburon Strategic Advisors

Nexus Strategy

Charles Schwab

Randall Smith

March 2, 2017 — 10:53 PM

I believe this is only the beginning. I predict with rising interest rates transaction fees will be $0. The major custodians have found many other revenue sources of which to capitalize. The larger question here, how will smaller broker/dealers compete in this new normal? What revenue sources do they need to adjust, what new pricing approach do they need to offer. I wonder how Fidelity's subsidiary, National Financial Services (NFS) conveyed to their B/D clients'; have they lowered their transaction fees on that side to allow their correspondent clients like Commonwealth Financial and many others to compete and remain viable in the long-term?

David Sandler

March 3, 2017 — 3:08 AM

Most of my trades are ETF's without commissions. The execution differences are speculative until objective proofs are put out there. Schwab's Intelligent Portfolios are far more sophisticated than Fidelity or most other robos. At these rates little reason for accounts outside Schwab or Fidelity. Time to consolidate?

Stephen Winks

March 3, 2017 — 6:18 PM

Schwab, Fidelity and all the major wirehouses can execute trades a zero cost or better.after the proceeds from the sale of their trading volume to other electronic crossing networks. Fidelity years ago found they can be very profitable if they charged nothing for trades. So, we are on the brink of a zero trading cost environment which is ideally suited to fiduciary duty. As a consequence tremendous emphasis is placed on prudent process (asset/liability study, investment policy, portfolio construction, performance monitor, authenticated back to statutory fiduciary duties) which literally put "financial services back into the financial services business. The free market does more for adoption of fiduciary duty than regulators. SCW

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Mentioned in this article:

Tiburon Strategic Advisors
Consulting Firm
Top Executive: Charles Roame

Nexus Strategy
Consulting Firm
Top Executive: Timothy D. Welsh