Brokers are competing for your business with cash offers
— -- Q: A brokerage firm is offering me hundreds of dollars to switch from my current broker. Should I move?
A: Brokers are so determined to win you over as a customer that they're willing to pay up.
All the major brokerage firms, including TD Ameritrade, Charles Schwab and E-Trade, are aggressively wooing existing customers to move additional assets to them or for new customers to switch. Payments of hundreds of dollars are pretty commonplace for customers who move their money.
If you're unhappy with your online broker, now is certainly a good time to keep your eyes open. Thanks to these promotions, you can easily move your account and not worry about paying transfer fees. Many brokerages will hit you with fees of $75 or higher to move your account. But the bounties being paid by the receiving brokerage should more than cover that. Additionally, many online brokerages are offering to reimburse any transfer costs since they're being so aggressive in picking up new assets.
Reasons you might be unhappy with your current broker are plentiful. If your brokerage isn't offering $0 commissions on exchange traded funds, that might be reason to move if you're a big ETF investor. You might also consider moving if you're a more active trader, or use options frequently, and demand more sophisticated trading tools than those offered by your current brokerage firm.
But with that said, investors need to carefully consider all the costs connected with changing their brokerage before grabbing the cash payouts. If you're a frequent trader and the new brokerage charges a higher commission, it won't take long before you eat into your cash bounty.
Less apparent, though, are things such as cost-basis tracking. If you have many investment positions that are years old, you'll need to be very careful when you switch so that you don't lose track of your cost basis. Your current brokerage most likely is tracking that for you. But that information could be lost in a transfer if you don't take the time to write it all down and move it to the new brokerage firm. Not having the cost basis on your stocks can create a painstaking problem come tax time.
And if you switch brokerage firms, you're also taking the chance that you won't like the website of the firm you're moving to. While most of the online brokerage sites are pretty comparable, if you're used to doing things a certain way with your existing brokerage, you might have a tough time adjusting. You might want to test the broker's website you're thinking about moving to just to make sure you like it first.
Yes, there's cash to be had for those investors willing to switch. And if you've been waiting for years to dump your broker, now's the time. Just be sure you'll be happy with the arms you're running into.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz
