Race to the Bottom on Brokerage Commissions! - Bloomberg

It seems as it was only yesterday that the online discount brokers started their first price war as the Internet enable a new generation of investors to access the financial markets.  I still remember being in school when the phenomenon started which gave me my first steps into the world of finances which I quickly fell in love with.  Prior to this, investing was seen as something only for the wealthy as money managers and brokers would often shun away those with large accounts to establish brokerage accounts.  In fact, my parents never had a brokerage account until I was able to start my own and help them with theirs as time went on.<p>
 

The trend has now gotten to its full impact as the price war started again and has intensified over the last couple of weeks as now all the major online brokers have started offering free online trades for their clients!  That is a large amount considering that most were averaging from $5-$10 USD per trade.  A couple of trades a month can absolutely help the cost average of the investments in any person’s portfolio over time.  This could help investors improve their returns as competition to achieve returns continues to be challenging with many hedge funds and money managers competing in the challenging market environment.

What is interesting is how this will continue to evolve the players in the markets as a number of these brokerages depend highly on commissions as a portion of their revenues.  Some, like Interactive Brokers and TD Ameritrade, record over 30% of their revenues coming from commissions!  It will be interesting to see how investors decide to go from here as it will now come down to added services and tools offered to differentiate their capabilities to their clients.  It will also probably lead to more consolidation as shareholders look to unlock value in the trading platforms by adding volume over time.

"The fee war has rattled the broader asset management industry as well. Since the middle of last year, firms including Fidelity Investments, Vanguard Group and JPMorgan Chase & Co. have eliminated fees and commissions on a range of offerings.”

Given the trends in more online trading against the traditional brick and mortar investing via brokers, stakes are very high as there seems to be further commoditization of the services happening in the industry.  Even larger players are carefully watching the implications for their money management business as wealth management could be impacted over time as it continues to be a fee based business as a percentage of assets is a normal way to contract their revenue streams. At least this will be an example of how competition could be advantageous for customers over time!

Discord: @newageinv#3174

Chat with me on Telegram: @NewAgeInv

Follow me on Twitter: @NAICrypto

The following are Affliate or Referral links to communities that I am a part of and use often. Signing up through them would reward me for my effort in attracting users to them:

If you are like me and interested in continued personal growth, invest in yourself and lets help each other out by leveraging the resources Minnowbooster provides by using my referral link

Start your collection of Steem Monsters today at my referral link

Try the Partiko Mobile app to engage while on the go with my referral link

Get started on the latest game on the blockchain Drug Wars by signing up here!

If you select one of my above referral links, I will sponsor a @steembasicincome SBI in return. Let me know if you do so in the comments below!

_{^{DISCLAIMER: The information discussed here is intended to enable the community to know my opinions and discuss them. It is not intended as and does not constitute investment advice or legal or tax advice or an offer to sell any asset to any person or a solicitation of any person of any offer to purchase any asset. The information here should not be construed as any endorsement, recommendation or sponsorship of any company or asset by me. There are inherent risks in relying on, using or retrieving any information found here, and I urge you to make sure you understand these risks before relying on, using or retrieving any information here. You should evaluate the information made available here, and you should seek the advice of professionals, as appropriate, to evaluate any opinion, advice, product, service or other information; I do not guarantee the suitability or potential value of any particular investment or information source. I may invest or otherwise hold an interest in these assets that may be discussed here.}}

Source of shared Link

---