Wells Fargo’s Free Trade : ACH & Cost Basis
This post is another of a series of post about Wells Fargo’s Free Trade program using their PMA package.
ACH (electronic money) transfers
Before going into ACH transfers, let me first clarify on the accounts. Wells Fargo’s free trade program requires a minimum of two accounts: 1) the checking account (part of the PMA package) and 2) the brokerage account.
- The checking account is like any other bank checking account — you can write checks (unlimited in this case and checks are free) and there is no limitation on the number of transactions per month. You get free online bill pay and a check card linked to this account. Currently, this account pays an interest of 2.75% APY if you have between $5,000 and $100,000 in the account.
- The brokerage account is for stock trading and has its own money settlement account. All trading transactions are swept and settled through this settlement account. I picked the Wells Fargo Treasury Plus money market fund for this settlement account. This fund pays around 4.75% at the present moment. As far as I know, you cannot write checks on this account.
Now, for the ACH part. The checking account does not allow you to initiate ACH transactions; although it does accept ACH request. On the other hand, the brokerage account allows you to set up ACH links to external bank accounts. To set this up, you have to fax in an authorization form, together with a copy of the voided check of the external account. Approval for me took one business day. As far as I know, there is no limit as to how many external accounts you can link up.
ACH transactions using the ACH link is fast and is executed the next business day if you submit the request within the specified deadlines on a business day. The deadlines are shown below:
So if you submit a request before the above times, the money transfer will be reflected in your external bank account the next business day.
On a related note, Wells Fargo’s checking account is linked to the brokerage account in the same manner as any other external bank account. From the best of my knowledge, there is no immediate money transfer between these two accounts.
Cost basis
As mentioned in a previous post, the brokerage account supports the HIFO method of accounting for tax reporting. The question that comes to mind is what if you transfer in some stocks from an external account? Well, the online system actually allows you to specify the cost basis easily. The following is a snapshot from the cost basis entry page:
I have been quite happy with the Wells Fargo PMA + brokerage package so far. I will write about trading executions in a future post.
Stumble it!
April 26th, 2007 at 6:47 am
You haven’t written much about your Wells Fargo Brokerage experience in quite a while. Are you still happy with your choice? Have you actually done any trading? Would you still recommend them? I am currently with Fidelity (all ETFs) but have been thinking about switching so that I could do more cost effective dollar-cost averaging for my ETFs. Wells does not have any brick and mortar locations where I live, so I am a little hesitant to deal with them.
April 26th, 2007 at 8:17 am
Dave,
I have made a several ETF trades and they work as expected, no complaints. Their trading screen is not as convenient as Ameritrade’s but they suffice for me.
Yes, I am still happy with my Wells Trade account and would still recommend them if you meet the minimum hurdle and do not plan on transferring out for a while (since transfers out cost money). Nevertheless, 2 trades at VBS would pay for the transfer itself, but I digress.
I have transferred a holding from Etrade to Wells Trade and this went without a hitch. I also made a DTC stock transfer to Wells Trade with no hiccups. The few times I called, customer service has been friendly and helpful.
May 18th, 2007 at 2:43 pm
Well, I completed an ACH transfer today and executed 2 trades. Everything worked flawlessly. I was actually pleasantly surprised that my ACH funds were immediately available to purchase securities. I wasn’t expecting the funds to be available until the next business day. I have also initiated a partial transfer from Fidelity. Hopefully that will go well too.