Adios to Wells Trade

As I was reviewing some old notes I had of  Wells Trade, the investment arm of Wells Fargo, I see a trend that Wells Fargo has been trying hard to make some money out of these “free-trade” accounts:

  • 02/2008 : Introduced 100 free trades for PMA package with $25k or more.
  • 08/2008 : Eliminated the respectable money market sweep funds and replaced them with a crappy bank account sweep.
  • 12/2008 : Eliminated RMMXX, a relatively high yield MMF at that time, for purchase.
  • 01/2009 : Close out fee increased from $50 to $75.
  • 03/2010 : Close out fee to increase to $95.

In addition, Wells Fargo has been “cracking down” on people who did not actively use the checking account of the PMA package. These accounts are marked as “dormant” and quite a few people reported having to jump through some hoops to re-activate them again.

With the talk of additional tax on big banks, I won’t be surprised to see another round of fee increase on the horizon. The money for the taxes has to come from somewhere.

Wells Trade did have some good points. Their reps are quite friendly and helpful, and the trading system, while nothing fancy, generally works. They also introduce a good online feature, which is the capability to track and specify specific tax lots for trading, very helpful for a taxable account.

Anyway, because of my upcoming Roth conversion, I am done with Wells Trade. I will be contributing $75 to them for the free trades they have given me over the past three years or so when I close out my accounts later this month. Good luck to all those sticking with Wells Trade.

7 Comments

  1. jag

    is there any othere reason for getting out of wellstrade. i have been using this for past 5 months. I am satisfied that i rolledover my 401k to them just strday. I am not worried about the closeout fee unless i decide to close the account. I am not worried about the sweep fund and rmmxx bcos i am fully invested and usally use a savings account to save any money. I still see the value in this 100 trades in my taxable and 100 trades in ira. Assuming the lowest price and am using the whole offer thats worht 800$ in trade fee i am saving per year. Now did u find any better deal or service some where else?

    Reply
  2. indexfundfan (Post author)

    Jag, I am currently left with a Traditional IRA (TIRA) with Wells Trade. I am consolidating my TIRAs so that I can rollover the pre-tax portion to my 401(k) account. Of the remainder, I will convert to a Roth IRA tax-free. The tax benefits will far outweigh the close out fee or free trades. This is the main reason for my move.

    The upcoming new fees for Wells Trade in Mar 2010 are probably OK as long as they continue to offer the free trades. But with the trend, I am not sure if they will not tinker with that when people are “more” locked in.

    I had already moved out my taxable account from Wells Trade last year to take advantage of the savings rate to margin interest rate spread at another broker. That spread alone is sufficient to pay for any free trades and then some.

    Reply
  3. Steve

    You seem to have a type in the date “03/2010”, since that’s in the future.
    A lot of brokerages refund ACAT fees charged by the other brokerage when you do a transfer, so I’m not super concerned about the fee increase.

    Reply
  4. indexfundfan (Post author)

    Steve, that’s not a typo. Wells Trade has announced the fee increase, to start on 3/2010.

    Reply
  5. Bruce

    You seem to have a type in the date “03/2010”, since that’s in the future.
    A lot of brokerages refund ACAT fees charged by the other brokerage when you do a transfer, so I’m not super concerned about the fee increase.

    Reply
  6. Dave

    I’m ready to bail on Wells Fargo. Ever since they converted my account to Well Fargo Advisors, it has been a total mess. The customer support people are not friendly or helpful. What sequence did you follow to close out both the Brokerage and PMA accounts? Did you liquidate your holdings or did you do an ACAT transfer? I want to minimize the number of fees this stupid bank charges me, so I want to get the process right. Any help you can provide would be appreciated.

    Reply
  7. indexfundfan (Post author)

    Dave, if I recall correctly, I closed out the bank account first, then transferred out my holdings, then closed the brokerage account.

    The reason was because without the brokerage assets (>$25k), I would be hit with the PMA monthly fees. Note: If your total assets drop below $25k, your trades will not be free but it is not important as I was already transferring out the account.

    Are you stuck with huge capital gains? If no, you can just sell the assets, transfer out the cash, then close the account. There will be no ACAT fee for this.

    If you need to ACAT, I have heard that partial transfer fees can be waived. You might want to try that first. Just transfer out those assets with capital gains leaving one or two behind, which you eventually sell and transfer the cash out.

    In all cases, you need to watch the total assets level if you want to avoid the PMA fee.

    Reply

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