Are the Broker Wars Finally Over?
For decades, the brokerage industry has had to deal with the competitive battles Wall Street deregulation fostered. Along the way, investors have reaped the rewards as all sorts of costs of investing got cut. When exchange-traded funds started gaining popularity more quickly in the late 2000s, brokers fought to bring in new clients by offering free trading of ETFs without commissions.
It was only a few years ago, however, that brokers turned their attention to their most important fee: commissions on regular stock trades. Earlier this week, major players in the industry finally made the move that upstarts had offered for a long time, slashing their commissions all the way to zero. The obvious question that raises is whether there's any more room to compete on price or whether brokers will have to shift their focus to intangibles like quality and ease of use.
It's interesting that Charles Schwab (NYSE: SCHW) was the first this time around to cut its overall stock and ETF trading commissions to $0. A decade ago, Schwab was the first to introduce the concept of commission-free ETF trading to investors. Rival brokers like TD Ameritrade (NASDAQ: AMTD), Fidelity, Vanguard, and E*Trade Financial (NASDAQ: ETFC) took steps to respond, with some coming out with their own proprietary lines of ETFs while others formed partnerships with established ETF providers. Nevertheless, investors can now find a wide range of commission-free ETFs at various brokers.
Source Fool.com
