On the cusp of the 2020 — and months after similar moves by Charles Schwab Corporation SCHW, TD Ameritrade Holding Corp. AMTD, E*TRADE Financial Corp ETFC, Ally Financial Inc ALLY and Fidelity Investments — Vanguard expanded commission-free trading from mutual funds and ETFs to all stocks and options.
The firm intends to leverage its competitive trading policies, including no minimums or account fees, to siphon clients from rivals.
“The continued reduction and elimination of fees across the investment industry is a positive development for investors and one that Vanguard has long championed,” Karin Risi, managing director of Vanguard’s Retail Investor Group, said in a statement.
“However, as we move to an environment in which ‘zeros’ dominate the headlines and explicit fees become implicit, we encourage investors to look more deeply at the total cost picture. Vanguard remains a vocal proponent of clear and transparent fee disclosure.”
What is good for clients is not necessarily good for brokers. The elimination of commission fees has not historically been a lauded strategy. The earlier moves by Charles Schwab and peers led to broad analyst downgrades and drops in stock value.
To offset commission-related losses, Vanguard said it will seek to expand its client volume by upgrading services in 2020 with online improvements, a mobile redesign and a new trade path.
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