Capital One ShareBuilder Drops its Price to $6.95, Pressuring the Competition
Capital One ShareBuilder (NYSE: COF) has announced that it is reducing the price of all real-time trades.
On Friday, March 1, the company will replace its existing price structure (both the $9.95 standard commission rate and the $7.95 Advantage Program commission price available to those with a $12 monthly subscription) with a flat commission structure. From that point forward, investors will pay $6.95 for all real-time stock, ETF and options trades, and just $0.75 per options contract.
"Our pricing, we just didn't feel it was low enough," Dan Greenshields, President of Capital One ShareBuilder and President and Chief Investment Officer of ShareBuilder Advisors LLC, told Benzinga. "As a cost leader and value leader we thought that we could go lower. We thought it was good for investors, we thought we could simplify our structure, and eliminate some customer confusion and still maintain our margins."
Greenshields won't say exactly how the company is able to sustain its margins. "It's trade secrets that we'll never talk about because they're operational efficiencies that we built from the ground up, not unlike the formula for Coke," he said.
ShareBuilder hopes the announcement will advance its competitive position with top tier online brokerages, such as Charles Schwab and E*TRADE.
When the company was founded more than a decade ago, ShareBuilder catered to novice investors. The new price reduction signals the next stage in the firm's evolution towards courting more sophisticated clients who trade more often and are thus more price-sensitive.
Additionally, Greenshields said that it is very important for ShareBuilder to deliver its service "in a simple and easy to understand way, not a complex, institutional-type trading way."
"Our target is average Americans that need to save for retirement or their kids' education or whatever goal that suits them, and empowering them to take control of their financial future so that they can be successful investors and not get bogged down in jargon and tables that are detailed that are geared toward professionals in the financial industry," he said.
ShareBuilder officially joined Capital One on February 17, 2012.
"We're very focused on making people successful long-term," Greenshields concluded. "If we really focus on the customer, we'll be successful long-term. Capital One and ShareBuilder both believe deeply in that."
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