Online Brokers Open Physical Offices/Online Trading Is Free for Large Depositors

The cost of trading stocks online has plummeted since the inception of online trading in the 1990s, thanks to the low overhead achieved when an internet-enabled brokerage uses the latest technology to cut the amount of costly office space and support staff required to execute trades. (Processing trades online is vastly more cost effective than the pre-internet process of placing orders by phone with individual brokers.) Furthermore, an increasing number of investors are using the internet as their primary method of buying, selling and tracking investment portfolios and financial accounts, regardless of whether those portfolios consist of stocks, bonds, mutual funds or other assets. Likewise, tens of millions of households now manage their bank accounts online. Research and investment advice (both good and bad) are readily available and easily located on the internet. Virtually all stock brokerages that offer online trading also make research reports available online to their registered account holders.

In October 2019, Charles Schwab Corp. ceased charging commissions for trading stocks, ETFs and options online. Competitors including TD Ameritrade Holding Corp. and E*Trade Financial Corp. rushed to do the same. Brokers now must find alternative ways of generating income, such as Charles Schwab’s asset management service called Schwab Intelligent Portfolios Premium. Customers pay a modest service fee for unlimited access to financial planners and online tools to meet financial goals. The focus is on financial planning as opposed to investment management. Many of the financial plan details and suggestions are generated by computer models that take into consideration such factors as age, income and personal goals.

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