TD Ameritrade Saves Face - And Our Loyalty — Sommers Financial Management

Ever since the merger between Ameritrade and TD Waterhouse in early 2007, I have considered making a change with regard to your custodian. I wrote of my displeasure back in the July 2007 newsletter, and requested feedback. While most clients were annoyed by the over-exuberant mailings and poor technology interface, you don’t seem to require a change. My yearn for a change has most likely been because my biggest complaint against the new TD Ameritrade is related to their customer service and technology offering —both of which Joyce and I here in the office firewall for you.

After going through an exhausting custodian search this summer, and narrowing the list to Folio Institutional or Trust Company of America, TD Ameritrade came through for us in a BIG way. They now offer commission-free trading on over 100 ETFs—meaning WE basically get a custodian for your investments free of charge. No longer does it cost $9.99 (or $16.99 if you have less than $500k and want statements in the mail) to trade some of the ETFs we most commonly place in your accounts. So we plan to stick with TD Ameritrade as our preferred custodian for the foreseeable future.

TD Ameritrade was not the first to offer free ETF trading: Schwab offers their proprietary Schwab ETFs commission-free. Fidelity offers iShares ETFs commission-free. And Vanguard offers their namesake ETFs at no commission. But, TD Ameritrade out-did them all, offering over 100 commission-free ETFs from nine different sponsors, including iShares, Vanguard, and State Street Global Advisors, sponsor of the popular SPDRs (“Spiders”). The only *catch* is you must hold them at least 30 days to avoid incurring a $19.99 “short-term trading fee”.

We can now build a diversified portfolio, allocated to seven different asset classes, using no-transaction-fee ETFs. This is a thing of beauty to this frugal mind. Here are the ETFs I commonly use in client accounts that are now *commission-free*:

Short-term/Liquid:

Vanguard Short-Term Bond Fund (BSV)
iShares 1-3 Year Treasury Bonds (SHY)

Fixed Income:

Vanguard Total Bond Fund (BND)
SPDR High-Yield Bond (JNK)
SPDR International Treasury Bonds (BWX)
PowerShares Emerging Market Debt (PCY)
iShares Nat’l Municipal Bond Fund (MUB)

Alternative Assets:

We use two No-Transaction Fee mutual funds: one invests in Managed Futures, and one in Oil & Gas MLPs

Inflation Hedges:

Barclays TIPS Bond Fund (TIP)
SPDR International Gov’t Inflation Protected Bond (WIP)
PowerShares Commodity Tracking Index (DBC)
SPDR Global Real Estate Fund (RWO)

Large US Stocks:

Vanguard Dividend Appreciation (VIG)
iShares S&P 500 (IVV)

Small US Stocks:

Vanguard Small Cap ETF (VB)

International Stocks:

Vanguard Total World ex-US (VEU)
Vanguard Emerging Markets ETF (VWO)

Call our office if you’d like more details!