Tags: brokerage account | Charles Schwab | TD Ameritrade | E-Trade | Wells Fargo

Brokers Paying Cash To Lure New Clients

By Michelle Smith   |   Friday, 11 Nov 2011 12:53 PM

Trade volume is often an important part of the brokerage business. But, according to USA Today, brokers are encouraging trades of another sort—from one firm to another—and they are using cash to lure clients in their direction.

USA Today says a full-scale war is raging as brokerages battle each other for assets.

Charles Schwab, TD Ameritrade, E-Trade and Wells Fargo are among the brokers that are willing to dole out cash for new clients. The bait can exceed $2,000 in some cases, reports USA Today.

Volatility in the markets has helped brokerage firms boost revenue.

E-Trades's revenue-generating trades climbed to an average of 164,715 per day last quarter, according to Bloomberg, which noted that the firm added $2.1 billion in net new client assets in the quarter ending Sept. 30.

Charles Schwab told Bloomberg its clients executed a record 1,005,000 trades on a single day in August when the volatility was at its peak. Overall revenue for that firm rose 11 percent to $1.18 billion, says Bloomberg.


Still, struggling with an array of challenges, including economic and regulatory uncertainties, many brokers aren't doing as well as they want to be. As a result, it appears they have taken to using cash incentives to attract more assets.


And, it's not only new customers who can take advantage of brokers' frenzy for new clients. USA Today reported that if an existing Zecco client makes a referral that results in the firm getting a new account valued at $10,000 or more, both the new and old clients can get $100.

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