Some ETFs are incredibly cheap. For example, Charles Schwab recently cut expense ratios on some of its ETFs down to just 0.04%. Also, Schwab clients can trade its ETFs without paying commissions, and the firm isn’t the only one offering rock-bottom ETF fees and free trades. [Schwab Cuts Fees on 15 ETFs]
Merrill Lynch’s recent move to raise its minimum charge for stock trades could provide more fuel to the shift to fee-based advising, the WSJ reports.
“For years, major brokerages have tried to make fee-based relationships a bigger part of their business, and to reduce their dependence on per-transaction charges for revenue,” according to the article.
“The serious money is in fee-based,” said a Merrill financial advisor and branch manager. [Fee-Based Advisors and Managed ETF Portfolios]
“The growth of the fee-based advisor over the last five years has been remarkable, and it was probably keyed off of the events of 2007 and 2008. It’s not a temporary trend, it’s a permanent change in the way advisors view themselves,” Paul Hatch, vice chairman of Morgan Stanley, said in an AdvisorOne report.