DEATH TO ONLINE BROKERAGES: $JPM Launches Free Trading App

It’s over E-tradeFAGS. You had your chance to shine, now it’s time to go away.

Here’s how JP Morgan will bankrupt the litany of online brokerages, including those freeFAGS at Robinhood.

Signing up through the bank’s app can be done in three minutes, and moving money between Chase accounts happens instantaneously. Users can also seamlessly fund their investments from outside accounts. There is no minimum required to open an account.

All customers get 100 free stock or ETF trades in the first year, an offer that becomes permanent for those with Premier-level bank accounts, which require a combined $15,000 held at the bank.

Those with Chase Private Client, a higher account that typically requires at least $100,000 in holdings, get unlimited trades. The bank is currently considering adding other tiers that would incentivize people to pull money from other brokerages.

Users can construct diversified portfolios with an automated tool called portfolio builder by inputting their risk tolerance and objectives. In a recent demonstration, a client was able to quickly screen through ETFs — most of which came from competitors including Vanguard — and construct a portfolio composed of cheap ETFs and a few stocks.

The number of free trades a user has left is prominently displayed on the app. Keough said that most investors don’t typically need more than 100 trades a year, but if they exceed that amount, they’ll be charged $2.95 per trade, which still undercuts most rivals.

For instance, TD Ameritrade and E-Trade charge $6.95 per trade. Charles Schwab charges $4.95 a trade. All three offer free trades for a fixed amount of time for new clients who deposit enough money. Bank of America offers customers of its Merrill Edge service 30 free trades per month, but that perk begins at $50,000 in balances. Otherwise, trades cost $6.95.

Shares of TD Ameritrade and Schwab were lower in premarket trading Tuesday.

The next phase for J.P Morgan is for investors who want to be more hands off. Start-ups including Wealthfront and Betterment pioneered the so-called robo-advisor, or automated investment managers. Big banks including Morgan Stanley and Wells Fargo have since released their own robo-advisors. Most charge between 0.25 to 0.50 percent of assets under management per year.

J.P. Morgan will unveil its own robo-advisor under the You Invest brand in January, Laskowitz said. He declined to say whether the bank will make good on Dimon’s threat from 2016 to give away the service for free.

“If you think about our pricing structure, it will be very similar with what we’re doing with our brokerage platform,” Laskowitz said of the robo-advisor. “We’re rewarding people for doing more with Chase.”

Thank God the online brokerages have business relationships with advisors, otherwise their B2C models would be blowing up right now.