Wells Trade Review

Wells Fargo is one of the oldest banking institutions in the United States, going all the way back to the mid-19th century. The company has survived wars, financial crises, and integration with companies it has acquired. It’s a traditional business in a modern world, but one that is trying to move forward. Unfortunately it seems that its attempts to enter online broking are entrenched in the traditional mentality of its banking businesses.

Be prepared to wait

You’ll spend the best part of 30 minutes completing the application process to open a Wells Trade account, filling in paper forms (for an online broker?) and then mailing them. Contrast and compare with the online giants such as Etrade, TD Ameritrade and OptionsXpress where it’s almost possible to trade in the time it takes to complete the Wells Trade paperwork. It’s almost as mind numbing as waiting in line for a cashier at a Wells Fargo branch.

A redeeming factor; Research

Once the account is opened, you have access to some great research, market commentaries and S&P stock reports. Wells Fargo’s research is pretty good, and as a Wells Trade customer you’ll have the whole lot at your fingertips. And that includes reports from nearly 90 analysts and economists, and analysis on over 1700 companies. For the investor who trades by fundamental analysis, this is great coverage.

Unfortunately the good news pretty much ends there.

Trading with a traditional bank costs

For those investors who have a portfolio of mutual funds, then the online dealing cost of $35 per trade is one of the most expensive in the industry. In comparison Zecco charges just $10..

The story in stock trading is similar, though providing you have a Wells Fargo PMA package, then your account allows you to transact up to 100 trades commission free per year. Otherwise, and over the 100 trades limit, stock trades are charged at $8.95.

That’s pretty steep in today’s competitive market), but not nearly as steep as Wells Trade’s commission on stocks under $1. Without a PMA package, the standard charge to trade these stocks is a minimum of $34.95, or 3.5% of the value of the trade. Even with the PMA, you’ll be charged $24.95 or 2.5% of the trade value, whichever is the greater.

The story grows worse if you need broker assistance to trade: you’ll be charged an extra $25 on top of the commissions above. On a penny share, that makes the minimum round trip charge a huge $119.90.

IRA account holders will have to pay an annual fee of $30.

The Trading System

As you can see from the order entry screen shot, the system is basic, though it is easy to use. Trading out of stocks from the position screen is a bit laborious when compared to other brokers’ workstations. Annoyingly, the profit and loss information doesn’t update real time: active traders will hate this and find it completely unmanageable.

The workstation has a charting tool that allows you to build moving averages, and stochastics, but the portfolio tracker only receives quotes on a 20 minute delay. On the plus side you receive regular market wraps, but these are fairly basic and nothing that you couldn’t receive freely elsewhere.

Turning on WellsTrade is a turnoff

Overall, the trader workstation is no more than standard at best, is slow to respond and certainly not suitable for active traders. If the registration process and high stock trading fees doesn’t put you off, then the basic trading screen with delayed portfolio information certainly will.

The high fees don’t stop at stock trading: they boil over to mutual funds and other instruments too.

The way that WellsTrade is hidden in the depths of the Wells Fargo main website gives the impression that it has been developed to appease existing customers, and is aimed at those who are not tech savvy. There’s no trading community forum or blog, almost a given prerequisite for today’s modern trader who often sits in an office by himself.

Though some of the research functionality and content is valuable to the investor, it’s not enough to redeem Wells Trade as a solution for traders that need fast access to markets.

Basic, boring, and not a bargain.

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