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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (30691)	2/10/2019 9:04:06 PM
From: Thehammer	Respond to of 34328

I love reminiscing about the evolution of financial services. Started in the business when it was at the cusp of transitioning from paper to automation. For a spell in the 60's the NYSE would shut down 1 day a week so that firms could catch up with the "paper crunch". Firms went belly up because they couldn't reconcile their books. Sandy Weill at Shearson and other firms bought up some of these firms on the cheap and grew exponentially. I am not sure how lucrative payment for order flow is now at decimal trading and best-ex have placed some limitations and squeezes. Bernie and Peter Madoff were big in the order flow business and it actually was a win-win when stocks traded at a minimum of 1/8 spreads. For a long time, the least profitable part of financial services was listed stock trading. many other lines of business were more profitable including fixed income, open-end funds and fee based accounts. Brokerages also can make money off other services such as proxy, open end fund custodialization (networking or omnibus typically receive a fee from the fund like $10 per account annually) , interest on margin accounts and stock loan / borrow. This also doesn't touch on investment banking, institutional, research and internal trade accounts. Stock trading is the most automated of the financial processes and has long been the lowest cost option. I am not sure of the rationale for free trades but once you capture accounts, they tend to stay and also subscribe to other services. Trading stocks is almost like a check account. My firm gives me more free trades than I use in a year and as near as I can figure out if I do 5 trades in a day, they count it as one. I do more option trades and they are free but are discounted. Some firms will fee you to death as well. There is a fee for everything except doing trades. If you call in, they typically charge more. The people you call on the phone, probably have no clue about special trading arrangements or payment for order flow. That type info is usually only available to a few as they often won't even disclose relationships. If you ask, you can often get a lot of free trades or other services such as discounted margin rates or fees.