I love people who are loyal. They stick with you through good times and bad. Unfortunately, when it comes to business, loyalty is dead. Firms will spit you out at a moment's notice. Banks just move on to the next win once they've got you as a customer. This is why you shouldn't be afraid to transfer your capital for the rewards.
There is no loyalty when it comes to capital. Your goal should be to allocate your capital in as efficient a manner as possible. The more efficient your capital allocation, the greater your chance at financial freedom.
One of the reasons why I keep the comments section open despite the massive amount of spam I must wade through each day is that there are often nuggets of wisdom to be learned.
After publishing the educational post, how online brokerages make money if they cut trading fees to zero, one reader mentioned that Charles Schwab had a promotion where you could get $2,500 free if you move $1 million over to their platform. Not bad!
Then another reader chimed in that he came across a major trading platform with an even better offer. So I had to take a look.
Loyalty Is Dead: New Trading Account Promotion Bonus
Even though this promo isn't available any more, it's helpful to know what type of bonuses are constantly out there if you pay attention.
According to the trading website, you could get $12,000 in cash, gift cards, or products + a $700 cash bonus with a transfer by the deadline. Sweet!
There's just one problem, I don't have a spare $5 million lying around. Do you?
But it turns out, I just so happened to have a little over $1,000,000 available after transferring $1,000,000 to Wells Fargo to take advantage of its relationship pricing for a lower mortgage rate.
If I were to retransfer the $1,000,000 from Wells Fargo to the trading platform by the deadline, I could have made $3,000 in cash, gift cards, or products + $500 cash bonus. Better than a poke in the eye!
A $3,500 bonus would be great given that it would almost pay for two months of preschool. I'm on a mission to make an additional $2,200 a month to cover our new preschool + higher healthcare insurance costs.
By transferring over $1,000,000 to Wells Fargo, I was able to reduce my mortgage rate from 3% down to 2.625% on a $701,000 loan. That's a $2,629 a year interest savings. If I end up holding the loan for seven years given it is a 7/1 ARM, I'll end up saving around $17,000 in interest.
Therefore, the entire process of transferring $1,000,000 to Wells Fargo and then retransferring $1,000,000 from Wells Fargo to the trading platform would net me a handsome $20,500 in free money!
If you know of any even better online brokerage introductory rewards program, please share. Don't fall too much for bank loyalty.
Start Small And Work Your Way Up
The process of transferring funds to get sign-up rewards is very similar to signing up for new rewards credit cards to take advantage of bonus rewards.
Capital Transferring Tips For Free Money
For example, if you sign up for the Capital One Quicksilver Rewards Credit Card, you could earn cash back on unlimited spending plus a one-time cash bonus if you meet the promotion's minimum spending requirement on purchases within the first three months of signing up.
I know people who sign up for rewards credit cards every 3 – 6 months to take advantage of all the introductory offers. They'll end up with dozens of cards to keep track of, but at least they'll get lots of free cash and points. I used to do this in my early 20s, but I stopped once my company gave me an AMEX corporate card to spend on entertaining clients.
Transferring capital is next level rewards hunting because the dollar amounts are greater and you don't have to spend any money to get any rewards.
Just the fact that you have money allows you to earn free money. It's like finally getting recognized for practicing sound saving and investing habits.
Getting free money for having money is always great. It's like getting invited to the Oscars and then getting a swag bag with even more free goodies. This fact alone should incentivize you to save more aggressively.
1) Calculate how much time you'll need to spend.
However, here are some things you should consider before proceeding with transferring your capital:
It takes time to call an online brokerage and open up a $1,000,000 account. If you are transferring less than $1,000,000, you can usually open an account online with relative ease. The online brokerages are incentivized to get your money over as easily as possible.
According to the financial regulator, FINRA, individuals wanting to transfer their securities account from one broker-dealer to another must initiate the process by completing a Transfer Initiation Form (TIF) and send it to the firm to which they want to transfer their account. The firm a customer is transferring the account to can provide the form to facilitate the transfer. Once the receiving firm receives the TIF, it begins the process by communicating with the current or “delivering firm,” via ACATS.
The entire process generally takes about a week. I'm guessing you'll spend about 3 – 4 hours on the phone or online opening up the account, checking to see if the funds made it, learning how to use the new platform, setting up a link to your checking account so you can transfer future funds, and understanding where to get your tax documents.
Let's say you transfer $251,000 using the trading platform example. You'd get $1,300 in cash. If you end up spending four hours to transfer your funds and understanding the new platform, you've earned an effective rate of $325/hour. Do the math because time is money.
2) Make sure you are aware of all the terms.
When I transferred money to Wells Fargo to get the better mortgage rate, I knew that as soon as the mortgage closed I could transfer my money elsewhere. For the new trading account bonus program, I think you need to keep your funds with them for one year. Read the fine print.
So far, I've heard crickets from my Wells Fargo wealth manager. She hasn't explained to me how much trades cost. She hasn't told me about any innovative new financial products. Nor has she reached out to have a deep dive conversation about my goals for my capital. Therefore, I have no problems transferring away the $1,011,754.
Consider matching your capital's investment style with the holding period required to get the rewards. In other words, if you must keep your capital with the new institution for a year, consider transferring only your long-term assets where you seldom make any trades. The holding period will feel less painful if the new institution isn't up to expectations.
3) Make sure the receiver has your cost basis for all securities.
The cost basis is important for tax purposes if you ever want to sell a security. Transferring over the cost basis is normally a standard operating procedure, but again, best to double-check.
There was one year I received an erroneous $800,000 tax bill from the IRS because I had sold over $2,200,000 in stock and had forgotten to enter my cost basis for each trade! That was a stressful couple of months as I struggled to provide the IRS with the required information.
4) Make sure the benefits of the new online brokerage are just as good if not better than the old one.
The last thing you want to do is transfer money over and then have higher trading costs, poorer cash yields, higher expenses, worse customer service, less research, poor trading execution, and a slower platform. If you are an active trader, this stuff matters.
I'm an inactive trader who is almost always 100% invested. I learned my lesson over a decade ago that it's better to buy and hold for the long term. Therefore, I don't care how snazzy the new platform is, just so long as it works. Besides, to stay competitive, all the platforms are getting better.
We've already got free online trading. Now we're going to get higher cash yields and likely better new account bonuses. It's a war for assets!
5) Keep track of your capital.
Those of you who are willing to engage in capital transferring likely have more complicated net worths than the average person. Therefore, it's important to update your net worth tracker accordingly. The only way to make proper financial decisions is if you know your entire net worth composition.
I've personally got over 30 accounts to track. Before leveraging the internet, I would sometimes forget to update one line item in my Excel spreadsheet or forget to add or subtract an account when needed. As a result, I've made suboptimal financial decisions.
6) Ask your existing institution for any deals.
Presumably, over the years, you've been able to develop some goodwill with one or two institutions. If so, they'll probably want to keep you from moving your capital elsewhere. Ask to see if they have any freebies they can give you just for staying. If so, that might be an even better strategy.
If not, then move just enough capital where you still remain at a desirable customer tier. You don't want to downgrade yourself to the bottom of the rung again. You can always move your capital back to your favorite online brokerage once the conditions have been met.
7) Make sure you're getting the best offer!
Financial institutions may have multiple introductory rewards bonuses at any given time. It's kind of like how airlines charge a different price for a similar seat.
For example, thanks to reader feedback, it looks like trading platform example had a $600 bonus reward, an up to $2,500 bonus reward offer, and an up to $12,700 bonus reward offer like I've shown in this post. There is a chance that not all roads lead to Rome.
If you decide to sign up for a new account anywhere, make sure you talk to a representative at the receiving institution and ensure you are getting the absolute best deal at the time.
8) Be aware of any outbound transfer fees.
Financial institutions will sometimes charge a nominal fee for having them transfer money away. I've seen fees range from $0 – $75. The transfer fee will obviously cut into your free cash bonus. Therefore, either ask the financial institution to waive the fee or have the receiving financial institution cover the fee if there is one.
Never Turn Down Free Money
Ever since buying my first property, I've always told myself to always put in the effort to refinance if I could get at least a 0.25% lower mortgage rate with all costs baked in. The process is a PITA, but in the end, I've ended up saving over $150,000 in interest expense over 16 years.
Transferring assets to a new online brokerage for free money is a much easier process. We're talking 2-4 hours of effort and one week of waiting on average versus 6 – 12 hours of effort and 2-5 months of waiting to refinance a mortgage nowadays.
If you walk by a $20 bill on the ground, you're not going to ignore it. You're going to pick it up, count your blessings, and buy a loved one something nice. The same thing goes for taking advantage of introductory offers from online brokerages.
If you are investing for the long term anyway, you might as well optimize your capital and get there quicker.
Invest Your Capital Regularly
There are always free money promotions every month. You just have to go out there and look. The best way I look to make money is through long-term arbitrage opportunities, such as investing in the heartland of America real estate where valuations are lower, growth rates are higher, and there is a multi-decade demographic shift towards lower cost areas of the country.
One of the best ways I've found to take advantage of this trend is by investing with a platform like Fundrise or Crowdstreet (for accredited investors). They offer commercial real estate opportunities around the country. Both are free to sign up and explore.
Invest In Private Growth Companies
Finally, consider diversifying into private growth companies through an open venture capital fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment.
Check out the Innovation Fund, which invests in the following five sectors:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!
The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.
Fundrise is a long-term sponsor of Financial Samurai and Financial Samurai is an investor in Fundrise.
Thanks for the great tip, Sam: we also have a 7/1ARM with WF @2.75%. When you transfer $1M to get lower rate is that all cash, or they’d consider stocks/bonds?
Thanks,
80% bonds and stocks, 20% cash.
Hi. Great info. I’m super lazy so I take advantage of retention bonus instead. I find a good offer from a competitor then call my current firm and nicely ask for paperwork to transfer my assets. I’m not actually going to do it but they always ask me why and I say I’m happy at current firm but got offered a bonus somewhere else. They match it immediately or within a day. Done deal.
Agree. Just did this today. Confirmed the ability to move assets to collect a promo then called my existing brokerage firm to see if they will match. They did! I just got free money for making a couple of phone calls!
Best advice today time is money! Too many people spend multiple hours to save too little money. I have known people to spend 5 hours to save $20. I try to use $100 per hour for my time. I just refinanced the house and estimated saving 20K in interest over the loan. Not bad for about 10 hours of work. Most of the offers you showed today are totally are worth it if you have the net worth.
Banks and investment firms don’t care about loyalty they just want to meet next quarter numbers. I also wouldn’t be shocked if executives at these companies receive bonuses on new money brought in each quarter, and don’t care how long you stay.
Churn and burn! I’m sure there are monthly or quarterly quotas they try to hit as well.
Loyalty is indeed dead. Too big too fail established banks really couldn’t care less what I do with my account. The only thing they’re vigilant on is ensuring they have a mechanism in place to trigger fees when the account is less than a certain threshold.
Several months ago I transferred most of my money out of BofA’s saving account and immediately I was hit with a $5 monthly management fee. Sure the fee is nominal and sure it was spelled out in their terms and agreement but sheesh. Can’t they take some historical context of the account before being so black and white about immediately tacking up fees?
I have an account with Ally as well but they’ve been pretty cool. I had a six figure CD opened with them, but needed to make an early withdrawal. To waive the 2-month interest fee, all it took was a ten minute conversation over the phone for the representative to review my account. They made a determination that I’ve been with them for five years, had a reasonably high balance, so they honored my request without a single fuss. This good experience is 1) having me sing their praise in a financial website like this, 2) kept me as a happy customer, and 3) makes you realize that it’s still possible to reward loyalty and practice common sense.
Anyway, it’s great when sign up bonuses become a no-brainer. Do you guys remember Chase Sapphire Preferred that gave 100,000 points if you spent $4,000 in three months? The great thing about the CSP was how it gave 25% (or was it 50%) more if you claimed the points via their travel booking site. Capital One is currently offering 50,000 points if you spend $3,000 in three months which isn’t as great, but still a pretty solid deal.
Indeed. As I research more about the latest credit cards, the more I see why signing up for many is so alluring. I haven’t signed up for a new credit card in years.
Capital One and Chase do have some of the best cards. And I really like the Chase Ultimate Rewards program given I do have a Chase Business Ink card and am a Chase customer.
Time to think about getting us many freebies as possible before my boy turn 5 and can remember his travels! So far, I’ve got 350,000 Chase rewards points to use.
Nice accumulation of points. Nothing beats traveling for free using points!
This may be a biased view on my part, but it seems to me that frugal and/or financially prudent folks are mainly the ones that take advantage of promotion points / accumulating points to travel. One of my coworker is in the top 1% in the US and him and his family doesn’t need to use or worry about points to travel, but half of their vacations are done using points.
I’m not at 1%, but I’m fortunately in a position where I don’t have to worry or think about using points when going on vacation. However, I deliberately do so because nothing beats coming back home after a nice vacation and knowing that your bank account balance will more or less the same.
True. It’s only rational to spend your time where you can earn the most reward, and for folks near the top, they can make much more money doing something else.
That said, it’s always fun to save money and earn free money. And if I’m going to help readers save and make free money with credit cards, I want to get deep in the weeds myself. I just want to write from experience.
most of these promotions are taxed correct ?
I have a td brokerage account and a td credit card.
I run 60k per year thru the card but pay it off each month
If I ach to monthly 1.8% to the brokerage acct, at the end of the year my bonus is approx $1,000. I never received a 1099
I call them and was told that the bonus was transferred as points. nice loophole, probably will be closed now that
schwab has merged with them.
I made a bunch of money taking advantage of deals like this. It takes little to no effort, but you do have to read the fine detail to make sure there isn’t some ridiculous fee in there. Then close up shop and move on to the next bank offering something. I really enjoyed opening my Citi card and cashing out the $600 for flights then closing it up. Don’t pass up the free money.
I’ve taken advantage of such offers a few times but generally only when those funds are already liquid. Keeping a million in cash just to capture a bonus seems foolish given inflation. Sure you can transfer to some banks in kind, which offsets that risk, but not all banks offer in kind transfers. Also many banks charge for transfers. Finally don’t forget the bonus is taxable unlike card bonuses.
I heard that schwab is offering incentives for existing customers that add significant additional funds. I’m hoping that’s the start of a trend. Depending on timing of my annual stock bonus I might take advantage.
Tip #8: Be aware of outbound account transfer fees. For example, TD Ameritrade charges $75. This will impact the next time you want to take advantage of a transfer bonus. You can maintain a small amount in your TD Ameritrade account to avoid this fee.
Good tip! We should always ask the receiving bank to cover any transfer fees. Fidelity didn’t charge me anything when I moved $800,000 to WF. Citi didn’t charge me anything to wire $200,000 in cash to WF either.
I’m proudly the least loyal customer, and am constantly jumping for a better savings rate or new account bonus. This year I got a 12% risk free return on some idle cash by moving it from bank to bank. It’s great to get paid for a few minutes of paperwork. Just have to read the terms carefully–sometimes it can be clawed back!
As you noted, though, brokerage transfers can be more onerous.
“I’m proudly the least loyal customer.” Hilarious! You’ll have to share more about a 12% risk-free return, because that is the best risk-free return I’ve ever see.
After transferring a million to WF, the wealth manager hasn’t reached out at all. Before then, she was so attentive. This is also a pretty hilarious situation as well. Like… can they make it any more obvious they’re getting paid on new signups?
That is hilarious. You’d think Wells Fargo would make an extra effort to impress clients, given its recent…difficulties.
Citi, Chase, capital one, discover and many other banks offer $200-$600 for keeping $10-$15k in a new account for a few months. A few of these bonuses easily nets a double-digit return. They pay interest too!
I have noticed promotions have been watered-down since the Fed started cutting rates, though. Before that, banks were competing like crazy.
Glad to make you laugh!
I was thinking at least a, “Hi! Welcome to WF, here are some benefits a tier 1 customer can now enjoy.” But maybe I’m going too far with the service aspect.
I’ve gone to baseball games and multiple steak dinners as a Citigold client, as reference.
Maybe I might weird or maybe I’m just anti-social, but am I the only one who’d rather NOT get taken out to baseball games and steak dinners with my private banker (as if I had one)? And not just because baseball is less exciting than watching grass grow. It just seems weird. I don’t think I would ever enjoy it.
Sincerely,
ARB–Angry Retail Banker
Hi,
If you open a Chase Sapphire account and deposit 75k and leave it with Chase for 90 days you can receive a 1k bonus. One must open the account by 11/19/19 and must fund the account within 45 days of opening. The bonus gets the deposited within 10 days of completing the 90- day requirement.
I wish I had an extra $1M lying around too! ;) Or, $5M for the matter.
Regardless, there are always nice incentives for moving your money around from different banking institutions that are easy money.
I’m sure my son wouldn’t want to leave any free money on the ground. He searches for money everywhere we go.
Hi all,
I am afraid the information on the post might be incorrect.
In the link provided for TD Ameritrade and the WWW, there is no mention of such bonus offers.
Could you please post the link below to the bonus rewards to corroborate the info on your post?
Thanks!!
Weird it doesn’t show fro the sign-up page. Another thing consumers need to be aware of and talk to a representative to make sure you get all the rewards at the current time.
I’m assuming you didn’t go all the way to the end of the sign-up process though? B/c it should highlight the bonuses. Check it out: http://www.tdameritrade.com/gametime
Weird indeed. My apologies, I thought the post had incorrect information when I couldn’t find same information about the bonus on the net or TD Ameritrade, but apparently I was wrong. Sorry about that.
Thanks Sam. Looks like this isn’t for everyone though, from the small print, first line reads:
“Offer valid for preselected clients who respond to the offer and either open and fund a new account or fund an existing account with new assets between 08/19/19 and 11/08/19”
I called TD Ameritrade even though I wasn’t preselected. They still offered me the deal and emailed it to me writing that I would get the bonus.
I already got my bonus in less than a week after opening an account with TD Ameritrade.
Link didn’t work for me either – sent me their page with $600 cash for $250k+ transfer. Here’s a link from a simple Google search ($2500 for $1M transfer): https://www.tdameritrade.com/offer/2500/index.html
Wow, fascinating they’ve set up multiple types of offers where not all roads lead to Rome. Will update the post to watch out for this and to always ask for the best offer at the time. I hope the post, with the graphical proof, does show about the offers and to help readers ask about them.
I’ve updated the post with point #7 – Always make sure you get the best sign-up bonus possible at the time before transferring funds!
And to echo your point about reading the fine print… ~10 years ago I signed up for a Citibank account for a cash and rate bonus on a CD. The catch that I didn’t notice was that even though I signed up and transferred money online, you could only close the CD in person at the branch you picked as your “home branch” when you signed up, or for a fee (~$10) at another branch. I closed the CD and switched away from their credit card.
I looked up both. I was eligible for both and took the “gametime” promo since it was better for me. I just called them up and asked if I was eligible for the promo. I am.
Follow up comment. Consider double dipping if you have multiple brokerage accounts. I got my first broker to match the “gametime” promo (hit my account today). I’m now doing the “gametime” promo with a second broker. Vanguard does not play the matching game so I’m taking up the promo by moving money from Vanguard to TDAmeritrade now. You can even do a “triple dip” if you have separate IRA and brokerage accounts that you want to transfer. And then you can do a “quadruple dip” if your spouse also has an IRA you want to move. Move it all in-kind but call to verify TD Ameritrade is able to hold and trade the securities you want to move (Note: TD Ameritrade can only hold and sell Vanguard Adm shares). It’s all feasible per the “advisor” I talked to at TDAmeritrade. I’ll probably just stop at double dipping.
But don’t the funds need to be let at TD for a year?
Yes. But you can trade all you want during the year. You just can’t withdraw from your account for a whole year. Always read the fine print carefully.
Sam,this is exactly what I said in my blog post wrt earning more than 8% to 12% risk free on my emergency funds. Between business and checking accounts at several banks, I just click a button and transfer my funds netting over $6K in pure profit. And all FDIC insured :)
Oh wow those are some great rewards offers. It takes time to move money around, but getting paid to do so with those kind of bonuses is pretty darn sweet. TD Ameritrade has really stepped up the incentives after Schwab started the recent $0 fees change! I’m surprised with how fast they’ve pushed out their offers. Must have a lot of people working overtime.