JPMorgan Chase will be launching a digital investing service with free and discounted trades, beginning Monday, WealthManagement.com confirmed. The move will make the bank more competitive with discount brokerages, such as Charles Schwab and E*Trade, as well as no-fee trading services, like Robinhood.
The free and discount trading service will include Roth and traditional retirement accounts, along with taxable brokerage accounts. The first 100 trades are free for investors using Chase’s You Invest service and the full fee schedule will be available on Monday, although CNBC reported that trades will cost $2.95 for some customers after hitting the 100-trade limit.
There are no account minimums and customers who are Chase Private Clients will receive an unlimited number of free trades. Chase Private Client accounts must have a minimum average daily balance of $250,000 across “qualifying linked deposits and investments.”
Customers opening You Invest accounts, online and in the Chase mobile app, will have access to Trade and Portfolio products. Both include stocks, bonds and exchange traded funds, while the Portfolio product guides investors “who could use a little help with investing,” said JPMorgan spokesperson Darin Oduyuye. There are no cryptocurrencies on the platform and no plans for any, he confirmed.
While the service will see big benefits for retail customers, there are advantages for financial advisors as well, said Oduyuye. Advisors will have enhanced access to financial screeners, sell-side equity research, and learning and insights content, he said, as well as more flexibility in moving money between Chase accounts held by clients.
The ultimate goal of the new service is to bring in brokerage customers. Ninety percent of customers opening accounts during the soft launch had not invested with Chase before, said Oduyuye. The bank has 47 million digitally engaged customers. Brand new clients will be able to sign up to access the service from chase.com, or next week from the new YouInvest.com domain (which at the moment has a Coming Soon notice).
No established, satisfied client of a discount brokerage will likely be jumping ship to open a new Chase account, said Alois Pirker, research director at Aite Group. He likened the move to Blackrock's investment in micro-investing app Acorns: it could be a legacy play to capture a new demographic, while they're young, and round it out with a lot of other offerings. "If anyone should be worried at this point, it should probably be Acorns." he said. "The interesting question is, are they [JPMorgan] building a business model around it? Are they really trying to get a good handle on the millennial generation?"
You Invest is an opportunity for JPMorgan to cross-sell and "snuff out" smaller competitors, like Stash, said William Trout, head of wealth management research at Celent. "JPMorgan has the scale and reach to transform the marketplace here. The move represents a major incursion into a business that, while not a long term growth area, represents a springboard for deeper penetration of an attractive customer demographic. It’s a means of building on the dedicated community of self-directed investors."
While small players might be in trouble, bigger players were more measured in response. "Price is just one component," said TD Ameritrade spokesperson Joseph Giannone. "We believe [we] are well-positioned to compete and win in a low-cost environment, an environment that continues to shift. We remain nimble by continually evaluating our offerings and pricing, taking into account competitive changes and enhancements."
Schwab was also reserved in its response, noting that "any action by others to help people invest in their futures is positive," according to spokesperson Rob Farmer.
No-fee trading service Robinhood, which said it had over 4 million brokerage accounts earlier this summer and has been dismissive of legacy brokerages’ technology investments, had no comment on the launch. E*Trade did not respond for comment.
“Our goal is to be at the intersection of human and digital advice,” Oduyuye noted. “We are offering customers choice in the way they invest. Whether they are starters—new to investing—or switchers [who are] already trading/investing online elsewhere.”