@wasCB14 wrote:
@Anonymous wrote:Calculating the marginal bonus is way more useful, so ((bonus rate - base rate) + the brokerage bonus). The card bonus and base earning rate work for everyone, regardless of the relationship. Moving $200k for the $630 in marginal value comes out to a third of a percent. This is very much not worth it, especially if you're going to trigger a taxable event. Even without the potential tax liability, ML is not anywhere near the top of my list for mass affluent wealth management providers.
I definitely wouldn't consider moving any of my holdings to Merrill Edge for an upgraded CC bonus structure, even though hitting the top bonus would represent a small percentage of my net worth. The value proposition changes if you're already investing at ML, but I'd be stunned if they actually are getting people to move with this bonus structure.
You raise some good points.
I wouldn't say the base 1.5% earning rate is so good without a relationship. Maybe you mean the 1.5% + $500 is a good overall value for just $3k spend, with which I would agree. You're right that marginal rewards+bonus should be considered, but the difference on a calculation for $3k spend is small relative to $1100. I just intended to emphasize the bonuses and got lazy with the "regular rewards" portion. I have no experience with BofA, but their reputation suggests they are not one of the best.
That said, they don't need to be one of the best if all I do is have shares sit there. I've participated in many brokerage promos and moved shares around without actually selling them.
Admittedly, I don't really know the probability that some necessary number of clerks at the "sending" brokerage will simultaneously be incompetent enough to all ignore my written instructions and liquidate an account instead of transferring the shares as they are (or the difficulty of reversing it). Brokerage employees assure me it wouldn't happen, but I've mostly transferred shares with a small positive or negative unrealized return, and no large, highly appreciated positions.
I have over $200k of reasonably appeciated Berkshire Hathaway stock, and no intention to sell it. I was thinking of moving the position to Merrill Edge, just letting it sit there, and getting $600 and a good "travel cash" CC. *It's currently at Fidelity, where there is no outgoing partial ACAT fee. Minimizing those fees is an important part of how I get value from brokerage promos.*
That said, I've been thinking about it for a long time, but still haven't actually done it, given my concerns about Merrill Edge.
A couple responses to hopefully clarify.
I don't think the base rate is very good, and the bonus is decent (1.5+% and $500). However, everyone that is approved for the card receives those. Therefore, they are not a part of the marginal value of moving money to BOA/ML. The marginal value is roughly 1% per dollar spent with the CC and the $600 bonus for moving assets. While this roughly doubles the early return on getting the card, the potential for greater value added should be there at that asset level.
I do agree that ML can hold certain classes of assets competently, but I personally won't work with anyone that won't allow the selling of fractional shares of index funds. I see a few other issues with holding my assets at ML, but that is the single biggest issue for me.
I don't think you should be concerned about having something liquidated instead of transferred in kind, but the process is still onerous enough to TIK that I wouldn't personally bother to do so over 1% on spend and $600. Losing the automatic tax basis reporting would make the first few months of each year a little stressful for me, but I don't hold any individual position other than ETFs at 200k. Regular tax loss harvesting adds some serious bulk to my tax return and requires vigilance of wash sale rules.
My mention of potentially triggering a taxable event is that it is easier in certain portfolios to liquidate and transfer than to transfer in kind. You may not experience this if your account is less complex than mine, but I think most people in the position to transfer $200k at the drop of a hat have at least some complexity in their portfolio.
I'm glad what they're doing may work for you. I guess I'm just surpised that you consider this enough value added to move assets on that scale. I've never even considered chasing bonuses on brokerage accounts, but I find everything involving brokerages painful enough as it is.
