Wednesday, April 19, 2017

Farewell Loyal3

Image result for loyal3
I was saddened to received an email from Loyal3 yesterday (April 18, 2017) stating that they will shut down and transfer all brokerage accounts to FolioFirst on May 22, 2017, unless I either sell all shares and withdraw the cash, or transfer my account to another brokerage firm by May 15, 2017. FolioFirst supposedly offers more services including commission-free trading (up to 2,000 trades per month in twice-daily windows) in over 200 publicly traded stocks and ETFs (exactly which 200? it would not say). The catch, however, is a fixed $5 per month fee starting August 1, 2017.

While $5/month is not terrible, I can trade commission free with Merrill Edge and paying $5/month for the privilege of investing fixed dollar amount each month (currently I invest $1900/month at loyal3) is still a 0.26% expense ratio, more than I am willing to pay. Moreover, I suspect the $5/month fee is rather low for industry standards, and FolioFirst will most likely increase that to $10, $15, or even more down the road once it has acquired all the accounts from loyal3. After all, nothing prevented loyal3 from changing the rules and nothing will prevent FolioFirst from increasing its fees later on. Also, another big negative is a whopping $100 fee for full ACAT out by FolioFirst. Thanks, but no thanks. I am initiating full ACAT of my Loyal3 account to Merrill Edge today.

Loyal3 was fun while it lasted. I have been a loyal customer for 4 years enjoying no fees purchases of stocks in fixed dollar amounts every month, allowing me to use dollar cost averaging. For some time, Loyal3 even offered purchases by credit cards for no fees! No other brokers offer that. That allowed me to get a lot of cashbacks on my credit cards.

Unfortunately, all good things must come to an end. Free trades proved too good to last, and just like my first broker, Zecco, Loyal3 will cease to be a no fee broker.

Requiescat in pace, Loyal3!


  1. I was sorry to see them fold too. Have only been a customer for about a year but managed to amass a portfolio around $8k a little at a time...commission free. That was a no brainer. My other brokerage accounts are with USAA (high fees) and Robinhood (no fractional shares) so after some research I have decided to transfer to Stockpile. .99 cents per trade. Offers ETF's. Many more companies offered to trade. Credit card purchases allowed (xtra fee). It seemed to be the best option. I was not going to pay anybody $5 bucks a month for the privilege of holding my securities. Good luck.

  2. Move you money over to Robinhood. It's better than L3 and Robinhood offers free trades too. Robinhood also offers more than 5,000 stocks.

  3. Robinhood doesn't buy fractional shares for dollar cost averaging like L3 did. Merrill Edge also offers free trades and I don't see anything Robinhood can do that Merrill Edge cannot. Merrill Edge is also a more reliable broker. I'll stick with Merrill for free trades for now.