What exactly are the pros and cons of going paperless? In addition to reducing ‘clutter’, there can be some monetary advantages for certain clients – namely, those with less than $1,000,000 in cumulative balances at Fidelity. Fidelity offers a significant discount on trades for clients who go completely paperless – from $17.95 per trade for shares up to 1,000 and a penny and a half for each share over 1000, to $7.95 per trade for shares up to 10,000 and a penny per share over 10,000. On a $500,000 account where Doug is trading a block of 10,000 ETF shares valued at $5.00 each, that would mean a cost of $7.95 for the ‘paperless’ client versus $138.95 for the ‘papered’- a significant savings on an example that Doug describes as ‘very reasonable’. Please note, for this discount to apply, a client would need to be entirely paperless, meaning that they receive their statements electronically too. The message you are receiving on June 7th will strictly be to opt in or out of electronic trade confirms and legal documents - opting for electronic statements can easily be done with a call to our office. Also note that clients with cumulative balances of $1,000,000 or more at Fidelity already receive the discounted fees, so there would be no additional monetary advantage for them.
In the past, the per trade discounts have not really mattered much for clients under $1,000,000, since most tend to be invested in the Fund Scout strategy, which employs the use of mutual funds rather than individual stocks; however, Doug does expect to begin using ETF’s in these portfolios, and these are subject to the same fees as stocks. For that reason, switching to the electronic receipt of documents might make sense going forward.
In order to 'go electronic’, you must be prepared to organize the files on your computer and back-up your files regularly. This can be one significant disadvantage (though you can always print a copy of the documents you receive electronically if you feel you can’t get away from storing the paper copies).
As stated above, we do not necessarily advocate going paperless; in fact, our past recommendation has been against it since we didn’t feel that most of our clients were adequately prepared to organize, store, and back-up their electronic files. This is an issue that is going to continue to come up, however, as businesses continue to strive for more digital and less paper. The paperless movement is not likely to go away, and we are at a point where the cost savings might begin making sense for some clients. If you would like to talk to someone about your specific situation and whether or not it would make sense for you to transition into paperless, please feel free to give us a call at the office – we are always glad to help.
Douglas B. May, CFA, is President of May-Investments, LLC and author of Investment Heresies .
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