As anticipated, JPMorgan Chase (JPM) has launched its much-awaited free digital investment platform—You Invest—offering 100 free online trades to all its customers. According to JPMorgan, it will take less than three minutes to open a You Invest online investing account that users can manage from their phones or computers. They can transfer money from their Chase savings accounts to their investment portfolios in real time.
Users with the You Invest service will get 100 free stock or ETF trades in the first year and will be charged $2.95 per trade if they make more trades. The number of free trades will increase based on a customer’s relationship with the company. Members of the company’s Sapphire Banking and Chase Private Client with holdings of $100,000 will be allowed unlimited free trades.
You Invest is likely to intensify a price war in the online brokerage industry since its offerings are considered much less expensive than other players. Expecting a possible price war, investors were recently seen offloading their investments in online brokerage firms. Since August 21, E*Trade Financial (ETFC) and TD Ameritrade Holding (AMTD) stocks have fallen ~2.8% and ~1.6%, respectively.
JPMorgan’s fee of $2.95 per trade after 100 free trades is much lower than the fees for E*Trade Financial and TD Ameritrade, which both charge $6.95 per trade. Another major player in the space, Charles Schwab (SCHW), charges $4.95 per trade. Online brokerage firms might consider lowering their charges to remain competitive and retain their customers.
Year-to-date, JPMorgan has outperformed the Financial Select Sector SPDR ETF (XLF). JPM stock has risen 8.5% while XLF has risen ~2%.
Will it enhance its customer base?
JPMorgan’s You Invest is expected to enhance its customer base and encourage users to use its other services as well. Despite entering the space late, JPMorgan is likely to grab investors’ attention quickly with its lucrative free trades and lower fee offerings.
Many market experts believe the You Invest service will help the company target Millennials and new investor groups.
JPMorgan has a vast customer base of ~60 million. However, most of its customers have trading accounts with other companies through which they invest in stocks and ETFs. The You Invest service could lure those customers to JPMorgan, thus boosting its trading revenues in the long term.