Negotiate your margin rates and fees with your investment broker

You may think that you’re stuck with your investment brokerage’s advertised margin rates, commissions, and other fees. But, you’re not. Some investment firms allow customers to negotiate certain terms like margin rates and options contract commission rates.

The process for requesting special rates is fairly easy and not as intimidating as you may think. You’d simply make the request and answer a few questions about your trading activity. Your account will be reviewed and a decision is made, usually within a few business days.

Below are some typical questions that you can be prepared to answer when asking your broker for discounted rates and fees.

• How much money do you plan to hold in your account?
• Will you agree to transfer the bulk of your account to our brokerage?
• How many options contracts do you intend to trade in a week/month/year?
• What margin rate are you requesting?
• What margin rate are you being offered at other brokerages?
• What options contract commission rate are you requesting?
• What options contract commission rate are you being offered at other brokerages?

When requesting lower rates from your investment broker, it can be beneficial to have an account that aligns with the brokerage’s criteria for negotiable rates. If the broker provides reduced margin rates to accounts of a certain value, your request is more likely to be approved if the value of your account is near or at that level. If your investment firm only offers reduced options contract commissions to investors who trade a certain volume of options contracts, ideally, your account activity should reflect this trading volume.

Believe it or not, some brokerages will allow you to negotiate your fees at least once a year. But, it’s still important to ask the right questions before actually submitting your request for a rate reduction. Your first conversation about reduced fees should ideally be about the brokerage’s guidelines for negotiated rates. You should then evaluate your account to determine the best time to negotiate with your broker. By choosing the right time to negotiate, you may be able to secure more favorable rates and terms for your account.