Free ATM access is the latest perk being offered to retail investors as brokers battle to hold onto their assets.
Last week San Francisco-based Charles Schwab & Co. announced it will pay rebates on ATM fees to a select group of customers.
And Merrill Lynch & Co. on Tuesday announced a similar step, part of a broad restructuring of the New York firm's brokerage strategy. The announcement came as the full-service broker-dealer unveiled plans to get into the ring with Schwab as a discount broker.
Merrill's service, part of a Visa Signature card rewards program, is being be offered to investors with $100,000 or more to invest in a new no- commission account. The account, to be launched next month, will charge a $1,500 annual fee and be priced according to household assets.
Schwab, meanwhile, will offer its rebate to clients with $100,000 or more invested with the firm or who make at least 12 commission-based trades a year.
The rebate will be available to clients who have both a Schwab One investment account and a Schwab Access account, which provides on-line checking, electronic bill payment, and a Schwab Gold Visa debit card for ATM use.
About 10% of Schwab's clients are eligible. The brokerage has six million accounts, with $542 billion of assets.
To Schwab, picking up the ATM tab is worth the extra fee income because it helps attract high-net-worth clients, said Elizabeth M. Stelluto, senior vice president of asset and cash management products.
"We can increase the share of wallet they hold at Schwab," Ms. Stelluto said, because the pampered clients "become less likely to look elsewhere for services."
Schwab has gone as low as it can or wants to go in outdoing other brokerages on cheap commissions, said Les Dinkin, managing principal of NBW Consulting in Westport, Conn.
"Schwab has positioned itself as being above the melee in terms of competing on price. It tends to compete more in terms of value and service," Mr. Dinkin said.
Though ATM fees are more of an annoyance than a burden on wealthy customers, the strategy behind the rebate is to cater to the best clients, thereby encouraging them to move more money to the brokerage.
"Just because people are affluent doesn't mean that they don't care about paying fees," he said.
In that vein, Fidelity Investments on May 4 started offering to pay a $75 annual fee on the Fidelity American Express Gold Card for approved brokerage customers with cash management accounts with minimum balances of $30,000. Purchases and withdrawals are debited from the cash management account.
Other financial institutions with few or no ATMs have offered rebates on surcharges to customers who rely on so-called "foreign" cash dispensers, including USAA Federal Savings Bank and Telebank.
Most full-service brokerages offer debit cards, but discount brokerages have tended not to push them, said Bill Burnham, an electronic commerce analyst at Credit Suisse First Boston in San Francisco.
"The theory here is maybe you spend three or four bucks on rebates" for a given customer, "but if you get all their assets, you more than make up for the spread," Mr. Burnham said.
