Oppenheimer Background
Oppenheimer & Co., Inc. (“Oppenheimer”) is one of the oldest brokerage companies in the United States, dating back to 1881, when it was founded as
Fahnstock & Co. The company creates Oppenheimer & Co. in 1950 to serve as a broker-dealer and manager for large institutional clients.
Today, Oppenheimer provides a broad range of financial services, including wealth management, asset management, capital markets and investment banking.
Oppenheimer’s reputation has taken a number of hits over the years, including sanctions and fines from FINRA. Nevertheless, Oppenheimer soldiers on
continuing to provide services to private clients and institutional investors.
The following analysis will review the fees, costs and performance associated with a brokerage account at Oppenheimer.
Oppenheimer Fees and Costs
One of the mainstays of maintaining an account with Oppenheimer is the ability to get information from the analysts and associates. This is not a DIY (do it yourself) or
discount online brokerage where you do your own analyzing, make your own picks and use the
service simply as a conduit. Instead, this is a true full service brokerage
where you have the opportunity to discuss investment strategies with your broker, pick his or her brain for ideas, find out the latest news and advice from Oppenheimer’s team of trained experts. All of this comes at a price.
Currently, if you want to buy equity shares through an Oppenheimer broker, you are looking at a sliding commission scale depending on the amount
invested. This can range from 5.75% for amounts under $25,000, to 5.50% for purchases between $25,000 and $50,000, 4.75% for $50,000 to $100,000, 3.75% for $100,000 to $250,000, 2.5% for $250,000 to $500,000, 2.0% for $500,000 to $1,000,000, and 1.0% over $1,000,000. Clearly, there is something to be gained by investing more than less with Oppenheimer.
Pricing for debt is somewhat less onerous, with fees ranging from 4.75% for under $50,000, 4.5% for $50,000 to $100,000, 3.5% for $100,000 to $250,000, 2.5% for $250,000 to $500,000, 2.0% for $500,000 to $1,000,000, and 1.0% for $1,000,000 and up.
The best value for Oppenheimer is when you use your account to purchase any of a number of Oppenheimer and Fahnstock mutual funds. One set of funds have fees ranging from 2.25% for less than $100,000, to 1.75% for $100,000 to $250,000, 1.25% for $250,000 to $500,000, and no fees for over $500,000, provided there is no redemption for 18 months after investment. Another set of funds have slightly higher fees, starting at 3.5% for less than $100,000, 3.0% for $100,000 to $250,000, 2.0% for $250,000 to $500,000, 1.5% for $500,000 to $1,000,000, and no fees over $1,000,000, provided there is no redemption for 18 months after investment.
As a full-service broker-dealer, Oppenheimer offers its investors the ability to place their IRA with Oppenheimer. In addition to any brokerage fees
associated with purchases for the IRA, Oppenheimer charges an annual account maintenance fee which can range from $25 for traditional IRAs, Roth IRA, Simple IRAs, and SEP IRAS, to $30 for 403(b), Single K and Profit Sharing plans.
Comparative Analysis
As stated earlier, there is a price to be paid for keeping your money with a full-service broker. All of that information, analysis, and bells and
whistles does not come for free.
By comparison, the numerous online stockbrokers will always beat Oppenheimer on price, but at the cost of service and information. For example,
Fidelity, Charles Schwab and Merrill Edge have no minimum deposit requirements, while
E*Trade requires only $500 minimum deposit to get started. In contrast, you will need a minimum $1,000 to get in the “virtual” door at Oppenheimer.
Similarly, the fees stated above seem gargantuan when compared to those charged from the four previously mentioned online stockbrokers, which range
from a flat equity stock trade fee of $0 for
Charles Schwab, to $14.95 flat fee for
Muriel Siebert.
Further, you can pay a small premium if you want one of the brokers at these four to assist in a trade, but it is still less than Oppenheimer (Fidelity charges $32.95, TD Ameritrade charges $25, E*Trade charges $25.00, and Merrill Edge charges $29.95). Finally, none of the four have any annual fees for servicing your IRA.
Personal Experience
So why you pay the premium for a full-service stockbroker like Oppenheimer? The financial advisor assigned to your account will develop a personal
relationship with you. He or she will get to know you, your investment goals, your tolerance for risk, and what type of investment interest you
(i.e., debt, equity, options, mutual funds, municipal bonds, growth or income).
When there is analysis that one of the investments in your portfolio may be about to go down in value, you will get a friendly call from the financial
advisor assigned to your account who will tell you of the impending situation. Similarly, when there is an investment opportunity that suits your
goals and strategies, you will get one of these friendly calls as well.
Since they are working with you, and the goal is to keep you satisfied long-term, there is no pressure to buy or sell. The sense you get is that the Oppenheimer financial analyst is not looking to churn your file to boost fees. If you want to take a position long, they will be fine with it, provided that if they learn some information that could create a material adverse impact on such investment, they will make you aware of it, and assist you if you decide to make an adjustment in your strategy.
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Oppenheimer Review Recap
Oppenheimer makes sense for someone who needs a full-service stockbroker, which would be anyone who doesn’t have the time and/or knowledge to run his
or her own accounts. If you are the kinds of person who keeps a separate television in your home or office dedicated to constantly watching the
ticker, and you can figure out how to make trades on your own through an online broker account,
then Oppenheimer is not for you. You will simply be spending additional fees on analysis that you don’t need or don’t want.
On the other hand, if you are a person who needs someone to keep track of movement in the markets, has the support of some top Wall Street analysts,
and the ability to buy a wide variety of financial products, then Oppenheimer may be worth it for you to pay the extra fees and get all the bells and
whistles.
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