Coming Soon: New USAA Brokerage Services

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[Note: anyone can sign up for an account with USAA’s investment products, and you do not have to be a USAA member. Their website says “Our focus always has been and remains the military community, but USAA investment products are available to the general public.”]

USAA’s investment services will soon get even better: they’re adding a new brokerage platform and expanding their product line.

The company’s core business is property and casualty insurance, but over the decades they’ve added banking and investments. Outstanding member service has still been the priority across all of their divisions and products. The company is owned by its members, so its return on capital can be spent on long-term improvements to member services instead of chasing short-term share performance.

That philosophy carries over to USAA’s investment services. They are not the biggest financial company, but they rank high on trust. They don’t try to compete with other financial firms on price, but they compete on service. They don’t have the nation’s lowest expense ratios (like the Thrift Savings Plan) but they have competitive mutual funds.

Image of USAA logo |

Coming soon– new products!

Instead they offer consolidation and convenience. The typical USAA customer is a very busy military family. They already have their property and their vehicles insured with USAA. Perhaps they’re using banking services like personal checking, savings, and credit cards. They might have a USAA mortgage or CDs. When they transition from uniform to a civilian bridge career (or retirement), they can keep their membership and continue to enjoy all of these member services.

As USAA (and its membership) grew larger, the company added mutual funds and a brokerage. Customers can keep all of their savings, investments, and insurance with one trusted company and move their funds quickly between accounts. They can see all of their finances on one screen, and (most importantly) they can log in from a combat zone or overseas base housing at 3 AM on a weekend. Members can trust that no matter where they are or what they’re doing, they’ll be able to contact a USAA member services rep who can take care of their business with one phone call.

This degree of comprehensive service and convenience was unprecedented in the 1980s, but today it’s a commodity. Almost every financial services company offers consolidated account views (even across different investment firms) and every firm wants to help you move your money faster. USAA was losing their lead.

I spoke with USAA’s financial services execs about their upgrades. Kevin Craft is USAA’s Vice President of Investment Operations and Sean Grindall is the Assistant Vice President of Retirement & Wealth Solutions. They have the daunting task of overhauling a 15-year-old system while improving its member services.

Instead of spending millions of member dollars on an arms race of networks and features that would look like every other major financial company, USAA has contracted National Financial’s brokerage technology.

The company is a subsidiary of Fidelity Investments, so if you have a Fidelity account then you already see National Financial’s trade execution and other back-office support. This upgrade brings one of the world’s top brokerage platforms to USAA’s member service. National Financial will handle trades along with share custody and clearing. Better yet, they’ll offer a few new features: options trades and strategies, brokered CDs, and immediate access to cash trades. USAA’s current brokerage customers have already been notified of the change and the conversion will roll out later this summer. As the upgrade moves from USAA’s servers to National Financial’s servers, the only obvious change to members will be the new products.

Is USAA encouraging its investors to pick their own stocks and trade options? Well, only if they want to. Members have been asking for more brokerage services for years, and they’ve had to find them at other financial firms. Now members can use these complex investment techniques right at USAA instead of having to split assets across multiple companies. If you don’t pick stocks or trade options now then there’s no reason to start.

The upgrade also frees USAA to focus on their expert financial advice & management along with outstanding customer service. (National Financial is only contracted for the infrastructure and execution.) Members still have a consolidated view of all their assets. USAA still offers one of the Internet’s most user-friendly retirement planners. You can still plan your savings for college or other goals.

You’ll still enjoy access to USAA’s market-analysis tools. You can still check your accounts and execute trades with their mobile investing app. Their member service representatives are happy to help with asset allocation questions using USAA mutual funds or exchange-traded funds. They’ll even manage a member’s accounts. Best of all, National Financial’s systems offer faster execution at a lower price. Take a look at USAA’s fees and see if you’re eligible for free trades.

By the way, many military veterans still remember when USAA membership was only for officers. That is no longer the case, and USAA has been trying for nearly two decades to get the message out to eligible veterans. The criteria is “All who have served honorably, and their families”.

You might even qualify without any military service– if your parents or grandparents were in the military and discharged honorably, then they can join USAA. Once they join USAA, then you can join too.

More questions? Start with USAA’s investing center or add a comment below!

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  1. What does $50 fee cover? What does it do for me.

  2. Vanguard SP500 index fund charges lower fee than corresponding USAA SPIndex fd
    Any reason I should keep my IRA in USAA-SP500-index fund?

    • Great question, Gerd!

      The answer is the same, regardless of the expense ratio: you should go with the fund that makes you feel secure and happy.

      If that’s Vanguard’s low expenses, or USAA’s convenience and customer service, then you should go with whichever appeals to you more.

      I’d also suggest that you should convert the percentage difference into actual dollars per year. That’ll give you a concrete number to decide whether the expense ratios are a factor worth considering.

  3. “outstanding customer service…” I remember when USAA sat on its hand doing nothing to offer its military members facing no pay in 2011, when other banks servicing primarily military customers immediate came out to the front saying they would provide free gap pay. This is the kind of customer service which comes after USAA had increased its net worth by $1.7bn off its members in the wake of the great recession. I’ve been a USAA member for over 20 years, and the level of customer service has only decreased. It’s unfortunate the company which perceives itself as having “outstanding customer service” doesn’t realize being able to provide competitive investment (and finance) options is part of having outstanding customer service. This is a reason I removed vast majority of assets out of USAA and do not bother getting a loan from USAA, since the convenience and customer service were not outweighing the higher costs

    They are also doing silly things in this transition to new brokerage services like doubling the minimum balance for the asset management account and locking out your ability to use your associated debit card if it falls below the new account minimum. Seriously silly things.

    Frankly, I haven’t seen any of the long term improvements to this customer, so I’m not sure where the billions being made off its members is going toward. All I see are higher cost products, reduced benefits, and simply weird rules. I’m still a member, but may be extricating myself from its brokerage services.

    • Thanks for the comment, Tim!

      I think USAA is more interested in competing on their reputation for trust and the convenience of consolidated accounts– not so much on price (which would be subsidized by members). If it’s any consolation, USAA learned their lesson after the 2011 government shutdown. In Feb 2014 they were ready to step in and cover pay for military members.

      I’ve heard that all financial institutions are facing rising compliance costs, which accounts for the changes to USAA’s debit card policies and mortgage rates. They’re forcing many financial products to stand on their own instead of being subsidized by members who don’t use them.

      I appreciate you pointing out the issues– I’ll add them to my list, and I discuss that every few months with one of their staff. I’ll keep everyone posted on what I hear.

      • @Doug, that is precisely the point: USAA is relying more on “reputation of trust” rather than providing more competitive products. However, I do not believe standing by high priced financial products is a sound business model unless you are relying on the ignorance of your broader membership.

        Don’t get me wrong, I appreciated some simplicity and convenience in USAA investment products, but after being informed, quickly found out they were simply not competitive in terms of expense ratios and under performing (speaking about mutual funds). I had two USAA mortgage loan officers tell me USAA required 40% down, because that was the standard based on FHA. This was a complete fabrication, especially since our two FICOs were above 800. I also appreciated USAA maintaining conservative balance sheets, which helped them weather the recession; however, the mere fact they were making huge profits from its membership (noted in its annual financial reports), which was greatly expanded to include enlisted folks, then you had how it handled 2011 after reporting $1.7bn net worth increase, just made me seriously question the reputation of trust.

        I understand banks are all facing higher compliance costs, but they are also able to borrow money for next to nothing and make a risk free profit, so i don’t know how that translates into goofy rules like blocking out debit card use on a high balance minimum account, while doubling high minimum balance account requirements. I suppose as more blogs like yours and others inform the wider membership, USAA will not be able to let its products stand on their own, since who wants to tie up lots of money to give them a free loan, while they charge higher than average for loan products to you and charge higher fees and have higher expense ratios, and implement some goofy rules?

        Again, I’m still with USAA, but there are many things, the least of which are these last changes to the brokerage services rules, make me think USAA no longer is the company it purports to be.

        keep up the good work on the blog.

  4. Nords – just saw the Yahoo Finance Daily Ticker piece featuring you, congrats! Hope the additional exposure helps you spread the word on the power of saving to FIRE…

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