General Stock Investment Strategies/Stockbrokers
Many stockbrokers, such as Scottrade and TD Ameritrade, offer cash or cash equivalents for transferring stocks or cash into an account. This can be easily done by transferring stocks to them from another broker. For example, a 500k transfer gives you over $1000. Why do they do this? Why is it so valuable for them to have stocks in my account? Is there any reason for me not to keep taking advantage of such offers?
Alorac, I can not answer this question as to their actual motives, but it's a fair guess that somehow they will be making more than $1,000 off of your account at sometime in the future, possibly within the first year.
In your example of transferring 500k into an account with one of the brokers you mentioned those brokers might make money off of the interest that they receive for investing your money while it is sitting in your "cash" account. They probably pay you interest on that balance, but they possibly keep some amount of the difference between what they are actually getting paid and what they pay you for the use of your money. Let's say they are paying you 0.01% on your money for the next 3 months or so. But maybe they can get 0.035% on their investment. So they are making 0.025% on that 500k or $125. Using greater scales, if they lump your money with other people's cash balances at their firm and invest that larger sum for longer periods then they might be able to get 1.00% return on the money. This could potentially net them thousands of dollars in a year while still conservatively paying you interest on your (and the other clients) cash balance.
Another scenario that can help them make money is by your trading stocks. Turning over your portfolio to greater and greater degrees will always make more and more money for the broker by way of their commission.
I personally do not like change too much anymore. I have stuck with one discount broker for as long as I can remember. I don't have to do a lot of desk/paper work to change brokers because I don't change brokers. It's one less thing I have to be concerned with. I can count on consistency in the look of my statements and I can go visit the same office, if needed, and enjoy seeing familiar settings. But this is the way I am bent right now.
You may enjoy switching and the return you recieve ($1,000) each time you switch. That is really a personal preference. If you find it rewarding, go ahead with your desires.
I hope I've shed some light on this from one more perspective.