brolic said:And I wonder if Vanguard, Fidelity, et. al., will match? Regardless, Schwab was the first mover and they're gonna get my cash!

First mover???

Fidelity cut the expense ratio on their index funds several years ago, to below Vanguard's. If you have enough money to get into the Advantage class, they're still the lowest.

As for banking, Fidelity's ACH capability alone makes them far more versatile than Schwab's banking products. I've used Fidelity as my financial hub for several years, with not a single hiccup. My first few months w/ Schwab have had several problems, all fixed but annoying nonetheless.

I don't want to start a Fidelity/Vanguard/Schwab battle. I have the Schwab 2% Visa (and brokerage and checking accounts as part of the same deal). I am pleased they are entering this market, it's good for all of us. But Schwab is following, not leading. If you're already at Schwab, this is good news. But this is hardly a reason for Vanguard or Fidelity customers to consider switching.

thanks OP. This sounds like a good deal for those who have the 2% reward card/brokerage combo to dollar-cost-average the rebates!

I also saw the following paragraph here.

By the end of 2009, Schwab plans to launch its first series of proprietary ETFs that will be made available not only to clients who invest through financial advisers but to its self-directed clients as well, says Merk. It's an effort to be more relevant to investors who balk at paying fees on an index mutual fund when ETFs are so cheap, says Jeff Mortimer, Schwab's chief investment officer.

dup post, deleted

Be careful with what happens next, especially if it does not happen soon.
Schwab and the investment adviser have agreed to limit the fund's "net operating expenses" as stated in the prospectus for each fund, for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the fund's Board of Trustees.
Translation: you happily invest with them, adding to the position regularly over the next several years, then they realize they've gotten enough assets with this loss leader and they vote to raise the fees. If it is a taxable account, you are faced with a fat capital gains tax if you switch to another fund. So, consider investing in a tax-deferred or tax-free account only.

Fidelity had the same problem when they slashed some of their index fees to bellow those of Vanguard, which Vanguard promptly pointed out in a couple of articles, to which Fidelity reacted by changing things so that fees can be increased only by shareholder vote. Much better, although the probability of shareholder blackmail is still non-zero ("Dear Valued Shareholder, Times are hard, we are managing the funds very efficiently, but cannot afford to lose as much money and will dissolve the fund if the suggested fee increase is voted down").

Those Expense ratio look nice, and put them along with Schwab's credit card/checking account makes Charles Schwab package unbeatable. But sounds like everyone here is skeptical that this won't last and is just a promo.

somdave2005 said:Anyone else thinking of switching over to Charles Schwab now that their Index funds have the lowest expense ratios in the industry? even lower than Vanguard and Fidelity. Their lower minimums to invest ($100) is also nice too. Couple it with their awesome checking/CC package, Charles Schwab is starting to look mighty good.

I'm in the process of liquidating my Roth account with Chase and transfer it to Charles Schwab since I already have checking account and CC with them. Before this post, I was planning to go with Vanguard.

Could someone explain what is being talked about in this article? What are these fee waivers, that may come to an end soon?

ohhenry1 said:olegos said:Could someone explain what is being talked about in this article? What are these fee waivers, that may come to an end soon?

Hmm, it's not a very clearly written article. From what I can tell, they are talking about Money Market Funds, which are different from the Index Funds that this thread pertains to. So I'm guessing that it doesn't affect us (holders of their Index Funds) directly?

Yes - this is about their money market funds, not their index funds (emphasis mine):

Charles Schwab Corp (SCHW.O) expects to waive about $100 million in money market fees in the current quarter

In the current rate environment they can't charge all their fees against the fund without making it break the buck, so they are having to waive those fees instead. These waivers will come to an end when the money in the fund is actually making enough to cover their expenses, and only after that point will the interest rate rise.