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Schwab Reduces Fees

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Online trades reduced by $2 plus some other reductions, beginning 2/3/17.
 

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I am waiting for the auctioneer to start. $3.95......3.95.......do we have 3.95???

Clocks (Feb. 28, 2017 @ 9:47a) |

Great stuff! I'm very happy with Schwab and it's yet another reason to like them even more!

s3riously (Feb. 28, 2017 @ 12:42p) |

I found this 500 free trades for a year offer at Schwab.

Offer good for new and existing clients.  $100,000 of new funds... (more)

burgerwars (Mar. 12, 2017 @ 5:09p) |

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That is truly good news. My commissions are lower at E*trade, but Schwab's ETF rates coming in substantially lower than Vanguard is a shot across the vanguard bow.

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This is welcome news. I too trade far fewer equities but any reduction from a company as good as Schwab is welcomed. Thanks for the alert OP.

Edit: Also interesting that they're adding a written guarantee: 
"Additionally, the company has initiated a broad-reaching Satisfaction Guarantee for clients, unique among brokerage firms. Simply, if a Schwab client is not satisfied for any reason, Schwab will refund any related commission, transaction fee or advisory program fee paid to the firm1."

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Some more details on ETF and mutual fund charges per this change:

https://www.csimfunds.com/public/csim/home/nn/lower-costs-announ...

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I closed my Schwab accounts in December. Trying to simplify my life and I didn't feel like they were offering anything all that compelling over their competition. This is a positive change, but not enough to get me to re-open those accounts.

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Fidelity gives $4.95 trades after a bit of negotiating.

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Good news.  I pulled my IRA out of Vanguard in December and transferred it to my Schwab account.  It was tough getting anyone on the phone at Vanguard.

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Fidelity seems to give me 10 more free trades about every third time I call them.

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Anyone have any luck convincing Schwab to give you free trades? Did you have to have a certain amount invested?

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Depending on your balance, Merrill Edge gives you 30 or 100 free stock and ETF trades per month. At Platinum Honors ($100K balance), you also get a 2.625% on everything cashback credit card, 3.5% on groceries and warehouse clubs and 5.25% cashback on gas, plus all ATM fees are reimbursed.

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DavidScubadiver said:   That is truly good news. My commissions are lower at E*trade, but Schwab's ETF rates coming in substantially lower than Vanguard is a shot across the vanguard bow.
I love competition and applaud Schwab for making this move, but for SCHB, for instance, it represents a 1 basis point reduction from 4 basis points to 3. Vanguard's VTI is at 5 basis points, so we are not talking about significant pricing differences. VTI, however, is based on the CRSP US Total Market Index and includes more stocks than SCHB's Dow Jones US Broad stock market index (which excludes microcaps). VTI is also more liquid.  

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geo123 said:   Depending on your balance, Merrill Edge gives you 30 or 100 free stock and ETF trades per month. At Platinum Honors ($100K balance), you also get a 2.625% on everything cashback credit card, 3.5% on groceries and warehouse clubs and 5.25% cashback on gas, plus all ATM fees are reimbursed.
  wait ...a 2.625% cash back credit card for having just a 100k balance? wow..need to look at that.

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sharpie130 said:   
geo123 said:   Depending on your balance, Merrill Edge gives you 30 or 100 free stock and ETF trades per month. At Platinum Honors ($100K balance), you also get a 2.625% on everything cashback credit card, 3.5% on groceries and warehouse clubs and 5.25% cashback on gas, plus all ATM fees are reimbursed.
  wait ...a 2.625% cash back credit card for having just a 100k balance? wow..need to look at that.

  Yep, just don't try to churn it, as they tend to monitor your accounts quite closely.

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BostonOne said:   I closed my Schwab accounts in December. Trying to simplify my life and I didn't feel like they were offering anything all that compelling over their competition. This is a positive change, but not enough to get me to re-open those accounts.
  Are you aware of Schwab's Intelligent Portfolio Management service?  It is like Betterment or WealthFront.  But Schwab does not charge any fees!
They also have higher level of portfolio management services that do have a fee, but competitive to boutique management services. 

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FWjunkie2 said:   BostonOne said:   I closed my Schwab accounts in December. Trying to simplify my life and I didn't feel like they were offering anything all that compelling over their competition. This is a positive change, but not enough to get me to re-open those accounts.
  Are you aware of Schwab's Intelligent Portfolio Management service?  It is like Betterment or WealthFront.  But Schwab does not charge any fees!

They make you keep 7% in cash which is worse than a fee.
They also have higher level of portfolio management services that do have a fee, but competitive to boutique management services. 
  

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geo123 can you please post a link to the card that has 2.625% cash back? I have a platinum relationship with MerrillEdge/Bank Of America but for ordinary purchases it is 1.75% cash back, Groceries is 3.5%, and gas is 5.25%. Platinum relationship gives a 75% bonus but the basic card is actually 1% everything except, 2% groceries, 3% gas.

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swapanshah said:   geo123 can you please post a link to the card that has 2.625% cash back?
 

http://www.doctorofcredit.com/bank-of-america-preferred-rewards-...

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FWjunkie2 said:   
BostonOne said:   I closed my Schwab accounts in December. Trying to simplify my life and I didn't feel like they were offering anything all that compelling over their competition. This is a positive change, but not enough to get me to re-open those accounts.
  Are you aware of Schwab's Intelligent Portfolio Management service?  It is like Betterment or WealthFront.  But Schwab does not charge any fees!
They also have higher level of portfolio management services that do have a fee, but competitive to boutique management services. 

  They profit when they churn your portfolio but at least the fees on the underlying investments are not that bad.

https://intelligent.schwab.com/public/intelligent/insights/whitepapers/guide-to-asset-classes.html

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DrForce said:   Anyone have any luck convincing Schwab to give you free trades? Did you have to have a certain amount invested?
  Never had problem getting free trades and wires

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sharpie130 said:   
geo123 said:   Depending on your balance, Merrill Edge gives you 30 or 100 free stock and ETF trades per month. At Platinum Honors ($100K balance), you also get a 2.625% on everything cashback credit card, 3.5% on groceries and warehouse clubs and 5.25% cashback on gas, plus all ATM fees are reimbursed.
  wait ...a 2.625% cash back credit card for having just a 100k balance? wow..need to look at that.

  That's a CASH balance, and not a securities balance, no?  $100,000 in cash earning practically nothing in the cash accounts is costing quite a bit in lost interest.

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geo123 said:   
DavidScubadiver said:   That is truly good news. My commissions are lower at E*trade, but Schwab's ETF rates coming in substantially lower than Vanguard is a shot across the vanguard bow.
I love competition and applaud Schwab for making this move, but for SCHB, for instance, it represents a 1 basis point reduction from 4 basis points to 3. Vanguard's VTI is at 5 basis points, so we are not talking about significant pricing differences. VTI, however, is based on the CRSP US Total Market Index and includes more stocks than SCHB's Dow Jones US Broad stock market index (which excludes microcaps). VTI is also more liquid.  

  The 5 year performance chart shows SCHB returning 70.66% and VTI returning 70.35% (difference of .16)
  The 10 year performance chart shows SCHB returning 110.55 % and VTI returning 109.6% (difference of .95)
  The ETF's appear to track almost exactly on the graph so I don't think the extra diversification is doing all that much for Vanguard's fund.
   

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DavidScubadiver said:   
sharpie130 said:   
geo123 said:   Depending on your balance, Merrill Edge gives you 30 or 100 free stock and ETF trades per month. At Platinum Honors ($100K balance), you also get a 2.625% on everything cashback credit card, 3.5% on groceries and warehouse clubs and 5.25% cashback on gas, plus all ATM fees are reimbursed.
  wait ...a 2.625% cash back credit card for having just a 100k balance? wow..need to look at that.

  That's a CASH balance, and not a securities balance, no?  $100,000 in cash earning practically nothing in the cash accounts is costing quite a bit in lost interest.

  They look at the combined balances between your BOA deposit and Merrill Edge accounts. Your ME funds can and should absolutely be invested in securities, and they just look at its fair market value as of the date of determination.

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geo123 said:   
DavidScubadiver said:   
sharpie130 said:   
geo123 said:   Depending on your balance, Merrill Edge gives you 30 or 100 free stock and ETF trades per month. At Platinum Honors ($100K balance), you also get a 2.625% on everything cashback credit card, 3.5% on groceries and warehouse clubs and 5.25% cashback on gas, plus all ATM fees are reimbursed.
  wait ...a 2.625% cash back credit card for having just a 100k balance? wow..need to look at that.

  That's a CASH balance, and not a securities balance, no?  $100,000 in cash earning practically nothing in the cash accounts is costing quite a bit in lost interest.

  They look at the combined balances between your BOA deposit and Merrill Edge accounts. Your ME funds can and should absolutely be invested in securities, and they just look at its fair market value as of the date of determination.

  Wow, that is not at all how they describe it in print. Thanks.

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DavidScubadiver said:   
geo123 said:   
DavidScubadiver said:   That is truly good news. My commissions are lower at E*trade, but Schwab's ETF rates coming in substantially lower than Vanguard is a shot across the vanguard bow.
I love competition and applaud Schwab for making this move, but for SCHB, for instance, it represents a 1 basis point reduction from 4 basis points to 3. Vanguard's VTI is at 5 basis points, so we are not talking about significant pricing differences. VTI, however, is based on the CRSP US Total Market Index and includes more stocks than SCHB's Dow Jones US Broad stock market index (which excludes microcaps). VTI is also more liquid.  

  The 5 year performance chart shows SCHB returning 70.66% and VTI returning 70.35% (difference of .16)
  The 10 year performance chart shows SCHB returning 110.55 % and VTI returning 109.6% (difference of .95)
  The ETF's appear to track almost exactly on the graph so I don't think the extra diversification is doing all that much for Vanguard's fund.
   

It depends on what you're looking for. VTI contains more than twice as many stocks as does SCHB, as the indices that they track are slightly different. So, if your goal is to own the entire US total stock market, then VTI is more comprehensive. Likewise, as I mentioned above, VTI is more liquid, as SCHB doesn't have the same trading volume.

They're obviously very similar, but given the price difference of only 2 basis points, I'd focus on the other differences instead.

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Geo, why wouldn't you consider the performance of the two indices over time? Thanks for the tip on the platinum rewards. I recently opened up the merrill edge account for the $1,000 bonus. When I've been there 3 months I will enroll in the platinum honors.

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Thanks OP, I've got a large portion of my investments currently in SCHB because it already had this 3 basis point fee, but I always would have prefered indexing against the S&P500 instead of the Dow and now I can move it into SWPPX without it costing me extra.

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I get cheaper trades at IB, ETrade , and similar at TDA, but people who trade a lot can negotiate this.  Vanguard will give you free or $2 trades if you have enough with them.  

It's a step forward but I'm not sure commission should be the real focus.  Execution at Schwab in my experience is not so hot.   Execution quality is the big issue, since for more than trivial sized orders or very high priced liquid stocks/ETFs, saving a fraction of the spread is worth more than the commission.  Buy 1000 shares and pay an extra penny, that's $10, double the cost of the new lower commission.  It could be free and you'd still have paid more than $7 for a trade at a better broker (*). 

The problem is that many brokerages get kickbacks from dark pools or market makers to give them a first look at filling your order (which leads you to get poor quality fills), and this is not passed on to you.  The commissions could be free and you would still be the product - the brokers make more off these rebates than they do from charging you, but it gives them a way to look a bit cheaper than the next guy and distract you from the real issue you should be caring about.  You know what they say - if you're getting something for free, you're not the customer, you're the product and the product tends to get exploited.

* in a similar vein, but not exactly on the same topic, who cares if Schwab's index fund charges 1 basis point less than Vanguard's - do you know how well they track their actual index?  If they have invisible cost drag from excessive turnover or poor execution or higher tax impacts or differential securities lending risks, almost any of those are going to be bigger effects than 1bp per year.  But the average customer can't see those and reporting is bad / non-existent, so they compete over cost and with marketing when those aren't the right issues to care about.  I mean, if you want a bigger picture, who cares if they track the S&P500 well if it does poorly compared to a similar basket of stocks not anointed by the committee of active managers over at S&P?   But that way leads away from index funds and to more subtle issues, so I don't expect many of you to follow it.

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DavidScubadiver said:   Geo, why wouldn't you consider the performance of the two indices over time?Depends on your investing philosophy. You are buying a US stock market ETF for its tax efficiency as well as for the diversification benefits. In this case, diversification means that you're getting exposure not just to the S&P500, but also to the mid caps, small caps, micro-caps, etc... So, SCHB gives you access to roughly 98.5% of the US stock market, whereas VTI gives you access to almost 100% of the US stock market.

Conceptually, this discussion is not that different from a discussion over tracking errors with index funds. A lot of people consider tracking errors to be a negative, while plenty of people consider them a positive (when the tracking errors favor the investor).

In my case, I favor VTI, but SCHB is a perfectly reasonable choice as well, and one that I'd use in a tax loss harvesting situation. Some people use VOO instead, etc...

Thanks for the tip on the platinum rewards. Sure, for ETF's and stocks, ME is a great option, particularly in combination with Platinum Honors.
  

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FWjunkie2 said:   
BostonOne said:   I closed my Schwab accounts in December. Trying to simplify my life and I didn't feel like they were offering anything all that compelling over their competition. This is a positive change, but not enough to get me to re-open those accounts.
  Are you aware of Schwab's Intelligent Portfolio Management service?  It is like Betterment or WealthFront.  But Schwab does not charge any fees!
They also have higher level of portfolio management services that do have a fee, but competitive to boutique management services. 

  I find it a bit cash heavy, but nice for free

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DavidScubadiver said:   Geo, why wouldn't you consider the performance of the two indices over time? Thanks for the tip on the platinum rewards. I recently opened up the merrill edge account for the $1,000 bonus. When I've been there 3 months I will enroll in the platinum honors.
  Note that if you have a large enough balance you don't need to wait 3 months to qualify.  For example, if you had 300k opening deposit then after only a month your 3-month average is 100k which is enough for the top tier.  One month is a minimum wait time though as they only calculate the average once a month.  The second tier also has free trades which only require 50k average.  One thing I'm not sure on is if you need a opened checking account before start counting your monthly average.  So if your average already meets requirements and then you enroll in a checking account do they instantly give you platinum honors status or you have to wait up 3 months. 

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I just checked the box to have them inform me when I qualify. I already have an e-checking account with them so I am set in that department.

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Luniz97 said:   Fidelity gives $4.95 trades after a bit of negotiating.
I read in another thread that they'll give you free trades if you ask. Presumably you need to be a good enough customer for them to care. I haven't tried it myself.

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Snezz said:   Note that if you have a large enough balance you don't need to wait 3 months to qualify.  For example, if you had 300k opening deposit then after only a month your 3-month average is 100k which is enough for the top tier.  One month is a minimum wait time though as they only calculate the average once a month.  The second tier also has free trades which only require 50k average.  One thing I'm not sure on is if you need a opened checking account before start counting your monthly average.  So if your average already meets requirements and then you enroll in a checking account do they instantly give you platinum honors status or you have to wait up 3 months. 
 

I actually spoke to the BofA Rewards people today since I am waiting to get into the program. I've had BofA savings/checking for several (3+ months) but just opened my ME account in late December and did not have a significant amount until after the January deadline for qualifying. In theory based on the 3 month running average I should qualify for the Platinum (middle) level when they look at balances this month. The person on the phone seemed to say that the ME account had to be open for 3 months. I don't think that is correct, but I'll have to wait until sometime next week to see if I get in.

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DavidScubadiver said:   I just checked the box to have them inform me when I qualify. I already have an e-checking account with them so I am set in that department.
I hadn't noticed that box before -- just signed up there. Hopefully I will hear from them next week when they look at my January balances.

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JonnyRock said:   
FWjunkie2 said:   
BostonOne said:   I closed my Schwab accounts in December. Trying to simplify my life and I didn't feel like they were offering anything all that compelling over their competition. This is a positive change, but not enough to get me to re-open those accounts.
  Are you aware of Schwab's Intelligent Portfolio Management service?  It is like Betterment or WealthFront.  But Schwab does not charge any fees!
They also have higher level of portfolio management services that do have a fee, but competitive to boutique management services. 

  I find it a bit cash heavy, but nice for free

  
I've read a few posts of people who have compared Schwab's robo-advisor service vs Wealthfront vs Betterment vs other robo-advisors and Schwab comes out on top. I was surprised by it because of their relatively hefty allocation to cash. Or it could just be noise given the timeframe.

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I have a few robo advisor accounts, and probably prefer Wisebanyan. But I still am not sure they provide much value over cheaper Target date funds.

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gaffer said:   I've read a few posts of people who have compared Schwab's robo-advisor service vs Wealthfront vs Betterment vs other robo-advisors and Schwab comes out on top. I was surprised by it because of their relatively hefty allocation to cash. Or it could just be noise given the timeframe.
There was a study released recently by Condor Capital comparing different Robo firms, with the exception of Wealthfront, who apparently didn't like their methodology and closed their account. Regarding Schwab, they said "The Condor Capital report found that Schwab's allocation to emerging markets paid off, as did the portfolio's inclusion of high yield and international bonds last year." I was also surprised to see that Schwab was top rated.

You can request the report from Condor Capital but need to give your contact info. Here's the article with the details:

http://www.investmentnews.com/article/20170125/FREE/170129963/wh... 

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can anyone provide some advice on how to get some free trades each month?

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mrbigballer said:   can anyone provide some advice on how to get some free trades each month?

Call and ask.

Alternatively it sounds like you can call after a trade and request a fee refund.

Skipping 22 Messages...
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I found this 500 free trades for a year offer at Schwab.

Offer good for new and existing clients.  $100,000 of new funds must be added to the account.  I'm thinking the free trade offers at Merrill Edge are better, but worth considering.  Maybe if you already have $100,000 in funds/assets there, you can argue you've been a long time customer to get the offer.  Worth a try.

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