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Old 10-19-2019, 09:10 PM   #1
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Charles Schwab? What say you?

Back in the day, before I became just a boating bum and was working as a financial advisor, I had a partner. When I retired I opened the type of account where he has full trading authority and makes all the decisions about what to own, what to trade, etc.

For this he charges me a small amount and for that I don't pay any commissions. Of course as the account balance goes up, so does this pittance.

Recently the major investment trading companies dropped their online trading fees so now, Schwab, E*TRADE and a couple of others are offering FREE line trades.

I've talked with my partner about this and the firm he's with does not seem likely to offer any online trading. Zero. So there's no way this company is going to go to zero commission trading.

I'm considering moving my account to Schwab and doing all my trading myself. Now I do not consider myself a "trader". Never have been, likely will never be. But the ability to go online (or on an app on my phone) and trade into or out of a stock, ETF or many other classes of investments whenever I want and not pay any commissions is intriguing.

Does anyone on here use Schwab as their investment company? If so, what has your experience been.

What I'm NOT looking for is for people who trade with other firms to chime in and let me know how your firm does for you. No offense, but that's not what I'm asking for. I'm only interested in what Schwab clients have experienced.

Thanks
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Old 10-19-2019, 09:42 PM   #2
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I have a self-directed account at Schwab and have had no problems. I previously had a managed account with them but had to switch because of their arrogance toward my wife and weak strategy.
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Old 10-19-2019, 10:46 PM   #3
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Hi Mike,

I think there are several aspects to consider imbedded in your question.
A big part of it may be just about the software platform and how user friendly you find it to navigate when comparing Schwab to ETrade or Ameritrade or others. Also quality of the research sources they provide for free versus some you may choose to pay for. How timely and easy to access are the tax forms, how user friendly is the gains keeper function, how timely to get help from a person when you might like some, etc., etc.
Also, remember these are, in fact, for profit enterprises so there will be fees for services in the account other than trading. The ads will say commission free trading but they do need revenue and will find different ways to collect it so think about what other services within a self directed account you will use and compare to your current situation or other online self directed options.
I use both self directed and full service managed accounts that work on a fee related to the value of the account. The managed account do not have commissions for execution, clearing, or custody. Some fees not related to trading are cheaper at the managed firm accounts than they are on these self directed cheapo accounts. Both have their place.
Also, consider if you are sure you will enjoy self directing or find that the self directed part and its responsibility will be a sort of un-retirement in some ways. I feel that way some days.
I still keep value in self directed and our managed accounts seem to have no specific strategic prowess. At the end of the day, even net of fees, I do not really get paid to manage my own money any higher return than letting others do it even though there is this little slice that they get.
One pretty important difference to consider regarding a question that is discussed on this forum on occasion: People have stated that they will take a boat loan in lieu of cashing in some of their investments. I think this is not an either or question. Securities can be margined for short or intermediate term cash needs right? Margin rates can be quite low and I have noticed that margin rates are considerably lower at the firm we used in the managed accounts than they are in the self directed cheapo accounts.
Everybody has to eat, even the 'free trading' firms. No such thing as free really.
Good luck with this. It can be fun, it can be a PIA. I find it reasonably unlikely, based on your own admission, that it will yield you more than a managed portfolio. Doing this with part of it may be a good initial approach.
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Old 10-19-2019, 11:09 PM   #4
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We have a self directed Schwab account and have experienced no issues with it. Our only complaint is the occasional call wanting to know if we'd like some assistance, meaning someone trying to talk us into converting to Managed.

There are some potential charges to be aware of. For instance, up to $49.95 for purchases of mutual funds other than Schwab funds. All their pricing is well laid out. Also, phone trades cost and if one of their people call and talk you into a trade then that's $25.00. Also, don't do wire transfers, do everything ACH.

https://www.schwab.com/pricing?src=T...wd-48652299435

I'd also recommend reading reviews.

https://www.schwab.com/public/schwab...wd-48652299435
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Old 10-19-2019, 11:17 PM   #5
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I have had self-directed accounts with Schwab for 20 years, IRA's and brokerage, I have always found them to be well-run and they've done a good job for me.
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Old 10-19-2019, 11:37 PM   #6
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Interesting and timely thread for us to read. I am considering Schwab for cash management as we transition to cruising life, as their ATM and foreign exchange fees are supposedly among the most attractive of available options. We need to be able to drop the hook at xxx and get some local currency out of an ATM without getting fleeced with fees, and we want to be able to do this frequently.

Cheers
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Old 10-20-2019, 12:13 AM   #7
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My oldest daughter got out of school a little more than a year ago, got a job, and has been saving more than she spends. After saving some cash, putting all of her 401K money into index funds, and reading WSJ religiously, she was ready to start buying individual stocks. Nothing too risky, mostly Fortune 1000. She signed up with Schwabb (entirely self directed), and was ecstatic when they dropped their commission (at least on her trades) to $0. She has had absolutely no problems with service, but I don't think she has ever had occasion to interact with a human, either. She is developing a sense for values and valuations, and looks forward to a broad decline so she can buy her favorites "on sale".
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Old 10-20-2019, 01:16 AM   #8
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Self-manage investments here, most all with a Schwab account.. Always found my instincts were better than others. (Long-term outlook, conservative investor with a bias toward dividends.) Yes, I was surprised my last week's stock trade included no fee from Schwab, but then it was always nominal if one did it self directed without dealing with a human.
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Old 10-20-2019, 02:24 AM   #9
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Well, I don't profess to doing better than professionals would. However, investments are just not something I could give control over to someone else. I like to know my thought process and reasoning behind the moves and understand it all fully. I also know my motivations completely.

On the other hand, simply because I think the professional might possibly do better than me, I'm not convinced that they'll do 5% better and definitely not 10% better. Plainly, I'm not convinced they'll do enough better to pay their fees.

Now, I'm not saying ever that using an advisor is wrong. For the majority of people it is probably the right thing to do, especially early in their investing. A lot of beginning investors buy and sell based on emotions and personal preferences and not based on knowledge or research. They may invest in highly volatile stocks or in companies they've long loved that are faltering seriously.

One thing that has changed is availability of information. Today, I can have all the information a broker or financial advisor has. I don't have their education or experience but I also understand me better than they do. The only ways to have access to better information are illegal, the reason I did very little investing in my employer prior to retirement and still don't invest or sell when working on a consulting project for them, or at least until after any activity is completed. Once in my career I've undone deals where I had a transaction less than 60 days before something significant, even though I knew nothing about the deal that was about to happen. One other time I would have had to undo one, but I lost money so that was fine to keep. If you lose money it's fine, but making money isn't.

As to the question of how to they make money with no commissions. They have back-end revenue which includes payments for order flow, loans (both stock and margin loans), and interest on balances. In 2018, 57% of Schwab's revenues were from banking. E-trade is 67%. Simply paying you less interest than they can earn and charging you more interest than their cost. They also hope to pull in money management customers and they make a lot of money on their own mutual funds. 10% of all money with brokerages is in cash.
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Old 10-21-2019, 05:35 AM   #10
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Some folks fear the large number of ETF accounts will crash the market as all try ti=o exit at the sane tine.
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