Schwab charging $76 for VG funds

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icallnocalling
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Schwab charging $76 for VG funds

Post by icallnocalling » Fri Jan 02, 2015 7:16 pm

I have a very BH portfolio, but have been at Schwab since my start...I use VG funds for all but total stock market (with a few other minor exceptions). The issue is that every time I rebalance - once a year or with a major windfall -- Schwab charges me $76 every time I buy a VG fund. When you do that across 5 accounts it starts to add up. I have been on the verge of moving to VG just because of the fees, but inertia (and having the knowledge that all of my records are at Schwab) has kept me from doing so. Any one get them to waive similar fees? Thanks....I will hang up and listen... :D

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Re: Schwab charging $76 for VG funds

Post by kolea » Fri Jan 02, 2015 8:24 pm

I agree it is annoying. I mostly buy VG ETF rather than mutual fund, for instance VTI rather than VTSAX (or whatever it is) but there are a couple of active funds at VG I like a lot.

I doubt Schwab is going to budge but it would be nice if they did. They probably want a kick-back of some sort from any mutual fund provider and because VG is already heavily discounted, VG won't do it. But that is just a guess.

Maybe if there are enough of us complaining all at once they will relent.
Kolea (pron. ko-lay-uh). Golden plover.

DSInvestor
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Re: Schwab charging $76 for VG funds

Post by DSInvestor » Fri Jan 02, 2015 8:34 pm

If you want to stay at Schwab:
1. Consider buying Vanguard ETFs instead of Vanguard mutual funds.

2. Consider buying schwab index funds instead. Here's a link to a Bogleheads wiki page for Charles Schwab that lists several index funds that may be viable alternatives to Vanguard index funds.
https://www.bogleheads.org/wiki/Charles_Schwab

3. Look for a lower way to purchase vanguard mutual funds at Schwab. I have accounts at Fidelity who charges $75 for purchases of Vanguard funds.
Once the fund position has been established, one can use automatic purchases for $5/transaction instead. This is cheaper than the $7.95 brokerage commission to trade ETFs at Fidelity.

Check to see if Schwab offers a discounted rate for automatic transactions.
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kolea
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Re: Schwab charging $76 for VG funds

Post by kolea » Fri Jan 02, 2015 8:43 pm

That is interesting - the $75 at Fidelity is pretty close to the $76 at Schwab. I wonder if this fee is being charged by VG to Schwab and then passed on to us?
Kolea (pron. ko-lay-uh). Golden plover.

DSInvestor
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Re: Schwab charging $76 for VG funds

Post by DSInvestor » Fri Jan 02, 2015 8:50 pm

TwoByFour wrote:That is interesting - the $75 at Fidelity is pretty close to the $76 at Schwab. I wonder if this fee is being charged by VG to Schwab and then passed on to us?
Schwab and Fidelity both have No Transaction Fee (NTF) funds. These NTF funds will charge a 12b-1 fee which is a way for the fund to compensate the brokerage firms for marketing and record keeping. Vanguard does not have a 12b-1 fee so there is no mechanism to compensate Fidelity, Schwab or any other broker for their marketing or record keeping.

I believe the $75 Fidelity fee and $76 Schwab fee applies to any fund that is not in the No Transaction Fee list.
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sambb
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Re: Schwab charging $76 for VG funds

Post by sambb » Fri Jan 02, 2015 8:55 pm

open up new accounts at vanguard and don't contribute further to Schwab accounts. Then reevaluate in a few years.

GoldenFinch
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Re: Schwab charging $76 for VG funds

Post by GoldenFinch » Fri Jan 02, 2015 8:57 pm

I asked a Schwab rep online if Schwab could waive the $76 fee just two weeks ago and they politely told me no. I sent my husband to our local Schwab office and had him ask directly (he is a friendly business guy and often gets a "yes" in situations where I get a "no") and they told him it is Vanguard charging them the fee, so it couldn't be waived.

HIinvestor
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Re: Schwab charging $76 for VG funds

Post by HIinvestor » Fri Jan 02, 2015 9:02 pm

I was able to get fees waived by speaking with the manager at our Schwab office. At the time we had very large balances there. I have since moved much of if to Fidelity.

Tamales
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Re: Schwab charging $76 for VG funds

Post by Tamales » Fri Jan 02, 2015 9:05 pm

Let us know the specific funds and percent of portfolio you are interested in. Odds are fairly good there are non-vanguard alternative funds available for no or low cost, which track the Vanguard fund and the associated index as perfectly as you could expect. If you're buying non-index, non-passive Vanguard funds, the search is a little harder but you can still likely get very close when you look at the aggregate portfolio.

I've taken an "overdiversified" portfolio of 20+ mutual funds someone had, and figured out how to replicate it within a small error just using 6 funds. When I completely dumped some of the 20 funds (such as commodities, precious metal, high yield, and all the various redundant funds) I reduced it to 4 funds, with better total return and lower standard deviation (and no annual account management fees).

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BL
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Re: Schwab charging $76 for VG funds

Post by BL » Fri Jan 02, 2015 9:13 pm

sambb wrote:open up new accounts at vanguard and don't contribute further to Schwab accounts. Then reevaluate in a few years.
+1
It makes no sense to me to pay $75 each time anywhere when they are free at Vanguard. Total Stock Market Admiral is 0.05%ER when you have $10k in it. I don't know if you can get Admiral fees but the ETFs are about the same ER.

GoldenFinch
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Re: Schwab charging $76 for VG funds

Post by GoldenFinch » Fri Jan 02, 2015 9:20 pm

It sounds like they waive the fees in some cases when there is a very large balance involved and the decision is at the discretion of the manager. We have used Schwab for about ten years and I paid the $76 fee only one time when I invested a large sum in VASGX. They charge fees to move accounts to Vanguard so I just ate the cost instead of going through the hassle of moving the accounts. However, no new money will be going to Schwab. I do like Schwab's website.

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Toons
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Re: Schwab charging $76 for VG funds

Post by Toons » Fri Jan 02, 2015 9:54 pm

I suggest as has been mentioned,Open an account @Vanguard online,takes a few minutes and make your fund purchases.Can't imagine paying 76 bucks to purchase a no-load fund. :shock:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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FelixTheCat
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Re: Schwab charging $76 for VG funds

Post by FelixTheCat » Fri Jan 02, 2015 10:44 pm

This is simple. Do you want the $76 in Schwab's pockets or yours? If you intend to be a Boglehead, move your accounts to Vanguard. I pay 0 fees for my boglehead portfolio.
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evilityb
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Re: Schwab charging $76 for VG funds

Post by evilityb » Fri Jan 02, 2015 10:54 pm

Consider using Schwab index funds like SCHB. The expense ratio is even a bit lower sometimes.
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Re: Schwab charging $76 for VG funds

Post by jeep364 » Fri Jan 02, 2015 11:01 pm

This might be a noob question, but is there any reason not to leave Schwab and go to vanguard? I recently started using their brokerage, only was in their funds for roth ira before, and it is probably not as advanced as scottrade but it has 7 dollar trades and is easy to use. And no fees for the funds.

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Toons
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Re: Schwab charging $76 for VG funds

Post by Toons » Fri Jan 02, 2015 11:24 pm

jeep364 wrote:This might be a noob question, but is there any reason not to leave Schwab and go to vanguard? I recently started using their brokerage, only was in their funds for roth ira before, and it is probably not as advanced as scottrade but it has 7 dollar trades and is easy to use. And no fees for the funds.
Vanguard :happy
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CABob
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Re: Schwab charging $76 for VG funds

Post by CABob » Fri Jan 02, 2015 11:27 pm

TwoByFour wrote:That is interesting - the $75 at Fidelity is pretty close to the $76 at Schwab. I wonder if this fee is being charged by VG to Schwab and then passed on to us?
No, the problem is that Vanguard will not pay a sales fee to Fido or Schwab for selling their funds so that feel they need to charge the client to make a couple (make that 75) of bucks.
You can be assured that they are getting fees from someplace for selling the funds on their NTF list.
Bob

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Toons
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Re: Schwab charging $76 for VG funds

Post by Toons » Fri Jan 02, 2015 11:29 pm

I'm still trying to comprehend paying 75 bucks for a Vanguard Fund when you can purchase it directly from Vanguard minus the fee :shock:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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in_reality
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Re: Schwab charging $76 for VG funds

Post by in_reality » Fri Jan 02, 2015 11:33 pm

jeep364 wrote:This might be a noob question, but is there any reason not to leave Schwab and go to vanguard? I recently started using their brokerage, only was in their funds for roth ira before, and it is probably not as advanced as scottrade but it has 7 dollar trades and is easy to use. And no fees for the funds.
Rest assured. You can be a boglehead at Schwab using thier excellent ETFs.

If you prefer mutual funds, then Vanguard is a better choice.

I like Schwab's fundamental Russell series to give me a value tilt. It's not everyone's cup of tea definately though.

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Re: Schwab charging $76 for VG funds

Post by mhalley » Fri Jan 02, 2015 11:34 pm

I think all three major brokerages have their pluses and minuses. I don't think it is required for a boglehead to be at vanguard, as you can replicate most of their funds by using the appropriate Fidelity or Schwab index funds, or else etfs that are on their no fee list. If you want the vanguard active funds, then you would need to transfer to avoid the $75. I have accounts at all three because I am a little paranoid, and I like all three. It does make it a little harder to rebalance across accounts, but with all the neat apps, spreadsheets, etc etc it is not that hard to do.
Mike

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BL
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Re: Schwab charging $76 for VG funds

Post by BL » Fri Jan 02, 2015 11:36 pm

Toons wrote:I'm still trying to comprehend paying 75 bucks for a Vanguard Fund when you can purchase it directly from Vanguard minus the fee :shock:
If you put in $1500, isn't that 5%? If you buy funds with a load, that may be what you would pay. I doubt if most Bogleheads would pay that, either. If you want Vanguard mutual funds, that is where to buy them.

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Toons
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Re: Schwab charging $76 for VG funds

Post by Toons » Fri Jan 02, 2015 11:39 pm

BL wrote:
Toons wrote:I'm still trying to comprehend paying 75 bucks for a Vanguard Fund when you can purchase it directly from Vanguard minus the fee :shock:
If you put in $1500, isn't that 5%? If you buy funds with a load, that may be what you would pay. I doubt if most Bogleheads would pay that, either. If you want Vanguard mutual funds, that is where to buy them.
Exactly
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

icallnocalling
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Re: Schwab charging $76 for VG funds

Post by icallnocalling » Sat Jan 03, 2015 1:09 pm

Thanks all! This is very helpful. I have a call into my "sales professional" who is assigned to my account just to check on the waiver issue. Otherwise, I will need to brush up on any disadvantages of using ETFs vs MFs - and see if that avenue makes sense. OR, whether Schwab has comparable mutual funds with similar low fees. But, just looking at their total bond index equivalent MF shows them underperforming Vg's. I was also burned by their "money market fund" that fell 10% in 08...so have an inherent distrust of their bond funds....I guess the other key issue is I know all of my records are at Schwab going back to my start - and I hate to give up the ability to get to all my records...But again, I will work through these. Thanks!

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Re: Schwab charging $76 for VG funds

Post by Pizzasteve510 » Sat Jan 03, 2015 2:35 pm

Schwab is not always on track with what I would want them to offer, but the services are excellent. I think they are best for someone who is not a 100% pure boglehead, as vanguard only fund holders have little reason to not be at vanguard. For me they offer better service, a nice user experience and good low cost options mixed with average options. Their products fit most asset class needs, but I think Fidelity and VG may beat them slightly in commodities and international bonds. A few areas that are less than ideal, but still decent.

Lately I hold mostly ETFs, which are close to tracking indexes and have very low sub .1% fees. While they are far from perfect, I find their service and options compare favorably well with Fidelity and VG. I agree that their bond offerings are not as strong historically, but the new bond ETF seems to be tracking indexes and has almost the same fee levels. Only you can decide if switching is worth the hassle or not. I might move some of my assets to Vanguard, if they offered any kind if reasonable incentive to make up for the paperwork/record hassles and tax challenges. I hold maybe 30% of our accounts in one Vanguard ETF or another. The rest are either a schwab ETF, fund or single asset. Also, I find they offer free trades for many issues or on request for good customers, so buying a VG ETF available can be almost free.
Last edited by Pizzasteve510 on Mon Jan 05, 2015 11:11 am, edited 1 time in total.

dbr
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Re: Schwab charging $76 for VG funds

Post by dbr » Sat Jan 03, 2015 2:43 pm

I pay transaction costs on all my investments. So far I am running a 0.007% cost drag which increases my portfolio average ER from 0.10% to 0.11%. A large part of this is due to using a brokerage link in my 401K where there is no choice of brokerage. In my situation there are not very many transactions and usually they are large. The most recent was when the 401K discontinued the stable value fund and I spent some money to buy something else at the brokerage.

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Re: Schwab charging $76 for VG funds

Post by john94549 » Sat Jan 03, 2015 5:52 pm

My SEP-IRA is with Schwab. As I recall, when I "attempted" (foolishly) to purchase another provider's fund, bells and whistles went off about the transaction fee. I purchased an ETF similar to the fund for a fee of $9 or thereabouts.

JRF1965!
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Re: Schwab charging $76 for VG funds

Post by JRF1965! » Thu Nov 16, 2017 12:27 pm

The charges are Vanguards charges, Schwab and Fidelity are only passing on the charge that Vanguard CHARGES.........
Schwab and Fidelity charge 0 on a sale of Vanguard Funds and 76 or 75 to buy Vanguard Funds, so much for low cost at Vanguard.

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Re: Schwab charging $76 for VG funds

Post by DSInvestor » Thu Nov 16, 2017 3:10 pm

JRF1965! wrote:
Thu Nov 16, 2017 12:27 pm
The charges are Vanguards charges, Schwab and Fidelity are only passing on the charge that Vanguard CHARGES.........
Schwab and Fidelity charge 0 on a sale of Vanguard Funds and 76 or 75 to buy Vanguard Funds, so much for low cost at Vanguard.
That is not correct. Those transaction fees are not charged by Vanguard. You can buy those funds directly from Vanguard for no transaction fees. The reason why Schwab, Fidelity and other brokerages charge a transaction fee for Vanguard funds is because Vanguard funds do not have a 12b-1 fee which compensates the broker. If you look at funds that are included in list of No Transaction Fee funds at Fidelity and Schwab, I suspect they will have 12b-1 fees.

SEC Page on Mutual fees (12b-1 fees ): https://www.sec.gov/fast-answers/answer ... stribution
SEC wrote:Distribution [and/or Service] (12b-1) Fees
This category identifies so-called "12b-1 fees," which are fees paid by the fund out of fund assets to cover distribution expenses and sometimes shareholder service expenses."12b-1 fees" get their name from the SEC rule that authorizes a fund to pay them. The rule permits a fund to pay distribution fees out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing their payment. "Distribution fees" include fees paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares, and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature.The SEC does not limit the size of 12b-1 fees that funds may pay. But under FINRA rules, 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder service expenses) cannot exceed 0.75 percent of a fund’s average net assets per year.

Some 12b-1 plans also authorize and include "shareholder service fees," which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. A fund may pay shareholder service fees without adopting a 12b-1 plan. If shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in this category of the fee table. If shareholder service fees are paid outside a 12b-1 plan, then they will be included in the "Other expenses" category, discussed below. FINRA imposes an annual .25% cap on shareholder service fees (regardless of whether these fees are authorized as part of a 12b-1 plan).
If investing in brokerages other than Vanguard, ETF shares will be more cost effective. Fidelity charges $4.95 for ETF trades.
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DetroitRick
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Re: Schwab charging $76 for VG funds

Post by DetroitRick » Thu Nov 16, 2017 3:24 pm

That transaction fee, charged on buys but not sells, is Schwab's. It is not Vanguard's fee. There are a number of funds (fortunately a pretty small number) where Schwab imposes that standard flat fee - not just for Vanguard. Dodge and Cox is one example. T Rowe Price carried that same fee at Schwab until earlier in the year when it was dropped (with no change in annual fund operating expenses). For some fund families it is only charged on certain funds - Harbor Funds for example (where HACAX carries the $76 fee, HIINX does not).

I largely duck the fee by using Vanguard ETF's where necessary. Schwab also has some good substitutes (funds and etfs), so I sometimes do that. But overall, these fees are pretty are easy to avoid at Schwab. I currently only pay the fee on two seldom-traded actively managed funds, and those particular cases are acceptable to me (very large positions, core positions that I rarely trade, and very low expense ratios). If it was more significant, I'd try to get at least a temporary waiver - I've heard people describe doing so in the past, but have no way to verify that it really happens (and under what circumstances). Still, worth a call to your rep first.

Edited to add: Just to further clarify, when this fee is charged, it is charged on purchases but NOT on reinvestments. Also don't assume this fee is charged when no 12b-1 fee is paid (there are many funds at Schwab with no transaction fees AND no 12b-1 fees, you have to look case-by-case).
Last edited by DetroitRick on Thu Nov 16, 2017 3:31 pm, edited 1 time in total.

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Re: Schwab charging $76 for VG funds

Post by ruralavalon » Thu Nov 16, 2017 3:29 pm

icallnocalling wrote:
Fri Jan 02, 2015 7:16 pm
I have a very BH portfolio, but have been at Schwab since my start...I use VG funds for all but total stock market (with a few other minor exceptions). The issue is that every time I rebalance - once a year or with a major windfall -- Schwab charges me $76 every time I buy a VG fund. When you do that across 5 accounts it starts to add up. I have been on the verge of moving to VG just because of the fees, but inertia (and having the knowledge that all of my records are at Schwab) has kept me from doing so. Any one get them to waive similar fees? Thanks....I will hang up and listen... :D
If you want Vanguard funds there is usually no good reason to have accounts anywhere other than Vanguard, in my opinion. Those $76 per transaction fees do indeed add up.

Is it time to move the 5 accounts to Vanguard? It's an easy move, especially if you are talking about IRAs.
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Re: Schwab charging $76 for VG funds

Post by Didymograptus » Thu Nov 16, 2017 4:12 pm

I have a Schwab Tradelink account as part of my employer's T. Rowe Price 401k plan.

Within that account I was tempted to get some Vanguard Mutual Funds but went for the no transaction fee Schwab funds as follows:

Schwab International Index SWISX - ER 0.06%
Schwab Total Stock Market Index - SWTSX ER 0.03%
Schwab US Aggregate Bond Index - SWAGX ER 0.04%
Schwab Short-Term Bond Index - SWSBX ER 0.06%

Quite happy with the cost of these.
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Re: Schwab charging $76 for VG funds

Post by oldcomputerguy » Thu Nov 16, 2017 5:13 pm

DetroitRick wrote:
Thu Nov 16, 2017 3:24 pm
That transaction fee, charged on buys but not sells, is Schwab's. It is not Vanguard's fee. There are a number of funds (fortunately a pretty small number) where Schwab imposes that standard flat fee - not just for Vanguard. Dodge and Cox is one example.
Fidelity also charges a fee ($75) to purchase Dodge & Cox.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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