Schwab Vs. Vanguard?

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meowcat
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Schwab Vs. Vanguard?

Post by meowcat » Wed Apr 26, 2017 6:23 am

I've been looking at Schwab's website, comparing costs between their index funds and Vanguard's, specifically, total stock market and S&P 500. There's a nice link on Schwab's site where you can compare costs with Vanguard funds. Something is amiss, however, as Schwab says Vanguard's TSM is 4 basis points, yet Vanguard says their costs are 5 basis points. (Admiral shares, of course). Am I missing something on Vanguard's site, or is Schwab?
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Re: Schwab Vs. Vanguard?

Post by Doc » Wed Apr 26, 2017 6:44 am

It's probably a difference in ER from the prospectus vs a annual report.

See recent thread "Schwab false add". It's not.

Schwab has lower costs in many cases but it's not enough difference to base a decision on. However once you get beyond the 500 you may see differences in index which could be a better reason to choose one over the other.
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Re: Schwab Vs. Vanguard?

Post by radiowave » Wed Apr 26, 2017 7:04 am

The Vanguard Institutional Total Stock Market (VITNX) has an expense ratio of 0.04% https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Re: Schwab Vs. Vanguard?

Post by onourway » Wed Apr 26, 2017 7:36 am

I like my Schwab checking account but I prefer Vanguard for my investments. Schwab's index offerings are really quite slim.

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Re: Schwab Vs. Vanguard?

Post by meowcat » Wed Apr 26, 2017 8:18 am

Thanks for the info.
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Re: Schwab Vs. Vanguard?

Post by kolea » Wed Apr 26, 2017 9:27 am

onourway wrote:I like my Schwab checking account but I prefer Vanguard for my investments. Schwab's index offerings are really quite slim.
I like Schwab customer service. They have been really easy to work with. They Express mail, overnight paperwork to us when we really needed it fast, on their dime. I like to use Chat to solve problems because my hearing sucks and a phone call does not work for me.

Most of my money is in Vanguard funds, held at Schwab. Not a problem, especially with ETFs. Mutual funds are kind of a pain since there is a purchase fee. As Schwab funds have gotten cheaper I am starting to use them more.
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Re: Schwab Vs. Vanguard?

Post by Countermoon » Wed Apr 26, 2017 9:38 am

If you want to do a Three Fund portfolio, Schwab has everything you need at very low ERs:

Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)

Personally, I really like their website and customer service.

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Re: Schwab Vs. Vanguard?

Post by powermega » Wed Apr 26, 2017 9:51 am

The difference in mutual funds expenses is not big enough to be a driver for this decision unless you're talking about smaller investment amounts that don't qualify for the admiral share pricing. Schwab has far superior customer service, integrated bank accounts, and branch offices. Vanguard has a broader list of index funds. It's more of a question of what's important to you personally. I think both are great choices and you couldn't go wrong with either one. We have accounts at both.
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Re: Schwab Vs. Vanguard?

Post by Jack FFR1846 » Wed Apr 26, 2017 10:13 am

onourway wrote:I like my Schwab checking account but I prefer Vanguard for my investments. Schwab's index offerings are really quite slim.
Are there funds that you actually want to use that are missing at Schwab?

The way I look at it is that if they have the basic 3 funds I'm looking for, whether they have another 2 or another 300 that I don't use doesn't make any difference to me at all.
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Re: Schwab Vs. Vanguard?

Post by Doc » Wed Apr 26, 2017 10:56 am

Jack FFR1846 wrote:The way I look at it is that if they have the basic 3 funds I'm looking for ...
The Total Stock Market funds are not the same: Schwab uses Dow US total stock market and Vanguard uses CRSP US stock market. To make it even fuzzier Morningstar benchmarks both of them against the Russell 1000.

In this case it probably makes no difference but if you are tilting it can make a significant difference.

Some differences that I see are CRSP has limited history you are relying on back testing. On the international side Vanguard includes emerging markets for most fund while Schwab does not. I don't want EM so I prefer Schwab but others may have a different perspective. (If I did want EM I would prefer it in a separate fund so I can cheer/cry a lot as the South Korea for example moves into or out of EM.)
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Re: Schwab Vs. Vanguard?

Post by onourway » Wed Apr 26, 2017 12:10 pm

Jack FFR1846 wrote:
onourway wrote:I like my Schwab checking account but I prefer Vanguard for my investments. Schwab's index offerings are really quite slim.
Are there funds that you actually want to use that are missing at Schwab?

The way I look at it is that if they have the basic 3 funds I'm looking for, whether they have another 2 or another 300 that I don't use doesn't make any difference to me at all.
Schwab only just started offering a total bond index fund - and bonds seem to be difficult enough to index that I would not be comfortable there. They offer almost nothing in the way of municipal bond funds; Vanguard has over a dozen. I also like that Vanguard has a large number of balanced funds to choose from. We have a variety of accounts across many providers, and I prefer to be able to hold a single fund in some of those accounts to keep things simple.

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Re: Schwab Vs. Vanguard?

Post by Doc » Wed Apr 26, 2017 12:54 pm

onourway wrote:Schwab only just started offering a total bond index fund - and bonds seem to be difficult enough to index that I would not be comfortable there.
Most of our bond fund portfolio is at Vanguard and my preferred management style for bonds is active not indexed when I can get around the $50k minimum for admiral shares. But I don't invest in a Total Bond Market either, whether active or indexed.
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Re: Schwab Vs. Vanguard?

Post by Nestegg_User » Wed Apr 26, 2017 11:39 pm

powermega wrote:The difference in mutual funds expenses is not big enough to be a driver for this decision unless you're talking about smaller investment amounts that don't qualify for the admiral share pricing. Schwab has far superior customer service, integrated bank accounts, and branch offices. Vanguard has a broader list of index funds. It's more of a question of what's important to you personally. I think both are great choices and you couldn't go wrong with either one. We have accounts at both.
If you have enough assets in Schwab (pinnacle status) the representative can set up your account to allow for one or two fund companies to not have the normal fees, we set up ours for Vanguard and don't pay those fees. The customer service for Schwab has been very good for us even in the earlier days with smaller asset levels.

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Re: Schwab Vs. Vanguard?

Post by dn123 » Thu Apr 27, 2017 12:14 am

One difference that I think I saw between some Schwab index funds and Vanguard is that Schwab paid out dividends one per year vs Vanguard 4x per year (based on the distributions tab that I see on Schwab's site for SWTSX). I would rather get them quarterly, esp if I was in retirement years and not let Schwab get to use that money until it needs to be paid out (maybe thats how they can get their ER down a bit?). Please correct me if Im wrong here.

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Re: Schwab Vs. Vanguard?

Post by ClaycordJCA » Thu Apr 27, 2017 12:51 am

Nearing_Destination wrote:
If you have enough assets in Schwab (pinnacle status) the representative can set up your account to allow for one or two fund companies to not have the normal fees, we set up ours for Vanguard and don't pay those fees. The customer service for Schwab has been very good for us even in the earlier days with smaller asset levels.[/quote]

Can I ask what the threshold is for pinnacle status? A quick web search was unsuccessful.

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Re: Schwab Vs. Vanguard?

Post by oldcomputerguy » Thu Apr 27, 2017 5:33 am

meowcat wrote:I've been looking at Schwab's website, comparing costs between their index funds and Vanguard's, specifically, total stock market and S&P 500. There's a nice link on Schwab's site where you can compare costs with Vanguard funds. Something is amiss, however, as Schwab says Vanguard's TSM is 4 basis points, yet Vanguard says their costs are 5 basis points. (Admiral shares, of course). Am I missing something on Vanguard's site, or is Schwab?
Vanguard dropped the ER. If you check their web site now, they show the ER of their TSM and S&P500 Admiral-share mutual funds VTSAX and VFIAX as 0.04% each.
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Re: Schwab Vs. Vanguard?

Post by Doc » Thu Apr 27, 2017 5:55 am

dn123 wrote:One difference that I think I saw between some Schwab index funds and Vanguard is that Schwab paid out dividends one per year vs Vanguard 4x per year (based on the distributions tab that I see on Schwab's site for SWTSX). I would rather get them quarterly, esp if I was in retirement years and not let Schwab get to use that money until it needs to be paid out (maybe thats how they can get their ER down a bit?). Please correct me if Im wrong here.
The dividends from the companies in the fund get paid to the fund not Schwab.

I prefer the annual divs since that fits my cash flow needs better and simplifies bookkeeping especially with possible wash sales. If I needed monthly income I would use withdrawals from a short term bond fund.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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Re: Schwab Vs. Vanguard?

Post by Devilsfan118 » Thu Apr 27, 2017 9:03 am

What are your thoughts on both companies' Target Date Retirement Funds?

I'm a novice investor compared to most of you guys, just getting started and prefer the simplicity of the target date funds until I get a substantial foothold established.

But anyway, I have my Roth IRA in VFFVX (let's say about 15k) and am thinking of rolling over an old 401k (also about the same amount) into SWXJX just to not have everything in/at the same place.

Any of you guys have thoughts on the target date funds?

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Re: Schwab Vs. Vanguard?

Post by goingup » Thu Apr 27, 2017 9:16 am

powermega wrote:The difference in mutual funds expenses is not big enough to be a driver for this decision unless you're talking about smaller investment amounts that don't qualify for the admiral share pricing. Schwab has far superior customer service, integrated bank accounts, and branch offices. Vanguard has a broader list of index funds. It's more of a question of what's important to you personally. I think both are great choices and you couldn't go wrong with either one. We have accounts at both.
Agreed completely about the ERs not being the decision driver in the OP's case.
The difference in .01% ER on a $1mil portfolio is $100 per year. Other considerations are more important.

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Re: Schwab Vs. Vanguard?

Post by G-Force » Fri Apr 28, 2017 5:45 pm

ClaycordJCA wrote:
Nearing_Destination wrote: If you have enough assets in Schwab (pinnacle status) the representative can set up your account to allow for one or two fund companies to not have the normal fees, we set up ours for Vanguard and don't pay those fees. The customer service for Schwab has been very good for us even in the earlier days with smaller asset levels.
Can I ask what the threshold is for pinnacle status? A quick web search was unsuccessful.
I'd be curious to know what pinnacle status means as well. How much do you need to achieve that level? Are there any other status levels at Schwab?

If you choose Vanguard as your fund company of choice, do the fee waivers include ETFs and Mutual Funds, or only ETFs?

Can you own Admiral Shares of Vanguard mutual funds at Schwab?

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Re: Schwab Vs. Vanguard?

Post by schoolboyguy » Fri Apr 28, 2017 9:09 pm

I've used both companies, but recently moved all assets back to vanguard. Schwab definitely has better website, customer service, and research resources. I only owned etf's and individual stocks there, so I can't speak on mutual fund experience. But the reason I switched back to vanguard was liquidity concerns with Schwab's commission free etf's. Most of their commission free etf's have relatively low volume, which I perceived as a potential problem. Most of vanguard's etf's don't have that problem, so I'm willing to accept their other issues.

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Re: Schwab Vs. Vanguard?

Post by MnD » Sat Apr 29, 2017 1:50 pm

Decades long happy customer at Schwab. We have a couple of Vanguard ETF's my Schwab accounts and a Vanguard Fund in her 401K.
Not having an account at Vanguard does not preclude one from owning their funds or ETF's.

In fact it seems like most of the Vanguard complaints here are about their accounts and related services, not about their funds.

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Re: Schwab Vs. Vanguard?

Post by ruralavalon » Sun Apr 30, 2017 10:09 am

goingup wrote:
powermega wrote:The difference in mutual funds expenses is not big enough to be a driver for this decision unless you're talking about smaller investment amounts that don't qualify for the admiral share pricing. Schwab has far superior customer service, integrated bank accounts, and branch offices. Vanguard has a broader list of index funds. It's more of a question of what's important to you personally. I think both are great choices and you couldn't go wrong with either one. We have accounts at both.
Agreed completely about the ERs not being the decision driver in the OP's case.
The difference in .01% ER on a $1mil portfolio is $100 per year. Other considerations are more important.
I agree that the tiny differences in expense ratios should not be a factor in the decision.

A major advantage of Schwab for the new investor with a modest income is the tiny initial minimum investment required.

My personal preference for Vanguard is because of their very large selection of low expense ratio funds.
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Re: Schwab Vs. Vanguard?

Post by jamesthebaker » Sun Apr 30, 2017 10:47 pm

I own both swtsx and vtsax and from what I can see they move practically in lockstep so I'd be hard pressed to say one is better than the other in my portfolio. I'm sure one can split hairs to micro analyze these two funds but in practical terms either one will meet your goals.

I keep accounts at both Schwab and Vanguard because I'm paranoid about cyber security. I just feel safer having my money split between the two accounts. I use two factor ID at Vanguard and use a token generator on my Schwab account.

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Re: Schwab Vs. Vanguard?

Post by chinto » Mon May 01, 2017 12:47 am

My personal view is that Vanguard has an endemic culture problem that creates a headwind against providing a quality customer service experience.

I am a FIDO guy and a very reluctant Vanguard customer, I regret ever putting a large chunk of taxable money at Vanguard. I have sampled Schwab's customer service and find it superior. I tend to think that is you believe you are going to end up with true wealth in retirement (defining that as 5 million on up) then you will probably appreciate the amount of quality, free expertise you can avail yourself of at Schwab (or Fidelity) when contrasted with Vanguard. Also, the basic customer service experience at Schwab (or Fidelity) is simply superior. To me that matters.

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Re: Schwab Vs. Vanguard?

Post by TigerNest » Mon May 01, 2017 12:51 am

I am a client of both. I love Vanguard, but if I had to choose one, I would choose Schwab. They've been consistently great over the last decade. You can always own Vanguard funds and ETFs through the Schwab brokerage account.

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Re: Schwab Vs. Vanguard?

Post by jalbert » Mon May 01, 2017 1:06 am

These are just projected costs. Vanguard is more conservative in their projections. Last year, the Vanguard total US stock index fund advertised a projected ER of 5 bp but it came in at 4 bp per the latest shareholder report.

Differences in expenses not accounted for in ER are usually greater than 1 bp per year also.

Any net cost is a drag on tracking the index so the best way to compare costs of two total US stock market index funds is to compare historical tracking error.
Last edited by jalbert on Wed May 03, 2017 2:31 pm, edited 1 time in total.
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Re: Schwab Vs. Vanguard?

Post by House Blend » Mon May 01, 2017 10:04 am

jalbert wrote:Any net cost is a drag on tracking the index so the best way to compare costs of two total US stock market index funds is to compare historical tracking error.
Best if you can compare two funds tracking the *same* index, such as the ubiquitous S&P 500.

Otherwise, tracking error can easily be swamped by differences in the returns of the two "total market" indexes in question. The point being that one needs to acknowledge that aside from index fund management skill and cost, it is *possible* that some total market indexes are better than others. (Certainly people have strong opinions about the "best" index for narrower slices of the total market.)

For example, for the 10 years ending with 2016, the CRSP index (currently used by VG) returned 7.03%/yr, and the MSCI index returned 7.25%. That's 22bp/yr.
https://www.bogleheads.org/wiki/US_tota ... ex_returns

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Re: Schwab Vs. Vanguard?

Post by SpringMan » Mon May 01, 2017 11:13 am

radiowave wrote:The Vanguard Institutional Total Stock Market (VITNX) has an expense ratio of 0.04% https://personal.vanguard.com/us/funds/ ... IntExt=INT
Your link also shows that VITNX has a $100,000,000 minimum. Perhaps some have access through a company specific 401k but few Bogleheads have that kind of dough. Also the admiral shares have a .04% ER so I am sure the institutional shares would be even less.
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Re: Schwab Vs. Vanguard?

Post by mptfan » Mon May 01, 2017 11:22 am

radiowave wrote:The Vanguard Institutional Total Stock Market (VITNX) has an expense ratio of 0.04% https://personal.vanguard.com/us/funds/ ... IntExt=INT
Do you have $100,000,000 to invest in that fund?
:shock:

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Re: Schwab Vs. Vanguard?

Post by triceratop » Mon May 01, 2017 11:32 am

On the ETF side, if you call Schwab and ask for free trades to transfer assets in, they may oblige. They offered me 100 free trades per year, to any fund family (OneSource ETFs did not count against this number).
Doc wrote:It's probably a difference in ER from the prospectus vs a annual report.

See recent thread "Schwab false add". It's not.

Schwab has lower costs in many cases but it's not enough difference to base a decision on. However once you get beyond the 500 you may see differences in index which could be a better reason to choose one over the other.
Yes but in this case Schwab is helping Vanguard out ;-)
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Re: Schwab Vs. Vanguard?

Post by House Blend » Mon May 01, 2017 12:39 pm

mptfan wrote:
radiowave wrote:The Vanguard Institutional Total Stock Market (VITNX) has an expense ratio of 0.04% https://personal.vanguard.com/us/funds/ ... IntExt=INT
Do you have $100,000,000 to invest in that fund?
:shock:
Interesting to note that VITNX is "Institutional Total Stock Market Index Fund Institutional Shares". Hidden in that title -- the two appearances of "Institutional" -- is a marker that indicates that it is not another share class of VTSAX.

So if you were rich enough to hold this in taxable, you would not benefit from the tax efficiencies of the ETF share class. You may be on the hook for cap gains distributions. (And in fact, this did happen in 2016.)

My employer offers VITSX: "Total Stock Market Index Fund Institutional Shares" in our retirement plan. That one *is* another share class of VTSAX.

Also curious is that after the latest round of price cuts, VITNX remains at 0.04% (same as VTSAX), but VITSX dropped to 0.035%. Presumably VITNX has not yet gathered enough assets to fully benefit from economies of scale.

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Re: Schwab Vs. Vanguard?

Post by jalbert » Tue May 02, 2017 7:44 pm

Otherwise, tracking error can easily be swamped by differences in the returns of the two "total market" indexes in question.
That is true of total return, but tracking error is error relative to the index being tracked, so a good measure of net costs even for similar but different indices.
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Re: Schwab Vs. Vanguard?

Post by UnclePennybags » Wed Nov 15, 2017 3:28 pm

G-Force wrote:
Fri Apr 28, 2017 5:45 pm
I'd be curious to know what pinnacle status means as well. How much do you need to achieve that level? Are there any other status levels at Schwab?
I just got Pinnacle status added to my account and based on the timing, I can't be sure what the threshold is, but I suspect it is a million. In my attempts to learn about it, I found very little information. I did learn that there is a higher level called Chairman's Circle for those with 5million at Schwab.

The brochure they sent me has very little specific information: http://www.coroflot.com/jenniferahomer/ ... h-Bookmark

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Re: Schwab Vs. Vanguard?

Post by ColoRetiredGirl » Wed Nov 15, 2017 4:52 pm

Countermoon wrote:
Wed Apr 26, 2017 9:38 am
If you want to do a Three Fund portfolio, Schwab has everything you need at very low ERs:

Schwab Total Stock Market Index (SWTSX)
Schwab International Index (SWISX)
Schwab U.S. Aggregate Bond Index Fund (SWAGX)

Personally, I really like their website and customer service.
I am in the process of moving my TSP account. I already have my 401K with Schwab. I am thinking of doing the three fund portfolio you show above. Are there any hidden costs/fees I need to know about or any downside? What about their new 1000 index fund? Any recommendations are greatly appreciated.

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Re: Schwab Vs. Vanguard?

Post by ColoRetiredGirl » Wed Nov 15, 2017 5:08 pm

G-Force wrote:
Fri Apr 28, 2017 5:45 pm
ClaycordJCA wrote:
Nearing_Destination wrote: If you have enough assets in Schwab (pinnacle status) the representative can set up your account to allow for one or two fund companies to not have the normal fees, we set up ours for Vanguard and don't pay those fees. The customer service for Schwab has been very good for us even in the earlier days with smaller asset levels.
Can I ask what the threshold is for pinnacle status? A quick web search was unsuccessful.
I'd be curious to know what pinnacle status means as well. How much do you need to achieve that level? Are there any other status levels at Schwab?

If you choose Vanguard as your fund company of choice, do the fee waivers include ETFs and Mutual Funds, or only ETFs?

Can you own Admiral Shares of Vanguard mutual funds at Schwab?
Can you go over all levels at Schwab and Vanguard? This is the first time I have heard about levels/status. I didn’t see this on Schwabs website.

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Re: Schwab Vs. Vanguard?

Post by G-Force » Wed Jan 17, 2018 2:14 pm

ColoRetiredGirl wrote:
Wed Nov 15, 2017 5:08 pm
Can you go over all levels at Schwab and Vanguard? This is the first time I have heard about levels/status. I didn’t see this on Schwabs website.
Vanguard has 5 levels

Personal Investor - less than $50k assets
Voyager - requires $50k assets
Voyager Select - requires $500k assets
Flagship - requires $1M
Flagship Select - requires $5M

Schwab does not publicize different status levels so everything I know comes from this thread:

Pinnacle - $1M assets
Chairman's Circle - $5M+ assets

Schwab also has private client status with a $500k requirement but this would require you to let Schwab manage the money for you with a fee starting at 0.9% AUM. Most on this board would not choose this option.

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Re: Schwab Vs. Vanguard?

Post by ColoRetiredGirl » Wed Jan 17, 2018 4:15 pm

I think Schwab only has private client status. You do not have to use their AUM. I told them I wanted no or low fees. I have ETFs. They do assist individuals with questions, setup etc at no charge.

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