Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges

[MFInvestor]

Charles Schwab (SCHW) Eliminating Commissions for Stocks, ETFs and Options Listed on U.S. or Canadian Exchanges

Beginning October 7, 2019, the company will reduce U.S. stock, ETF and options online trade commissions from $4.95 to zero. And with no minimum account size to open a full featured Schwab brokerage account, every investor, no matter how large or small, can benefit from the expertise and support of a firm that has been entrusted with more than $3.7 trillion in client assets. Every Schwab client using our web and mobile channels automatically qualifies for the new pricing, without opening a new account, making a new deposit or maintaining a minimum balance of any type.

https://www.streetinsider.com/Corporate ... 67021.html

[pkjr]

it looks like a response to InteractiveBrokers' offering.

[bgf]

Cool, thanks for the heads up. I guess I'll be able to go ahead and make a trade with that $45 i have sitting in there.

[CardinalRule]

Might not be a good day for the brokerage stocks themselves, on this news.

[bondsr4me]

I just now heard that on CNBC.

I may end up moving most funds from Fidelity to Schwab; just wish they would get rid of the .65/contract fee on options.

Have a great day.

[Jack FFR1846]

Oh.... Now BRK/b won't cost anything to buy. Interesting.

[student]

My concern is they may have to save money elsewhere and it may affect customer service.

[arf30]

Other brokerages like Robinhood have proven this model profitable through securities lending, payment for order flow, etc so I wouldn't be worried about Schwab. They wouldn't have made the change if it wasn't going to make money and it brings in new customers to use higher margin products.

[bondsr4me]

If they have a huge amount of money transferred in from other brokerages, they will probably make a decent amount on the uninvested cash in customer accounts...I believe about they had a pretty large amount of earnings from the uninvested client cash in brokerage accounts.

Net Interest Revenue was 57% recently; brokerage revenue was 8%....from CNBC today.

[frugaltigris]

This is good news. Let us see how Fidelity and Vanguard react. My guess is that Fidelity would react and Vanguard would ignore.

[Plz]

Great! So I can buy Vanguard ETFs at schwab for free?

Effectively, is there a difference between holding Vanguard ETFs at Vanguard vs at schwab?

Also, is there a reason to prefer a US total market etf from schwab over vanguard anymore?

[gjlynch17]

This is good news. Let us see how Fidelity and Vanguard react. My guess is that Fidelity would react and Vanguard would ignore.

Concur this is great news for investors! Vanguard was already ahead with commission free ETFs but Schwab is upping the ante with stocks. I hope Fidelity follows suit.

[Nate79]

Awesome news!

[frugaltigris]

No difference on holding Vanguard ETFs in Schwab. Many will switch to Schwab now.

[NMBob]

thanks for posting. was debating to transfer part/all of schwab ira to a free trade place, such as merrill where i had free trades in taxable. now can just wait a week.

[indexfundfan]

Wow. Wondering if Fidelity will follow suit.

[Jack FFR1846]

Schwab has been trolling existing customers for new money, offering bonuses. I just transferred my SCHB dividend out this morning. Will wait until we pay for our new roof, then transfer money into Schwab and buy something, gaining $200 ($50k investment min). Perfect timing for me!

[frugaltigris]

Well Fidelity changed their Welcome page today. Pretty amusing. Seems they are panicking.
They state "Investing isn't just about money – it's about your future"

Come on Fidelity, do a comparison with Schwab!

[aristotelian]

They have always given me free trades on request. This just codifies what they are already doing.

Smart move to get out in front of M1 and Robinhood so people don't have a reason to leave.

[MnD]

Great! Been with Schwab since 1990 and have yet to be disappointed with ever-improving service and lower costs.
This eliminates one of my three Schwab pet peeves, namely having to use 3 international Schwab ETF's to approximate an all-country (ex-US) all cap fund like VXUS to avoid paying commissions. I'm still hopeful they will implement auto-roll on treasuries. Not optimistic they will offer a default cash sweep federal MM fund given their bank sweep is a cash cow for them from asleep at the wheel investors.

[Startled Cat]

I think this was inevitable and Schwab's competitors will match this move shortly. Brokerages have other revenue sources which are more significant than commissions (see https://www.kalzumeus.com/2019/6/26/how ... ake-money/).

Stock/ETF trades have been free for me since about 2008 (first with WellsTrade, and I've since switched to Merrill Edge). But this is now becoming the industry norm instead of something offered by specific brokerages to customers who meet a balance threshold. If brokerages resist the trend, they'll lose much of their business to the likes of Robinhood, Interactive Brokers, and Schwab.

[furgason5]

So what funds are people looking to swap out in tax advantaged accounts? Personally I am liking VXUS for SCHF and VBR for SLYV.

[Doc]

This eliminates one of my three Schwab pet peeves, namely having to use 3 international Schwab ETF's to approximate an all-country (ex-US) all cap fund like VXUS to avoid paying commissions.

On the other side of the coin it eliminates one of my pet peeves with Vanguard by not making me buy EM.

[David Althaus]

It's almost assured other brokers will soon follow. What will this eventually do to traditional mutual funds? Other than not being able to purchase fractional shares I can think of no reason we all shouldn't switch to the ETF version and save on the expense ratio.

All the best

[Library_Lady]

Now if only they’d eliminate mutual fund commissions of $49.95..

[inbox788]

My concern is they may have to save money elsewhere and it may affect customer service.

That was my concern with Fidelity as well. Vanguard has virtually no offices, while Schwab and Fidelity keep a large number of offices and staff. I just looked and found 2 Schwab offices near me (with each having 3 vp/senior financial consultants -- salespeople?). I don't think their financial consultants are fiduciaries, so I wouldn't trust them to be looking out for me.

Any good reasons to visit these Schwab offices?

[bgreat]

So it sounds like this would apply to the International Brokerage too (they do generally have the same fees for Schwab International vs Schwab US, and their statement does state all customers will enjoy this).

So the question is: will it be cheaper to trade with an Interactive Broker's standard account (fees of e.g. 35 cents for a trade), or Schwab (0 per trade) - apparently IB have better execution which would presumably affect purchase price, anyone able to explain the difference better?

[Hector]

it looks like a response to InteractiveBrokers' offering.

What is their offering?

[indexfundfan]

it looks like a response to InteractiveBrokers' offering.

What is their offering?

https://ibkr.com/lite

[Hector]

My concern is they may have to save money elsewhere and it may affect customer service.

If other brokers don't match. Schwab would keep getting new money $ in. They make money from their sweep accounts fees (ER of Money Market Funds), by offering their inventory for secondary treasury trading, other commissions on fix income options, bid and spread difference in trading.

[Hector]

it looks like a response to InteractiveBrokers' offering.

What is their offering?

https://ibkr.com/lite

Thanks

[TIAX]

Everyone should send a message to or call their broker asking them to match Schwab.

[MichCPA]

Great! So I can buy Vanguard ETFs at schwab for free?

Effectively, is there a difference between holding Vanguard ETFs at Vanguard vs at schwab?

Also, is there a reason to prefer a US total market etf from schwab over vanguard anymore?

Your website won't crash at Schwab.

[bondsr4me]

My concern is they may have to save money elsewhere and it may affect customer service.

That was my concern with Fidelity as well. Vanguard has virtually no offices, while Schwab and Fidelity keep a large number of offices and staff. I just looked and found 2 Schwab offices near me (with each having 3 vp/senior financial consultants -- salespeople?). I don't think their financial consultants are fiduciaries, so I wouldn't trust them to be looking out for me.

Any good reasons to visit these Schwab offices?

Why not call and ask these 3 "Salespeople?" if they are fiduciaries or just "salespeople". They may very well act as fiduciaries just like some at VG or Fido or any other firm that works in a fiduciary capacity.

[sperry8]

Schwab has been trolling existing customers for new money, offering bonuses. I just transferred my SCHB dividend out this morning. Will wait until we pay for our new roof, then transfer money into Schwab and buy something, gaining $200 ($50k investment min). Perfect timing for me!

How are you notified of their promo? I have an open brokerage account with them (with $1 in it) so I can have a checking acct and their amazing debit card (which has no int'l transaction fees for ATM withdrawals).

I'd transfer (in kind) assets from VG to them if I could get a bonus for doing so. But I don't see anything on their website. How did you find out about their existing customer offers?

[MichCPA]

It's almost assured other brokers will soon follow. What will this eventually do to traditional mutual funds? Other than not being able to purchase fractional shares I can think of no reason we all shouldn't switch to the ETF version and save on the expense ratio.

All the best

My prediction: Investment co's will follow the Fido route and give ultra low or even negative ERs on funds you cannot hold at any other brokerage to achieve client lock in.

[an_asker]

Schwab has been trolling existing customers for new money, offering bonuses. I just transferred my SCHB dividend out this morning. Will wait until we pay for our new roof, then transfer money into Schwab and buy something, gaining $200 ($50k investment min). Perfect timing for me!

How are you notified of their promo? I have an open brokerage account with them (with $1 in it) so I can have a checking acct and their amazing debit card (which has no int'l transaction fees for ATM withdrawals).

I'd transfer (in kind) assets from VG to them if I could get a bonus for doing so. But I don't see anything on their website. How did you find out about their existing customer offers?

Schwab has never asked me for new money

[TIAX]

It's almost assured other brokers will soon follow. What will this eventually do to traditional mutual funds? Other than not being able to purchase fractional shares I can think of no reason we all shouldn't switch to the ETF version and save on the expense ratio.

All the best

My prediction: Investment co's will follow the Fido route and give ultra low or even negative ERs on funds you cannot hold at any other brokerage to achieve client lock in.

If many companies do so, that won't lock anyone in.

[WhiteMaxima]

I just wish real estate could be traded commissions free too. 6% is outrages.

[whodidntante]

Well Fidelity changed their Welcome page today. Pretty amusing. Seems they are panicking.
They state "Investing isn't just about money – it's about your future"

Come on Fidelity, do a comparison with Schwab!

LOL
I want my future to have lots of money.

Your move, Abby.

[Nate79]

Schwab has been trolling existing customers for new money, offering bonuses. I just transferred my SCHB dividend out this morning. Will wait until we pay for our new roof, then transfer money into Schwab and buy something, gaining $200 ($50k investment min). Perfect timing for me!

How are you notified of their promo? I have an open brokerage account with them (with $1 in it) so I can have a checking acct and their amazing debit card (which has no int'l transaction fees for ATM withdrawals).

I'd transfer (in kind) assets from VG to them if I could get a bonus for doing so. But I don't see anything on their website. How did you find out about their existing customer offers?

Schwab sometimes sends an email to existing customers for a bonus offering.

[whodidntante]

Other brokerages like Robinhood have proven this model profitable through securities lending, payment for order flow, etc so I wouldn't be worried about Schwab. They wouldn't have made the change if it wasn't going to make money and it brings in new customers to use higher margin products.

When did we learn that robinhood is profitable? I think their business model is possibly a cash shredder. Lots of trading beyond meat options with tiny accounts, and writing to support.

[TIAX]

Schwab CFO's commentary on the changes.

[inbox788]

My prediction: Investment co's will follow the Fido route and give ultra low or even negative ERs on funds you cannot hold at any other brokerage to achieve client lock in.

I'm all for a free lunch, but we all know someone is paying for it. These businesses are not charities, so if their income and earnings are cut to the bone, where are they going to get sufficient revenue to keep going? After losing this revenue, they will either have to find more revenue elsewhere or cut expenses and services.

[OnLevel]

I really hope Fidelity follows suit. They are my favorite.

[Scooter57]

Now if only they’d eliminate mutual fund commissions of $49.95..

Did that remain the same? I am ready to move my assets to a firm that can be trusted not to screw things up for my heirs on my demise and where there is real phone support.

Are the brick and mortar offices at all useful? They are far from me but convenient to my kids.

We ran into issues with required medallion guarantees with my parents' estates which our small town local banks couldn't handle. Would a Schwab office handle that for Scwab account holders?

Vanguard's deteriorating service and generic robo stuff is really worrying me.

[fujiters]

Schwab has been trolling existing customers for new money, offering bonuses. I just transferred my SCHB dividend out this morning. Will wait until we pay for our new roof, then transfer money into Schwab and buy something, gaining $200 ($50k investment min). Perfect timing for me!

How are you notified of their promo? I have an open brokerage account with them (with $1 in it) so I can have a checking acct and their amazing debit card (which has no int'l transaction fees for ATM withdrawals).

I'd transfer (in kind) assets from VG to them if I could get a bonus for doing so. But I don't see anything on their website. How did you find out about their existing customer offers?

+1

I have the exact same situation (opened account to get the fee free ATM card). Never been offered a bonus for moving money in (but would move money for a bonus).

[DonIce]

The free options trading is unique I think? Are there other brokerages that have $0 options trading? Lots now offer ETFs and stocks commission free but I don't recall seeing free options.

[Workable Goblin]

That was my concern with Fidelity as well. Vanguard has virtually no offices, while Schwab and Fidelity keep a large number of offices and staff. I just looked and found 2 Schwab offices near me (with each having 3 vp/senior financial consultants -- salespeople?). I don't think their financial consultants are fiduciaries, so I wouldn't trust them to be looking out for me.

Any good reasons to visit these Schwab offices?

Drop off paperwork? I had to recharacterize some IRA contributions earlier this year, and it was certainly more convenient to be able to drop off the paperwork at their office here as opposed to mailing it in, much less trying to find a fax machine.

[Doc]

If other brokers don't match. Schwab would keep getting new money $ in. They make money from their sweep accounts fees (ER of Money Market Funds), by offering their inventory for secondary treasury trading, other commissions on fix income options, bid and spread difference in trading.

Schwab's Sweep account is Schwab Bank account not a MM fund. The sweep account pays 0.15% interest for balances less than $1,000,000. Over $1 million 0.55%.

The net ER on their "main" purchase money market account is currently 0.34% with waivers.

So they are making more money on "cash" investments than say a Vanguard.