Considering Schwab

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WhitePuma
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Considering Schwab

Post by WhitePuma »

I’m considering transferring existing assets to a new brokerage account at Schwab. Initially, I just plan on transferring and holding a couple mutual fund / ETFs there to see how it goes and whether I like it.

I’ve never used Schwab before. Are there any big negatives or “gotchas” that I should know about?

Also, while I know they typically charge a fee to buy Vanguard mutual funds like VTSAX, do they allow free auto-reinvestment of dividends? I don’t wish to convert to VTI even though I know this question would go away if I did.
student
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Re: Considering Schwab

Post by student »

Their settlement fund does not have a competitive interest rate.
lostcoast2023
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Re: Considering Schwab

Post by lostcoast2023 »

I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
Topic Author
WhitePuma
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Re: Considering Schwab

Post by WhitePuma »

lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
Thanks for sharing this list. They are definitely marks against Schwab in my book too. But on the plus side, it sounds like if I were to just move a mutual fund (like VTSAX) over and hold it, none of these would apply— is that a correct interpretation?
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samsoes
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Re: Considering Schwab

Post by samsoes »

WhitePuma wrote: Thu Apr 18, 2024 11:23 am
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
Thanks for sharing this list. They are definitely marks against Schwab in my book too. But on the plus side, it sounds like if I were to just move a mutual fund (like VTSAX) over and hold it, none of these would apply— is that a correct interpretation?
It is.
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the_wiki
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Re: Considering Schwab

Post by the_wiki »

Schwab is not that great for mutual funds unless you only want to hold Schwab's own funds. And they have a fairly limited selection (like no total international or emerging market index funds).

Etrade is actually the best for mutual funds. No fees for any mutual funds from any company and they offer a great selection of Vanguard, Fidelity and Schwab funds, among many others. Many of the list of Cons for Schwab applies to Etrade as well.
lostcoast2023
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Re: Considering Schwab

Post by lostcoast2023 »

WhitePuma wrote: Thu Apr 18, 2024 11:23 am
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
Thanks for sharing this list. They are definitely marks against Schwab in my book too. But on the plus side, it sounds like if I were to just move a mutual fund (like VTSAX) over and hold it, none of these would apply— is that a correct interpretation?
Yes, if Schwab will accept your third party mutual funds, these are not big concerns. They mostly impact One Stop Shop customers.

I have been 100% ETF for a while now, but I do remember restrictions and fees associated with buying and transferring mutual funds to other brokerages.
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ruralavalon
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Re: Considering Schwab

Post by ruralavalon »

WhitePuma wrote: Thu Apr 18, 2024 10:12 am I’m considering transferring existing assets to a new brokerage account at Schwab. Initially, I just plan on transferring and holding a couple mutual fund / ETFs there to see how it goes and whether I like it.

I’ve never used Schwab before. Are there any big negatives or “gotchas” that I should know about?

Also, while I know they typically charge a fee to buy Vanguard mutual funds like VTSAX, do they allow free auto-reinvestment of dividends? I don’t wish to convert to VTI even though I know this question would go away if I did.
Almost zero interest paid on idle cash, uses a bank account as the sweep for idle cash. Does not allow use of a money market fund as the sweep for idle cash.
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J295
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Re: Considering Schwab

Post by J295 »

We have been at Fido over 40 years, and have an account at Schwab also the past few years.

Fido is superior in our experience. For our limited use at Schwab, the cash management process is cumbersome, and costs us some interest. (But because we don’t want all of our family resources at one institution, we stick with Schwab and shrug).
MishkaWorries
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Re: Considering Schwab

Post by MishkaWorries »

Schwab was our broker for many years. No real complaints. Their customers service is top notch.

Are you transferring a fairly large amount? If so ask for a transfer bonus.

Schwab doesn't charge anything to auto invest dividends or sale shares in an outside mutual fund and (according to reports here on BH) Schwab will waive the fee for purchasing additional shares of an outside mutual fund if you transfer enough to Schwab. I believe it is $250,000.
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123
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Re: Considering Schwab

Post by 123 »

A common complaint about Schwab is the low interest rate they pay on their settlement account, they profit from it due to their ownership of Schwab Band. You can get higher MMF interest but you have to use purchased MMFs which you have to sell to cash before cash is available. Because you have to have cash to buy anything (assuming non-margin account) you lose interest between the date of your purchase and settlement date, this can really up your trading costs if you do buys with large tran$action amount$. If you buy treasuries at auction and want auto-reinvestment you are limited to treasuries that are 26 weeks or less and you lose a week of interest because the proceeds sits in cash for a week before the reinvestment in the following auction. If you're planning ahead to RMD years currently there is no really free automatic RMD payment service at Schwab, you have to be enrolled in one of their portfolio management services. Those portfolio management services generally use a significant cash position (at low interest) to fund the cost of the service. None of these limitations exist at Fidelity.

That said Schwab is a fine custodian if you hold a fully invested account and seldom trade. We still have significant accounts at Schwab, they are packed to the rafters with VTI with automatic reinvestment. Most of our accounts are now at Fidelity. We believe its a good practice to spread assets among more than one custodian.
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glitchy
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Re: Considering Schwab

Post by glitchy »

Commenting on lostcoast2023's list here...
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
What's the nature of the PFOF complaint? I thought everybody was wholesaling their retail trades except for Fidelity who do the same thing but in-house. I get price improvement over market, seems like a win, is there something I should be unhappy about?

I've also read complaints about ACH at Schwab several times and I'm not sure what's up. I only pull into Schwab from external sources, but every time I have done it the funds are immediately available to invest even if it doesn't clear until later--they're actually giving me some float, which seems very un-Schwab! Online ACH requests (if Schwab-initiated) have a daily cap of $100k, after that one needs to call. (Although making a pair of five-digit transfers for a total close to $200k worked, I think the cap is really "no more ACH after the daily total tops $100k".)

I agree on everything else, unless the ATM rebates at end-of-month is a complaint that they're not immediate. I'm happy to get them at all.

I've also been mildly burned by their daft dividend handling, aside from it being slow--dividends paid but earmarked for reinvestment still show up in cash balance, so for instance if I sell some equities and then put my entire cash total into MM without looking carefully I might pick up some funds I should have left alone. (I went negative at the end of March that way. Oops. I fixed it before it settled.)

I have heard complaints about them not correctly honoring specific-lot trades and causing tax headaches but I have never experienced it. As noted on their trade page, though, they don't reflect chosen basis properly until the next day, which seems ridiculously 1980's. It seems possible people have seen the immediate (wrong) view and freaked out, and honestly I can't blame them, the tax implications can be horrific.

More basis wackiness: switching mutual fund holdings away from average-cost requires filling out a paper form, although it can be scanned and submitted online. They will at least make the change retroactively as long as you haven't sold any of the relevant fund. (I believe the SEC requirement is to allow it for a year, but Schwab seems to be happy to do unlimited lookback. Again, as long as no sales have taken place!)
WeakOldGuy
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Re: Considering Schwab

Post by WeakOldGuy »

I have all my investment accounts at Schwab other than my active 401k, and it will be rolled over to my IRAs in Schwab in 2025 when I fully retire. I don't do any banking through Schwab, but transfer money back and forth from Wells Fargo as needed. That is a very easy process.

Two issues with Schwab, neither of which is a big issue for me.

1. As others have noted, the settlement fund pays low bank interest and there is no automatic sweep into a MM fund.
I keep very little cash in my settlement fund (currently there is $12.19). I periodically will purchase MM shares or shares of a floating rate bond ETF for my "cash" positions.

2. Automatically reinvested dividends will first show as available cash in the settlement fund for a day or 2 before it is reinvested. This can create a problem if folks are unaware. It is possible to see available cash in the settlement fund and make a trade with those funds. Then when the reinvestment is made, there can be a negative balance in the account or a margin loan.
There are only two accounts that have automatic reinvestment of dividends, an HSA and an IRA. Both of those only hold one fund. So this is a non-issue for me.

I primarily use ETFs now, but have used mutual funds in the past. I have had no problems with either. I just tend to prefer ETFs. When I used more mutual funds, I was always very happy with the choice of funds available with Schwab.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
lostcoast2023
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Re: Considering Schwab

Post by lostcoast2023 »

glitchy wrote: Thu Apr 18, 2024 12:33 pm Commenting on lostcoast2023's list here...
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
What's the nature of the PFOF complaint? I thought everybody was wholesaling their retail trades except for Fidelity who do the same thing but in-house. I get price improvement over market, seems like a win, is there something I should be unhappy about?

I've also read complaints about ACH at Schwab several times and I'm not sure what's up. I only pull into Schwab from external sources, but every time I have done it the funds are immediately available to invest even if it doesn't clear until later--they're actually giving me some float, which seems very un-Schwab! Online ACH requests (if Schwab-initiated) have a daily cap of $100k, after that one needs to call. (Although making a pair of five-digit transfers for a total close to $200k worked, I think the cap is really "no more ACH after the daily total tops $100k".)

I agree on everything else, unless the ATM rebates at end-of-month is a complaint that they're not immediate. I'm happy to get them at all.

I've also been mildly burned by their daft dividend handling, aside from it being slow--dividends paid but earmarked for reinvestment still show up in cash balance, so for instance if I sell some equities and then put my entire cash total into MM without looking carefully I might pick up some funds I should have left alone. (I went negative at the end of March that way. Oops. I fixed it before it settled.)

I have heard complaints about them not correctly honoring specific-lot trades and causing tax headaches but I have never experienced it. As noted on their trade page, though, they don't reflect chosen basis properly until the next day, which seems ridiculously 1980's. It seems possible people have seen the immediate (wrong) view and freaked out, and honestly I can't blame them, the tax implications can be horrific.

More basis wackiness: switching mutual fund holdings away from average-cost requires filling out a paper form, although it can be scanned and submitted online. They will at least make the change retroactively as long as you haven't sold any of the relevant fund. (I believe the SEC requirement is to allow it for a year, but Schwab seems to be happy to do unlimited lookback. Again, as long as no sales have taken place!)
My issue with PFOF is mostly that it feels like a hidden commission. The broker gets a couple cents per share, and you likely pay a higher price (but this is obviously hard to quantify and compare). Fidelity supposedly doesn't do it.

ACH at Schwab is fine for pulls, but once you get a taste of Same Day ACH, it is so much nicer. If I push or pull from Fidelity in the morning, the transaction is completed by the afternoon, not the next day.

For ATM reimbursements, Schwab is good, but I certainly prefer seeing the refund in my account in two days, rather than the end of the month.
aless
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Re: Considering Schwab

Post by aless »

ACH at Schwab is fine for pulls, but once you get a taste of Same Day ACH, it is so much nicer. If I push or pull from Fidelity in the morning, the transaction is completed by the afternoon, not the next day.
I recently opened a Schwab checking account and did some push ACH that were initiated from my credit union. The two times that I did it so far, when I initiated the ACH in the morning, the transactions are posted to my Schwab checking account in my evening (PDT). YMMV as my credit union advertises Same Day ACH and Schwab seems to support it from my (albeit limited) experience.
bonesly
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Re: Considering Schwab

Post by bonesly »

samsoes wrote: Thu Apr 18, 2024 11:28 am
WhitePuma wrote: Thu Apr 18, 2024 11:23 am
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
Thanks for sharing this list. They are definitely marks against Schwab in my book too. But on the plus side, it sounds like if I were to just move a mutual fund (like VTSAX) over and hold it, none of these would apply— is that a correct interpretation?
It is.
Schwab doesn't charge a $25 fee to hold VTSAX (as opposed to VTI which would clearly be no fee)? I'm pleasantly surprised if that's true.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
jebmke
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Re: Considering Schwab

Post by jebmke »

bonesly wrote: Thu Apr 18, 2024 1:34 pm
samsoes wrote: Thu Apr 18, 2024 11:28 am
WhitePuma wrote: Thu Apr 18, 2024 11:23 am
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
Thanks for sharing this list. They are definitely marks against Schwab in my book too. But on the plus side, it sounds like if I were to just move a mutual fund (like VTSAX) over and hold it, none of these would apply— is that a correct interpretation?
It is.
Schwab doesn't charge a $25 fee to hold VTSAX (as opposed to VTI which would clearly be no fee)? I'm pleasantly surprised if that's true.
I don't think Fidelity does either if my memory is working today.
When you discover that you are riding a dead horse, the best strategy is to dismount.
glitchy
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Re: Considering Schwab

Post by glitchy »

bonesly wrote: Thu Apr 18, 2024 1:34 pm Schwab doesn't charge a $25 fee to hold VTSAX (as opposed to VTI which would clearly be no fee)? I'm pleasantly surprised if that's true.
Holding and selling is free. Buying more is ~$75 per transaction. Apparently some people have fees for buying Vanguard funds at Schwab permanently waived as part of an incentive deal to move to Schwab, too.
bonesly
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Re: Considering Schwab

Post by bonesly »

glitchy wrote: Thu Apr 18, 2024 2:28 pm
bonesly wrote: Thu Apr 18, 2024 1:34 pm Schwab doesn't charge a $25 fee to hold VTSAX (as opposed to VTI which would clearly be no fee)? I'm pleasantly surprised if that's true.
Holding and selling is free. Buying more is ~$75 per transaction. Apparently some people have fees for buying Vanguard funds at Schwab permanently waived as part of an incentive deal to move to Schwab, too.
Thanks! I found this on their site:
Schwab wrote: Transaction Fees:
Purchase
$06 online for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource service.
Up to $74.95 for all other funds.

Redeem
$06 online for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource service.
†Per-trade transaction fees do not exceed 8.5% of principal, up to $74.95. Trades below $100 in principal are exempt from the transaction fee.
I had to login to my Schwab account to see the explicit costs for VTSAX.
Image

Given that, I'd probably sell VTSAX at Vanguard, transfer the cash to Schwab, then buy Schwab's native Total US Stock fund (SWTSX) (avoids a $75 fee for each new purchase).
Last edited by bonesly on Thu Apr 18, 2024 5:41 pm, edited 1 time in total.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
WeakOldGuy
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Re: Considering Schwab

Post by WeakOldGuy »

bonesly wrote: Thu Apr 18, 2024 2:54 pm
glitchy wrote: Thu Apr 18, 2024 2:28 pm
bonesly wrote: Thu Apr 18, 2024 1:34 pm Schwab doesn't charge a $25 fee to hold VTSAX (as opposed to VTI which would clearly be no fee)? I'm pleasantly surprised if that's true.
Holding and selling is free. Buying more is ~$75 per transaction. Apparently some people have fees for buying Vanguard funds at Schwab permanently waived as part of an incentive deal to move to Schwab, too.
Thanks! I found this on their site:
Schwab wrote: Asset Allocation Sheet
Transaction Fees:
Purchase
$06 online for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource service.
Up to $74.95 for all other funds.

Redeem
$06 online for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource service.
†Per-trade transaction fees do not exceed 8.5% of principal, up to $74.95. Trades below $100 in principal are exempt from the transaction fee.
I had to login to my Schwab account to see the explicit costs for VTSAX.
Image

Given that, I'd probably sell VTSAX at Vanguard, transfer the cash to Schwab, then buy Schwab's native Total US Stock fund (SWTSX) (avoids a $75 fee for each new purchase).
Would it be possible to simply transfer the the VTSAX to Schwab and then purchase VTI to add to that type of position?
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
FulanoG
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Re: Considering Schwab

Post by FulanoG »

lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
I am confused by this response which seems to imply this list are reasons not to consider Shcwab

Long time Schwab brokerage and checking customer here. I have always gotten reimbursed for ATM refunds and they do fractional shares of ETFs when reinvesting dividends, thorough perhaps you cannot buy 0.5 share of an ETF from cash.

Customer service is great. Always get someone who is actually friendly and sounds like they like their job and I always get my Qs answered.

Other observations about schwab:

Positive: you can buy CDs and individual bonds

Negative: interest rate on cash is horrible but I've never had an issue just using SWVXX MM fund instead, settles in one day.

My parents have 99.9% of their investible wealth with Schwab. I have helped them out a bit and Shwab has been easy to deal with. They recently rolled a very confusing annuity my parents had into one under the Schwab umbrella that seems easier to manage and can be done thru their assigned advisor.
50, married (48 yo spouse) with two kids (9 & 11). Been saving 20-30% of salary my whole life. $2M in the market for retirement, $200K total in 529s. Hoping to retire by ~2030.
bonesly
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Re: Considering Schwab

Post by bonesly »

WeakOldGuy wrote: Thu Apr 18, 2024 4:21 pm Would it be possible to simply transfer the the VTSAX to Schwab and then purchase VTI to add to that type of position?
Yes. It's not clear to me that they would accept VTSAX without charging a (one-time) $75 fee, but if you were getting a transfer bonus to move assets to Schwab from another brokerage, it seems likely they'd waive any such transactions fees (you'll have to be sure to ask for this in a written email).

I also think they might let you setup automatic re-investment of dividends in VTSAX without a transaction fee, but not positive on that (I don't hold mutual funds in my Schwab account, so no personal experience to verify that). For any new direct purchases, you'd want to buy VTI.
Edit: Strike that, the status in the image I linked says "Automatic investment plan: No" so maybe they make distributions go to their cash bank account at near-zero interest and you have to explicitly re-invest as a direct purchase.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
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krafty81
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Re: Considering Schwab

Post by krafty81 »

I have been very happy with Schwab for over 40 years now. I like the customer service and having a person assigned to me at our local branch. He invites me to a lot of stuff though I am usually too busy to go. When I have needed help, they have always been there. I am a buy and hold guy but the website is easy to use for buying/selling/transferring.
lostcoast2023
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Re: Considering Schwab

Post by lostcoast2023 »

FulanoG wrote: Thu Apr 18, 2024 5:39 pm
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
I am confused by this response which seems to imply this list are reasons not to consider Shcwab

Long time Schwab brokerage and checking customer here. I have always gotten reimbursed for ATM refunds and they do fractional shares of ETFs when reinvesting dividends, thorough perhaps you cannot buy 0.5 share of an ETF from cash.

Customer service is great. Always get someone who is actually friendly and sounds like they like their job and I always get my Qs answered.

Other observations about schwab:

Positive: you can buy CDs and individual bonds

Negative: interest rate on cash is horrible but I've never had an issue just using SWVXX MM fund instead, settles in one day.

My parents have 99.9% of their investible wealth with Schwab. I have helped them out a bit and Shwab has been easy to deal with. They recently rolled a very confusing annuity my parents had into one under the Schwab umbrella that seems easier to manage and can be done thru their assigned advisor.
The ATM reimbursement at the end of the month is a negative for me compared to Fidelity, which always issues the refunds in about 2 days, regardless of the time of month. Not a huge deal, but a negative for me.

Schwab does support fractional shares of ETFs as dividend reinvestments, as you mentioned, so it is annoying they don't allow purchasing arbitrary dollar amounts anytime. They clearly have the capability.

I do think the Schwab website is a little better than Fidelity. It is more consistent, more customizable, and seems to have more functionality in some places, like outgoing wire transfers.
RetiredAL
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Re: Considering Schwab

Post by RetiredAL »

FulanoG wrote: Thu Apr 18, 2024 5:39 pm
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
I am confused by this response which seems to imply this list are reasons not to consider Shcwab
There is no such thing as the perfect brokerage. They all have a few warts/short-comings. By in knowing these issues ahead of time allows you to make a cognizant decision on accepting, or if you can mitigate the concern.

For example, 'low core interest rate', you just buy a money market fund and accept a 1 day lag for selling before you can transfer to your checking. To me, this is a zero concern. If I need money moved, either internally within Schwab or externally, I always do so adequately ahead of need.
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greenrebellion
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Re: Considering Schwab

Post by greenrebellion »

I find it helpful to put things in real dollar terms.

I'm with Fidelity because my "checking" account is always invested in the money market sweep automatically. My average "checking" account balance remains around $5,000 during the course of a year which means at 5% money market rates, that is $250 in interest income per year.

With Schwab, my checking account would not automatically invest in money market and I'd like to have $5,000 or so liquid at any time. So the opportunity cost is $250 (maybe a bit less adjusted for taxes).

It is not worth it to me to pay $250 per year in opportunity cost to be with Schwab.

My mom is on Schwab though and I have full trade authority on her accounts. Schwab has a very nice, easy to use website and interface.
- greenrebellion
CuriousGeorgeTx
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Re: Considering Schwab

Post by CuriousGeorgeTx »

I’ve had a Schwab brokerage account for over 30 years. Customer service is consistently great.
I was able to get the fees on Vanguard funds waived, although I have generally moved to ETFs.

Roth conversions are simple, completely online, and instantaneous, and you can see the price that will be used before you confirm the transfer. (It may be that way at Fidelity, too. I’d be interested to hear from others on that).

My biggest complaint is the very low interest on settled funds. It isn’t that much money, but it is an irritant. I try to watch out for idle cash, most of which comes from my CD/Treasury ladder in my IRA.
Second biggest complaint is the week out of the market for Treasury Bill rollovers.

The only thing I use my linked Schwab bank account for is ATM access when traveling internationally.

I have just moved our transactional activity from Ally to Fidelity, and am happy (so far) with how using a brokerage account for checking and savings is working. No more moving funds back and forth to savings account to achieve higher yields. Not ready to move brokerage/tIRA/rITA/529/DAF yet, but if spending account continues to work well, and they offer me an incentive, I might.
RetiredAL
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Re: Considering Schwab

Post by RetiredAL »

greenrebellion wrote: Thu Apr 18, 2024 7:14 pm
My mom is on Schwab though and I have full trade authority on her accounts. Schwab has a very nice, easy to use website and interface.
Schwab's POA functions are better Fidelity's. As Agent at Fidelity, you have to call to transfer money. At Schwab you can do that transfer online.
BoilerBear
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Re: Considering Schwab

Post by BoilerBear »

I have both a Schwab and Fidelity account.

As others have noted, they both have strengths and weaknesses.

If you are just looking for a brokerage account to buy ETFs and not actively moving money around a lot … not sure you’d see a difference.

Schwab did inherit TDAs Think or Swim platform if you are an active trader. Fidelity’s interface seems a little more cumbersome for frequent trading.

As noted, the Fidelity cash sweep/mm feature is much nicer if you are really looking to use the account for cash management purposes.

I can also say Schwab’s online customer service has been excellent. Questions submitted via email get answered relatively quickly and the answers actually helped me. It was a piece of cake to do a back door Roth on their platform.
FromAto401k
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Re: Considering Schwab

Post by FromAto401k »

I don’t think there is anything Schwab does that Fidelity doesn’t, but there are some things Fidelity does that Schwab doesn’t.

The intangible for Schwab is their customer service. It is the best of all the brokerages by quite a bit in my opinion. For some people like me, at least for now, the elevated CS is enough to overcome the few bells & whistles Fidelity has that Schwab doesn’t.
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Re: Considering Schwab

Post by jebmke »

FromAto401k wrote: Thu Apr 18, 2024 10:56 pm I don’t think there is anything Schwab does that Fidelity doesn’t, but there are some things Fidelity does that Schwab doesn’t.

The intangible for Schwab is their customer service. It is the best of all the brokerages by quite a bit in my opinion. For some people like me, at least for now, the elevated CS is enough to overcome the few bells & whistles Fidelity has that Schwab doesn’t.
What services does Schwab provide that Fidelity does not? It would be helpful to know for those contemplating a change. They might or might not be relevant.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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legio XX
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Re: Considering Schwab

Post by legio XX »

123 wrote: Thu Apr 18, 2024 12:26 pm . . . If you're planning ahead to RMD years currently there is no really free automatic RMD payment service at Schwab, you have to be enrolled in one of their portfolio management services. . . . None of these limitations exist at Fidelity. . . .
Thanks for this. I'm in the process of deVGing and the auto-RMD is something that has worked so far (AFAIK🤞). So will consider moving taxable first if I go to Schwab.

I too have been with VG for 30+ years and can't recall any issues from back then. Probably because all I did was watch it grow, occasionally write a check on the MM acc't, etc. Lately . . . OK, most of what is discussed here is stuff I don't do, but the mess they made of closing the mutual fund platform has generated long threads and left me short on confidence in VG.

The fact that I'm relying on BH and not VG for info on what's up at VG should be a hint. Yeh, I worry.
VViseguy
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Re: Considering Schwab

Post by VViseguy »

bonesly wrote: Thu Apr 18, 2024 5:46 pm I also think they might let you setup automatic re-investment of dividends in VTSAX without a transaction fee, but not positive on that (I don't hold mutual funds in my Schwab account, so no personal experience to verify that). For any new direct purchases, you'd want to buy VTI.
Edit: Strike that, the status in the image I linked says "Automatic investment plan: No" so maybe they make distributions go to their cash bank account at near-zero interest and you have to explicitly re-invest as a direct purchase.
The automatic investment plan (AIP) relates to adding new money to funds on a periodic basis (e.g., investing an additional $100 monthly). Thus, when you see "Automatic investment plan: No", then that fund is not eligible for automatically buying fixed amounts on a regular schedule, but that has no bearing on dividend reinvestment.

There is no problem for Schwab to automatically reinvest dividends and capital gains, without any fee. I have funds which I can no longer purchase there (using AIP or otherwise), but distributions are all reinvested.
jacksprat
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Re: Considering Schwab

Post by jacksprat »

no really free automatic RMD payment service at Schwab, ?

I see that you can set up recurring RMD distributions from your available cash at Schwab, so is the limitation that they won't liquidate a fund to cover the RMD if your cash is not sufficient ?? Or something else ??

Please explain what is not automatic...
..
Last edited by jacksprat on Fri Apr 19, 2024 11:40 am, edited 1 time in total.
MnD
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Re: Considering Schwab

Post by MnD »

Across 6 accounts we have 6 cents in the low-yielding FDIC settlement account.
It keeps me on my toes to move any idle to cash to stock/bond or money market positions, but it doesn't happen very often since most holdings are auto-reinvest.

Someone mentioned being out of the T-bill market for a week on rollovers. That does appear to happen with auto-rollover but I manually enter an order for the "correct" corresponding new t-bill (that has a settlement date equal to the maturity date of the old bill) so I don't have that issue.
That takes me about 30 seconds a month.

In short Schwab makes a ton of money from people that are asleep at the wheel with regards to cash management which provides a "free lunch" in terms of low costs and excellent service for everyone else.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
James2
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Re: Considering Schwab

Post by James2 »

We ended up with accounts at Schwab after they bought TD Ameritrade. So far, I’ve been pretty happy. We have brokerage accounts elsewhere, Fidelity, Wells Fargo as well. They all have pros and cons.

Will probably stay with Schwab for the accounts that are there now. “My guy” has told me that if I make purchases of Vanguard funds and get charged a fee then I should call him and he’ll get it waived for me. I’ve been really impressed with their customer service, no attempts so far at aggressive sales. YMMV.

The cash management is fine, I don’t keep much uninvested cash around and I don’t move too fast for “opportunities” either so a day to liquidate a MMF is fine with me.
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HueyLD
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Re: Considering Schwab

Post by HueyLD »

jebmke wrote: Fri Apr 19, 2024 5:32 am
FromAto401k wrote: Thu Apr 18, 2024 10:56 pm I don’t think there is anything Schwab does that Fidelity doesn’t, but there are some things Fidelity does that Schwab doesn’t.

The intangible for Schwab is their customer service. It is the best of all the brokerages by quite a bit in my opinion. For some people like me, at least for now, the elevated CS is enough to overcome the few bells & whistles Fidelity has that Schwab doesn’t.
What services does Schwab provide that Fidelity does not? It would be helpful to know for those contemplating a change. They might or might not be relevant.
Well, Schwab is a good second brokerage for those already have accounts at Fidelity. Don’t put all your eggs in one basket.
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ruralavalon
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Re: Considering Schwab

Post by ruralavalon »

123 wrote: Thu Apr 18, 2024 12:26 pm . . . If you're planning ahead to RMD years currently there is no really free automatic RMD payment service at Schwab, you have to be enrolled in one of their portfolio management services. . . . None of these limitations exist at Fidelity. . . .
This is an important negative in my opinion anyone with a traditional IRA.

Age 78, retired taking Required Minimum Distributions (RMDs) using Vanguard's free, automated RMD service for my rollover IRA at Vanguard. This is a hugh plus.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
zie
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Re: Considering Schwab

Post by zie »

lostcoast2023 wrote: Thu Apr 18, 2024 1:02 pm

My issue with PFOF is mostly that it feels like a hidden commission. The broker gets a couple cents per share, and you likely pay a higher price (but this is obviously hard to quantify and compare). Fidelity supposedly doesn't do it.
1st, you don't pay a higher price. NBBO exists. See 17 CFR § 242.600 It's not like this stuff isn't monitored and tracked. It's all digital now, it's easy for the SEC to monitor pricing of assets on the various US exchanges. The SEC gets cranky when they find out you weren't following the rules.

Around Fidelity: It's technically true that they don't do PFOF, but it's not very truthful. Fidelity does their own order flow instead. Back in 1996, they bought a market maker for the NASDAQ exchange, and I'm sure that business has grown some since then.

NYT article from the time: https://www.nytimes.com/1996/06/11/busi ... -unit.html
And a Spokesman article with a bit more detail, including quotes from Fidelity: https://www.spokesman.com/stories/1996/ ... -maker-in/

The rest of Wagner Stott Mercator that Fidelity didn't buy got pulled into Bear Sterns, so we know that ended in disaster.

I think for the most part, either Schwab or Fidelity is a totally fine place to let hold your assets. I don't think this PFOF issue is actually an issue.
Whether rich or poor, a young woman should know how a bank account works, understand the composition of mortgages and bonds, and know the value of interest and how it accumulates. -Hetty Green
DetroitRick
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Re: Considering Schwab

Post by DetroitRick »

I've generally been happy with Schwab over many decades. They still hold the bulk of my accounts and I often recommend them to friends who ask (helping a close friend set up new Schwab account next week, in fact). I also shop around every few years to reassess whatever choices are best for me.

There are tons of different services and features that all good brokers offer. Always have a mental list so that you can assess and rank your choices, because there are nuances between the major players. But any reservations I have about Schwab are relatively petty to me. If they weren't, I would bolt in a heartbeat. Competition is a beautiful thing. The biggest pluses for me (no particular order): order execution, depth of book on bonds, website/trading platform/app, selection of fee free funds, commission structure, general fee structure, and ease of communication (office/website/phone/chat). And on rare occasion, I have found local rep quite helpful.

To your transaction fee question - no they don't charge fees on reinvestment of distributions from transaction fee funds. While I can't find a specific reference in their pricing guide, I have held one or more of these transaction fee funds for decades, and have never been charged fees reinvestment. Examples: Dodge & Cox, Vanguard, T Rowe (back when they were onvr a transaction fee family at Schwab, long since no fee nowadays).
Joe Public
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Re: Considering Schwab

Post by Joe Public »

jebmke wrote: Fri Apr 19, 2024 5:32 am
FromAto401k wrote: Thu Apr 18, 2024 10:56 pm I don’t think there is anything Schwab does that Fidelity doesn’t, but there are some things Fidelity does that Schwab doesn’t.

The intangible for Schwab is their customer service. It is the best of all the brokerages by quite a bit in my opinion. For some people like me, at least for now, the elevated CS is enough to overcome the few bells & whistles Fidelity has that Schwab doesn’t.
What services does Schwab provide that Fidelity does not? It would be helpful to know for those contemplating a change. They might or might not be relevant.
The poster isn't aware of any - reread the bolded part above.
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Re: Considering Schwab

Post by jebmke »

Joe Public wrote: Fri Apr 19, 2024 11:52 am
jebmke wrote: Fri Apr 19, 2024 5:32 am
FromAto401k wrote: Thu Apr 18, 2024 10:56 pm I don’t think there is anything Schwab does that Fidelity doesn’t, but there are some things Fidelity does that Schwab doesn’t.

The intangible for Schwab is their customer service. It is the best of all the brokerages by quite a bit in my opinion. For some people like me, at least for now, the elevated CS is enough to overcome the few bells & whistles Fidelity has that Schwab doesn’t.
What services does Schwab provide that Fidelity does not? It would be helpful to know for those contemplating a change. They might or might not be relevant.
The poster isn't aware of any - reread the bolded part above.
Let me re-phrase. What specific aspects of "customer service" are noticeably better at Schwab? CS is a pretty vague term.

I'm curious in case it is relevant to any decision I might make to abandon VG.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Carol88888
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Re: Considering Schwab

Post by Carol88888 »

At Schwab unlikeVanguard, customer service is excellent. They usually pickup after a minute. The reps are very knowledgeable and if they don't know the answer to something they go get the answer and call you back.

I love that I can reach them 24/7.

Just don't leave your idle cash there. Use Vanguard's money market funds for that.

Also, I love their website that gives you your cost basis and allows you to select what way you want to sell a position (first in, first out, lowest cost basis, highest cost basis etc.)

It is a very easy to use platform for placing a trade. You can see quickly if the trade was filled and if it wasn't you can easily change your price.
Fat far superior to anything that Vanguard offers.

For that reason I will never place another order with Vanguard. Not willing to transfer the rest of my assets to Schwab because I am afraid Vanguard might flub that also.

I won't even get into how Vanguard has cost me money because of a flub on the trading platform.
glitchy
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Re: Considering Schwab

Post by glitchy »

jebmke wrote: Fri Apr 19, 2024 1:44 pm Let me re-phrase. What specific aspects of "customer service" are noticeably better at Schwab? CS is a pretty vague term.

I'm curious in case it is relevant to any decision I might make to abandon VG.
I'm not the person you asked, but for another perspective: when I've had questions for or issues with Schwab, I have gotten helpful answers via online chat very quickly. They were great about handling an Inherited IRA. Paperwork has been processed promptly and competently. I outlined some complaints with Schwab earlier in this thread but they are much more about systemic problems with how the brokerage does things--within that envelope I've always had ready help when I needed it.

My basis for comparison is with Fidelity, and when I have tried chatting with them the online answer is always "you need to call" (maybe so they can do voice authentication?), so I call, and having called Fidelity four times in the last couple of months for account and rollover issues I've had one person who didn't understand 2FA, another person who also didn't understand 2FA but to whom I ended up reading the URL on fidelity.com so he could read about it, one person who was super-helpful and immediately mailed me some 401k paperwork that needed to be completed on paper and described what would happen next (but who also tried to sell me extra services), and one call that from what I could hear, and after waiting on hold for a while, rang through to a human who immediately hung up on me. I'm also two weeks past the deadline they promised for processing the aforementioned paperwork, although I'll cut them some slack for that given that it's tax time and I bet things are a little nuts. They apparently also consider me to be some kind of Special Person, so when I call the generic number they always tell me they need to transfer me to handle even mundane issues. I haven't done much with Vanguard but if they're worse than what I've had from Fidelity I shudder.
Flight Plan
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Re: Considering Schwab

Post by Flight Plan »

lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
I think some more detail is in order. Your bullet point claims just don't tell us enough. For example, "Slow ACH". What does that even mean? ACH should follow banking rules. If Schwab doesn't follow banking rules, then that would actually be a legal problem, wouldn't it?

Another example, "Slow Dividend Payments". Again, what does "slow" mean in this context, and how would it compare with a company that you think is doing it right? Are we talking about days? Or months? And how is that adversely impacting the Schwab account holder?

And one more, "low interest rates on idle cash". Yes, sweep money is just held in a money fund. None of them pay well. So please compare it to Fidelity, or whomever you think is doing a significantly better job.

Thanks in advance!
Flight Plan
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Re: Considering Schwab

Post by Flight Plan »

Carol88888 wrote: Fri Apr 19, 2024 2:48 pm At Schwab unlikeVanguard, customer service is excellent. They usually pickup after a minute. The reps are very knowledgeable and if they don't know the answer to something they go get the answer and call you back.
This is my experience too.
I love that I can reach them 24/7.

Just don't leave your idle cash there. Use Vanguard's money market funds for that.
Great suggestion. Or, if the market is in a bear and you're not trading a lot (or at all), then slide that money over to an Ally account. If it's in an IRA, then it's probably better to buy that money market fund. But for money that is just sitting there and could be deployed in the next week or month, the sweep account is not going to yield a significantly less return.
Also, I love their website that gives you your cost basis and allows you to select what way you want to sell a position (first in, first out, lowest cost basis, highest cost basis etc.)
Yes, I use the cost basis all the time, as well as the ready-display of the unrealized gains or losses in either percentage or dollars. I use the percentages because everything I do is in percentages anyhow, and percentages work the same whether my account value is 1K or 1M.
It is a very easy to use platform for placing a trade. You can see quickly if the trade was filled and if it wasn't you can easily change your price.
Fat far superior to anything that Vanguard offers.
I can't speak for Schwab being "far superior" to Vanguard, but I CAN vouch for how easy and fast it is to place a trade. It's easy to trade from just about any screen that shows your holdings. The only thing I wish I could do is change the default from "Limit" to "Market". I never do limit trades.
For that reason I will never place another order with Vanguard. Not willing to transfer the rest of my assets to Schwab because I am afraid Vanguard might flub that also.

I won't even get into how Vanguard has cost me money because of a flub on the trading platform.
I can't comment on Vanguard because I have no experience with them.
stupidkid
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Re: Considering Schwab

Post by stupidkid »

I am largely consolidated at Schwab, other than a residual HSA at Fidelity, a 401k at Empower, checking with ally, and treasurydirect.

I was a TDA account holder but had opened a Schwab account prior to the merger, now all accounts are under Schwab.

As others have noted, the cash sweep isn't great but whatever - it's easy to buy and sell MMF. I currently do a Treasury MMF to avoid state taxes but could switch between regular or muni depending on tax equivalent yield. For my "that day" cash needs I use Ally but could easily fully consolidate with Schwab if I took the time. Otherwise I sell what I need and it's available the next day.

As a trading platform I find Schwab easy to use. Really easy to build ladders (t bills, notes, CDs) for whatever duration. Easy to make buy/sell other market orders. And as others have said - great customer service.
lostcoast2023
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Re: Considering Schwab

Post by lostcoast2023 »

Flight Plan wrote: Tue Apr 23, 2024 10:59 am
lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
I think some more detail is in order. Your bullet point claims just don't tell us enough. For example, "Slow ACH". What does that even mean? ACH should follow banking rules. If Schwab doesn't follow banking rules, then that would actually be a legal problem, wouldn't it?

Another example, "Slow Dividend Payments". Again, what does "slow" mean in this context, and how would it compare with a company that you think is doing it right? Are we talking about days? Or months? And how is that adversely impacting the Schwab account holder?

And one more, "low interest rates on idle cash". Yes, sweep money is just held in a money fund. None of them pay well. So please compare it to Fidelity, or whomever you think is doing a significantly better job.

Thanks in advance!
Sure, I can provide more details.

Schwab does not support Same Day ACH. If you submit an ACH transfer request in the morning, it will be completed the next day. Fidelity, and others with Same Day ACH support can complete transfers submitted in the morning by that afternoon. This can be really nice in some cases.

For slow dividend payments: I didn't notice it until somebody on this forum mentioned it, but sure enough, once I started paying attention, other brokerages (Fidelity, IBKR) make dividend payments available several days sooner than Schwab.

Schwab currently pays something like .45% interest on idle cash. Fidelity is paying a 4.95% dividend if you select SPAXX as your core position. This is a huge factor for many Bogleheads going with Fidelity. IBKR is paying 4.83% on idle cash if you have a high balance.

Schwab does a lot of things very well, but it does require more work to maximize the return on your money.
CletusCaddy
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Re: Considering Schwab

Post by CletusCaddy »

lostcoast2023 wrote: Thu Apr 18, 2024 10:38 am I was a happy Schwab customer for many years. Here are my main issues with them (that are not problems at Fidelity):
  • Payment for Order Flow
  • ATM Rebates at end of month
  • Low Interest Rates on idle cash
  • No Fractional Shares on ETFs
  • Credit card is Amex and less than 2%
  • Slow ACH
  • Slow Dividend Payments
That said, if you don't care about these things, they are excellent to work with.
I forgave all of these sins when Schwab/Rocket offered me a 1.5% mortgage back in 2021.
livesoft
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Re: Considering Schwab

Post by livesoft »

Flight Plan wrote:Another example, "Slow Dividend Payments". Again, what does "slow" mean in this context, and how would it compare with a company that you think is doing it right? Are we talking about days? Or months? And how is that adversely impacting the Schwab account holder?
When a ticker (stock, ETF, mutual fund) has listed a "Payable Date" for a dividend, then I think the dividend should be in your account within a few hours after midnight on that date and certainly before the stock market opens on that day, so that you can use the dividend to buy something or ACH transfer it out. WellsFargo and TDAmeritrade are two brokerages that do that. Schwab notes your dividend after the market closes on the "Payable Date" or the next day. So "slow" means one day later than others.

See also this thread on speed of dividend payments: viewtopic.php?p=7804053#p7804053
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