Earlier this year, Charles Schwab’s brokerage made a key pricing move. As of January 19th, Schwab lowered its online equity trade commissions to $8.95 each–they had been $12.95–in an effort to put pricing more in line with discount brokers. The price cut, along with a massive campaign and new slogan, “Talk to Chuck,” sees Schwab moving away from the daunting formality that previously might have scared off online investors.
The good news is that Charles Schwab’s brokerage maintains all of its comprehensive trading tools and benefits, including expertise and experience that the newer online brokers simply can’t match. Schwab may still not be the lowest priced brokerage on the block, but there are other qualities and features to consider, as we will see in this BankShout review.
In business as a brokerage since 1975, Schwab has been an industry leader for decades. As such, the company offers a large assortment of products for investing, including equities (of course) and options, mutual funds, exchange traded funds, and bonds and fixed income securities. Differentiating in each category seems to be a Schwab specialty; mutual funds, for instance, include no-load and equity index funds, as well as money market varieties. Beyond this, Schwab offers a “select list” of mutuals, vetted by the firm’s investment experts, that breaks down the best Large-Cap, Small- and Mid-Cap, and foreign funds, among others.
Schwab’s own exchange traded funds (or ETFs) include both domestic and international funds (more on the pricing below). For the fixed-income focused, Schwab’s website states that the firm offers 28,000 different securities available from 300 dealers, as well as a bevy of retirement products from IRAs and various annuities, to brokered deposits like high-yield CDS. There are also, for traders on the polar opposite end of the risk scale, margin loans available. In short, Charles Schwab is the definition of a full-service broker.
Despite the big marketing push and online stock commission price cut, Schwab still has pricing that can best be described as a mixed bag. On the one hand, the $8.95 per equity price gets Schwab more in line with the discount brokers that are picking up much of the online trading market these days. With more investors going online, traditional brokers like Schwab simply have to compete on base price, and to their credit, the company has done that. Another big pricing plus: Schwab online ETFs are commission-free, where companies like ETrade and AmeriTrade charge $9.99 a pop. Schwab’s ETF expense ratios are lower than the average, also. Minimum account balance is $1000.
Yet Schwab still retains some of the overpriced remnants of its days as a traditional brokerage. That means that if you need broker assistance on an ETF trade, for example, it will cost you $25. Foreign stock trades get slammed with a fee of either $100 or 5% of the principle. Short term redemption fees on mutual funds run $49.95 and tack on another 25 bucks if you need a broker-assist on the transaction. Even if you call Schwab on the phone-on an automated system, no less–that’s going to cost you $5.
Yet despite the expense of some of its services, Schwab also separates itself from the online brokerage pack through its massive amount of trading tools and services. This is no bare bones operation.The brokerage offers comprehensive analysis on every product they offer, down to the most minute details (the technical analyst will be in heaven here, I have a feeling).
To name just a few, Schwab’s trading tools feature the firm’s equity ratings and the mutual fund “OneSource Select” list, in which Schwab analysts list the top-performing funds in each category. Schwab’s equity ratings are especially easy to use; the company rates equities weekly with a grade from A to F. Schwab’s online platforms are also top-notch. Active traders will appreciate the Strategy Center, with its screeners and alerts, along with streaming data. For fixed-income folks, BondSource shows not only fixed-income prices, but also ratings, yields, and maturity dates as well.
Schwab may have some of the higher pricing of a traditional broker, but they have an expert staff on hand as well. Investment consultants are available around the clock by telephone and Schwab has physical branch locations throughout the country, second to only Scottrade in number. In summary, you might pay a bit more for Schwab services overall, but you are getting more expertise than at the average online broker as well.
- Vast number and variation of mutual funds
- No commission online Schwab ETFs
- Trading tools are highly detailed, yet easy-to-use
- Longevity and expertise of the company
- Broker-assisted trade price is relatively high
- Automated system fee
- High commission for foreign stocks
- Big fee for short-term redemption of mutual funds