What’s the deal with Charles Schwab brokerage services?
Charles Schwab online brokerage services have everything you could need. They are a bank, a financial planner especially for IRA retirement work and online stock and securities trading. Commission is competitive and there are no account management fees. You can open an account with as little as $1000 and get access to their 3 trading platforms. A genuine strength for Charles Schwab is in the 2000 ‘no-load’ mutual funds that they can offer to the investors who like these vehicles.
Similar to most online brokerages the commissions charged for trading come down as the number of trades the investor makes goes up and the same is true for the larger the balance held. For example, if you’re balance is over $1 million or you execute more than 120 trades in a year you can pay the minimum $8.95 per trade. A lesser level of trading activity and you will pay an above average commission of $12.95. Options contracts are typical for the sector at 75 cents. Margin rates also vary with account balance from base rate plus 1/2% to plus 2%. Experienced traders who are looking for brokerage purely on price will find better commission rates elsewhere.
Charles Schwab is a gateway online broker to the total investment landscape. All of the basic investments are available including stocks, options, mutual funds, futures and exchange–traded funds. They also offer any other fixed income investments that you can think of including bonds, treasury issues, Certificates of Deposit and many more. They offer a wide portfolio of 2,000 no-load mutual funds, annuities, money market funds and margin loans. You can also get trading access to non-U.S. securities and American Depositary Receipts or ADRs, and Canadian foreign orders. These esoteric investments are an attractive feature of Charles Schwab which otherwise has trouble standing out from the crowd.
The Charles Schwab trading platform has all the functionality of typical brokerage software. It is easy to use once the investor is familiar with it, but for the beginner these powerful trading tools may be an obstacle to effective investment management. The software enables you to make your own investment ‘desktop’ specify alerts for significant changes to your investments, level I and II quotes, option chains, ‘screeners’, ‘hot stock’ lists, charts and graphs and a great deal more. They also offer investment learning resources to build your technical knowledge of investment. Other resources include streaming headlines, research reports and daily and weekly market commentary from Market Edge®. They do not yet have a ‘roving’ investment option for trading via a cell phone. Why anybody would want to risk this kind of distracted investment on the move I cannot imagine but other brokerages offer it, yet Charles Schwab does not.
Where Schwab does score well is in customer service, with 300 physical offices around the country and all possible means of customer contact round the clock. However, customer service is all about responding well when mistakes are made and two ex-investors on ‘Dogs of the Dow’ tell stories around Charles Schwab that seem to indicate some systemic blemishes. The first one tells of a 2003 IRA contribution posted to 2004 and a stock offer that was paid in cash rather than stocks as requested by return mail. The second tells of two further blemishes. First, any cash in Schwab is swept into an account that only pays 1/2% unless you have more than half a million in assets and secondly, to use the “sell one fund and buy another” function, your buy trade execution takes 24 hours. You have to sell and buy in separate orders so that you get same day execution. This is not made clear at the time of trade.
Overall, Charles Schwab has an excellent brokerage service, the question you need to answer before deciding on these guys – is how much are you willing to pay as it relates to service? Tradeking (which we’ve reviewed for you), or one of the other brokerage companies (we have several reviews) may be a better option if you’re concerned about costs.
(Schwab is often mispelled Schwabb)