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Charles Schwab Commercial
Old 10-09-2014, 10:01 PM   #1
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Charles Schwab Commercial

Charles Schwab TV Commercial -- "Why" :30 - YouTube

Love this Charles Schwab commercial. I have no personal experience with Schwab. I see many positive comments about them here on the board, but I wonder....
Are they really any more transparent than other managers?
Do they have any sort of refund if thier advice does not pan out?
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Old 10-09-2014, 10:17 PM   #2
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Originally Posted by jazz4cash View Post
Do they have any sort of refund if thier advice does not pan out?

I doubt they would even refund the cost of producing the commercial.

The risk is assumed by you.
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Old 10-09-2014, 10:28 PM   #3
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Originally Posted by jazz4cash View Post
Charles Schwab TV Commercial -- "Why" :30 - YouTube

Love this Charles Schwab commercial. I have no personal experience with Schwab. I see many positive comments about them here on the board, but I wonder....
Are they really any more transparent than other managers?
Do they have any sort of refund if thier advice does not pan out?
Sure, they give you double your money on what you lost or lagged. Also, 100 better than virgins in the afterlife.



Ha
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Old 10-09-2014, 11:33 PM   #4
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According to Wealth management | Charles Schwab
(The normal print)

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Because we believe investors deserve accountability, we offer The Schwab Accountability Guarantee™: If for any reason you’re not happy with one of our participating investment advisory services, we’ll refund your program fee from the previous quarter and work with you to make things right.
The fine print

Quote:
The guarantee applies to the following investment advisory services ("Participating Services") and associated program fees: (i) Schwab Private Client ("SPC"); (ii) Schwab Managed Portfolios™ ("SMP"); and (iii) Managed Account Connection® ("Connection") for accounts that are managed by investment advisors affiliated with Charles Schwab & Co., Inc. ("Schwab"): Windhaven Investment Management, Inc. ("Windhaven®"), ThomasPartners, Inc. ("ThomasPartners®"), and Charles Schwab Investment Management, Inc. ("CSIM").

The guarantee does not apply to (i) accounts managed by investment advisors that are not affiliated with Schwab; (ii) accounts managed by Schwab-affiliated advisors outside of the SPC, Connection, and SMP programs; or (iii) any other product or service made available by Schwab or its affiliates. SPC, SMP, and Connection are wrap fee programs sponsored by Schwab.

If at any time or for any reason you are not completely satisfied with a Participating Service, at your request Schwab will refund the associated program fee for the previous calendar quarter applicable to the Participating Service. The program fee is a percentage of the eligible assets in your Participating Service account(s). You will receive a credit to your Participating Service account(s) within approximately four weeks of your request. No other fees, commissions, charges, expenses, or market losses will be refunded. If Schwab is unable to address your concerns after consulting with you and refunding your program fee, Schwab will work with you to help meet your financial goals. Schwab reserves the right to change this guarantee in the future after providing notice. For additional information regarding associated program fees, please see the disclosure brochure for the Participating Service, available at the time you enroll or upon your request.
-Jon
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Old 10-10-2014, 06:34 AM   #5
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The term "wealth" is just another marketing tool.
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Old 10-10-2014, 10:47 AM   #6
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I'm guessing the new Schwab Robo Investment Adviser (RIA) being rolled out in a month or so won't have a very high fee, to rebate.

What's up with Schwab getting into the robo-style online advice business and is Windhaven the linchpin? | RIABiz
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Old 10-10-2014, 04:49 PM   #7
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I am a credit union fan rather than big banks but this Commercial is funny.
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Old 10-10-2014, 06:02 PM   #8
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I am a credit union fan rather than big banks but this Commercial is funny.
There's always a catch!

Sent from my mobile device so please excuse grammatical errors.
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Old 10-11-2014, 01:13 AM   #9
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Originally Posted by jazz4cash View Post
Love this Charles Schwab commercial.
What a sweet ad. How can you not want to give money to these guys?

SEC Charges Schwab Entities and Two Executives With Making Misleading Statements; 2011-7; Jan. 11, 2011
N.Y. appeals court revives claims against Charles Schwab | Reuters
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Old 10-11-2014, 10:21 AM   #10
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The term "wealth" is just another marketing tool.
It really is. I vaguely remember years ago on a TV show that a girl liked men with money clips. That was because they had money in the clip. Oddly enough I use a money clip and it makes me feel like I have money.

Wealth manager is a lie, but if you have a wealth manager then you must have, well, wealth! Doesn't that sound good. In the car culture many refer to car dealerships as stealerships for the cost of parts & services. We need a quick turn of phrase to use in place of wealth management.
Any suggestions?
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Old 10-11-2014, 12:48 PM   #11
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I don't know about the commercial, but I am switching some $$ to a Schwab account to take advantage of some ETFs with fees in the area of .04%. I am planning on building my own version of Vanguard Wellesly using ETF funds - 60% total bond market ETF, 40% dividend paying stocks ETF. Hopefully, it will work.
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Old 10-11-2014, 12:52 PM   #12
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The term "wealth" is just another marketing tool.
I agree. I think they are trying to justify higher fees than a "regular" FA that will work with just anyone.
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Old 10-12-2014, 06:17 PM   #13
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Schwab offers a variety of financial advice. Typical annual fees are in the .5-1% range.
So for a $1 million portfolio the refunds would one quarter of that or $1250 to $2500. Not nothing but if you lose 5% or 10% hardly significant.

As much as love Schwab, I wouldn't recommend their financial adviser to a forum regular. The possible exception is their one time fee service for $2K which I think would make sense for folks who have sold a multimillion business with complicated stock options and such.

On the other hand, there fees are 1/2 of Amerprise, Morgan Stanley, or UBS, all but one of the advisers I've meet were bright. They recommend appropriate investments. So one could do a lot worse.

Good luck getting your quarterly fee refunded from Amerprise
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Old 10-12-2014, 11:14 PM   #14
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We have strong data driven numeric proof that so-called wealth managers that actively manage investments underperform passive index investing on average. But if you want to pay a 1% fee, they will take their chances on keeping your 1% each quarter if random variation allows them to be close enough (or even do better) to the market, or that they can "sell" you on the merits of the service regardless of performance. It's all marketing and apparently effective marketing.
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Old 10-13-2014, 12:52 AM   #15
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We have strong data driven numeric proof that so-called wealth managers that actively manage investments underperform passive index investing on average. But if you want to pay a 1% fee, they will take their chances on keeping your 1% each quarter if random variation allows them to be close enough (or even do better) to the market, or that they can "sell" you on the merits of the service regardless of performance. It's all marketing and apparently effective marketing.
While that is certainly true on average. There are many things were you can make the same point. On average professional sports coaches and general managers lose as many games as they win, on average lawyers lose as many cases and on average poker player loses money. Yet nobody would claim that there aren't superior coaches, GMs, lawyers or poker players. There are superior money managers, it is just very difficult for the average person to figure out who is really good, and who is just using smoke and mirrors.

As I said I'm not recommending the Schwab adviser for people on the forum. But the problem with just buy a few index funds as one size fits all approach is two fold. First, some people have complex financial situations involving company stock, a business they own etc. The 1/2 in Vanguard Total Bond Market and 1/2 in Total Stock Market re-balance every year or even a more complicated portfolio is just too simplistic, in many cases.
In the real world, most people have multiple 401K with limited choices and tax consideration, which a good financial adviser can help provide money saving guidance on.

Second and more importantly normal investors as opposed the folks on the board behave badly. We have strong data driven numerically proof that investing in index funds, doesn't mean you'll get index fund returns. The total returns of VFINX (S&P 500) over the last 15 year have averaged 4.25% the investor returns are 2.55%. For a 1 million dollar portfolio 50/50, that difference is more than $200,000. Even subtracting Schwab .70% fee for $1 million portfolio that still adds up to more than 100K. In order for an adviser to justify his fees, all the adviser had to do was convince his client one time not to do any of the follow.
1999 sell all his bonds and put his money in the stocks, especially them internet stocks
2008, early 2009, don't sale stocks
2010 buy stocks if you previously has sold them.

Now I have only meet a couple of Ameriprise adviser and seen their disastrous result on the forum many times. I believe they are entirely motivated by commission, and their are multiple layers of commission.
Funds, commission are relatively small part of how Schwab compensates their advisers.

For a disciplined investor there is no need for an adviser, for a person who is disciplined about getting exercise there is no need for a personal trainer/or fitness classes. For the rest of us they can help.
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Old 10-13-2014, 01:11 AM   #16
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some people have complex financial situations involving company stock, a business they own etc
These people need actual legal advice and possibly accounting, such as a CPA. The kind of investment adviser in the Schwab program is NOT equipped to handle these kinds of issues.

By the time you know enough to tell a good adviser from a good schmoozer, you know enough to do it on your own. Most investment advisers are NOT the rare case of a talented adviser with genuine good investment ideas.
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Old 10-13-2014, 05:04 AM   #17
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These people need actual legal advice and possibly accounting, such as a CPA. The kind of investment adviser in the Schwab program is NOT equipped to handle these kinds of issues.

By the time you know enough to tell a good adviser from a good schmoozer, you know enough to do it on your own. Most investment advisers are NOT the rare case of a talented adviser with genuine good investment ideas.

Actually a CFP (and most of the Schwab advisers I meet are CFPs) gets pretty good training on a lot of tax issues with respect to investment. Example include asset location, tax treatment of MLPs, LLC, and life insurance.

Depending on which service you sign up for they will provide that level of advice.

I completely agree that knowing enough to tell a good adviser from a schmoozer, means you are more than qualified to do your own investing.

But that is a function mostly of there being no standards, too many silly designations, and nothing that is equivalent of Angie's list or Yelp for rating financial advisers. There are good advisers out there, some of them on this forum.

I think we get the opinion that they are all the equivalent of Amerprise advisers (I am sure there are some good Amerprise advisers) and routinely condemn them all.

I consider, Fidelity, Vanguard, and Schwab all good firms, and while they all started with DIY model. They all offer advisers because their customers asked for them (and of course they hope to make money.)
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Old 10-13-2014, 05:25 AM   #18
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While that is certainly true on average. There are many things were you can make the same point. On average professional sports coaches and general managers lose as many games as they win, on average lawyers lose as many cases and on average poker player loses money. Yet nobody would claim that there aren't superior coaches, GMs, lawyers or poker players.
Didn't think before about the other professions, interesting parallel you draw.

One of the big differences I do see with all of those is that a highly talented and paid coach, GM, lawyer and poker player face other highly paid and talented counterparts.

Nobody expects a non-trained poker player to win from a professional. Put an average joe (or me ) in charge of a complicated lawsuit and he'll lose for sure to the professional one, etc ..

On the other hand, an untrained DIY investor handsomely beats >70% of his professional counterparts just by doing nothing at all - just 1 decision to index and sit on your hands. There is no equivalent in all of these professions available.

Doesn't that make it different?
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Old 10-13-2014, 06:59 AM   #19
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The term "wealth" is just another marketing tool.

In other words, if you have it, they want it.
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Old 10-13-2014, 07:17 AM   #20
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Nobody expects a non-trained poker player to win from a professional. Put an average joe (or me ) in charge of a complicated lawsuit and he'll lose for sure to the professional one, etc ..

On the other hand, an untrained DIY investor handsomely beats >70% of his professional counterparts just by doing nothing at all - just 1 decision to index and sit on your hands. There is no equivalent in all of these professions available.

Doesn't that make it different?
I do think there is a difference for the reason you suggest, a simple legal strategy (the judge knows the law let him decide) is seldom a winning strategy. A simple investing strategy is fine, but only if you stick to it.

However, an important point which I think is not well understand on the forum is the average DIY investor in index funds doesn't beat 70% of the professional even if they invest in index funds which beat 70% of actively managed funds. I know this seem counter intuitive.

The average index investor doesn't make a the total returns of an index fund, he makes the investor returns. These are almost always lower in many cases much lower than total returns.

DIY index fund investor aren't much different than active fund investors. They buy high and sell low. Morningstar tracks the funds inflows and outflows and calculates the investor return. IMO this is the right benchmark to use to compare the returns of money manger not the total returns.

I mentioned in early post that for the Vanguard 500 fund the total return was 4.25% over the last 15 years vs only 2.55% investor return a 1.8% difference. In the case of Vanguard Total Bond market fund total returns are 5.43% vs 4.13% investor returns or a 1.3% difference. I can tell you that my bond returns the last 5 years are definitely in the investor category.

So the average investor would actually come out paying an adviser 1% year, to invest in index and the only job of the adviser would be to convince, ignore, or outright lie when the investor demands he sell low and buy high. Now are financial advisers immune to buying high and selling low no, but I suspect that good ones with lots of experience and/or formal training are better than average DIY.

Now most forum members are far more disciplined than average investors, but even so we have plenty of folks who claim to be index fund investor with fixed AA, who have been sitting on large pile of cash for the last 1-5 years.


We even see it on the advice given. Newbie, "I just changed jobs and rolled over my 401K in a IRA, the market seems really high." I want a target AA of 60/40, I am scared to put it into the market now." About 80% of the forum regulars will say it is ok to dollar cost average over the next 6 months to 12 month. Now this maybe reasonable advice, but it also is form of market timing, and goes a long way to explaining why investor returns lag total returns.

(For the record, I believe in picking individual stocks, Vanguard actively managed funds, dynamic asset allocation (i.e. market timing), and that good financial advisers are good idea for many people. I also don't post much on Boglehead)
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