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Charles Schwab SDBA
Old 05-07-2015, 10:21 AM   #1
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Charles Schwab SDBA

Has anyone used Charles Schwab Self-Directed Brokerage Account (SDBA) for their retirement accounts?

The fund options in our core 457 plan are becoming more expensive. For my asset allocation, it went from 0.18 to 0.34 but some of the planned changes haven't gone into effect yet. However, the plan does offer a Schwab SDBA option for an additional fee of $50 per year. My concern is availability of low-cost index funds and/or ETFs and other additional fees on top of the $50 annual fee.

Core Plan
InvestmentExpense Ratio
Bond0.26
Large-Cap0.02
Mid-Cap0.52
Small-Cap0.42
International0.50

Definitely keeping Large-Cap in the core plan. The Bond fund seems reasonable enough, too. Thinking I might need to replace the Mid-Cap, Small-Cap and Int'l Stock (which I'm guessing could go up to 0.80 after plan changes have been finalized).

My AA
InvestmentAllocation
Bond10%
Large-Cap25%
Mid-Cap20%
Small-Cap20%
International25%

So any opinions on Schwab SDBA? Also, what funds/ETFs to replace the above with?
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Old 05-07-2015, 11:54 AM   #2
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My company was just sold and the new management picked Transamerica Retirement Solutions as the 401k provider with Schwab as the SDBA, which I participate in (most of my assets are in the SDBA).

Aon Hewitt was our old 401K provider; Hewitt charged $20 quarterly fee ($80 annually) for their SDBA, so the $50 Schwab fee is an improvement...

In regards to any Vanguard funds in the Hewitt SDBA, I could only buy their Admiral Index funds (for some reason the ETFs weren't allowed). The purchase fee for Admiral funds is higher than for their corresponding ETF funds, but the expense ratios are way low, so I was willing to take a small hit for that...All those funds transferred into my new Schwab SDBA.

With Schwab, however, I am allowed to buy Vanguard ETF index funds, so I am looking further into that. I also dabble in a few selected individual stocks...

see this BogleHeads link for further perusal:

Lazy portfolios - Bogleheads

and this for alternatives using Schwab funds:
Three-fund portfolio - Bogleheads
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Old 05-07-2015, 12:39 PM   #3
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Quote:
Originally Posted by dadu007 View Post
In regards to any Vanguard funds in the Hewitt SDBA, I could only buy their Admiral Index funds (for some reason the ETFs weren't allowed). The purchase fee for Admiral funds is higher than for their corresponding ETF funds, but the expense ratios are way low, so I was willing to take a small hit for that...All those funds transferred into my new Schwab SDBA.

With Schwab, however, I am allowed to buy Vanguard ETF index funds, so I am looking further into that. I also dabble in a few selected individual stocks...
Hi and thank you for your reply. What fees do you have now on your Schwab SDBA? Are there any management fees on top of the $50 annual fee? Also, what about transaction fees? What mutual funds and ETFs are available and does Schwab have any low-cost no-fee, no-load equivalents to Vanguard funds/ETFs?

Thanks again!
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Old 05-07-2015, 11:24 PM   #4
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Yes, I have something similar in my 401k. $100/year and $8.95 per trade. Use it for all of my 401k, as it's cheaper by far than a management fee. Invested in brk and mkl, and minimize trading as new money is added to keep costs low. Works out to less than 0.1% annual I believe due to the size of the account.

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Old 05-08-2015, 12:41 PM   #5
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I have been using SDBA (called PCRA = Personal Choice Retirement Account) in my 401k with Schwab.
Around 2005 there used to be $100 annual fee, but it got dropped around 2010.
I have mix of Vanguard ETFs there and except for mysterious $7.13 record keeping fee once in 2009 all I pay (in excess of fund ER) is $7.95 transaction fee for buying and selling.
I keep VTI, VNQ, IJR, VEU & GIM there (my regular plan choices have higher expense ration than your plan)
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Old 05-08-2015, 04:54 PM   #6
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Thank you very much for all the inputs. Just enrolled in the SDBA option. It seems like Schwab has some ETFs similar to Vanguard's so I'm going with those since the Schwab versions don't have transaction fees and it looks as if the ERs are fairly competitive with Vanguard's.

NameTickerExpense RatioAllocationVanguard
BondSCHZ0.0510%BND
Multi-Cap CoreSCHB0.0465%VTI
Int'l Multi-Cap CoreSCHF0.0815%VEA
Intl'l Small/Mid-Cap CoreSCHC0.185%VSS
Emerging MarketsSCHE0.145%VWO

I calculated the weighed expense ratio for my new allocation and it's just 0.06. Quite a significant reduction from the 0.34 in the core plan.
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