Vanguard or Schwab?????

[Watertree]

DW and I early retired at age 62. We love retirement. Now 18 months later, I am reviewing investment accounts.

DW has IRA, I have IRA and Husband/wife have taxable account @ Schwab. Adult kids have taxable accounts @ Schwab. All accounts are managed by independent financial advisor since 2006. Independent financial advisor charges .75% assets under management. I hired financial advisor because he is DFA funds advisor. However, Vangard funds have performed as well as DFA funds. I did the math on all accounts which total mid six figures, annual % rate of return figures out to average of 2% per year using financial advisor. Researching Vanguard index funds and Schwab index funds I can do much better as a do it yourself investor using Schwab or Vanguard index funds or ETF's

I could leave investment accounts @ Schwab and buy their index funds or ETF's. I have read on other discussion boards, Bogleheads and Morningstar that Schwab is now competing head on with Vanguard for low cost index funds and ETF's

Schwab has an office 100 miles from my house. Vanguard would be phone/internet communication.

I have not talked with Vanguard or Schwab about me investing on my own. I think financial advisor contract needs to be cancelled.

I am asking ER board members their experience with Schwab and Vanguard. Also suggested questions to ask both Schwab and Vanguard. I would qualify for Vanguard Voyager Select.

Comments and opinions would be greatly appreciated.
Watertree

 

[steelyman]

They are both fine. We primarily use Fidelity, but that's convenience.

 

[samclem]

My experience with Vanguard has been very good. I hold only MFs with them, no brokerage account (yet). I don't have direct experience with Schwab, but have heard good things from cost-conscious investors who have used their brokerage services.

I would recommend you dig into the specifics of the actual funds and ETFs in which you'd want to invest. I'd check on their expenses and the costs (trading costs, ect) to go with house/non-house funds if you went with VGD or Schwab as your broker. Look into the variety of available low-cost funds, and their history/commitment to this type of investing.

Vanguard has a unique corporate structure, almost like a "mutual" insurance company. If you own their mutual funds, you benefit when the company does well. Lower cost MFs are not just a flavor-of-the-day at Vanguard, they a part of the corporate culture and hard-wired into the way the company is structured. I don't think there's any risk that will change. Schwab began as a groundbreaking low-cost brokerage, but that's a bit different than Vanguard's emphasis.

Both are good companies.

 

[ziggy29]

I'll give my usual answers here:

(1) If all you want to own is Vanguard funds, go with a Vanguard account. But Schwab is a superior brokerage to Vanguard, IMO and is a better platform for trading non-Vanguard (no transaction fee) funds and ETFs, so if those are in your plans, Schwab (or Fidelity) would be a good choice.

(2) It doesn't have to be either/or if you have enough assets for both, so you can use both Vanguard funds in a Vanguard MF account and access to a lot more stocks, ETFs and NTF mutual funds with a Schwab account (I think Schwab also provides superior service -- Vanguard's isn't bad but Schwab's has been very good in my experience). You lose a bit of simplicity with multiple accounts, but it's not unmanageable and you get some of the best of both worlds.

(Disclaimer: I have a Vanguard MF account *and* Schwab brokerage accounts and been very satisfied with both.)

 

[Bestwifeever]

If you are happy with Schwab why not just stay with them? I am not familiar with the firm but it has a very good reputation.

We have everything with Vanguard and are very happy with it, but we really have no contact with anyone there; we choose to do everything online. But I see that your level of assets would give you probably as much personal contact over the phone etc. as you would need:

A team of experienced investment professionals who will act as your guide to all we have to offer. They can answer your questions, make transactions, and help you learn about all of the products and services available to you.
Free consultations with a CFP® professional from Vanguard anytime the need arises, or a more detailed financial plan for your long-term investment goals—also at no cost.
Discounts on brokerage costs, which includes—in addition to commission-free Vanguard ETF trades—$2 commissions for stock and non-Vanguard ETF trades.**
Freedom from account service fees at Vanguard.

Either way, I don't think you need the FA any more.

 

[rodi]

I have the bulk of my funds at Schwab, self directed. My sister chooses to pay to have her funds at Schwab managed. (I'm too cheap for that). We share a "consultant" - she's just as nice to me as to my sis - even though she's making more money on my sis. (Granted our contact is usually just a once a quarter phone call to see if I need anything... but she was helpful when I rolled an IRA to them, and did a free sitdown with my husband and I about retirement plans/forecast.)

I have another old IRA at Fidelity. I'm happy with them too.

I have 529's at Vanguard. I had a beneficiary IRA there but transferred it to Schwab to a) consolodate, b) because of poor customer service (losing death certificate multiple times). In hindsight, perhaps I should have kept some money there.... but Schwab has been fine, and low cost.

 

[ziggy29]

Independent financial advisor charges .75% assets under management. ...

... I would qualify for Vanguard Voyager Select.

Either way, I don't think you need the FA any more.

Agreed. To qualify for VVS requires $500K or more in assets with Vanguard, and that means a 0.75% fee for an advisor eats more than $3,750 a year in fees. Compare that to many of the funds and ETFs through both Schwab and Vanguard that have 0.20% or less in fees, and in some cases less than 0.10% in fees. If you assumed an asset mix of diversified funds and ETFs with an overall expense ratio of 0.15%, the annual fees are only $750 on $500K instead of $3,750.

Are those advisors adding $3,000 of value a year? I doubt it.

 

[rodi]

Taking what Ziggy said one step further. The current adviser fees are ON TOP OF any loads or expense ratios for investments the adviser has put you in.

As mentioned - my sister has a managed account. She pays .5% for this privilege. This is on top of the expense ratio and transaction costs of the investments the managed accounts puts her in. Many are active funds, so expense ratios are far higher than the ETF/index type funds.

 

[clifp]

I have been Schwab customer for 30 years and they consistently delight me with their service. Vanguard is also a terrific organization and if all you are going to do is have 3 or 4 index funds, there are fine and possibly slightly higher performance than Schwab. (Schwab ETF have the same or lower expense than Vanguard Index funds, but Vanguard index funds seem to outperform Schwab one by a very small margin).

However, for more complicated needs I think Schwab is better and Schwab banking services are really great.

 

[retire2020]

I've Schwab and Fidelity but Schwab has better Customer Service. Vanguard is also regarded high by many folks but do not have any personal experience.

 

[Bikerdude]

I have IRA's with both and a brokerage account with Schwab. Both are very good. The Schwab Bank link is very useful along with the fee paid ATM debit card and free checking. The only drawback is if I want to buy or add to Vanguard funds in my Schwab IRA. It can be very expensive however, if its a large amount and you don't trade often its no big deal.

 

[Midpack]

I had my 401k at Schwab and everything else at Fidelity until about 10 years ago when I moved everything to Vanguard. IMO all three are good choices.

I was with Fidelity when I held/traded individual stocks and active mutual funds. I only switched to Vanguard when I quit trading individual stocks and went to index funds mostly. To me, it depends mostly on what you want to hold/trade - and then choose the one(s) that offer the assets you want.

None are good at hand holding investors, Fidelity and Schwab offer some advisory services but they're really hit and miss IME, there are some good advisors and others who barely know what they're talking about. Vanguard does less hand holding, but costs are generally a little lower (you get what you pay for), and their advisors also vary by individual (no matter how many figures your portfolio is).

 

[Ready]

I have accounts at Vanguard, Fidelity and Schwab. All three seem very good, but at Vanguard I have a personal rep who knows me and my partner well and provides a very custom level of service to us. I also have direct access to a dedicated financial planner any time I have questions or want to do a periodic review. And I pay nothing for all of these services. I'm just required to maintain a minimum balance, which I do, but all in very low cost index funds.

I just started buying some Schwab and Fidelity index funds, and I seem to remember their fees are just a bit higher than Vanguards. Probably not enough to switch, but if I was starting from scratch and planned on buying mostly index funds, I'd go with Vanguard.

Finally, don't spread yourself too thin to the point where you won't get all the freebie services that come with maintaining a minimum investment balance with each company.

 

[Fean]

I have accounts at both Schwab and Vanguard and I have never had trouble with either of them. Both have low-cost options with fantastic expense ratios (e.g., VTI @ .05% and SCHB @ .04%).

I like diversifying my index funds and ETFs across both companies because:

1) I want a backup in case something drastic happens. For example, if someone manages to get unauthorized access to one of my accounts, I want resources available to me from another company while I deal with the situation at the first company. Yes, I know I'm paranoid. Very very paranoid...

2) Although Schwab currently has slightly lower expenses in a few cases, I'm not convinced that they are as committed to that strategy in the long run as Vanguard is. Schwab jumped onto the low-cost bandwagon recently and it wouldn't surprise me if they jumped off of it when the next investing fad (or perceived fad) comes along.

-Fean

 

[Watertree]

I'll give my usual answers here:

(1) If all you want to own is Vanguard funds, go with a Vanguard account. But Schwab is a superior brokerage to Vanguard, IMO and is a better platform for trading non-Vanguard (no transaction fee) funds and ETFs, so if those are in your plans, Schwab (or Fidelity) would be a good choice.

(2) It doesn't have to be either/or if you have enough assets for both, so you can use both Vanguard funds in a Vanguard MF account and access to a lot more stocks, ETFs and NTF mutual funds with a Schwab account (I think Schwab also provides superior service -- Vanguard's isn't bad but Schwab's has been very good in my experience). You lose a bit of simplicity with multiple accounts, but it's not unmanageable and you get some of the best of both worlds.

(Disclaimer: I have a Vanguard MF account *and* Schwab brokerage accounts and been very satisfied with both.)

Having accounts @ Schwab and Vanguard both could get me the best of both worlds. Vanguard for index funds and Schwab for their ETF's or funds not available @ Vanguard.

 

[Watertree]

My experience with Vanguard has been very good. I hold only MFs with them, no brokerage account (yet). I don't have direct experience with Schwab, but have heard good things from cost-conscious investors who have used their brokerage services.

I would recommend you dig into the specifics of the actual funds and ETFs in which you'd want to invest. I'd check on their expenses and the costs (trading costs, ect) to go with house/non-house funds if you went with VGD or Schwab as your broker. Look into the variety of available low-cost funds, and their history/commitment to this type of investing.

Vanguard has a unique corporate structure, almost like a "mutual" insurance company. If you own their mutual funds, you benefit when the company does well. Lower cost MFs are not just a flavor-of-the-day at Vanguard, they a part of the corporate culture and hard-wired into the way the company is structured. I don't think there's any risk that will change. Schwab began as a groundbreaking low-cost brokerage, but that's a bit different than Vanguard's emphasis.

Both are good companies.

Very good advice to compare both Vanguard and Schwab index funds and ETF's. Vanguard has a long track history with their index mutual funds. Schwab seems to be playing catch up with Vanguard index mutual funds and ETF's

I would need to contact Vanguard and Schwab to see I how get along with them as a do it yourself advisor. The respective Vanguard and Schwab recommendations would also be a major factor in my decision making.

 

[Watertree]

If you are happy with Schwab why not just stay with them? I am not familiar with the firm but it has a very good reputation.

We have everything with Vanguard and are very happy with it, but we really have no contact with anyone there; we choose to do everything online. But I see that your level of assets would give you probably as much personal contact over the phone etc. as you would need:



Either way, I don't think you need the FA any more.

Staying with Schwab using their index mutual funds or ETF's is a viable option. Another factor, my wife has no investing knowledge and doesn't want to learn. If I were to predecease her, she would need someone to talk with about investment accounts. Posts from other discussion boards, Bogleheads and Morningstar, report Vanguard does a great job on the phone or video conference meetings. Schwab does have a brick and mortar office 100 miles from our house.
Watertree

 

[Watertree]

I have the bulk of my funds at Schwab, self directed. My sister chooses to pay to have her funds at Schwab managed. (I'm too cheap for that). We share a "consultant" - she's just as nice to me as to my sis - even though she's making more money on my sis. (Granted our contact is usually just a once a quarter phone call to see if I need anything... but she was helpful when I rolled an IRA to them, and did a free sitdown with my husband and I about retirement plans/forecast.)

I have another old IRA at Fidelity. I'm happy with them too.

I have 529's at Vanguard. I had a beneficiary IRA there but transferred it to Schwab to a) consolodate, b) because of poor customer service (losing death certificate multiple times). In hindsight, perhaps I should have kept some money there.... but Schwab has been fine, and low cost.

An advantage Schwab has over Vanguard, Schwab has a brick and mortar office 100 miles from our house. However, Vanguard is clearly the leader in index mutual funds. Lots of business can be done over the phone or internet.

I will call Vanguard for a financial review and planning meeting. I will also make an appointment with Schwab office for a financial office and planning meeting. I can then compare Schwab and Vanguard after the two meetings.

Watertree

 

[Watertree]

I had my 401k at Schwab and everything else at Fidelity until about 10 years ago when I moved everything to Vanguard. IMO all three are good choices.

I was with Fidelity when I held/traded individual stocks and active mutual funds. I only switched to Vanguard when I quit trading individual stocks and went to index funds mostly. To me, it depends mostly on what you want to hold/trade - and then choose the one(s) that offer the assets you want.

None are good at hand holding investors, Fidelity and Schwab offer some advisory services but they're really hit and miss IME, there are some good advisors and others who barely know what they're talking about. Vanguard does less hand holding, but costs are generally a little lower (you get what you pay for), and their advisors also vary by individual (no matter how many figures your portfolio is).

Planning to contact both Vanguard and Schwab. A major part of my decision making process is how well I communicate with Vanguard on an over the phone/internet basis. It sounds like their is a bit of the luck of the draw on the Vanguard rep I would be talking with, same with Schwab

Watertree

 

[Watertree]

Financial advisor is not worth .75% AUM given his poor track record of % rate of returns since 2006.

I can be my own financial advisor and get better returns with index funds.

Watertree

 

[Watertree]

I am confident I can be my own financial using index mutual funds or ETF's with Total Stock Market, International stock fund bond funds.

Do you have any recommended index mutual funds or EFF's?

Thanks! Watertree

 

[Midpack]

Planning to contact both Vanguard and Schwab. A major part of my decision making process is how well I communicate with Vanguard on an over the phone/internet basis. It sounds like their is a bit of the luck of the draw on the Vanguard rep I would be talking with, same with Schwab

Watertree

There is some luck of the draw involved. Even if you like whoever you talk with at Vanguard or Schwab, they will probably change at some frequency. And it will depend on your level of assets (may be a downside to splitting $ among several providers), here are the Vanguard levels and associated services https://investor.vanguard.com/what-we-offer/account-types-and-services/benefits.

With Fidelity and Schwab I rarely talked to the same rep twice. With Vanguard I have more assets and an assigned rep - but that changes every few years, and he rarely has answers to questions without 'getting back to me.' So I never call, I email to avoid the 'getting back to me' step.

When all is said and done all three can provide decent basic advice, but nothing exotic usually.

 

[Chuckanut]

1) I want a backup in case something drastic happens. For example, if someone manages to get unauthorized access to one of my accounts, I want resources available to me from another company while I deal with the situation at the first company. Yes, I know I'm paranoid. Very very paranoid...

I think this is a wise move considering the ease with which criminals can not only penetrate computer systems, but then hang around collecting data for weeks and in some cases months before they are detected.

 

[redduck]

I've been using both Vanguard and Schwab for many years. I've had no problems with either one of them. Actually, they've been quite helpful answering my questions even if they do need get back to me with the answers.

 

[growing_older]

Either company has been very good, and I've had accounts at both. I consolidated to Vanguard for simplicity and because I have no interest in an adviser. You could probably do just fine with either, or both.