Fidelity or Vanguard

[Markola]

The tone of your post might inadvertently give the impression that Schwab might push for active management of your account by a Schwab compensated "advisor." They do offer a wide variety of services including relationships with FA's, robo-investing, etc. But, other than your anecdotal story, I've never heard of a Schwab employee pushing to bring assets under paid management.



I've been with Schwab for over 30 years and have never, even in the smallest way, been pushed towards using a "Schwab advisor." I see mention of these services on their site along with mention of many other services, but never feel pressured in the slightest to partake as I might if my funds were at Edward Jones, etc.

I don’t know that he was aiming to actively manage my money, as in an AUM arrangement, and Schwab’s reputation is infinitely better than Edward Jones’. As I said, I generally had a good experience as a Schwab client. The fact is, one day a Schwab agent called me out of the blue, insulted my index fund strategy and wanted me to come in to the office so he could advise me how to do it better. There was certainly some angle I didn’t like, and talk about “tone”. I’d been thinking of moving to Vanguard for the alignment reasons noted and this encounter sparked action.

 

[OldShooter]

The tone of your post might inadvertently give the impression that Schwab might push for active management of your account by a Schwab compensated "advisor." They do offer a wide variety of services including relationships with FA's, robo-investing, etc. But, other than your anecdotal story, I've never heard of a Schwab employee pushing to bring assets under paid management.

I've been with Schwab for over 30 years and have never, even in the smallest way, been pushed towards using a "Schwab advisor." I see mention of these services on their site along with mention of many other services, but never feel pressured in the slightest to partake as I might if my funds were at Edward Jones, etc.

Same with us. In fact I don't think our guy is allowed to pitch investments like specific mutual funds, etc I have asked maybe once and got pointed to the Schwab "select" list or whatever they call it. He does get a regular payment based on our account balances but it's not huge.

That said, I recently got a notice that their compensation is changing. Details here: https://www.schwab.com/legal/compensation-advice/us-branch-representatives-compensation Reading this I could see where there might be more pressure on the reps to sell services, but there is an interesting statement: "We aggregate within each of these [compensation] categories a range of advisory programs or investment products that are similar in terms of complexity and the time, on average, it is expected to take a Financial Consultant to work with a client. We do this to guard against a Financial Consultant having undue incentives when giving investment advice." How serious they are and how it will work out in practice remains to be seen.

Personally I am not at all worried that my guy will morph into Fast Eddie.

 

[youbet]

I don’t know that he was aiming to actively manage my money, as in an AUM arrangement, and Schwab’s reputation is infinitely better than Edward Jones’. As I said, I generally had a good experience as a Schwab client. The fact is, one day a Schwab agent called me out of the blue, insulted my index fund strategy and wanted me to come in to the office so he could advise me how to do it better. There was certainly some angle I didn’t like, and talk about “tone”. I’d been thinking of moving to Vanguard for the alignment reasons noted and this encounter sparked action.

OK, understood.

If it weren't for the fact that I actively trade about 5% of our assets (95% buy and hold), I might have gone with Vanguard years ago. But at that time, Vanguard's brokerage services were poor. And, I wanted to have a local, walk-in office for DW staffed with people that would handle administrative issues (transfers, setting up POA's, etc.) without hassle. So I interviewed Fidelity and Schwab and went with Schwab. Previously, I had been with Paine Webber.

Schwab hasn't been entirely issue-free over the decades, for sure. At one time, you couldn't hold Vanguard Admiral shares there, for example. (My largest holding, by far, is VTSAX.) And today, their interest rates on idle cash are poor and you have to do some maneuvering around that. And you can see evidence of fewer perks (classes, seminars, etc.) than in the past likely due to the competitive cost structure they find themselves in.

But all in all, I can't find anyplace today I'd rather be at this time of life and have no regrets over having been a long term customer.

 

[youbet]

Same with us. In fact I don't think our guy is allowed to pitch investments like specific mutual funds, etc I have asked maybe once and got pointed to the Schwab "select" list or whatever they call it. He does get a regular payment based on our account balances but it's not huge.

That said, I recently got a notice that their compensation is changing. Details here: https://www.schwab.com/legal/compensation-advice/us-branch-representatives-compensation Reading this I could see where there might be more pressure on the reps to sell services, but there is an interesting statement: "We aggregate within each of these [compensation] categories a range of advisory programs or investment products that are similar in terms of complexity and the time, on average, it is expected to take a Financial Consultant to work with a client. We do this to guard against a Financial Consultant having undue incentives when giving investment advice." How serious they are and how it will work out in practice remains to be seen.

Personally I am not at all worried that my guy will morph into Fast Eddie.

I read the compensation notice with interest too.......

Since I don't receive any individualized investment advise or pay for any services from Schwab, I'm not too concerned. Generally, when I see my rep in person it's because I wanted to have some administrative service taken care of for me (setting up some POA's for example) and I dropped by to get some explanations and sign the forms. While I'm there I usually ask about some of the fee-based FA services so I'm informed. If I should predecease DW, she'd need help both managing the FIRE portfolio and with taxes. I want to be sure I understand that Schwab would be a good place for her to be and the rep and I usually chat about that scenario and the services (and their costs) that are available. Of course he'd like to sell me some services now! But he knows I'm a DIYer and just tells me what they offer, what the costs are and sends me home with some brochures. And I go on being a DIYer, low cost, investor.

So, I'm not worried about my guy becoming "Fast Eddie" either.

 

[mickeyd]

With FIDO the Johnson family owns it. With VG, investors do. Your choice though.

 

[PatrickA5]

We moved everything from VG to Fido last year (in kind). Mainly for the CMA account, better customer service and the ability to go to an actual storefront. I think this will be better for DW when I'm gone.

 

[PatrickA5]

With FIDO the Johnson family owns it. With VG, investors do. Your choice though.

I was with VG for years (before moving to Fidelity), but not sure I ever really understood what benefit the above provided for me. With fees being for the most part equal these days, I don't see the benefit.

 

[MRG]

I was with VG for years (before moving to Fidelity), but not sure I ever really understood what benefit the above provided for me. With fees being for the most part equal these days, I don't see the benefit.

I spent two days of my life arguing with a new Fidelity private client representative about him wanting my to buy an annuity with ALL my assets. When I complained to the branch manager I no longer have a private client representative.

While you can stay on the inexpensive side of Fidelity it's not guaranteed.

 

[PatrickA5]

I spent two days of my life arguing with a new Fidelity private client representative about him wanting my to buy an annuity with ALL my assets. When I complained to the branch manager I no longer have a private client representative.

While you can stay on the inexpensive side of Fidelity it's not guaranteed.

While my local advisor has never tried to sell me on anything, I can see how a over eager advisor could try to lead us DIYers astray. I have been "grooming" DW to say NO.

 

[MRG]

While my local advisor has never tried to sell me on anything, I can see how a over eager advisor could try to lead us DIYers astray. I have been "grooming" DW to say NO.

I have assets at Fidelity and Vanguard. DW'S been instructed if I go first move everything to Vanguard and put it in PAS and just take whatever she needs.

 

[Markola]

While you can stay on the inexpensive side of Fidelity it's not guaranteed.

Somebody’s got to pay for Fidelity and Schwab’s nice storefront offices and television ads and, one way or another, even if you can’t see it, it’s you [emoji15]. They aren’t paying for air conditioning just because they enjoy seeing your freeloading mug occasionally. I understand the ability to walk in with one’s spouse to talk with a helpful human has great value and, if Vanguard didn’t exist, I’d use Fidelity or Schwab and be happy about it. In fact, my 403b, in which I own VG funds, is administered by Fidelity and I’m satisfied with them.

 

[TechLead]

Somebody’s got to pay for Fidelity and Schwab’s nice storefront offices and television ads and, one way or another, even if you can’t see it, it’s you [emoji15]. They aren’t paying for air conditioning just because they enjoy seeing your freeloading mug occasionally. I understand the ability to walk in with one’s spouse to talk with a helpful human has great value and, if Vanguard didn’t exist, I’d use Fidelity or Schwab and be happy about it. In fact, my 403b, in which I own VG funds, is administered by Fidelity.

They are paid by fools.

Fidelity or Schwab does not *force* to buy anything. You can make those accounts very cheap. BTW Schwab has outstanding exchange rates when traveling (Internationally)

 

[PatrickA5]

I have assets at Fidelity and Vanguard. DW'S been instructed if I go first move everything to Vanguard and put it in PAS and just take whatever she needs.

I had the same instructions for DW when I was at VG.

DW loves the fact there is a Fidelity office, though.

 

[PatrickA5]

Somebody’s got to pay for Fidelity and Schwab’s nice storefront offices and television ads and, one way or another, even if you can’t see it, it’s you [emoji15]. They aren’t paying for air conditioning just because they enjoy seeing your freeloading mug occasionally. I understand the ability to walk in with one’s spouse to talk with a helpful human has great value and, if Vanguard didn’t exist, I’d use Fidelity or Schwab and be happy about it. In fact, my 403b, in which I own VG funds, is administered by Fidelity and I’m satisfied with them.

I'm sure somebody is paying for the offices - so far at least, it isn't me.

 

[OldShooter]

I think there are a couple of takeaways from this thread. First, the three we are talking about are all quite acceptable brokerages. To a degree it is a matter of taste, looking for particular funds, and fondness or not for the various web UIs. IMO multiple good choices are good thing for investors.

Second, partially from the thread and partially from looking at the competitive environment, I think we customers have not yet seen the brokers' offerings stabilize. Schwab made the decision to take out some of the competition by zeroing trading fees. Probably they expected TDAmeritrade to fall into their lap as it did. IIRC TD's reliance on trading fees as a % of revenue was double or triple what Schwabs was. Bye bye. But .. as discussed, someone has to pay the brokerage firms' costs, so all three of them are undoubtedly scouring the customer lists and scouring their operations costs looking to pick up enough pennies to run the business. Until that process runs its course we will not know where we as customers stand. For example, Schwab made their sweep account into an FDIC insured bank account, substantially increasing their income on customers' float. Fido did not do this and has been advertising the fact. Will Schwab reverse their decision or will Fido join them? No way to know. Schwab also revised their compensation plan (apparently) to put more emphasis on higher-profit services. So will their people become more aggressive/like Fido's?What about Vanguard? Who knows?

So IMO we customers have a pretty good deal going with three quite acceptable alternatives, but the brokers' world has not yet stabilized so our relationships can't be considered stable either.

 

[jazz4cash]

I was with VG for years (before moving to Fidelity), but not sure I ever really understood what benefit the above provided for me. With fees being for the most part equal these days, I don't see the benefit.

I agree. I have accounts at both VG and Fido. VG is a low cost pioneer but now that many others are competitive on cost, it seems their reluctance to invest in technology puts them behind the others wrt customer support. I hope they improve.

 

[MRG]

Somebody’s got to pay for Fidelity and Schwab’s nice storefront offices and television ads and, one way or another, even if you can’t see it, it’s you [emoji15]. They aren’t paying for air conditioning just because they enjoy seeing your freeloading mug occasionally. I understand the ability to walk in with one’s spouse to talk with a helpful human has great value and, if Vanguard didn’t exist, I’d use Fidelity or Schwab and be happy about it. In fact, my 403b, in which I own VG funds, is administered by Fidelity and I’m satisfied with them.

Exactly and those storefronts don't exist for me. It's a day's journey to visit one.

 

[nwsteve]

I agree. I have accounts at both VG and Fido. VG is a low cost pioneer but now that many others are competitive on cost, it seems their reluctance to invest in technology puts them behind the others wrt customer support. I hope they improve.

It is not just the tech VG has been slow to invest but also IMHO in selecting and training Reops who have the ability and training to listen and get answers to any question beyond "vanilla" and on a script. This last shortfall is what drove me to consolidate accounts at Fido. On average, Fido employees are much more capable than all but a few I experienced when was at VG even though we were Flagship when we left.

 

[PatrickA5]

It is not just the tech VG has been slow to invest but also IMHO in selecting and training Reops who have the ability and training to listen and get answers to any question beyond "vanilla" and on a script. This last shortfall is what drove me to consolidate accounts at Fido. On average, Fido employees are much more capable than all but a few I experienced when was at VG even though we were Flagship when we left.

My first Flagship rep was great. He had a lot of experience and could answer almost any question I threw at him. My last one (according to Linkdin) had two years of retail manger experience and zero financial experience or schooling. She was nice, but I felt like I was training her when I called. So far, my Fido questions have all been answered correctly and promptly regardless of who I contact (in person, on phone, or chat). From a customer service perspective, I'd give Fido an A and VG a C. Schwab was also good when I had an account there.

 

[Katsmeow]

I have both. I mostly keep Vanguard because I don't want all my eggs in one basket. I do like fidelity the best.

 

[stephenson]

Vanguard is facing some difficulty right now - they had a differentiator for many years, but it is gone.

I have accounts with both Vanguard and Fidelity - about the same size. Fidelity treats me like royalty - Vanguard seems slow in comparison.

 

[jazz4cash]

Vanguard is facing some difficulty right now - they had a differentiator for many years, but it is gone.

I have accounts with both Vanguard and Fidelity - about the same size. Fidelity treats me like royalty - Vanguard seems slow in comparison.

What kind of difficulty

 

[Jeb-NY]

I guess I'm in the group of 2 baskets for my eggs. Between my wife and I, we had money spread between 6 or so companies. As we phased into retirement I consolidated all my 401K and Roth accounts to Vanguard and my wife's to Fidelity. We have a joint brokerage account in VG. It is probably because I use it more, but I like VG website better than Fidelity, both could be more user friendly. I have made a folder of bookmarks to the parts of VG's site I want to go back to so I don't have to figure out the path I used to get their again. I have had good luck with my Flagship rep, they often refer me to an expert on whatever I'm asking but I get good answers.

Didn't even know Fidelity had local offices, just looked and they do have one about 30 minutes from me but I don't see any reason why I would want to go.

Jim...

 

[braumeister]

BTW Schwab has outstanding exchange rates when traveling (Internationally)

That's well known here. Many of us have used the Schwab debit card for years to get cash from ATMs overseas. And that's really the point, I think. Each of us has to look at what we want from a financial relationship. Once that's determined, it's not hard to find the best choice of a firm to provide it.

 

[richardf]

Choose a fund with the lowest cost and other fees. All funds and all companies are the same. Best income fund is Schwab Intelligent Portfolio and best investment is Vanguard VTSAX.