What's wrong with Schwab?

[Finance Dave]

I used to have Vanguard, but their customer service was terrible, their website and research online tools are weak, and they would not provide me a dedicated advisor for free. FIDO did, and IMO they are WAY better than Vanguard. I've moved all our funds to FIDO.

[beernutzbob]

I have retirement accounts at both TIAA and Vanguard and taxable investments at Schwab (since 1984). Schwab customer service is far ahead of the other two as is their website. The worst of the three is TIAA though especially their customer service which has fallen off a steep cliff the last few years.

[bada bing]

Quote:

Originally Posted by MRG The support for 401k are handled by a different group of people at fund companies.They use different tools and systems to service the participants. My experience with Fidelity's group was a one phone call, with them sending a follow-up email months later.

+1

I have had great experience with Fidelity, but I interact with them through the Retirement Services group for my old mega-corp employer. I don't have any experience with Fidelity as a retail customer.That's different people and different phone numbers.

I am a retail customer at Schwab and also get great service there for 25 years and counting. No issues since I opened the accounts. My top preference is Schwab for an account custodian.

I had tIRA and Roth at Vanguard. I got tired of their continual minor incompetence and moved all accounts away 4 years ago. I very much admire Jack Bogle's legacy and I still like Vanguard ETF's (which can be held anywhere). Vanguard as a custodian ? I can and am now doing much better without them. JMO but Jack Bogle's brilliance was in pushing low cost indexing. His organization of Vanguard as a customer owned co-op was a mistake. Sounds good on paper, but every customer owned co-op I have ever dealt with (think utility companies) doesn't run very well because there isn't a laser focus on the business.

But it's all good and anyone should be able to find an adequate custodian for their account needs. Competition is good.

[24601NoMore]

Haven't seen anyone mention one big difference yet - the cost to trade a "transaction fee" mutual fund.

At Vanguard, you can get 25 free trades (including tx-fee mutual funds) per year at the Flagship level ($1M+ in VG-branded assets). That's not inconsequential when comparing to FIDO, who I believe still charges $75 (!!!! who on earth still charges $75 per transaction?!) per fund purchase and Schwab, who charges up to $49.95. Fund sales are (I believe) transaction cost free at FIDO and incur an additional $49.95 fee at Schwab.

Those 25 "free" trades on funds that are not NTF can add up to nearly $2K ($1,875) per year.

As others have mentioned up thread, you can also hold a wide variety of popular VG funds like Wellesley, Wellington, Tax Managed Balanced and others far easier and free, (vs paying transaction fees) at VG.

All that said, there are some real trade-offs using VG. The biggest, IMHO, is no 24x7 customer service. They're only reachable M-F, 8-8. That can be a big deal when you have a concern about an account over a weekend and need to wait until Monday at 8 ET to reach them..

VG is also WAY behind FIDO and Schwab on account security. There's currently no secure 2FA - just 2FA via text, which can be easily compromised by SIM hacks. (FIDO, on the other hand, uses Symantec VIP Access that generates a random number every 60 seconds. WAY more secure). Many of us have requested that VG get with the times and implement something like VIP Access and despite repeated requests, VG just doesn't appear to care.

VG does offer a way to restrict logon access to only one computer, but that feature frequently doesn't work. Just happened to me yesterday - tried to log on, and the VG website didn't recognize my PC and wouldn't let me in. So, had to call to get access restored. Fortunately, it was during their (very limited) CS hours. I would have been SOL if it had been a weekend.

It's also taking a lot longer recently to reach a live rep at VG. I had to do a callback (about 10 min wait) yesterday. I seem to get FIDO reps live every time I call them (retail, not 401K) FWIW.

I'd be tempted to consolidate at FIDO or Schwab but the Mutual Fund fees (and ability to have Admiral Wellesley and Wellington among other VG Admiral funds without trading fees) is a biggy to me as I have a number of actively managed funds from companies like PIMCO, Dodge & Cox and others that I don't want to give up..(heresy, I know..), and I don't want to pay nearly $2K / year in MF trading fees at FIDO if I decide to move things around..

ETA - you can also buy the Institutional share class of popular PIMCO funds at VG (like PIMCO Income) with a $25K minimum at VG. Minimums are $1M elsewhere on those Institutional share classes..PIMCO funds usually have very high ERs, and the only class worth even thinking of holding is Institutional for their lower (but still comparatively/ridiculously high) ERs.

[gayl]

Quote:

Originally Posted by 24601NoMore ... actively managed funds ... don't want to pay nearly $2K / year in MF trading fees

Isn't that an oxymoron? MFs close end of day so you cannot react mid day. Have you thought about ETFs which trade like stocks and will have lower expense ratios than the MFs you're mentioning?

[24601NoMore]

Quote:

Originally Posted by gayl Isn't that an oxymoron? MFs close end of day so you cannot react mid day. Have you thought about ETFs which trade like stocks and will have lower expense ratios than the MFs you're mentioning?

No. Trading fees apply every time you buy or sell a TX fee fund at Schwab, and every time you buy a TX fee fund at FIDO. Obviously, that's only at end of day NAV - but any newly acquired shares, disposed shares, moving shares between funds will incur a "trading" (transaction) fee - even though that trade is at end of day NAV.

[gayl]

Quote:

Originally Posted by 24601NoMore No. Trading fees apply every time you buy or sell a TX fee fund at Schwab, and every time you buy a TX fee fund at FIDO. Obviously, that's only at end of day NAV - but any newly acquired shares, disposed shares, moving shares between funds will incur a "trading" (transaction) fee - even though that trade is at end of day NAV.

Looking at a recent trade on Schwab: 0 commission / 0.04 exchange fee. Other recent trade 0 commission / 0.33 exchange fee. Wow. You must be doing more than my high of 300 trades per year to get to $2000 in exchange fees!!!! But then I do individual stocks and ETFs

[24601NoMore]

Quote:

Originally Posted by gayl Looking at a recent trade on Schwab: 0 commission / 0.04 exchange fee. Other recent trade 0 commission / 0.33 exchange fee. Wow. You must be doing more than my high of 300 trades per year to get to $2000 in exchange fees!!!! But then I do individual stocks and ETFs

I'm talking about mutual funds, not ETFs and stocks. I thought that was pretty clear in my original post..

Schwab and FIDO do have many "NTF" (non transaction fee) funds. But many of the better ones (eg: from PIMCO) are "Transaction Fee" funds that you incur $75 per buy at FIDO and $49.95 per buy and another $49.95 per sell at Schwab.

Not everyone invests purely in ETFs and individual stocks. There are areas where indexing through ETFs is appropriate (eg: S&P500 index fund) but other areas (Fixed Income, International, some Value funds) where Active management does make sense.

[beernutzbob]

Quote:

Originally Posted by 24601NoMore Haven't seen anyone mention one big difference yet - the cost to trade a "transaction fee" mutual fund. At Vanguard, you can get 25 free trades (including tx-fee mutual funds) per year at the Flagship level ($1M+ in VG-branded assets). That's not inconsequential when comparing to FIDO, who I believe still charges $75 (!!!! who on earth still charges $75 per transaction?!) per fund purchase and Schwab, who charges up to $49.95. Fund sales are (I believe) transaction cost free at FIDO and incur an additional $49.95 fee at Schwab. Those 25 "free" trades on funds that are not NTF can add up to nearly $2K ($1,875) per year. As others have mentioned up thread, you can also hold a wide variety of popular VG funds like Wellesley, Wellington, Tax Managed Balanced and others far easier and free, (vs paying transaction fees) at VG. All that said, there are some real trade-offs using VG. The biggest, IMHO, is no 24x7 customer service. They're only reachable M-F, 8-8. That can be a big deal when you have a concern about an account over a weekend and need to wait until Monday at 8 ET to reach them.. VG is also WAY behind FIDO and Schwab on account security. There's currently no secure 2FA - just 2FA via text, which can be easily compromised by SIM hacks. (FIDO, on the other hand, uses Symantec VIP Access that generates a random number every 60 seconds. WAY more secure). Many of us have requested that VG get with the times and implement something like VIP Access and despite repeated requests, VG just doesn't appear to care. VG does offer a way to restrict logon access to only one computer, but that feature frequently doesn't work. Just happened to me yesterday - tried to log on, and the VG website didn't recognize my PC and wouldn't let me in. So, had to call to get access restored. Fortunately, it was during their (very limited) CS hours. I would have been SOL if it had been a weekend. It's also taking a lot longer recently to reach a live rep at VG. I had to do a callback (about 10 min wait) yesterday. I seem to get FIDO reps live every time I call them (retail, not 401K) FWIW. I'd be tempted to consolidate at FIDO or Schwab but the Mutual Fund fees (and ability to have Admiral Wellesley and Wellington among other VG Admiral funds without trading fees) is a biggy to me as I have a number of actively managed funds from companies like PIMCO, Dodge & Cox and others that I don't want to give up..(heresy, I know..), and I don't want to pay nearly $2K / year in MF trading fees at FIDO if I decide to move things around.. ETA - you can also buy the Institutional share class of popular PIMCO funds at VG (like PIMCO Income) with a $25K minimum at VG. Minimums are $1M elsewhere on those Institutional share classes..PIMCO funds usually have very high ERs, and the only class worth even thinking of holding is Institutional for their lower (but still comparatively/ridiculously high) ERs.

I have had phone call 2FA set up at Vanguard for years. I login and then receive a call on my home number which conveys the access code. I am not restricted to logging in with one computer.

[gayl]

Quote:

Originally Posted by 24601NoMore I'm talking about mutual funds, not ETFs and stocks. I thought that was pretty clear in my original post..

Your statement that Fido / Schwab are more expensive than Vanguard in actively trading MFs was perplexing as MFs aren't set up to actively trade IMHO. But to each our own (FWIW: Schwab & Fidelity are fairly competitive in not charging to trade their proprietary MFs but will charge on the fund families you like)

[24601NoMore]

Quote:

Originally Posted by beernutzbob I have had phone call 2FA set up at Vanguard for years. I login and then receive a call on my home number which conveys the access code. I am not restricted to logging in with one computer.

I think you're also missing the point I was trying to make. Secure 2FA is something like Symantec VIP Access that generates a 6-digit random number, which FIDO (and AFAIK based on my reading, Schwab) offer. That number changes every 60 seconds and is based on your individual hardware - just like the old RSA tokens many of us used at w*rk.

VG does not "require" you restrict access to just one computer. It's an OPTIONAL security feature. Unfortunately, it often does not work. (VG's website randomly "forgets" your PC - presumably after a Windows or browser update or for some totally random reason). IF that happens to you (it's happened to me roughly 4 times in the past 4 months), you need to call in to have them allow any PC to login, and then reset to restricted PC access. It's basically a giant PITA.

The lack of true secure 2FA has been talked about on Bogleheads and elsewhere for years. Many of us have asked VG to implement something similar to Fidelity but VG has yet to do so. Are there workarounds like using a home phone to get a "2FA" number read off to you? Sure. And not to get into the weeds of why, but many including me strongly prefer a solution like Fidelity has with their VIP Access app.

The point I was attempting to make is that FIDO and presumably Schwab offer something that many people believe is much more secure than VG. I'm not here to debate that, but simply to point out yet another important (to many) difference between Schwab, FIDO and VG.

[24601NoMore]

Quote:

Originally Posted by gayl Your statement that Fido / Schwab are more expensive than Vanguard in actively trading MFs was perplexing as MFs aren't set up to actively trade IMHO. But to each our own (FWIW: Schwab & Fidelity are fairly competitive)

I'm not talking trading.

I'm talking acquiring and selling mutual fund shares, which can get significantly more expensive at FIDO and Schwab than it can be at VG, depending on what you are buying and selling.

That's a real cost at FIDO and Schwab if you want mutual funds from companies like PIMCO that fall under their "transaction fee" funds.

Further, "NTF" (Non Transaction Fee) funds, which Schwab and FIDO do offer and promote, often have 12B-1 fees associated with them, making them significantly less attractive. That's a big part of why FIDO, Schwab and others do not charge transaction fees to buy or sell those funds - they rake in .25% or whatever similar 12B-1 fee every single year for people who hold those particular funds.

I totally get that many here only trade ETFs and individual stocks. But for those of us who ALSO hold traditional mutual funds, there can be some significant differences between the three brokerages depending on what fund families you want to hold.

[beernutzbob]

Quote:

Originally Posted by 24601NoMore I think you're also missing the point I was trying to make. Secure 2FA is something like Symantec VIP Access that generates a 6-digit random number, which FIDO (and AFAIK based on my reading, Schwab) offer. That number changes every 60 seconds and is based on your individual hardware - just like the old RSA tokens many of us used at w*rk. VG does not "require" you restrict access to just one computer. It's an OPTIONAL security feature. Unfortunately, it often does not work. (VG's website randomly "forgets" your PC - presumably after a Windows or browser update or for some totally random reason). IF that happens to you (it's happened to me roughly 4 times in the past 4 months), you need to call in to have them allow any PC to login, and then reset to restricted PC access. It's basically a giant PITA. The lack of true secure 2FA has been talked about on Bogleheads and elsewhere for years. Many of us have asked VG to implement something similar to Fidelity but VG has yet to do so. Are there workarounds like using a home phone to get a "2FA" number read off to you? Sure. And not to get into the weeds of why, but many including me strongly prefer a solution like Fidelity has with their VIP Access app. The point I was attempting to make is that FIDO and presumably Schwab offer something that many people believe is much more secure than VG. I'm not here to debate that, but simply to point out yet another important (to many) difference between Schwab, FIDO and VG.

You made a factually incorrect statement and I corrected you. You absolutely can set up a Vanguard account so that you can't login without receiving a randomly generated access code sent with a phone call to a designated number. My account has been set up this way for years and it has never failed. If you don't want to do this that is your choice but to state it can't be done is inaccurate.

[gayl]

There is nothing 'wrong' with Vanguard. I simply prefer 1 contact person, local office, low fees, wide options.

[24601NoMore]

Quote:

Originally Posted by beernutzbob You made a factually incorrect statement and I corrected you. You absolutely can set up a Vanguard account so that you can't login without receiving a randomly generated access code sent with a phone call to a designated number. My account has been set up this way for years and it has never failed. If you don't want to do this that is your choice but to state it can't be done is inaccurate.

It's not factually incorrect to say that VG does not have a secure 2FA **APPLICATION** like Fidelity does with VIP Access. That was my point. If I stated it less clearly than I intended, my apologies.

If you're comfortable with VG's current "2FA" solution, that's great. But many are not, and there are hundreds of posts on Bogleheads over many years including recently as to why others are not happy with it, either.

My intent was to point out real differences between the brokerages that had not been mentioned yet. And the lack of a modern, application-based 2FA solution IS a very real difference between them. One that's important to many people, me included.

[OldShooter]

Quote:

Originally Posted by 24601NoMore Haven't seen anyone mention one big difference yet - the cost to trade a "transaction fee" mutual fund. ...

I think there are a couple of reasons for this. First, apparently the fees that some funds pay Schwab for customer bookkeeping vary, so adding a transaction fee would tend to discourage customers from buying low-paying funds. Second, call it "nanny state" if you like but the fees and the buy/sell timing restrictions on some funds are specifically intended to discourage trading. The extreme anecdote on trading being hazardous is the poor kid who committed suicide because he misread his Robin Hood statement. And, speaking of Robin Hood, I have never looked at the site but from what I've read they make trading look like a video game. That would be anathema at Schwab IMO, and properly so.

Personally, I've never worried about the fees. First, we trade very seldom and, second, a $75 fee is negligible on our typical ticket sizes. Our objective for any trade dwarfs the $75 pittance in importance.

Change may be on the horizon, though. Despite the Schwab acquisition, TDAmeritrade has been spending big advertising bucks at The Economist magazine recently, promoting their trading software. IIRC last week or the week before they had the back cover and this week they have a prominent full page ad. I can't imagine that they'd be doing this if the acquistion didn't represent at least a small change in Schwab's attitude toward traders. We'll see, I guess.

Edit: Thinking a little more about this, wouldn't The Economist be about the last place you'd go to look for traders?

[indiajust]

I love Schwab, just bought the biography on the founder. VG invented the no load mutual fund, and the funds own the company itself. They run a tight ship. But Schwab invented low cost self investing, and that caters to this crowd. I always took advantage of rollover situations to consolidate with schwab in my rollover. I have used almost every service they offer and never had an issue. They would need to chase me away with a stick at this point.

[Dash man]

Quote:

Originally Posted by indiajust I love Schwab, just bought the biography on the founder. VG invented the no load mutual fund, and the funds own the company itself. They run a tight ship. But Schwab invented low cost self investing, and that caters to this crowd. I always took advantage of rollover situations to consolidate with schwab in my rollover. I have used almost every service they offer and never had an issue. They would need to chase me away with a stick at this point.

Have you used their private client service, and if so, were you happy with it?

[foxfirev5]

For myself, DW and DM I keep everything where it is. I've had far too many negative experiences trying to transfer funds. It works out to be nearly split between VG and Fido. Good enough for me.

[Jim in PA]

I have been a very satisfied client of Schwab for many years. It started when my then employer used Schwab for stock based compensation. Very recently Schwab seems to have slipped. It’s things like not being able to reach support or glitches on the trading system. A few days ago I THOUGHT I had placed an order… but I couldn’t see it on the system. This wasn’t something immediate it was at least 10 to 15 minutes later and it still wasn’t there. I figured I must have made a mistake and failed to save it. As I created a replacement order, I got a error message.

I don’t know, but I speculate that maybe they picked a large number of new clients with the Robin Hood fallout and all of those trading wizards with stimulus money. Or perhaps it’s integrating the TD Ameritrade clients.