Schwab Review

Section 1: Web Site Functionality Rank

Navigation
Regardless of your investing skill or internet savvy, Schwab.com navigation is simple and intuitive. There are plenty of tools for every type of investor and the clean and well organized layout makes it easy to find the ones you need.

Whether you're browsing your portfolio, doing research or checking the news, every part of Schwab.com has the same look and feel. This may not sound important but it actually makes a big difference to the average browser. Many sites feel cluttered or cause constant distractions because different pages have a different design. Schwab pays careful attention to these types of details, which is why their site navigation and appearance always rates so high.

This is another site where you don't have to worry about constantly being "pitched" every time you log in. You won't get any pop-ups or sales pitches once you've logged in unless you actually choose to review a product offering.
Dependability

Schwab.com is extremely strong in this category. While all of the major online brokerages want us to believe that they are all operating perfectly 100% of the time, the reality is that there are going to be issues and glitches now and then.

Most online investors have experienced frustrating service outages that resulted from human error, server upgrades, or new software. Even more common are glitches such as charting errors, outdated data or broken research tools. Schwab appears to have less downtime and fewer glitches than any other site, we are only aware of one human-error related crash in 2007 and they were back online the same day. At Schwab.com you will rarely have to deal with technical errors or glitches, they are very diligent about site and account maintenance.

Customization
Schwab is better than most in the customization category but they could use a little more flexibility on their portfolio and home pages. Many sites have recently added customization options since this is a relatively inexpensive way to improve the customer experience. Schwab is usually fast to adapt to customer needs and the rumor is that they will roll out additional customization options some time this year.

Trade Execution Schwab will always have the best trade execution guarantee in the business. Why? Because they promise to match the best competitor. Fidelity, and therefore Schwab, currently offer the fastest with a 1 second trade execution guarantee.

Section 2: Trading Costs and Fees Rank

Intuitive Commission Structure?
Schwab's commission structures aren't complex but they certainly aren't simple. They do offer competitive prices when compared against other high-end brokers but they're a little pricey compared to the deep discount brokerages.

For investors with larger portfolios, Schwab is ideal. Not only do economies of scale kick in for the HNWI (High Net Worth Individual), but they also receive special deals and discounted rates. For those with portfolios smaller than $100,000, Schwab can eat your profit up with transaction fees.
Minimum to Open an Account $1,000 minimum to open a new account.

Stocks
If you make < 120 trades per year and have < $1,000,000 portfolio
Internet Trades = $12.95 + $0.015 per share after 1,000 shares. Confusing? For example, if you have a $100,000 portfolio and buy 2,000 shares of General Motors, you would pay $12.95 + 1,000 shares X $0.015 = $27.95.
Interactive Voice System = Add $5 to the internet trade price.
Broker Assisted = Add $25 to the internet trade price

If you make 120+ trades per year or have a $1,000,000+ portfolio
Internet Trades = $8.95 flat fee, no per share expense.
Interactive Voice System = Add $5 to the internet trade price.
Broker Assisted = Add $25 to the internet trade price.
Options Internet Trades = $8.95 + $0.75 per Contract
Interactive Voice System = Add $5 to the internet trade price.
Broker Assisted = Add $25 to the internet trade price.

Mutual Funds
No-Load No-Fee Funds = $0.00 Free trades, No commissions or transaction fees charged by the Mutual Fund or Schwab. (1,900 available)
No-Load Funds = $49.95 transaction fee charged by Schwab (5,000+ available)
Load and Fee Funds = Fees charged by mutual fund and possibly by Schwab as well.
Tip: Avoid any funds with loads or fees. Schwab has the largest selection of no-load no-fee funds offered by any online brokerage, so there's no reason to ever pay them!

Treasuries & Bonds
Treasuries at auction = $0 No transaction fee for Treasuries bought online, $25 transaction fee if Broker assisted.
Bonds and CDs = $1 per Bond with a $10 minimum and a $250 maximum. Schwab reserves the right to act as principal on any fixed income transaction, public offering or securities transaction. When Schwab acts as agent, a commission will be charged on the transaction. When Schwab acts as principal, the markup is included in the bond price. Add $25 to your trade if it is Broker assisted.
Tip: Schwab has one of the widest varieties of bond and treasury products of any online broker, they are a strong choice for the income investor.

Rates & Fees
Margin Rate: 6.75% base rate and adjusted up or down based on size of portfolio. Goes as high as 8.75% for $0-$25,000 accounts and as low as 6.25% for $2,500,000+ accounts.

Interest Paid on Cash (Sweep): Every new client can enroll in a 2.26% yield checking account when they sign up for a new brokerage account. There are no account fees and no ATM fees. This is the best checking account we saw at any of the sites we reviewed.

Checkbook: Standard checks are free.

Paper Statements: Every investor is automatically signed up for free electronic statements. If you switch to paper statements you will be charged a small monthly fee.

Electronic Statements: Free.

Wires: $25.

Section 3: Customer Service Rank

Phone Reps
Schwab's specialty is developing personal relationships and their phone support reflects that philosophy. Wait times are always short, reps are always well trained and knowledgeable, and you can call 24 hours a day.

From the very first day you sign up they go out of their way to provide great phone support with perks such as a "New Client Concierge" who assists you with the paperwork and gives you a tour of the site.

Online Support
Online support is great, Schwab has the same email and FAQ support as their competitors, but they also recently added an instant message chat support service. Great chat support combined with the best phone support in the industry makes Schwab the winner in the Customer Service category.

Advanced Support (Options, Funds, Bonds, etc.)
Since customer satisfaction is linked to call wait times and Schwab is in the business of building personal relationships, they over-deliver in this category. Even for specialists, the wait times are always short and reps are always well trained and knowledgeable. If you are seeking expert advice, Schwab has a wide variety of qualified Stock, Mutual Fund, Bond, Planning, Banking, and Option specialists to assist you.

Section 4: Research Tools & Investing Information Rank

Market Research
Schwab excels in most areas of market research and analysis. If they have any weakness it's that they do push investors very hard toward managed accounts. This can be annoying to self-directed investors with no interest in trusting their portfolio to someone else's decisions. However, as long as you don't mind a “pitch” now and then, Schwab offers outstanding mutual fund, stock and bond tools, research and guidance for free to all clients.

Level II Quotes & Streaming Data
Both are available

StreetSmart.com
We love the paper trading concept, it allows people to test a strategy before risking real money. StreetSmart is as robust and powerful as any competing simulator, you can define strategy entry and exit rules, test your rules against historical market data, and then activate your winners for live trading.

Schwab Portfolio Checkup
For Index Investors or any other buy-and-hold strategy, rebalancing can be a pain. Our favorite aspect of the Schwab portfolio checkup tool is that it makes rebalancing a piece of cake. It's also great for ensuring that you are meeting your asset allocation and diversification targets.

However, given Schwab's expertise and in-depth knowledge, we were a little disappointed that the tool doesn't have more features to assist with risk management, risk adjusted comparisons, and performance benchmarking.

Trading Platforms
Wow… they have a platform designed for every type of investor. You definitely pay more to trade as a Schwab.com client, but they deliver on their value promise in this category.

Streetsmart Pro: Schwab's most customizable and powerful trading platform. You can add any type of research, analysis, valuation, charting, or message tool by simply choosing which modules meet your demands and adding them to your trading desktop.

Streetsmart.com: Features some of the most popular tools from Streetsmart Pro but designed specifically for active/option traders. While it doesn't include some of the Streetsmart Pro bells and whistles, it is well designed. The clean and efficient layout allows Streetsmart.com users to research trades and act on decisions very quickly.

Schwab.com: Features some of the most popular tools from Streetsmart Pro but designed for the beginning trader. Schwab did a wonderful job, this is a great starter platform. Navigation is intuitive and the functions are broken out to different tabs so that beginners aren't overwhelmed by the amount of data presented on more advanced platforms like Streetsmart Pro.

Section 5: Perks Rank

New Client Concierge
Schwab's New Client Concierge is a creative and fun way to introduce new clients to the Schwab site. When you sign up for an account, your New Client Concierge welcomes you, helps you with paperwork, points to investment tools suited to your investing goals, gives you a tour and answers any questions that you have. Very nice touch.

Current Specials
New Accounts & Transfer Accounts: You receive 50 free trades if you can commit to making a minimum of 36 online equity or options trades per year and deposit a minimum of $25,000 at account opening.

High Volume Discounts
120 or more trades per year will decrease your stock transaction price from $12.95 +$0.15 for every share over 1,000 to a flat $8.95 per trade.

Section 6: Product Offerings

Retirement Accounts
IRAs, Roth IRAs and personal 401Ks

Education
529, Custodial, and Education Savings Accounts

Managed Account
Yes. The minimum investment is $350,000 and the annual fee is 1.1% for the first $1,000,000, 1% for the next $2,000,000 and 0.9% over $3,000,000.

Specialty Accounts
Estate, Trust, Investment Club, and Pension Plans for Small Businesses

Section 7: Security

SIPC Member
Yes. SIPC protects securities in your account up to $500,000. Schwab also carries insurance over and above the SIPC protection.

Firewall Secured and Fraud Protection
Yes. All of the major sites have dependable security. They can't afford to make mistakes, they wouldn't survive a year if they gained a reputation for mishandling money or for lax security.

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