The Charles Schwab Corporation (NYSE: SCHW) is a well-known and respected firm, and after 46 years of financial industry evolution, Schwab, one of the nation’s first discount brokerages, is now considered to be a full-service broker with low-fee service options. Schwab places emphasis on personal service and financial planning to facilitate the ease of online trading and customer service. It offers a full line of individual retirement account (IRA) products.
Schwab offers traditional IRA accounts that have tax-deductible contributions with withdrawals of principal and earnings subject to income taxes. Roth IRA account contributions are after-tax dollars with tax-free withdrawals of principal and earnings. It has IRA rollover accounts for transfers from 401(k) accounts, custodial IRAs for children with income and inherited IRAs for beneficiary survivors. There are no fees to open or maintain an IRA account at Schwab.
Schwab offers a full selection of mobile apps. All clients receive access to Schwab’s Trade Source online trading platform and the StreetSmart Edge desktop software, which has a full suite of investment tools and data.
Investors with accounts of at least $5,000 can take advantage of Schwab Intelligent Portfolios. Schwab Intelligent Portfolios is a robo-advisor. Investors just answer a few questions regarding goals, assets and risk tolerance, and a computerized algorithm creates a diversified portfolio of exchange-traded funds (ETFs). Periodically, the robo-advisor will rebalance the ETF portfolio to maintain the desired risk and return ratio. There is no charge to use the service and no asset management fees or ETF trading commissions.
Investors may choose from a broad range of investments, including common stocks, preferred stocks, stock options, bonds, mutual funds, ETFs and cash accounts. Schwab Mutual Fund OneSource offers mutual funds from hundreds of different asset managers as well as funds covering all asset classes. Trades are available commission-free, with no transaction fee or sales charge. Investors wishing to trade other funds may pay a transaction fee of up to $49.95 to buy, but not to sell, and may face front-end loads or redemption fees. Schwab offers commission-free trading of 200 plus ETFs that cover all asset classes. Stock and bond transactions incur the standard commission fees charged to all accounts.
Schwab’s ETF Select List, meanwhile, features picks for the best fund in selected categories. The list is sortable by features, such as expense ratio, Morningstar category, and benchmark index.
Schwab customers can also use the Personalized Portfolio Builder tool, which helps Schwab investors develop diversified portfolios, based on your financial goals, risk tolerance, and time horizon.
The Schwab MarketTrack Portfolios combine fundamental Index and market-cap index strategies, each with a different mix of diverse investments. These portfolios allow an investor to just choose one that best matches their risk tolerance and goals.
Schwab's Target Date Funds are rebalanced based on your target date for retirement. As Schwab adjusts the fund for you over time, it helps investors avoid making snap decisions that may adversely affect their retirement plans. Target Date Funds aim for more growth in the early years and then place an increasing emphasis on stability up to retirement and beyond.
Schwab Monthly Income, meanwhile, uses a fund-of-funds strategy to deliver monthly income and the opportunity for growth. Investors choose the fund that matches their asset allocation needs and let CSIM portfolio managers do the rest.
Competitors and Costs
Competitors, such as E-Trade Financial Corporation (NASDAQ: ETFC), TD Ameritrade Holding Corporation (NASDAQ: AMTD) and Fidelity Investments, all offer close to the same services at the same price, with a few exceptions. Schwab aggressively competes on costs with flat fee commissions of $4.95 for online stock and ETF trades. For mutual funds, there’s no minimum initial investment, and investors pay the same expense ratios on these funds regardless of the amount invested. Meanwhile, expense ratios for Schwab ETFs match or beat those from Vanguard or BlackRock.
Schwab offers around-the-clock phone and chat support. It also offers more than 350 branches (though there’s not a presence in every state), where you can attend complimentary workshops and meet with financial consultants by appointment.