Personal Investments • Re: Charles Schwab question

My mom has been using them since the 90's. They have good customer services and better customer service hours. The same concern that you have about making money applies to Vanguard. Due to the low expense, it's probable that Vanguard makes considerable less than Schwab for the same amount of money being held. If I remember correct Schwab makes money by:

• Asset Management Fee - this would include stuff like asset service fee, trade commission, margin loans, etc.
• Banking - Schwab has their own bank which is unusual among the big three. This part of the business is under pressure though. Part of it may be that they are a HYSA account that isn't all that competitive. They use to derive a significant portion of their income from this sector, but less so these days.
• Trading - they are a brokerage firm so gets money from people buying and selling assets.

All of the financial firm has its pluses and minus in terms of trust. Charles Schwab is publicly traded company, so one could argue that there is a bias toward serving the shareholder. However, being publicly traded means its working is better known than Fidelity and Vanguard. Fidelity is owned privately, so the shareholders are the Johnson family and the employees. So the inner workings are more opaque. Vanguard is supposed to be own by the shareholders, but Shareholders don't really have have any say in the management so management does whatever it wants and you have to trust that they will serve your interest.

My mom has not taken advantages of her other services other than mutual funds. They have made sells pitches for other services, but even though my mom hasn't taken advantage of them Charles Schwab did not treat her differently. If you have a significant asset, they definitely want you to transfer them to Schwab.

Statistics: Posted by gavinsiu — Fri Aug 30, 2024 8:17 am

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