Educating the Wheelers

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Chronicling the Experience of Educating our Children and Managing our Family

Wednesday, December 07, 2005

Bye, bye Schwab...

Well, we've liquidated all of our taxable accounts as one of the final steps to moving everything from Schwab to other investment houses.  We've already transferred all our IRAs from Schwab to Vanguard, so once we move the taxable stuff we're done w/ Schwab.


I was happy with Schwab for years.  The service is excellent, and the web site is pretty darn good - especially compared to Fidelity circa 10 years ago when I migrated out of Fidelity and into Schwab.  The problems started to creep in when Terri and I started to get more involved with our investements, and figure out what exactly we were looking for.  What we primarily want are index funds with very low expenses, and pretty good returns without huge risk.  But most importantly, we also don't want to have to do much "active management" of our funds.  Neither of us are really into "playing the market", and I think we'd be happiest if we could put our retirement investments on "cruise control", and feel confident that our investmenting is sound, without much more than maybe a quick monthly checkup.


The problem is that Schwab seems to be more geared to the "active traders" than the "set and forgetters".  Their selection of no-load index funds are pretty good, but aren't the "best of breed" that can be found at Vanguard.  They also don't have any no-load "target retirement" funds: funds that balance themselves, and get progressively less risky as your retirement date approaches. 


To that end, we're moving our long-term investments to Vanguard, and our short-term/emergency funds to Emigrant Direct (4% and FDIC-insured - yippee!).


A word of caution if you leave Schwab: Schwab hit us with a $95 transfer fee for each account we rolled out of Schwab. 


And we had 4 IRA accounts - ouch!  They didn't give us any warning - the fee just showed up on our statement.  If we would've known then we could have done a few different things to reduce or completely negate these charges.  This was, by far, the slimiest thing I've experienced with Schwab.


Blogger JLP said...

I found your blog through a comment you left on my blog, AllThingsFinancial. I think it is ridiculous for Schwab to charge you $95 to move YOUR money.

I hope Vanguard turns out to be a better match.



12/08/2005 11:45:00 AM  
Blogger Terri said...

Yeah, I wasn't terribly happy about that, either. If we would have known that was how it was going to be, we would have liquidated the accounts and combine them into one ... or something. It's a shame, too, because otherwise we had a great experience with them, and I could have given them a good recommendation.

We already have a chunk of stuff that's been in Vanguard for about 6 months or so now, and all new money coming in monthly into our IRAs and whatnot goes into Vanguard, as well. So far, we haven't had any trouble with them, but I haven't really had to interact with their customer service for any reason yet.

I'm glad you stopped by -- I really enjoy your blog!

12/08/2005 05:13:00 PM  
Blogger Barry Barnitz said...

One of my employers (I work two jobs) established his SIMPLE IRA with Schwab. When he sold the business, my plan became inactive.

When my other employer sold his business, the new owner provided a SIMPLE with a high expense load fund group. I used the no load money fund and transferred year end balances to Schwab for two years (after which I could transfer balances to my Vanguard Traditional IRA). At the two year mark I transferred both my yearly accumulation in the load fund, and the Schwab account to Vanguard.

Not only did Schwab charge a $95 dollar transfer fee on the transfer, but the final dividend from my bond fund holding (American Century Inflation Bond Fund) was not transferred.

At $44.38, this sum would be eaten up by the transfer fee, so I have not even tried to transfer it.

I will likely have to attempt to withdraw it (hopefully not subject to a withdrawal fee) and either pay tax plus a 10 percent penalty tax, or else, if I get a check, rollover such a tiny amount into my IRA to avoid a tax.

Two irritants from Schwab

Financial page

12/09/2005 03:07:00 AM  
Anonymous segfault said...

I believe Schwab offers a line of no-load Target funds which hold mostly Laudus funds. The underlying expense ratio is close to 1%.

12/23/2005 08:28:00 PM  

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