|
Custodian Choice – Charles Schwab and Co.
In our experience, Schwab is the premier partner for wealth management services. Schwab was the first major brokerage to provide this client custody service to fee based advisors and they are still the biggest. Our client assets are housed at Schwab. We have explored using other custodians and our experience has been disappointing in comparison. Schwab is not the cheapest vendor we can find, but so far they are the best. We remain open to offering alternatives to our clients for the custody of their accounts, but only if in doing so we do not sacrifice our ability to service our accounts to our satisfaction.
Ø Transaction costs (commissions). One of the ways we keep the overall costs of our portfolios so low is by avoiding the use of "no transaction fee (NTF)" mutual funds. Schwab and others offer NTF programs in which trading costs appear free. Nothing is free, of course. To pay for the NTF programs, extra costs are built into the expenses of the mutual funds. These are called 12b-1 fees and they can be as high as .40% per year.
So instead we pay transaction costs in order to be invested in low cost index funds, ETFs and mutual funds that have among the lowest costs available. The transaction costs are higher at Schwab than at low cost, discount brokerages, but costs are still below what most "full service" brokerages charge.
For the type of trades we do most often, we have negotiated lower rates with Schwab based on our volume. Our clients get a 40% discount on most trades. We pay between $27 and $49 depending on order size to buy or sell shares of the low cost structured index funds that do not participate in the NTF (No Transaction Fee) platform. We pay $10 to $20 for most equity and ETF trades.
Ø Safety- Schwab maintains excess capital above what is required by SIPC and the NASD
Ø Web Access- Schwab offers 24/7 access to your account through their SchwabAlliance web site. Clients can access account information at any time over the web via a secure log in. Electronic delivery of confirmations, prospectuses and statements is now in place and is fairly seamless. Statements and tax reports (1099 forms) are stored online and retrieveable.
|