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Charles Schwab Wealth Management Review

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Charles Schwab & Co.

Charles Schwab & Co., Inc. is a fee-based financial advisor firm that offers a number services, including investment management, financial planning and a robo-advisor. With more than 2,100 employed advisors and $3.56 trillion in assets under management (AUM), Schwab easily ranks among the largest financial services companies in the U.S.

Charles Schwab Background

Charles Schwab was founded in 1971. Today, the business is a wholly owned subsidiary of the Charles Schwab Corporation (CSCorp). CSCorp is essentially a holding company for the various subdivisions within the Schwab group of brands.

Many of Schwab’s financial advisory programs include the services of a certified financial planner (CFP). The team also includes chartered financial analysts (CFA) and certified public accountants (CPA).

What Types of Clients Does Charles Schwab Accept?

Of Charles Schwab’s nearly 400,000 client accounts, more than 90% belong to either non-high-net-worth individuals or high-net-worth individuals. Businesses are another major client of Schwab, along with trusts and estates.

Charles Schwab Minimum Account Size

Charles Schwab does not institute a single minimum account size. Instead, the firm has varied requirements for different services, such as the following:

  • Schwab Private Client: $500,000
  • Schwab Advisor Network: $500,000
  • Schwab Managed Portfolios: $25,000
  • Managed Account Select
    • Mutual funds: $100
    • Exchange-traded funds (ETFs): at least one share
    • Separately managed accounts
      • Equities: $100,000
      • Fixed income: $250,000
      • Balanced: $250,000
  • ThomasPartners® Strategies: No set minimum
  • Windhaven Investment Management: $100,000
  • Schwab Intelligent Advisory: $25,000

Services Offered by Charles Schwab

Charles Schwab offers a plethora of advisory services. Take a look at the firm’s available services below:

  • Schwab Private Client (SPC)
    • Dedicated team of advisors
    • Wealth management
    • Retirement income planning
    • Estate planning
    • Insurance analysis and planning
    • Investment management
    • Asset allocation and diversification planning
  • Schwab Advisor Network
    • Advice through roughly 200 independent advisory firms
    • Investment management
    • Customized financial planning
    • Collaboration with other financial professionals (lawyer, accountant, etc.)
  • Schwab Managed Portfolios (SMP)
    • Professionally managed investment portfolios
    • Regular investment monitoring
    • Rebalances as needed
  • Managed Account Select
    • Meeting with a Schwab consultant to discuss your personal financial situation
    • Portfolio oversight by a third-party asset manager after investment strategy selection
    • Range of available investment strategies
    • Evaluation and monitoring by Charles Schwab Investment Advisory (CSIA)
  • ThomasPartners® Strategies
    • Retirement planning through investment management
    • Two equities and fixed-income/equity investment approaches
  • Windhaven Investment Management
    • Portfolio management through global diversification
    • Portfolio comprised primarily of ETFs, but also stocks, bonds, real estate and hard assets
    • Asset allocation planning and adjustments
    • Rebalances
  • Schwab Intelligent Advisory (SIA)
    • Combination of automated investment management and human advisory services
    • Online planning tools
    • Automatic rebalances as needed

Charles Schwab Investment Philosophy

Because Charles Schwab offers such an expansive array of services and has a wide network of advisors and partnered independent advisory firms, the company doesn’t necessarily abide by a singular investment philosophy. With that being said, Schwab as a whole emphasizes diversification. This principle dictates that clients’ assets should not only be invested across the market, but also throughout varying investment types. Generally, Schwab uses some combination of stocks, bonds, mutual funds and ETFs in client portfolios.

Fees Under Charles Schwab

Charles Schwab has a number of distinct fee schedules for its broad range of programs and services. We’ll provide an overview of the most common fees you’ll encounter at Schwab.

For the Schwab Private Client program, the firm charges an asset-based annual percentage rate (APR) as opposed to a traditional annual fee. To calculate this fee, the firm will multiply your account balance every day by 1/365 of your APR. These charges are billed in arrears.

Schwab Private Client Fees
Assets Under Management Annual Percentage Rate (APR)
Up to $1MM 0.80%
Next $1MM 0.75%
Next $3MM 0.70%
Over $5MM 0.30%

The Schwab Managed Portfolios program carries an annual fee that’s also charged on a quarterly basis. Schwab automatically bills these fees to your account on the final day of each quarter. The firm charges different rates for each SMP portfolio type.

Fees for SMP Mutual Fund Blend
Daily Eligible Assets Annual Program Fee
First $100,000 0.90%
Next $150,000 0.70%
Next $250,000 0.50%
Next $500,000 0.30%
Over $1,000,000 0.20%

 

Fees for SMP Mutual Fund Third-Party
Daily Eligible Assets Annual Program Fee
First $100,000 0.90%
Next $150,000 0.70%
Next $250,000 0.50%
Next $500,000 0.30%
Over $1,000,000 0.20%

 

Fees for SMP ETF Blend and Third-Party
Daily Eligible Assets Annual Program Fee
First $100,000 0.90%
Next $400,000 0.75%
Next $500,000 0.65%
Over $1,000,000 0.50%

For the Managed Account Select program, Schwab charges negotiable, asset-based fees that are determined based on which investment strategy you use. The firm tends to charge higher rates for risker strategies. Although the following table shows annual rates, Schwab charges clients on a quarterly basis.

Managed Account Select Fees
Assets Equity Strategy Diversified Portfolios Windhaven Strategies Balanced and Equity Index Strategy
First $500K 1.35% 0.95% 0.95% 0.95%
Next $500K 1.33% 0.90% 0.90% 0.90%
Next $1MM 1.30% 0.80% 0.80% 0.80%
Over $2MM 1.05% 0.70% 0.70% 0.70%

 

Managed Account Select Fees (cont.)
Assets ThomasPartners Dividend Growth Strategy ThomasPartners Balanced Income Strategies Fixed Income Strategy Municipal Bond Ladder Strategy
First $500K 0.90% 0.80% 0.65% 0.35%
Next $500K 0.80% 0.70% 0.60% 0.35%
Next $1MM 0.70% 0.60% 0.57% 0.30%
Over $2MM 0.50% 0.40% 0.45% 0.25%

All clients who use Schwab Intelligent Advisory are charged an annual fee of 0.28%, with a quarterly account-wide fee cap of $900. According to its Form ADV, Schwab calculates quarterly fees “by multiplying the daily value of the assets in a client’s SIA account(s), excluding cash, for each calendar day in the quarter by the applicable daily fee rate (i.e., the annual rate of 0.28% divided by the number of days in that year) and then adding together the fee for each calendar day in the quarter.”

Check out the table below to see how Schwab’s fees for its management services compare to those at similar financial advisor firms. Note that these fees are only estimates and actual costs may vary.

*Fee estimates only consider the maximum base fees for the services each firm provides. You may also pay manager fees and other fees, which can vary in amount. **All figures are based on median fee levels according to Bob Veres' 2017 Planning Profession Fee Survey. The above estimates solely take into account AUM-only fees. Total costs will likely be higher due to additional expenses.
Estimated Fee Comparison*
Your Assets Charles Schwab Managed Account Select Equity Strategy Fees National Median Advisory Fees**
$500K $6,750 $5,000
$1MM $13,400 $8,500 - $10,000
$5MM $57,900 $25,000 - $32,500
$10MM $110,400 $50,000

What to Watch Out For

Some of Charles Schwab’s financial advisory services have minimum account size requirements that may be difficult for some investors to reach. Although many of these stipulations fall below the high-net-worth threshold, most of Charles Schwab’s minimums do exceed $250,000. Generally speaking, the more personalized the services, the more you’ll need to invest.

Current and prospective clients should also note that Charles Schwab has legal and regulatory disclosures in its past. Find out more about this below.

Disclosures

Although not uncommon for a firm of its size, Charles Schwab has a number of disclosures listed in its SEC-filed Form ADV. These include:

  • Felony charges against the firm or an advisory affiliate
  • Violation of SEC or Commodity Futures Trading Commision (CFTC) regulations or statutes
  • An order from the SEC or CFTC filed against the firm or an advisory affiliate in connection with an investment-related activity
  • A cease and desist or money penalty issued by the SEC or CFTC
  • Various disclosures related to regulatory agencies, including involvement in a violation of investment-related regulations and an order in connection with an investment-related activity
  • Various disclosures related to self-regulatory organizations, including making false statements or omissions and involvement in a violation of its rules
  • Various disclosures related to domestic or foreign courts, including being enjoined in connection with any investment-related activity within the last 10 years, violations of investment-related regulations and dismissal of an investment-related civil action pursuant to a settlement agreement

Opening an Account With Charles Schwab

If you want to work with Charles Schwab, it may be worthwhile to stop by one of its nearby offices. The firm offers a “Find a Branch” tool on its website that will allow you to view every Schwab location in the country or locate the office closest to you. Another option is to call the firm at (866) 855-9102 or open an online chat with a Schwab representative.

Where Is Charles Schwab Located?

Charles Schwab, which is headquartered in San Francisco, has 350 financial service offices located across most of the U.S. In fact, the only states where the firm does not have offices are Montana, North Dakota and West Virginia.

Tips to Improve Your Investment Game

  • Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.  
  • One way to optimize portfolio performance is to align your risk tolerance and other investment considerations with your specific asset allocation. In other words, if you’re willing to accept high risk and volatility, you may include more stocks in your portfolio. On the other hand, a risk-averse investor would likely stay away from all but a few stocks and choose instead to focus on bonds and fixed-income securities. SmartAsset’s asset allocation calculator can help you determine an appropriate asset allocation for your portfolio depending on your risk tolerance.

How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology To determine how long a $1 million nest egg would cover retirement costs in cities across America, we analyzed data on average expenditures for seniors, cost of living and investment returns.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. This reflects the typical return on a conservative investment portfolio. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research