Charles Schwab Online Stock Broker Review

Charles Schwab Corporation began operations on May 1, 1975-as soon as the Securities and Exchange Commission opened the doors to discounters by deregulating commissions. In 1983, Charles Schwab sold the company to Bank of America for $57 million, but led a buyout to repurchase it in 1987 before taking the company public that same year. The company merged with U.S. Trust in 2000, substantially increasing its reach into the wealth-management segment of financial services.

Schwab recently announced that it would fully integrate its CyberTrader subsidiary into its corporate parent by year-end. And in additional developments, Schwab now allows its customers to make direct investments in Canadian securities. Schwab considers itself a value brokerage, an education provider and an investment manager, offering products and services to satisfy customers of all asset and investment levels. The firm’s services are more representative of a full-service, rather than a discount broker. Its independent advice, research, mutual funds and wide product offerings set it apart from its competition, yet its commissions compare well with the true discounters. Since last year, Schwab has further simplified its pricing structure - a plus for investors. The company provides brokerage, banking and wealth management services to 7.7 million account holders with nearly $2 trillion in assets.



Core Services and Fees
Online Schwab One accounts are differentiated by two trading levels as well as varying pricing tiers, based on account balances:
  • Less than 30 trades per quarter or less than 120 trades per year and <$1 million account balances.
  • More than 30 trades per quarter or more than 120 trades per year or > $1 million account balances.
Commissions:
Market: $9.95-$12.95
Limit: $9.95-$12.95
Options: $9.95+ $0.75/contract
Account minimums: $1,000
Margin Rates: BR - 0.5% to +2.0%
Additional benefits: Commissions are significantly lower than trading via telephone (an extra $5) or live person (an extra $25).

Schwab.com - Browser-based trading, account management and investing tools.
Additional benefits: Technical and fundamental research; scanning capabilities, and preinstalled queries for finding trading opportunities.

StreetSmart.com - Enhanced web-based trading platform for active traders.
Additional benefits: Real-time streaming quotes and news; interactive technical charts; linked trading tools; customizable interface.

StreetSmart Pro - Web-based, advanced customizable trading platform.
Additional benefits: Level II quotes; strategy testing; interactive technical charts; screening; conditional orders and alerts,, and customizable streaming data.

CyberTrader - A software platform for very active, advanced traders. CyberTrader offers Level II data, direct-access trading technology that sends orders to the Exchange, ECN or more than 450 market makers. Per-share commissions are available, as well as two trading platforms for very active traders.
Additional benefits: Technical analysis tools, including back-testing; customized charts; stock screening and signal-generating tools; in-depth technical analysis; customizable screens; real-time news; premium research; alerts, and risk management tools.

Schwab has recently eliminated all client account maintenance fees. And its customers can make trades 24/7 on the Web, via telephone, PDA, or through the company’s CyberTrader software platform.

Available Investments
Charles Schwab customers can trade stocks, over 20,000 fixed income securities, including Treasury, Agency, municipal and corporate bonds, more than 10,000 mutual funds (more than 7,000 with no transaction fees), options and IPO’s. Customers may also establish and trade IRA’s at Charles Schwab.

Non-Core Services
Schwab has expanded its educational offerings to include webcasts, trading workshops and webinars. The company’s stock ratings are now available on 3,000 stocks. Schwab offers a vast array of banking services, including CDs, credit cards and money markets, stock ratings, independent research, discounted annuities, and a sizeable assembly of investment advisers and planners. And for customers who like to deal with brick and mortar, the company operates almost 300 physical branches.

Media Reviews
Kiplinger recently ranked Schwab 8th for a $50,000 account and 4th for a $500,000 account, among the 11 browser-based brokerages it reviewed. The rating was positive on Schwab’s product offerings, especially its mutual funds, ease of use of its website, equity ratings and the company’s low-cost commissions. Kiplinger’s negative remarks were directed toward Schwab’s high incidental fees, as well as its lack of wide diversity in routing trades among a variety of market participants.

SmartMoney ranked Charles Schwab third in its survey of seven premium discount brokers, giving the company kudos for its reduced commissions and prowess in serving the full breadth of the market-from well-heeled customers to those looking for little service but low commissions. SmartMoney also praised Schwab for its wide array of product offerings, but criticized the company’s ancillary fees. Overall, SmartMoney gave Schwab 4 stars for its mutual funds offerings, 2 stars for trading tools, and 5 stars for investment products, 4 for banking amenities, 4 for customer service and 5 for research.

Consumers Rating

Strengths
Investors can trade just about any investment they desire. Offers a much wider range of services than the basic- or deep-discount firms, including tremendous availability of mutual funds and research. Commissions are very competitive for investors.

Weaknesses
Supplementary fees can quickly add up, although they were recently reduced to be more competitive. Trading service can be relatively expensive unless volume is very high. Emphasis on Schwab-related products and lack of diversity in order routing may not always be to the benefit of the investor.

Conclusion
Charles Schwab doesn’t consider itself a discount broker, but rather a full-service broker with discounted commissions-attempting to serve the bulk of the investor market. And while its commission structure may appeal to a small investor or casual trader, the company’s sheer size and breadth of product offerings may also intimidate them. For very active traders, its commissions are not as favorable. Schwab may be the best fit for the casual investor with sizeable assets, who is seeking services beyond mere execution.

About the company
The Charles Schwab Corporation (CSC) is a financial holding company. Through its subsidiaries, the Company engages in securities brokerage, banking and related financial services. As of December 31, 2008, CSC provided financial services to individuals and institutional clients through three segments: Investor Services, Advisor Services, and Corporate and Retirement Services. As of December 31, 2008, the Company had $ 1.137 trillion in client assets, 7.4 million active brokerage accounts, 1.4 million corporate retirement plan participants and 447,000 banking accounts. In November 2008, it announced the establishment of a new business unit, Institutional Services, to serve the needs of independent investment advisors (IAs), corporate benefit plan sponsors and third party retirement plan record keepers. The unit combines former Schwab Institutional and Schwab Corporate and Retirement Services operations.

Contact Info
The Charles Schwab Corporation is headquartered at:
120 Kearny Street, San Francisco, CA, 94108
United States
(415) 636-7000
https://www.schwab.com/

Sources and Additional Information:
http://www.brokeradviser.com
Reuters Research Report
http://www.onlinebrokerages.us/charles-schwab-broker.shtml

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