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Schwab Institutional transaction costs

My financial planner has been using Schwab Institutional to hold my accounts and has been using a lot Dimension Fund Advisor mutual funds. Between my wife and I we have eight different accounts and the fp has bought a lot of funds distributed among those accounts, with some redundancies.

I've become displeased with his performance and responsiveness. Yes I know the extreme changes and drastic loses to portfolios that are effecting many of us but I am disappointed that he didn't see this coming, which is kind of understandable, but in addition to that he has not managed things well from a tax perspective this year and I am dropping him and moving everything from this guy to a friend's fp at Merril Lynch. I just like and trust the new guy a whole lot more.

The multitude of DFA funds had to be sold and I am looking at 19 sales that were just made, ranging from $29 up to $49.95 with lots of different values in between. The sales on those funds came to $719.46.

I'm wondering if there was a better way to handle all of these sales? and why was there such a different range of prices for the sales? [I will talk to him and to Schwab to understand this but I thought I'd get some opinions here too.]

Thanks, Walter

Reply to
Walter_Slipperman
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Investing with a friend and trust are two of the factors why people invested with Madoff. So be careful.

Are these the charges for selling these funds?

I guess one reason may be when these sales were made. Sometimes when I buy or sell stocks through Schwab I get different costs even within the same lot.

Reply to
PeterL

Can you clarify, did your "fp" do this without your consent, or with your consent and knowledge?

I would like to ask you to elucidate why exactly you need someone to do your trading for you, as opposed to you selecting funds based on your own thinking.

Reply to
Igor Chudov

Cost-sensitive, passive-management firms like Vanguard and DFA do not typically reimburse custodians for holding their funds (the average mutual fund that can be traded at "no transaction fee" - NTF - is charged 0.35% per year to be listed on that platform, which can be substantially more costly than trade-ticket fees; the costs are borne, indirectly, by the shareholders of the fund). As a result trades of DFA/Vanguard funds are typically "non-NTF" and commissions apply. Not equity commissions, but the rates applicable to non-NTF mutual funds. These are unique to each custodian.

The commission rate can (but does not necessarily) vary a bit depending on the relationship between the advisory firm and the custodian. I'm not familiar with Schwab Institutional's current policies but it looks like their minimum may be $29, maximum $49.95, with staggered rates in between depending on the trade size - not atypical. Your (former) advisor can clarify the fee schedule for you. It would be interesting to ask Bank of America what they'd have charged to sell the funds for you.

Surely you've noticed trade-ticket charges in the past? If not this may be the time to start paying attention to how you pay for investment advice, and what you get for what you pay. You're about to step into what may be a completely different cost & service structure.

-Tad

Reply to
Tad Borek

With my consent. We had a meeting a month ago where I told him that I was considering changing financial planners. He warned me against changing from his stay-the-course-and-well-balanced philosophy to somebody he derided as a market timer but he said of course the choice is mine, it's my money. Last week I told him that I had made the choice and wanted him to sell off all of those DFA funds.

Over the 37 years of my adult life I have been too cautious, and not very systematic when I tried to do the investing myself. For example ever since the US started running large deficits in the Reagan years I figured that it was going to eventually lead to unavoidable hyper inflation and that bonds would be a miserable investment. So I would never consider owning any medium term government or commercial bonds. But using a fp they do that by habit and that was what balanced my portfolio in the early years of this decade and made the former fp look okay.

also in answer to your question why I don't do my own thinking, I have a lot of other interests and professional demands that use my time, so one percent of the value of the portfolio seems okay if a professional who is following the financial world can do better than me.

Walter

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Reply to
Walter_Slipperman

yes you are correct. I am going by my friend's experience with this fp at Merril. My friend has done well by him and I have met with him and get a better feeling about him than the former guy I've been using. But I will be watching what he is doing closely. In another response that I just posted I mentioned that I feel that I don't have time to be following the markets well enough to be making all my own financial decisions, but I do have the time to be checking my own account thoroughly to see if there is anything fishy going on.

Yes, those are charges for selling each fund.

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Reply to
Walter_Slipperman

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