Anybody use Schwab Financial Advisors?

Comments

• FD1000

  January 10 edited January 10

  Schwab assigned a local FA(financial adviser) to me when I joined years ago. This guy is amazing and can tell you what funds to use, he even does CEFs, all for free. I don't need it so I don't use him but over the years I met with him twice just to find out his knowledge. Last year I was assigned to another FA and she is your typical saleslady, which is what most FAs are IMO.
  I call it catch-22. If your knowledge is below average, you would not be able to know if the FA is good, if your knowledge is above average, you don't need one.
  In the past anytime I have asked Fidelity or Schwab for advice I received a portfolio made of 8-10 funds that looks like computer generated.
  My advice is to learn it by yourself, investing is really "simple" unless you want to complicate things...and most do. See ideas at https://www.bogleheads.org/wiki/Lazy_portfolios
  You can just go beyond that. Example: select 3 index funds + 2 managed funds = done.
• rforno

  January 10 edited January 10

  I don't need (or want) an FA to invest for me, thankfully.
  
  My Schwab FA came over from TDA. He treated me very well over the years in terms of customer service and we stay in touch very periodically to opine about the markets ... he has never pushed anything my way as a recommendation other than to gently note (back then) that I had a 'large cash pile' he thought could be better used. Also once he got to know me, he gave me direct access to some planning tools that he used to help his other clients, which I appreciated.*
  
  When we first met I told him my ground rules for a FA/broker: I'm self-directed, so while you can always recommend, don't be pushy. For 14-ish years, he's been exactly what I asked him to be. (The same applies to the FA for my long-long term account at WF, where we go back over 20 years)
  
  By contrast, the guy I was initially assigned from Schwab kept reaching out via email or phone, and once my TD guy also got onboarded at Schwab, I dropped him so we could reconnect and continue the relationship.
  
  
  * He appreciated that while I was very eager to leave TD once the merger was announced, I didn't transfer my TD account to Schwab in 2020 until after the TD FA evaluations were completed, b/c I didn't want him to have a noticeable loss of AUM on his book during the post-merger analysis of internal folks.
  
• sma3

  January 10

  @FD100 @rforno
  
  I have had a similar experience at Schwab with the local FAs who have been very helpful with moving money, checking on accounts and answering the phone almost immediately. They probably would have been happy to give me investment advice, if I asked. (This is in contrast to Vanguard where your local FA is a "team". Not much experience with FIDO in this regard.)
  
  The current proposal concerns a firm outside of Schwab, not a Schwab FA. The fees are similar or lower than most actively managed mutual funds, and the fees for FI are actually lower than most active bond funds.
  
  FD100, if I had a system as reliable and apparently as successful as you do, requiring little time, I would not consider outside advice.
  
  I have had decades of experience and have read many books about "Lazy portfolio's" "Couch Potato Portfolios" " Ivy League Portfolio", but these tend to work best for the "Accumulation" phase of life, where you can "set it up and forget it"
  
  The computer generated portfolios of Fido, Schwab and Vanguard are similar to these "Couch potatoes" but just more complex and rest on assumptions that most people are not aware of ( and may not agree with) , especially referring to their large % of foreign stocks recently. With bond coupons back up, the 60/40 seem more reliable, but 2022 was a disaster for people who suddenly found they had 15 to 20% less money then they thought on retirement.
  
  For a long winded defense of the above read the thread on Bogleheads
  
  https://www.bogleheads.org/forum/viewtopic.php?t=412507&sid=16550dda64788e8838fa5d7004273d09
  
  Now in retirement, my wife and I need advice on Roth conversions, withdrawal rates estate planning and are trying to avoid large drawdowns early on while maximizing income and return. I have investigated all of this and came up with similar answers, but it takes a lot of time.
  
  While I am in good health, I believe as Lynn does , that my wife needs an honest and reliable firm to deal with the investments if I get hit by a bus, with more expert personalized advice than I think you will get at Vanguard. Fidelity seemed to offer a computer driven portfolio for a higher fee.
  
  I have tried other advisors over the years with fractions of our money, and found them to charge 1.25% to put you in their firm's Bond funds and use a 60/40 portfolio to track the SP500. This is quite different than what I am looking for here.
  
  I am starting small and will see how it goes.
  
  
  
  
• Baseball_Fan

  January 10

  Would the class view it more important to work with an excellent CPA rather than an advisor? I do.
  
  Also, I remember a convo I had with my VP Engr in the late 90s. He and his wife were in their mid 50s at the time and had done well in their careers....told me that he saw an advisor who was like 20 years younger than him and had like 5% personal wealth than he had. VP felt that he should charge for his advice to the FA.... LOL.
  
  Also, it's my firm belief that I would never take financial advice from anyone who didn't have some gray hair and who didn't have very substantial personal wealth.... just like I like my pilots to have some gray hair....
• Baseball_Fan

  January 10

  @sma3. +1
  
  You're over the target. All investing models are based off assumptions which may or may not work in the future despite working in the past. Largest decision to make is asset allocation and how much cash tbills you want to hold to meet your needs and sleep well at night. As I stated above a good CPA can help you with positioning re taxes.
• msf

  January 13

  It sounds like the original question concerned paid advisory services, but the responses and OP followup seem to be adding sales reps ("local FA") to the mix.
  
  From Schwab:

  When we recommend that you buy, sell, or hold securities; pursue a particular investment strategy; or open up a brokerage or IRA account at Schwab, we are acting as a broker-dealer unless otherwise stated at the time of recommendation ...
  
  Schwab can also act as an investment adviser. You will know we are acting as an investment adviser because it is a distinct service that you select, and you will receive a special written disclosure.
  

  While B-D's duties to their customers have been expanded from what they used to be (just "suitability" of investments), these duties are still more limited than what is required of a fiduciary. You may be satisfied with a BD, but you should be aware of the differences.
  
  The industry has done what it can to obfuscate the differences. For example, here's what Fidelity says:

  At Fidelity, our representatives are required to provide advice that is in your best interest. This standard of care applies to all accounts and relationships we have with you when we provide advice. Certain regulations specify that the best interest standard is part of a “fiduciary duty.” Other regulations require the best interest standard but do not refer to a fiduciary duty. Fidelity advisors comply with all applicable regulations, including providing advice that is in your best interest.
  
  When providing advisory services, our advisors act in a fiduciary capacity.
  
  When assisting with your brokerage needs, our advisors provide recommendations in your best interest.

  That's clear as mud. Here's a page that helps sort out the difference between advisors (fiduciaries) and B-Ds:
  https://www.wealthstreamadvisors.com/insights/fiduciary-vs-broker-dealer
  
  Vanguard where your local FA is a "team". Not much experience with FIDO in this regard
  
  If we're talking free services, both Vanguard and Fidelity at best just assign you to a team. They dropped individual contact names from their statements years ago.
  
  If we're talking paid advisory services, Vanguard assigns you an individual adviser at the $500K level.
  https://investor.vanguard.com/advice/compare-investment-advice#comparison-chart
  
  Fidelity and Schwab have a wide assortment of paid services and investment offerings. It's easy to confuse the different offerings or miss one type of offering when reading about another.
  
  At the lowest level are robo/hybrid advisors that do not provide customization.
  My talks with Fidelity indicated they used many mutual funds in what seems like a computer driven process. Schwab will set up an "Intelligent Portfolio" in the same manner with dozens of ETFs,
  
  Fidelity uses Flex Funds with 0% ER; Schwab doesn't charge anything for its pure robo advisor but makes money off of high allocations to Schwab MMFs.
  
  Moving up the ladder, both companies offer in-house wealth management services (including tax/legacy planning if desired) and referrals to outside RIAs that use the brokerage for holding your managed investments. Services at both firms may build portfolios of individual securities or use funds, or both. The accounts may be discretionary (adviser trades w/o your explicit approval) or non-discretionary. They may be structured as separately managed accounts.
  
  You are looking at an outside wealth management firm, Wealth Enhancement Group, that provides advisory services through its RIAs (Wealth Enhancement Advisory Services?). So it sounds like your question is about this third party and not about Schwab. The brokerage that the firm happens to use (here, Schwab) is likely immaterial. If you're asking about Schwab (and not the RIA), then you might want to also look into the services that Schwab provides.
  
  Here's the disclosure for Schwab's referral service. It describes its referrals thusly:

  The Service provides referrals only and terminates once we [Schwab] have referred you to an Advisor. Once a referral has been made, Schwab does not assume any additional duties or obligations to the client from an “investment manager” perspective. ... It is up to you and your Advisor to determine what types of investments are right for you. Any tax, estate planning, accounting, legal or other advice or services other than investment management and any financial planning ... are strictly a matter between you and your Advisor.

  https://www.schwab.com/resource/schwab-advisor-network-disclosure-brochure?page=8
  
  Schwab's menu of different advisory services from Intelligent Portfolios (robo advisors) to financial planning:
  https://www.schwab.com/transparency/advisory
• rforno

  January 13

  msf said:

  
  The industry has done what it can to obfuscate the differences. For example, here's what Fidelity says:
  

  At Fidelity, our representatives are required to provide advice that is in your best interest. This standard of care applies to all accounts and relationships we have with you when we provide advice. Certain regulations specify that the best interest standard is part of a “fiduciary duty.” Other regulations require the best interest standard but do not refer to a fiduciary duty. Fidelity advisors comply with all applicable regulations, including providing advice that is in your best interest.

  Mud is an understatement -- kudos to their lawyers for the obfuscation.
  
  Some regulations say X is part of Y.
  Other regulations require X but do not refer to Y.
  Fidelity advisors will follow the regulations for applying X and/or Y as appropriate, but you're on your own to figure out if and when it might apply to you.
  
  TL;DR: 'best interest standard' is not the same as 'fiduciary duty.' Looks like they're purposely dropping terms hoping that casual readers of the agreement simply will nod and go "oh, they mentioned [TERM$], so it's okay."
• yogibearbull

  January 13

  Reg BI is a diluted standard that many brokers & financial advisors can claim they are following. Only the RIAs are obligated to follow fiduciary standard.
  
  Beware of dual-hatted advisors that have both RIA and broker/advisor credentials. There is a fuzzy area where the rules apply based on whatever hat that person is wearing - so better ask directly.
  
  This muddy solution of Reg BI was because only a small % of brokers & advisors also have RIA licenses. So, if fiduciary standard was imposed overnight, the financial industry would come to a halt.
  
  Industry is also resistant. The DOL wants fiduciary standard to apply to IRAs, 401k, etc, but even that is in the courts.
• sma3

  January 15

  Thanks or the information and advice. I have a hard time paying a computer even 0.3% for advice. You are also stuck with their version of Asset Allocation. This has been a major drawback for Vanguard for several years now.
  
  From what I can tell from a family member's account, at least the Intelligent Portfolios are paying a decent MMF rate on the cash
  
  Another way Schwab makes money on Intelligent Portfolios is channeling the money into dozens of funds that by themselves would not attract much cash.
• Old_Joe

  January 15 edited January 15

  "I have a hard time paying a computer even 0.3% for advice. You are also stuck with their version of Asset Allocation"
  
  Kind of like paying the mice to watch the cheese for you.
• msf

  January 15

  I have a hard time paying a computer even 0.3% for advice.
  
  Computer-only service at Vanguard costs 0.15%. All these programs and options do get rather confusing. At 0.30% a real human being at Vanguard will help you with some planning issues like sequencing of drawdowns. Not all of the 0.3% is going for paying a computer.
  
  0.15%: Vanguard Digital Advisor® - pure robo, pure index (VTI, BND, VXUS, BNDX)
  0.15% Vanguard Digital Advisor - pure robo, ESG index (ESGV, VCEB, VSGX, BNDX)
  0.20%: Vanguard Digital Advisor - pure robo, active/passive (as above plus VHCAX, VADGX, VZICX, VAGVX, VAIGX, VCOBX)
  
  0.30%: Vanguard Personal Advisor - hybrid, pure index (same index funds as above)
  0.30%: Vanguard Personal Advisor - hybrid, ESG index (same ESG funds as above)
  0.35%: Vanguard Personal Advisor - hybrid, active/passive (same as active/passive above)
  
  0.30% Vanguard Personal Advisor Select - dedicated advisor
  
  https://investor.vanguard.com/advice/robo-advisor (pure robo)
  https://investor.vanguard.com/advice/personal-hybrid-robo-advisor (hybrid)
  https://investor.vanguard.com/advice/personal-financial-advisor
  
  (I can't quite differentiate between all of these either.)
  
• sma3

  January 16

  As a ha ha Vanguard claims they have "leading technology"!
  
  I will check but I suspect most of the allocation decisions are in the hands of a computer, even if you get a personalized advisor for questions. I wonder how much they change the asset allocation as markets change.
  
  It does appear that with their active strategy you get access to two of Vanguard's better active stock funds and one active bond fund. All of the other funds are index funds. Index Bond funds are especially suspect in my view because they have to buy the largest debtor's bonds because they make up so much of the index.
  
  There are the usual other arguments for active stock mangers being unable to beat an index, which I generally agree with, but I think following a pre planned asset allocation is not the best approach.
• hank

  January 16 edited January 16

  Just have to chuckle. Human anything’s are hard to come by nowadays. Nasty trying to communicate with a robot on other end of the line when you find yourself stranded somewhere at midnight due to flight issues and you’re trying to secure food & shelter for the night.
  
  Investing? I heard on Bloomberg Spirit plunged 50% today. Guess there was a ruling against the merger with Jet Blue. There ya go!
• sma3

  January 16

  Who was it that claimed every dime invested in airlines since the Wright Brothers had a return of less than zero?
• FD1000

  January 17 edited January 17

  Just my opinion, it's difficult to find honest, great CFPs who are fiduciary and put their clients' interests first. If you are a typical investor, a CFP should be able to come up with a detailed plan in 3 hours and charge you a $1000 (maybe $1500) regardless if you have $300K or $500K, and only based on the complexity. This plan should be good for several years to come, until something major changes. If the clients need help, they should be able to pay by the hour. Think CPA. If you use a CPA, you pay by the hour or the job. The CFP plan doesn't change every year, it's even easier.
  
  That also means, no ongoing annual fee + setting you up with 5-6 funds max, mostly indexes to show you that it's not brain surgery.
  If the CFPs do the above they will starve. Hence, there is no way to put clients' interests first