|Charles Schwab - need help/advice||gtx|
Jan 13, 2003 5:40 PM
|Ok, this will probably make me sound like an idiot, but here goes...
I set up an account with Charles Schwab about 3 years ago. At that time it was a FREE account, all I did was pay a fee when I made a transaction. I bought of bunch of stock in one company, sold half of it a year later at a nice profit, stupidly held onto the other half as it tanked. No biggie, I was still ahead of the game. I continued to get my statements from Charles Schwab, but didn't look at them too closely. I knew my stock was going down, but had no plans to sell. Well, turns out Schwab changed the fine print on this account, so that they were now charging me $45 a quarter for the wonderful services they were providing me. I didn't notice this until they sold half my remaining stock without telling me last week. I admit, I should pay closer attention to my mail, but do I have any recourse? I've kept ALL the statements, and just went through them and didn't see any formal letters informing me of the change in policy on this account. I now realize that this column under "swerve" was in fact their accruing service charge (I thought it was some weird cash leftover from the first sale or something--ok, so I'm new at this). But I was never informed by Schwab that they were going to sell my stock, and I'm amazed they could do it without authorization. This seems like crummy customer service and bad PR. Even if I'm at fault here (which is very possible) there's no way in hell I will ever have anything to do with this company again.
Anyway, I'd like to hear if other people have had this happen to them and if anyone has any advice. This was my first time playing with stock, and I'm still ahead of the game, but this just seems bogus.
|A few issues here,||TJeanloz|
Jan 14, 2003 5:40 AM
|There are a few different issues involved:
(1) The terms of your account changed. Schwab must have sent you something telling you about the new accounting. It may have been as little as a one-liner at the bottom of a statement that said "Schwab will now charge a $45/quarter maintenance fee on accounts smaller than $XX." It wouldn't take a "formal letter" to change the terms - just a simple statement somewhere. I would suspect that Schwab could produce a copy of this statement for you if they needed to.
(2) Schwab selling stock to clear the fee. This is legitimate, as your initial agreement almost certainly says that if you have a negative cash position for more than X (usually 5) days, Schwab will liquidate equity holdings to cover it. This is completely normal. However, given good customer service, I would expect them to call me and say "You have a negative cash balance, so we're going to sell some stock" which gives me the opportunity to say "why do I have a negative cash balance?" and learn about the $45 fee.
End result is that Schwab probably didn't do anything wrong or illegal, but there was a definite gap in customer service.
|A few issues here,||gtx|
Jan 14, 2003 7:31 AM
|That sounds about right to me. It's funny because I've received formal letters from credit card companies when they've changed the most minor details in the terms (something that would have had zero impact on me). I actually was under the impression that Schwab wasn't a discount broker as the other poster mentioned--I was thinking they were above, say, E-trade, and in fact did pay more the one time I did make the sale. Oh well, I'm doomed I guess. I'm gonna let 'em know what I think of them, then take my money elsewhere. Thanks for the input.|
Jan 14, 2003 5:53 AM
|..you didn't read your statements. One of the pitfalls of a going through a discount broker is that there is no individual -other than yourself - responsible for your account. I would bet that there were warnings about the $45 and payment terms in several statements preceding the first charge. They were completely in their right to charge your account and liquidate securities to cover the debit. It is standard in the industry. Sorry.
Next time, pay a couple of extra dollars to a full service broker. Why?? No quarterly fee. ($45 per quarter is highway robbery!) And your personal rep (broker, financial advisor, investment counselor, whatever...) would have called you BEFORE the first fee was charged. If you were my account, I would have recommended that you take the certificate of the stock before getting charged. Just my $.02. Paul
|Yeah, but he would have charged $400/trade too (nm)||TJeanloz|
Jan 14, 2003 6:13 AM
Jan 14, 2003 7:41 AM
|As a VP with a full service broker, I can say that $400 transactions are few and far between anymore (damn! but I digress...). It all comes down to the amount of his initial transaction. If he ignored the fee for a year, the extra $180 hurt! And the extra $180 probably cost more than a full service, non discounted brokerage fee would have in the first place.
My real point is this: if you have the time, the expertise, the knowledge, and the resources to pay close attention to your investments on a daily basis, then go to a discounter. If you don't have any of the above, paying a few dollars more on commission very possibly could save you or make you a lot of money down the road. When getting surgery, you don't shop for the cheapest, you shop for the best - price is secondary. Paying an extra fee to a trained professional ...be it a surgeon, lawyer, bike mechanic, investment advisor - usually pays off in the long run.
But then again, I'm biased. I have to be. Paul
Jan 14, 2003 7:56 AM
|yeah, I'm still trying to figure out what I got for my $180 a year. You'd think they could make a phone call for that.|
Jan 14, 2003 10:48 AM
|If Schwaab is anything like Fidelity used to be, you probably got about $180 worth of junk mail from them trying to get you to open more accounts.
I had a simular problem with my old bank to a lesser degree. My old band was sold and the bank that bought it said there would be no changes. After a few months, my free checking usually ended up costing me about $15-20 a month. They kept adding transaction fees to everything such as transfers to checking from savings and charged to access the linked overdraft accoun. It was a huge pain to change banks. Took me a couple of months to catch on to this. I had direct deposit and several automatic debits on the account. Had to make sure all of them were taken care of before I could complete the switch.
Jan 14, 2003 7:32 AM
|Thanks for the input. Next time it will be E-trade or a real broker. Thought I was getting the best of both worlds with Schwab. I guess not.|
|they are desperate for income||DougSloan|
Jan 14, 2003 11:46 AM
|We got the same treatment. Guess what? Everything is moved to the credit union now.
One service I won't mention tried to charge a fee on an account we close with nothing in it. Try to understand that one.
The fees weren't so bad when we were making 40% on our money, but they aren't so nice when we are losing money. "Yes, we are charging you $45 a quarter to lose half your money." Thanks.
Are brokers above or below lawyers on the respect scale? :-)
|lawyer/broker respect scale||ms|
Jan 14, 2003 12:19 PM
|My guess is that when the Dow is above 10,000 (or some other arbitrary number) and people are getting good results on their accounts, brokers rate higher than lawyers. When the Dow is low or people are losing money, lawyers rate higher. I am sure my experience as a lawyer is no different than that of other professionals -- when I produce good results for my clients they love me and when I don't (even if there is a good reason for the bad result), they have a lower opinion of me.|
|To slightly skew the topic ...||OldEdScott|
Jan 14, 2003 12:35 PM
|I think we overgeneralize when we say people don't respect lawyers. I think people have VAST disrespect for personal-injury, slip-and-fall lawyers. I think sometimes they wonder about criminal-defense lawyers, but don't really disrespect them. But most people seems OK with the average Joe lawyer who probates their wills and helps them with the vissicitudes of life. Especially in small towns like mine.
Brokers -- well, I don't think most people have an opinion one way or another. Average folks probably don't use brokers. They buy direct from no-load mutual funds or invest in 401Ks.
|Used car salesmen then brokers||PaulCL|
Jan 14, 2003 12:50 PM
|As a broker, I pay attention.
A few years ago - when as Doug said, we were all making 40% per year - my profession was one of the top five most respected. Now that we all have been losing money, my profession is below lawyers on the respect scale. A few good years will change that.
OldEdScott is right. The "average" folks rarely have contact with a broker. Most of their investments are in a 401k or pension plan. If not there, then they have their IRAs in a 2% CD at the bank.
By the way...just to rub salt into my own wound...I come from a family of lawyers and my brother in law is in the auto business. We're used to the abuse ;) Paul
|re: Charles Schwab - need help/advice||daz I|
Jan 16, 2003 10:20 AM
|Schwab will probably only charge you such a sum if;
1. You have not traded for some time - they have a min no.
2. Your account balance is below a certain figure
They are still better than most discount brokers in terms of information and customer service. I have recently opened an account with Ameritrade and find the Schwab website is better set up. Although my only contact with Ameritrade customer service went quite well (8 mins on an international phone line but solved all my problems at a go)
If you want to cut fees the cheaper discount brokers might be OK but you then have to read the fine print even more closely.