Schwab Reduces Online Equity Commissions
February 04 2005 - 9:15AM
PR Newswire (US)
Schwab Reduces Online Equity Commissions Lower-Cost Access to Full
Breadth of Schwab Services and Research SAN FRANCISCO, Feb. 4
/PRNewswire-FirstCall/ -- Charles Schwab & Co., Inc. today
announced a 35 percent reduction of its online equity commission
for domestic retail investors with household assets(1) of between
$50,000 and $1 million with Schwab. The new $12.95 trade price(2),
reduced from $19.95, is effective February 8. "We've said we will
be relentless about creating the best value for individual
investors," said Chairman and Chief Executive Officer Charles R.
Schwab. "This change is especially important for the center and
heart of the investing population -- those investors with assets
between $50,000 and $1 million. Our intention is to ensure that
price isn't a barrier to the superior research, tools, service, and
advice that are available to them only at Schwab." The new pricing
also applies to clients who trade 9-29 times a quarter (36-119
times a year). The new pricing increases the affordability of
Schwab's extensive offering of brokerage services and
industry-leading research: -- Equity research -- at-a-glance
snapshots and in-depth analyses that incorporate multiple
third-party opinions as well as Schwab's own point of view (through
Schwab Equity Ratings(R)) -- Mutual fund research -- analysis of
over 10,000 mutual funds as well as a quarterly-updated selection
of Schwab's view of the leading no-load no-transaction-fee funds
available through Schwab -- State-of-the-art portfolio monitoring
and performance tracking -- Personalized portfolio advice and
in-person access to Schwab financial consultants -- 280 branch
offices throughout the U.S. -- Specialized trading consultants and
access to StreetSmart Pro, Schwab's premiere trading platform for
active traders -- Access to a complete range of investment and
Schwab Bank products -- 24x7 telephone service Active traders at
Schwab who make at least 30 equity or option trades per quarter, or
120 trades over the prior 12 months, will continue to pay only
$9.95 per online equity trade for unlimited shares. Clients with
more than $1 million in household assets at Schwab will also
continue to pay the same low flat rate. Clients with less than
$50,000 in household assets or fewer than 9 trades per quarter will
continue to pay $19.95 per online equity trade for the first 1,000
shares (plus $0.15 per share for each additional share). Schwab
Institutional, which provides custodial, operational and trading
support for approximately 5,000 independent fee-based investment
advisors with $348 billion in client assets at Schwab, expects to
roll out a comparable pricing model in the second quarter for
advisors' clients who enroll in electronic delivery of client
reports. Enhanced Delivery of the Industry-Recognized Schwab Equity
Ratings Schwab also announced that Schwab Independent Investing
Signature(TM) clients are now eligible to receive a comprehensive
Quarterly Portfolio Profile that highlights sector and equity
concentration, current vs. target asset allocation, as well as
performance ratings on each security in their portfolio, including
the Schwab Equity Rating on each stock they hold. A re-designed
account page on schwab.com, which will soon be available to all
clients, will also show the Schwab Equity Rating on the stocks held
in each client account. "Our objective is to help our clients
achieve the best investment outcomes possible, and that means great
tools and services that cover the entire investing process, from
setting objectives to selecting investments to monitoring
performance and making adjustments over time," said William Atwell,
executive vice president of Schwab's Individual Investor
enterprise. "We want to make sure our clients have a clear picture
of how their investments are doing -- as well as the right advice
to help them at every step along the way." Schwab Equity Ratings
are available exclusively to Schwab clients. In January, Schwab's
model equity portfolio, based on Schwab Equity Ratings, took first
place for the second consecutive year in a ranking by Zack's
Investment Services of the three-year stock-picking performance of
a number of well-known brokerage firms. Schwab's portfolio took
first place for the three-year period 2002-2004, producing
substantially greater returns than any of the 13 competing
brokerages. For the three-year period ended December 31, 2004,
Schwab's picks returned 53%, compared to the S&P's 11% and the
second place winner's 31%. Schwab took first place in the same
category last year, returning 18.3% for the 2001-2003 period
compared to a 12% drop in the S&P 500. Schwab Equity Ratings
also drive the selection of the 30 stocks on Schwab's Composite
List, available on schwab.com, which as a model portfolio has
outperformed the broad market in 59 out of the past 60 rolling
52-week periods as of January 3, 2005.(3) For more information on
Schwab Equity Ratings, including performance details, how
performance was calculated, comparison of performance to benchmarks
and limitations of model performance, visit
http://www.schwab.com/serperformance. "In addition to Schwab Equity
Ratings, we also offer a full menu of independent third-party
research," noted Atwell. "But the truth is that investors are
interested in Schwab's opinion, and they want an actionable point
of view that's relevant to them, more than sheer volume of research
opinions." Financial Considerations The Charles Schwab Corporation
believes that the pricing changes described above will enhance its
value proposition and competitive position, and result in the
consolidation of client assets and trades at Schwab. While the
actual timing and extent of any such consolidation is uncertain,
management estimates that these pricing changes could reduce
consolidated revenues by approximately 1 percent from current
levels during the 12-month period following implementation. Schwab
Chief Financial Officer Christopher Dodds commented, "We are
continuing to focus on delivering better value for our clients by
improving productivity and reducing costs, and we remain committed
to our 2005 objectives of a 25 percent pre-tax operating profit
margin and a return on stockholders' equity of at least 15
percent." Forward Looking Statements This press release contains
forward-looking statements relating to client assets, trading and
revenues, as well as pre-tax operating profit margin and return on
stockholders' equity. These statements reflect management's current
expectations and objectives, the achievement of which is subject to
certain risks and uncertainties that could cause actual results to
differ from the expressed expectations and objectives. These risks
include, but are not limited to, the Company's ability to
accurately assess the elasticity of client demand for trading
services and the effect of pricing changes on client acquisition,
retention and asset levels; a sustained decline in securities
prices, trading volumes and investor confidence from recent levels;
the company's ability to meet its expense plans; and other risks
set forth in the Company's most recent 10-Q. New Pricing Schedule
(Effective February 8, 2005) Commissions for Executed Online Equity
Trades Number of less than $50,000 to $1 million or household
$50,000 in $999,999 in more in trades per household assets
household assets household assets quarter 8 or fewer $19.95 for the
$12.95 for the $9.95 unlimited first 1,000 first 1,000 shares, plus
shares, plus $.015 cents per $.015 cents per share thereafter share
thereafter 9 to 29 $12.95 for the $12.95 for the $9.95 unlimited
first 1,000 first 1,000 shares, plus $.015 shares, plus $.015 cents
per cents per share thereafter share thereafter 30 or more $9.95
unlimited $9.95 unlimited $9.95 unlimited Previous Pricing Schedule
Commissions for Executed Online Equity Trades Number of less than
$100,000 to $1 million or household $100,000 in $999,999 in more in
trades per household assets household assets household assets
quarter 8 or fewer $19.95 for the $19.95 for the $9.95 unlimited
first 1,000 first 1,000 shares, plus shares, plus $.015 cents per
$.015 cents per share thereafter share thereafter 9 to 29 $19.95
for the $19.95 for the $9.95 unlimited first 1,000 first 1,000
shares, plus shares, plus $.015 cents per $.015 cents per share
thereafter share thereafter 30 or more $9.95 unlimited $9.95
unlimited $9.95 unlimited About Charles Schwab The Charles Schwab
Corporation (NYSE / Nasdaq: SCH), through its operating
subsidiaries, provides securities brokerage and financial services
to individual investors and the independent investment advisors who
work with them. With over 7 million individual investor accounts
and more than $1 trillion in client assets, The Charles Schwab
Corporation is one of the nation's largest financial services
firms. Its subsidiary Charles Schwab & Co., Inc. (member SIPC)
provides a complete range of investment services and products,
including an extensive selection of mutual funds; financial
planning and investment advice; retirement plans; referrals to
independent fee-based investment advisors; and custodial,
operational and trading support for independent fee-based
investment advisors through its Schwab Institutional division. Its
subsidiary Charles Schwab Bank (member FDIC) provides banking and
mortgage services and products. The corporation's other operating
subsidiaries include U.S. Trust Corporation (member FDIC) and
CyberTrader(R), Inc. (member SIPC). These companies' Web sites can
be reached at http://www.schwab.com/, http://www.schwabbank.com/,
http://www.ustrust.com/, and http://www.cybertrader.com/. Brokerage
products: Not FDIC insured. No Bank Guarantee. May Lose Value.
Investors should consider carefully information contained in the
prospectus, including investment objectives, risks, charges, and
expenses. You can request a prospectus by calling Schwab at
1-800-435-4000. Please read the prospectus carefully before
investing. Investment value will fluctuate, and shares, when
redeemed, may be worth more or less than original cost. (1)
"Household assets" are the aggregate balance of accounts of a
household that meet Schwab's householding guidelines (generally,
accounts of clients with the same last name, or who are related,
who reside at the same home address). (2) The $12.95 rate applies
to the first 1,000 shares (plus $.015 for each additional share).
(3) Limitations of Model Performance For all 3 model performance
results (Barron's, Composite List, and SER Cohort), there are
inherent limitations which investors should understand. Simulated
results do not represent actual investment performance or trading
and do not indicate what returns would actually have been realized
by relying on Schwab Equity Ratings or any stock list or model
mentioned. The results may have under- or over-compensated for the
impact, if any, of certain market factors, such as limited trading
liquidity. The results presented reflect past performance and
should not and cannot be viewed as an indicator of future
performance or an indicator of results which any investor will
realize. Schwab Equity Ratings and the lists or models mentioned
are not personal recommendations for any particular investor and do
not take into account the financial, investment or other objectives
and may not be suitable for any particular investor. Before buying,
investors should consider whether the investment is suitable for
themselves and their portfolio. Additionally, investors should
consider any recent market or company news. Stocks can be volatile
and entail risk and individual stocks may not be suitable for you.
The Schwab Composite Stock list is updated weekly. The performance
assumes a hypothetical investor purchased all stocks appearing on
the Composite Stock list for that week. The 52 week performance for
each Composite Stock List is calculated as the equal weighted
average of all the simple total returns associated with each stock
in that Composite Stock List. The Broad Market is represented by
the S&P 500 index, a capitalization weighted index of the
largest 500 companies from leading industries. For additional
information about the Zack's competition, as reported by Barron's,
visit http://www.schwab.com/. For additional information about SER
cohorts, visit
http://www.schwab.com/public/schwab/advice_research/schwab_equity_ratings?cmsi
d=P-362160&lvl1=advice_research&lvl2=schwab_equity_ratings
DATASOURCE: Charles Schwab CONTACT: media, Sarah Bulgatz,
+1-415-636-5940, or Glen Mathison, +1-415-636-5448, or investors,
Rich Fowler, +1-415-636-9869, all for Charles Schwab & Co.,
Inc. Web site: http://www.schwab.com/
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