Thursday, September 15, 2005

Schwab Cuts Fees

The Charles Schwab discount online trading brokerage announced today that it has reduced its fees to better compete with the likes of TD Waterhouse, E*Trade, Scottrade, Ameritrade and others.
Here is the PR Newswire version of the story:

SAN FRANCISCO, Sept 15, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- Charles Schwab & Co., Inc. today announced it is eliminating account service fees on all U.S. individual brokerage accounts effective October 1. The action impacts about 650,000 accounts with less than $25,000 (1). Also in October, Schwab is eliminating its $3.00 order handling fee on equity trades. The elimination of account service and order handling fees furthers a commitment to value and simplified pricing that Schwab launched in May 2004, and is the seventh price cut for clients since that time.

"This change opens the door for smaller investors and others who are interested in testing the waters with Schwab, expanding the range of clients who can now take advantage of the great investment services available here," said Charles R. Schwab, founder, chairman and CEO. "In mid-2004, we committed to eliminating price as a reason to go elsewhere, and thanks to improved efficiencies and streamlining, we can now profitably serve a much broader range of investors. These fee eliminations are also strategically important investments in our future: approximately 28% of current Independent Investing Signature clients, 40% of Active Trader clients, and 29% of Advised Investing clients started with less than $25,000 at Schwab."

Value, Performance and Service

Schwab further commented: "With our financial turnaround completed, we are shifting our attention to Schwab's second act, where our primary focus will be driving profitable growth through deeper relationships that improve our clients' experience and investment results.

"Over the last 16 months, we took a number of steps to build on our heritage as a company that provides incredible value," Schwab said. "Elimination of account service and order handling fees follows six rounds of reductions in fees and in online equity and option trading commissions since May 2004 that cumulatively represent an annualized investment in our clients of more than $375 million."

"On the performance front, across the board, we believe the advice we provide to our clients is institutional quality. Schwab Equity Ratings(R) continue to provide investors with a reliable, balanced and successful alternative to traditional Wall Street research," Schwab added, noting that since their inception in May 2002, Schwab Equity Ratings' buy recommendations have doubled the market's return (relative to the S&P 500 index) (2). "Additionally, all eight of the Schwab Funds equity funds* based on the ratings have beaten their benchmark and category averages since launching or converting to a strategy utilizing Schwab Equity Ratings. Our portfolio advice is based on the same sound principles of asset allocation and diversification applied by foundations and institutional investors, and we are delighted with the risk and return performance we are seeing with clients who enroll in our advised services."

Schwab also noted: "In January, we began providing more affluent clients with a dedicated financial consultant who can serve as a 'go-to' person on a wide variety of questions or investing needs." Depending on their location, clients are paired with a financial consultant in one of Schwab's 290 branch offices or one of its three telephone service centers. In a recent survey of clients following a conversation with a Schwab financial consultant, 50% of clients said they planned to increase their business with Schwab.

"We have also restored domestic 24x7 and holiday telephone service, upgraded our automated phone service with state-of-the-art natural language technology, and made a variety of enhancements to our website, Schwab.com, that make it easier to do business with us," Schwab said, adding that the company also has trained 1,400 employees across its branch network to become dual employees of both Charles Schwab & Co., Inc., and Charles Schwab Bank, to better help clients access the growing range of credit and cash management services from the bank.

"All of these advances are made possible by the tremendous drive and commitment of Schwab's employees," Schwab said. "Their dedication and enthusiasm are truly inspiring as we work together to create a client experience that is second to none."

[Disclosure ommitted]

(1) Account service fees are periodic fees of $120 to $180 a year automatically charged to accounts that fail to meet asset, trading or other published thresholds. Other fees, such as transfer of account fees, may apply. Accounts that are exempt from account service fees will be subject to a minimum balance charge of $30 per quarter for brokerage accounts or $50 per year for retirement accounts if, after receipt of notice and a notice period, their assets remain below account opening minimums of $2,500 for brokerage accounts or $2,000 for IRAs. The minimum balance charge is waived for households with balances of at least $10,000 or with at least eight equity and/or option trades in the preceding 12 months.

Excludes QRP, CRA, Individual 401(k), 403(b)(7), SIMPLE IRA -- plan level accounts, and all accounts held by clients who reside outside the U.S., its territories or possessions.

(2) Performance data based on all complete 12-month periods through 5/6/02 - 7/5/05 for all A- and B-rated stocks. Please refer to www.schwab.com/serperformance for more information about limitations of model performance and how performance is calculated, as well as other important disclosures. The worst period for the A-rated stocks was May 6, 2002 - May 5, 2003 and had a negative return of 5.93%. The S&P 500 Index returned a negative 10.4% in that same period. The worst period for the B-rated stocks was May 20, 2002 - May 19, 2003 and had a negative return of 6.08%. The S&P 500 Index return was negative 14.1% in that period.

Indices are unmanaged, do not incur management fees and expenses, and cannot be invested in directly. Stocks can be volatile and entail risk and individual stocks may not be suitable for an investor.

Investment Products: Not FDIC Insured | No Bank Guarantee | May Lose Value

SOURCE Charles Schwab

Media, Glen Mathison, +1-415-636-5448, or glen.mathison@schwab.com, or Sarah Bulgatz, +1-415-636-5940, or sarah.bulgatz@schwab.com, or Investors

http://www.prnewswire.com

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