A conversation with a Charles Schwab associate about funding a ROTH IRA and their options for it. (Part 1)

So I’m getting my ducks in a row and likely dumping my Edward Jones account and cashing out my Universal Life Insurance with Hartford so I’m on the lookout for a new brokerage. I’m dodging the no fee houses for now until I get my feet a bit more wet. I still like to have 4 or 5 investment people at each of the houses, so it’s nice to have a conversation or question I can ask them at any time, so keeping a little cash by them makes for easy question asking by dangling the proverbial carrot back at them –

Anyway, this may be a few parts worth so I’ll likely break it up, but I’ve been chatting with a Charles Schwab rep for a few days now deciding on whether or not I want to convert my ROTH over to them, and I have to be honest, they’re looking pretty good so far – here’s the string thus far:

From: [info.request at schwab.com]
Sent: Wednesday, November 14, 2007 10:24 AM
To: [Hank]
Subject: Re: Charles Schwab

Dear Mr. Hank:

Thank you for your interest. I am happy to say that we do offer consultations to discuss your investment portfolio. Once an account is established, we have a team that would be happy to discuss your account and provide one time recommendations. We also offer ongoing advice too. However, if you prefer to meet at a location close to you, I can arrange that.

Mr. Hank, it might be most beneficial for us to take 10-15 minutes and speak via phone about your overall investment situation as well as anything else you feel appropriate.

I am available from 8:30 AM – 5:00 PM MST, Monday through Friday,. I look forward to hearing from you soon.

[Charles Schwab guy]

From: [Hank]
Sent: Thursday, November 15, 2007 3:28 PM
To: ‘info.request at schwab.com’
Subject: RE: Charles Schwab

I called and left a message – feel free to cal me back or continue emailing – your choice – Thanks, Hank

From: [Charles Schwab guy]
Sent: Wednesday, November 21, 2007 10:30 AM
To: [Hank]
Subject: RE: Charles Schwab

Certainly happy to provide what I can, as limited as that may be to non-clients. 🙂

From: [Hank]
Sent: Wednesday, November 21, 2007 11:43 AM
To: [Charles Schwab guy]
Subject: RE: Charles Schwab
[Charles Schwab guy] –

I completely understand, but like I said, I’m a skeptic right now but you’re a breath of fresh air! So 3 questions then:

1. How do I become a client? What do I have to buy in to?
2. The one question I wanted to ping my Edward Jones guy on, “B” shares, why are they bad for me and good for him?
3. If I just stop paying him for my ROTH IRA, Can I open ANOTHER ROTH (with better investments) as long as it doesn’t go over the 4k limit this year?



From: [Charles Schwab guy]
Sent: Wednesday, November 21, 2007 11:02 AM
To: [Hank]
Subject: RE: Charles SchwabHank,

How do you become a client? Several ways. I can open an account for you, you can open one online at www.schwab.com , or I can send you forms to complete and you return them to me.

What do you have to buy into??? The only thing we want you to buy into is receiving electronic communications because we want to save trees. Other than that we have no hidden agendas, you make your own investment choices, we will certainly assist you if you want, but only if you ask us to.

B shares: In contrast to A-shares, fund companies offer Class B-shares at NAV. Since they forgo the revenue obtained from the up-front load by selling B-shares at NAV, fund companies charge higher 12b-1 <http://schweb.schwab.com/iwin/glossary/a-e/html/glos-2f.html> fees for these shares than for A-shares and charge a back-end load, or redemption charge, to discourage early redemption. A back-end load, also called contingent deferred sales charge or CDSC <http://schweb.schwab.com/iwin/glossary/a-e/html/glos-61f.html> , typically declines for each year that a shareholder remains in the fund. The CDSC schedule identifies the sales charges levied by the fund company if the shareholder redeems their shares within a specified number of years from the date of purchase. Back-end loads eventually reduce to 0.00%, after which Class B-shares often, but not always, automatically convert to Class A-shares of the same fund. Class A-shares are sold with an up-front sales charge which is reflected in the price at which the shares are offered, known as the public offering price (or “POP”). Investors may qualify for a reduction in A-share sales charges by purchasing an amount over a breakpoint level.
You can have any number of Roth accounts as long as you do not exceed the total deposits of $4,000 in any tax year.I hope this gives you some insight on things.


So far so good I’d say – I’m happy he’s willing to get back so timely – I ask a lot of questions because inquiring minds want to know. We’ll see how he does in part 2, and part 3, but yes, he’s doing a good job thus far.

Filed Under: financial educationInvestingMutual FundsNet WorthPortfolioRetirementROTH IRA