Although we often recommend Vanguard as a custodian for individuals opening self-directed brokerage accounts, we highly recommend Charles Schwab for institutions (the technical term for financial planners). They provide great service to both advisors and clients and have many well-made and well-supported features not available at other custodians.
Although individuals approaching Schwab are faced with a minimum account balance of $1,000 and minimum investment purchases, when you enroll for accounts at Schwab through an institutional relationship like Marotta Wealth Management, Schwab waves the minimum account balance, and the minimum purchase rules are aggregated across all our clients, effectively eliminating them.
Schwab offers many features to clients both through their online client portal, Schwab Alliance, and through their phone team.
Through a relationship with Charles Schwab, you gain access to Schwab Bank’s High Yield Investor Checking account. Schwab Bank is technically a separate service provider, but is overseen by its namesake.
This Schwab checking account provides six impressive services not true for most local banks.
1. Ordering a checkbook is free.
This is the most mundane of the impressive services, but it is still very nice. A lot of banks offer the first checkbook free and then charge you for future books ordered. Some banks allow you to come in and have a sheet of checks printed for free, leaving you either to purchase a checkbook or continually ask them to print another sheet.
With Schwab Bank though, any time you need more checks you can simply call and request them and they will send a box filled with multiple new checkbooks to your house.
2. ATM withdrawals and debit cards are free.
Schwab will provide you with Visa debit cards for any account holders (at no cost, even for replacements), which can then be used at any ATM anywhere and Schwab will pay the withdrawal fee.
This means that whatever bank’s ATM is convenient for you is effectively your ATM, including travelling abroad.
As Schwab says , “If you use your debit card to withdraw foreign currency from an ATM, or to pay for a purchase with foreign currency, we charge your account for the U.S. dollar equivalent of the transaction.” This makes the Schwab debit card one of the best cards to have if you travel internationally.
3. Easy check deposit.
There are two easy options for depositing checks: 1) you can use Schwab Mobile Deposit to deposit via a photo of the check, or 2) you can use the postage-paid envelopes provided by Schwab to mail the check to them.
Both of the services are free and simple.
4. You can easily transfer funds to other accounts.
Transferring from one of your Schwab accounts to another account is simple and available online on Schwab Alliance.
You can also transfer funds to your account at another institution after setting up what Schwab calls a MoneyLink (which is free) between the relevant accounts.
Between any of these accounts, you can also establish a recurring distribution in either direction such as: Move $100 from my local bank to Schwab monthly on the 15th of each month. This allows you to automate saving during your working years or spending after you are retired.
5. Free overdraft from your connected brokerage account.
When you set up a Schwab Bank checking account, you link it to a Schwab brokerage account to enable overdraft protection. If you make purchases against your checking account which is more than the balance, Schwab will automatically transfer money from your brokerage account.
If your brokerage account allows margin, you can temporarily get a short term loan against your investments in order to avoid over drawing on your checking account, bouncing checks, and incurring banking fees.
6. You gain access to Schwab Bill Pay.
Schwab Bill Pay is the best service of them all. It is a mechanism by which you can pay any bill you receive.
When you first are setting the system up, you enter relevant information to establish the organization you are trying to pay in your Bill Pay. After setting up the organization, they will show up in your Bill Pay list for easy access. Then when bills come in, simply enter the dollar amount you’d like to pay next to the organization and push Submit. After a brief confirmation screen, you will have successfully paid them.
Furthermore, if you have a bill you need to pay regularly where the price doesn’t change, you can set up a recurring Bill Pay to proactively pay the bill without even having to think about it. This has all the convenience of automatic withdrawal except that the power and control remains in the hands of the payer, not that of the payee.
The Schwab Bill Pay system can be accessed from a mobile device as well.
A family’s finances are complex enough. Anything which makes them simpler and easier is a welcome change. For those who are comfortable with online banking, Schwab Bank is a great choice.