Dear Mr. Berko: Please give me your opinion on DDR Corp., which yields 5.7 percent. I called Charles Schwab but had to call back three times to get an adviser. The adviser I worked with is no longer there, and this is my third adviser. What’s going on? I have a large account at Schwab (almost $600,000), and during the past couple of years, I’ve noticed a problem that bothers me. When I call Schwab’s home office, I have to wait three or four minutes to speak to someone to place a trade for a preferred stock or bond, transfer funds to my checking account or take a distribution from my individual retirement account. Is Schwab in financial trouble? I read that Schwab is encouraging employees to leave the firm. To prevent future problems, should I transfer my account to Fidelity? And should I sell my Schwab stock?
— S.S., Cleveland
Dear S.S.: I’m sorry to tell you that $600,000 is not a large account. It’s difficult to find a wise and experienced stockbroker if your account is less than a few million dollars. It’s even difficult to find a good broker if your account is worth more. Frankly, it doesn’t make a bit of difference which brokerage you use. Basically, except for minor differences in procedures, all brokerage firms are the same. Your success depends on employing a knowledgeable professional you can trust. Finding someone with whom you can confidently counsel makes all the difference in the world.
Charles Schwab (SCHW-$40) was founded in 1971. It’s a publicly traded company, so I have access to its financial statements. I can assure you that SCHW’s numbers are mighty impressive. And from conversations with industry executives, I assure you that SCHW has no financial worries. SCHW will be around for many, many more years. I’ve not heard a word about SCHW layoffs.
Many investors are no longer buying stocks. Rather, they’re shifting billions of dollars to low-cost investment products and index-based investments, which often perform better than actively managed funds. This has changed SCHW’s revenue mix, as fewer investors are paying advisers to actively manage their accounts.
