At the inception of Clear Rock Advisors, Schwab’s per trade commission rate for U.S. stocks and ETFs was $8.95. In February, Schwab lowered their rate to $6.95. Effective March 3, Schwab has lowered their trade commission yet again to $4.95, their lowest rate yet.
What is driving brokerage firms to cut costs?
In one word: competition. As the competition for market share amongst large brokerage firms such as Schwab, Fidelity, TD Ameritrade, etc., heats up, investors are reaping the rewards in the form of lower costs. Below is a timeline which illustrates just how heated the race to the lowest commissions has become:
- February 3, 2017: Schwab commissions go from $8.95 → $6.95
- February 28, 2017: Fidelity commissions go from $7.95 → $4.95
- March 3, 2017: Schwab commissions go from $6.95 → $4.95
- March 6, 2017: TD commissions go from $9.99 → $6.95
In addition to a low flat rate commission, Schwab offers over 200 ETFs on their Schwab ETF OneSource platform which charge zero commission when traded through a Schwab account. Several of these ETFs are currently part of Clear Rock’s investment model. Additionally, many of these ETFs offer some of the lowest expense ratios available to investors.
Clear Rock Advisors is committed to providing our clients superior investment opportunities within all our models. In addition to reviewing managers’ risk adjusted rate of returns, historical performance, stability, investment philosophy, etc., we are also keenly aware of the costs associated with these investment opportunities. We strive to provide the most cost effective options on the market so our clients’ returns are not diminished by excessive costs and fees.