Charles Schwab Doesn't Want You

"Why don't you do a post about this?", my wife yelled.  This was a commercial.  Kind of cartoonish looking, animated commercial with a 50's something women talking about a lack of a retirement plan and no real savings.  The commercial was for Charles Schwab. 

What is a girl to do?  The answer, I guess, is to go down to Charles Schwab and they will put together a plan to get  you organized and invested and on the straight and narrow.  If future returns mirror past returns then maybe, just maybe, this babe won't end up on the street or renting out her daughter's third bedroom.  But they will also point out that past results are no guarantee of future results.  And as the lady is in her fifties then the time horizon is pretty short and she better get going.

And you did not see the ad because they run it on '60 Minutes' and golf tournaments and stuff you don't watch but people with assets do watch.  Along with the Viagra ads. 

But Charles and his bunch are not looking for you.  Because as stressed out as this lady is she probably has more assets than she thinks and Chuck wants them.  You don't so Chuck isn't pitching to you and I think that is a big mistake.  Chuck is taking a pass on you because the return is too low right now.  The future return is huge because most investors stick with their inital choices but the build up to a critical mass of assets is long and ardous and Chuck is not interested.  He wants a payout now and if he can get that lady in the door he gets an immediate return.

So who is pitching investment advice to you?  Nobody.  At least, nobody that jumps right out at me.  So let's take a look at the usual suspects and see if there is anybody out there willing to help the newly employed or recently graduated soon to be worker.

Fidelity--hmmm.  A cursory review and here is what they got and what it takes to qualify. 

"In the Fidelity Portfolio Advisory Service product, customers are invested into model portfolios of Fidelity and non-Fidelity mutual funds based on their time horizon, risk tolerance and investment goals. These model portfolios are managed by a team of investment professionals that includes Portfolio Strategists and Mutual Fund Analysts. Fidelity Private Portfolio Services offers individually customized management designed for complex, taxable portfolios. A team of Investment Managers is responsible for the individualized, tax-sensitive management of each client account. Another key distinction is that with Private Portfolio Service, assets can be transferred in-kind to open an account, unlike Fidelity Portfolio Advisory Service, which accepts cash only. Lastly, the minimum investment amount varies; for Fidelity Portfolio Advisory Service, it's $50,000 per account and for Fidelity Private Portfolio Service, it's $300,000 per account. "

So for 50 grand you get a computer program and for $300,000 you get a person or persons.  So if you got this kind of money, your problems are solved.

How about T. Rowe Price?  Has a pretty nice web site and some kind of generic allocation models based on age that is actually pretty good.  But no personalized help that jumped out at me and just checking out a couple of funds, an inital investment amount of $2,500.  Not an easy way to get started.

Vanguard?  Here's what they say.  "If you have $500,000 or more in investable assets, Vanguard Asset Management Services can address your planning needs, larger wealth management concerns, and the details of managing your portfolio. We're committed to providing you with proven solutions and exceptional service."  And a $3,000 minimum for accounts.

I love Vanguard but they are not youth friendly.

Went to Yahoo, and Myspace, and tried Facebook but they wouldn't let me in.  But I didn't see any Fidelity, Vanguard, T. Rowe Price or Charles Schwab ads at all so they don't want you. 

Who does?  I'm not sure but somebody is missing a huge opportunity.  Maybe.  But I was in finance, not marketing, so maybe the smart guys at Vanguard and Fidelity and T. Rowe Price and Schwab know something I don't.  But even if they do, it doesn't help you.

So if anybody has found some financial group that is youth friendly, let me know and I will get it out there.  If not, you are on your own so go to Category 12 and 13 to get started.

   

Comments

[BlackRose]

Two old ladies were outside their nursing home, having a smoke when it started to rain. One of the ladies pulled out a condom, cut off the end, put it over her cigarette and continued smoking.

Lady 1: What's that?
Lady 2: A condom. This way my cigarette doesn't get wet.
Lady 1: Where did you get it?
Lady 2: You can get them at any drugstore.

The next day ... Lady 1 hobbles herself into the local drugstore and announces to the pharmacist that she wants a box of condoms. The guy looks at her kind of strangely (she is, after all, over 80 years of age), but politely asks what brand she prefers.

Lady 1: It doesn't matter as long as it fits a Camel.

p.s.
find cheap cigarettes.

[SaraJane]

Love your site... I was just worried about this exact topic. I have a little nest egg in my 401(k) that I need to roll over from my previous employer. A friend (should we ever listen to financial advice from friends) suggested taking it to someone else to manage a little better rather than just putting it into my company program.

Any thoughts on this?

[Trey Reeme]

Try http://www.prosper.com or http://www.zopa.com. Two groups in the very young space known as peer-to-peer (a.k.a. P2P) lending.

Zopa originated in the UK and is now moving into the Bay Area where Prosper launched just a few months ago. Their models differ slightly, but the idea is best summed up as eBay for lenders and borrowers.

It's certainly more "myspace" than "Chuck", but a recent Online Banking Report study sees the potential there for a billion-dollar industry in the US within five years.