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Assets Up, Prices Down at Schwab

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Charles Schwab Corp. announced June 14 a broad reduction and simplification of pricing for its retail and Schwab Institutional clients on mutual fund and fixed income trades, and eliminated a number of “nuisance fees,” all effective July 1. Separately on the same day, the company reported its financials for May, during which net new assets rose $9.3 billion to $1.274 trillion. That figure was up 17% from the year-earlier period, but down 2% from the end of April. Some 5,000 RIAs custody client assets at Schwab Institutional; total client assets at SI stood at $439 billion as of the end of the first quarter.

As for the price changes, Schwab Institutional spokeswoman Alison Wertheim said that “the biggest change is that we’re lowering our maximum price for mutual fund transaction trades that are placed electronically, so advisor clients will not pay more than $49.95 for electronic mutual fund trades,” down from a maximum of $99. The service fees being eliminated for advisor clients include those for Schwab One ATM, check order, check copy, duplicate statement and confirm copies; and security valuation service fees. “We’re removing any perceived barriers,” said Wertheim, “trying to make dealing with Schwab as easy and affordable as possible.”

In a statement accompanying the announcement, Schwab CFO Christopher Dodds noted that if the price cuts and fee eliminations had taken place at the beginning of 2006, “we estimate that revenues could have been reduced by up to $25 million for the first quarter . . . That said, we believe our success with investors over the past two years is a clear reminder that clients reward us for the investments we make in them.”


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