Charles Schwab recently announced $0 trade commissions, and its impact effectively cancelled Robinhood Investing, M1 Finance, and so many other brokerages - here’s why. Enjoy! Add me on Instagram: GPStephan
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First, Charles Schwab is a top tier, full service bank…they have physical locations to walk into, they have stellar 24/7 customer service where you can talk to an actual person, they have retirement and custodial accounts, they have a great user interface, great research tools, a well designed app, free ATM services…and now, completely free trades.
This beats Robinhood and M1 finance on pretty much EVERY SINGLE level.
And to me, this move just makes sense…Charles Schwab has a market cap of about 55 BILLION DOLLARS…and the vast majority of its revenue doesn’t come from stock trading commissions. In fact, according to CNBC, commissions only make up 3-4% of its net revenue…so cutting them out entirely might prove to be a HUGE opportunity to attract more customers to its platform…and also, MAKE MORE MONEY.
https://www.cnbc.com/2019/10/01/charles-schwab-is-eliminating-online-commissions-for-trading-in-us-stocks-and-etfs.html
This is because, in 2018, Charles Schwab made $763 Million from its trading revenue…which sounds like a lot to give up…until you realize that $5.8 BILLION DOLLARS came from net interest revenue, that grew by 36% over the last year. With that type of growth, interest revenue on cash deposits could GREATLY outweigh the money they’re “losing” by offering commission free trades…not to mention the business they can now take from Robinhood, M1 Finance, and many other brokerages.
https://www.sec.gov/Archives/edgar/data/316709/000031670919000008/schw-12312018x10k.htm
Charles Schwabs effect by lowering fees to $0 didn’t go un-noticed, and had far reaching impact…shortly after announcing it’s $0 commission, TD-Ameritrade stock plummeted over 30%…because, according to SEC filings, 36% of the companies revenue came from commissions and transaction fees…meaning that Schwab’s rate cut would undermine 1/3rd of it’s competitors revenue.
https://www.sec.gov/Archives/edgar/data/1173431/000117343118000125/amtd_20180930x10k.htm
And so, not surprisingly, TD Ameritrade announced - THE NEXT DAY - that they, too, would be lowering their trading commissions to…you guessed it…to $0.
https://www.businesswire.com/news/home/20191001006211/en/TD-Ameritrade-Introduces-0-Commissions-Online-Stock
To me, all of this is just a race to the bottom - each company is under-cutting the other in an effort to get YOUR business, and YOUR money. While Robinhood was certainly a pioneer for $0 stock trades in an easy to use app, they unfortunately lagged when it came to everything else…their customer somewhat sucks, they don’t offer any retirement accounts, you can’t re-invest dividends, you can’t buy fractional shares, and they don’t offer any banking services…this left the door open for OTHER, more established companies to replicate the Robinhood model…do it WAY better….and then…take over.
I personally believe we’re going to see most other brokerages follow this model and offer $0 trades, as well, until it just becomes the industry standard.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
The YouTube Creator Academy:
Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: https://bit.ly/2STxofv $100 OFF WITH CODE 100OFF
Get 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1000): https://act.webull.com/k/Vowbik9Tm5he/main
Merch: http://www.GrahamStephanStore.com/
Graham Stephan Discord: https://discord.gg/pazcWtR
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
First, Charles Schwab is a top tier, full service bank…they have physical locations to walk into, they have stellar 24/7 customer service where you can talk to an actual person, they have retirement and custodial accounts, they have a great user interface, great research tools, a well designed app, free ATM services…and now, completely free trades.
This beats Robinhood and M1 finance on pretty much EVERY SINGLE level.
And to me, this move just makes sense…Charles Schwab has a market cap of about 55 BILLION DOLLARS…and the vast majority of its revenue doesn’t come from stock trading commissions. In fact, according to CNBC, commissions only make up 3-4% of its net revenue…so cutting them out entirely might prove to be a HUGE opportunity to attract more customers to its platform…and also, MAKE MORE MONEY.
https://www.cnbc.com/2019/10/01/charles-schwab-is-eliminating-online-commissions-for-trading-in-us-stocks-and-etfs.html
This is because, in 2018, Charles Schwab made $763 Million from its trading revenue…which sounds like a lot to give up…until you realize that $5.8 BILLION DOLLARS came from net interest revenue, that grew by 36% over the last year. With that type of growth, interest revenue on cash deposits could GREATLY outweigh the money they’re “losing” by offering commission free trades…not to mention the business they can now take from Robinhood, M1 Finance, and many other brokerages.
https://www.sec.gov/Archives/edgar/data/316709/000031670919000008/schw-12312018x10k.htm
Charles Schwabs effect by lowering fees to $0 didn’t go un-noticed, and had far reaching impact…shortly after announcing it’s $0 commission, TD-Ameritrade stock plummeted over 30%…because, according to SEC filings, 36% of the companies revenue came from commissions and transaction fees…meaning that Schwab’s rate cut would undermine 1/3rd of it’s competitors revenue.
https://www.sec.gov/Archives/edgar/data/1173431/000117343118000125/amtd_20180930x10k.htm
And so, not surprisingly, TD Ameritrade announced - THE NEXT DAY - that they, too, would be lowering their trading commissions to…you guessed it…to $0.
https://www.businesswire.com/news/home/20191001006211/en/TD-Ameritrade-Introduces-0-Commissions-Online-Stock
To me, all of this is just a race to the bottom - each company is under-cutting the other in an effort to get YOUR business, and YOUR money. While Robinhood was certainly a pioneer for $0 stock trades in an easy to use app, they unfortunately lagged when it came to everything else…their customer somewhat sucks, they don’t offer any retirement accounts, you can’t re-invest dividends, you can’t buy fractional shares, and they don’t offer any banking services…this left the door open for OTHER, more established companies to replicate the Robinhood model…do it WAY better….and then…take over.
I personally believe we’re going to see most other brokerages follow this model and offer $0 trades, as well, until it just becomes the industry standard.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
Hi graham very good content your YouTube channel like to and learn thank you for Sharing your knowledge on stocks Finance real estate.
Why does he need that big of a mic, pulling his shirt 😂
Worst transfer service I've ever dealt with
Honestly Robinhood still has the most simplistic and easy to use app on mobile. Charles Schwab is also really behind with fractional shares. It's available, but only with a selection of stocks. I use both Robinhood and Charles Schwab, but I'm not rushing to get out of Robinhood. The app is a lot better than others
to many adds
Care to do an update video on Robinhood? They added that feature of fractional shares!
I think you have the same microwave as me lol
Watching this months later and Robinhood now has cash management, fractional shares, dividend reinvestment & basically everything he complained they didn't haha
Also with the fractional shares doesn't allow you to trade during extended hours. I may switch to Webull.
I do not how Robinhood delays my market sales incurring a high profit. Yet only when that stock Garner's a loss only then it sells . I may go to another brokerage. I'm not fond of Robinhood. Sure they send you a debit card. But their lag is terrible.
E*TRADE review!?!?!
So which investing app do you recommend???
I am abt to make a charels shwabb custodial account! Love your channel and it convinced me to start investing so we'll see how it goes!
I love Charles Schwab. Free international ATM withdraws, a US customer service rep always available, now free trades. I have no issues with them making some interest off me while I'm averaging my cash into the market.
But Graham I can't pick a brokerage now that's they're all on the race to zero trading commissions 🙁 lol
I'll keep researching.
Thanks!!
So you're saying they're ripping us off
It's just.. I vest some money in Robin Hood.. sorry buddy.. didn't mean to get angery…
Shwab used the stones to destroy the stones
I'm still sticking at Robinhood.
man i want to like Graham, because his topics are interesting – but he takes what feels like 20 minutes to make each individual points my goddddd
I just signed up for robinhood today over Schwab. I realize they are full service broker, but the guy I spoke to on the phone sounded a bit pretentious for someone like me who wants to just dip his toe into the market. I said I was interested in buying maybe 3-5 stocks to start off with, he somehow took it as $3-5k and belittled that amount as well lol. I make decent money, but I'm sorry I live in the real world with real bills and real debt. So robinhood works for me, I buy when I can/want. Don't have to talk to anyone… and If I ever decided to get more involved in the market I have the ability to switch.
Ok but why does he yell throughout his videos?
Scott trade. I like that broker . They wanted my money in their account and could care less if I every bought or sold . I'm presently with fidelity past 20 years . I'm satisfied with them,.. very satisfied
does he ever advertise what 20 cent coffee he makes at home? lolrus