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Table: Schwab: Tackling the Bull


How different is the Schwab model from the fee-based offering of its biggest competitor, Merrill Lynch?

SCHWAB

RETAIL BUSINESS

Sells equity offerings underwritten by Goldman Sachs (GS), but does not have investment-banking business. Retail clients account for 60% of revenues and 37% of operating profits.

RESEARCH

Employs no in-house research analysts. Distributes proprietary research based on quantitative models that it considers more objective. Also distributes Goldman Sachs research reports to investors with $500,000 of assets.

CHARGES

Charges annual fees of 0.6% for $2 million or less in assets. No fee on cash or money-market funds. Minimum charge $1,500.

TRADING FEES

Fifty free trades a year for clients with $1 million or less in assets.

ADVISERS

Network of 150 advisers in nine private-client offices, and dozens of Schwab branches. Plus network of 330 independent advisers.

MERRILL

RETAIL BUSINESS

Retail services contribute 44% of revenues and 31% of pretax earnings. But investment banking, which accounts for 65% of pretax earnings, is the bigger moneymaker.

RESEARCH

Employs 800 research analysts and distributes proprietary research to financial consultants. Provides technical research based on quantitative calculations, but maintains that fundamental research by analysts beats computer models.

CHARGES

Charges annual fees of 1.5% on client's first $1 million in equities, 1% on mutual funds, 0.5% on bonds and cash. Minimum charge $1,500.

TRADING FEES

Unlimited free trades for $1 million accounts, 300 for those over $500,000.

ADVISERS

Network of 14,000 in-house advisers in 700 branches across the U.S.

Data: Schwab, Merrill Lynch


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