What is Computershare?
Investors come with all different styles and strategies. Some invest passively and patiently, others invest actively and quite frequently. Others,
still, invest somewhere in between. The products and service of Computershare, likewise, will cause some investors to happily embrace it, while
causing others to quickly (and fearfully!) run away from it.
Compared to the online brokerages (TD Ameritrade, Vanguard, Schwab), Computershare has
remarkably little in common. In fact, Computershare is not even a brokerage company. Computershare is a stock transfer agent, which means that
they simply keep the corporate shareholder records. They work as link to connect the individual stockholder to the holding company, itself. This
article will review the products and services that Computershare offers, while providing investors with helpful information as they continue to
research and discern both their current and future investment strategies.
See Differences between brokerage and transfer agent
article for more info.
Company Overview
Computershare is an Australian-based company which considers itself to have "grown into the world's foremost transfer agent and investor services
provider." They are located in 21 countries and connect their services to 125 million shareholders and plan participants throughout the world. For
these shareholders, Computershare provides stock plans from 16,000 clients (holding companies), which include many well-known companies such as
McDonald’s, Johnson & Johnson, Coca-Cola, and AT&T.
Products
Computershare offers Direct Stock Purchase Plans (DSPPs) and Dividend Reinvestment Plans (DRIPs) on behalf of a large but limited number of U.S. and
international companies. Computershare does not offer general stock market trading, exchange traded funds (ETFs), mutual funds, certificate of
deposits (Cds), bonds, IRAs or other retirement accounts. With the online brokerages, investors can instantly access these products (and sometimes
many more). With Computershare, however, the investor only has the ability to purchase and sell stock from specific companies that are uniquely
managed by Computershare.
Since Computershare is a stock transfer agent, their role is simply to keep the corporate shareholder records, acting
as a bridge that connects the investor directly to the holding company. DSPPs, and especially DRIPs, are generally a favorable investment to the
more passive, "buy and hold" investor. DRIPs deliver a dividend, a steady distribution of the company’s profits that is paid out to the shareholder,
usually on a quarterly basis. This payment is given to the shareholder regardless if the stock rises or falls. With a DRIP, the shareholder also has
the option to be issued the money as a direct payment or to reinvest the money into purchasing more stock. Some investors see DRIPs as worthwhile
because they could offer a higher potential for steady, consistent growth despite the ups and downs of the market. For others investors, the steady
payout of a DRIP is seen as a hindrance to the stock’s performance, possibly holding it back from even bigger potential gains.
Computershare Fees & Pricing
Although Computershare itself does not charge a transaction fee, an investor will be charged a purchase and a sales fee directly from the holding
company. The minimums for initial stock purchases will also vary according to the limits determined by each company.
For example, AT&T stock which is available on Computershare, has a one-time purchase fee of $10 + $.05 per share along with selling fees of $10-$20 per transaction + $.10 per share. This means that
an order to buy 100 shares of AT&T stock will cost a client $15, 1,000 shares will cost $60. Selling these shares will cost double of that amount. The initial purchase minimum
for AT&T is $500. By comparison, big online brokerages like Ally Invest charge flat rate $0 per
stock transaction regardless of number of shares and offer initial purchase minimums for as low as $0.
Service & Support
Computershare offers a helpful Frequently Asked Questions (FAQ) along with a clever Virtual Agent, which provides generated responses to the frequently asked questions as well as answering commonly asked follow-up questions. The help and support throughout Computershare’s website was organized, clear, and easy to access.
Website
The design of the Computershare website is as up to date as any website. After logging into the Investor Center, however, the technology and accessibility to portfolio and individual stock plans information became only slightly above average. When it comes to managing a portfolio, Computershare does not have all of the technical ease and accessibility of the big brokerage companies, but they also don’t really need these upgrades. Remember, Computershare is not a brokerage, but an agent by which an investor can access specific stock plans which are, for the most part, intended to be held for a longer-term.
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Computershare PROs
- sole access to certain companies and their stock plans (DSPPs, DRIPS)
- no additional fees
- easy to access help and support
Computershare CONs
- very high transaction fees
- limited investment options
- variable transaction fees (determined by holding company)
- not for making frequent trades
Computershare Review Conclusion
Computershare is not geared toward the "day trader" or any investor who desires to have frequent access and management of their portfolio. It is for
the investor who has a plan for a specific stock that they merely want to set and forget - occasionally monitoring and evaluating whether to make
any adjustments.
Investors have a tradeoff to consider when choosing to use Computershare versus a true broker. Prices per transaction will usually
be MUCH lower using the online brokers (most of which now have $0 commission), but they also provide increased temptation to make more frequent transactions. Should Computershare be used in an investor's smart financial strategy? It depends on the
person, and it depends on how that person wants to invest.
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