UBS vs Fidelity, Vanguard, TD Ameritrade, and Charles Schwab in 2020



UBS vs Fidelity & Others: Cost


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
Ally Invest $0 $9.95 $0.50 per contract $0 $0
TD Ameritrade $0 $49.99 $0.65 per contract $0 $0
Fidelity $0 $49.95 $0.65 per contract $0 $0
Charles Schwab $0 $49.95 $0.65 per contract $0 $0
Etrade $0 $19.95 $0.65 per contract $0 $0
Vanguard $0 $20 $1.00 per contract $20* $20*


UBS vs Vanguard & Others: Services


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
Ally Invest
TD Ameritrade
Fidelity
Charles Schwab
Etrade
Vanguard


A Comparison of UBS to the Leading Discount Brokerages


UBS AG (originally Union Bank of Switzerland) is a Swiss global financial services company that provides wealth management services to high net worth individuals. Comparing UBS to discount brokerages is like comparing a Mercedes-Benz to a Toyota Corolla, but a comparison will illustrate the differences between a full-service broker that caters to the wealthiest clients and discount brokers that cater to the average investor.


Pricing


For equity trades, UBS has a complex commission schedule that bases commissions on the dollar amount of the trade, rather than a flat rate fee per trade. For example, a 100-share trade of a $5 stock or ETF is charged the greater of 5% of the principal ($25) or $0.10/share ($1). Therefore, this trade will cost $25, the greater amount.

Buying a large block of an expensive stock—let's say 1,000 shares purchased at $100/share, a $100,000 trade—will cost the greater of 0.90% of the principal ($900) plus $425 ($1325 total), or $0.10/share ($100). Therefore, this trade will cost the greater amount, $1325.

UBS notes that these are maximum commissions and discounts may apply, but they aren't specific about the size of the discounts. They also charge customers a $5.25 processing and handling fee per transaction.

In contrast, these two example trades would cost $0 if purchased through Ally Invest.

Mutual funds through UBS are all load funds, so those commissions are determined by share class purchased, amount invested, and any back-end loads or redemption fees that may be assessed. For all fund purchases, a $5.25 processing and handling fee is charged per transaction.

The discount brokers usually emphasize no-load mutual funds, but their commissions on mutual funds transactions vary widely from as little as $9.95 at Ally Invest to as much as $49.95 at Charles Schwab.

Options trades with UBS are pricey as well. On a trade valued at $500, say five contracts purchased for $100 each, the commission is 2.25% of the principal value ($11.25) plus a fixed dollar amount of $39 in this pricing bracket, plus $7.50/contract ($37.50), for a total of $87.75. Thankfully, UBS puts a cap on commissions at every price bracket, so this trade will cost only $46. For a larger trade, say 10 options contracts worth $5,000, the commission will be 1.75 % of the value ($87.50), plus an $80.75 fixed dollar fee, plus $7.50 per contract ($75). Total cost = $243.25. The cap on this bracket, trades valued from $5,000-$19,999, is $1,841.

Once again, discount brokers easily beat those rates. The most expensive commission for the first example, the $500 trade, will be through Vanguard, at $1/contract, or $5.00. Option pricing leader Ally Invest will do the same trade for $2.50.


Service


Since UBS charges steep commissions compared to discount brokers, one would assume they provide superior service for those extra commission dollars. They do offer extensive financial planning and other advisory services related to education, long-term care, retirement, and estate planning. They also offer banking services such as credit cards, mortgages, and cash management. Other than the full-service financial advisor feature, many discount brokers offer most of the other services for little or no cost.

Of course, UBS focuses on high-net-worth clients, those with at least $250,000 in UBS accounts. These clients receive personalized service from a dedicated financial advisor and a client service associate. Those services are usually offered on a retainer basis, meaning clients may consult with their advisors as often as they like for no extra charges other than commissions and fees paid for investment products.

However, UBS has only a three-star rating for customer service, which implies that the company isn't as responsive and helpful to their customers as the better discount brokers are. Ally Invest, TD Ameritrade, Fidelity, and Charles Schwab all received five-star ratings for customer service.


Conclusion


UBS gears its business for the wealthiest clients and don't directly compete with the discount brokers. That doesn't mean they aren't a good company. For clients with a lot of money and little investing or financial expertise, one-on-one financial planning and advising is a better option than do-it- yourself investing through a discount broker.

Each discount broker has its own strengths and weaknesses too. Ally Invest is the clear winner in this group for lowest stock commissions. Vanguard lags when it comes to trading tools and research, but is strong with its own funds and ETFs as well as offering excellent commission discounts to customers with high account balances.

Mutual fund investors will want to avoid the commissions charged by Fidelity and Charles Schwab if they actively trade funds. TD Ameritrade features the best trading tools, especially their professional trading platform, Thinkorswim. Ally Invest has a combination of excellent customer service, and easy-to-use trading screens, which makes both good brokers for beginning investors.

The bottom line is no one broker is perfect for everyone. Each investor must find the broker that best suits their trading style, experience, and budget.


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