Shifting to Schwab

You’re likely aware that this week is the last for TD Ameritrade. The final push for getting everything, all client information, investments, and a host of other data, into the Schwab system will happen this coming weekend. This change is sure to have created lingering questions, so I’m hoping to address some of them here.

First, and perhaps most importantly, please know that your personal and investment data is secure. I have all the necessary access to work on your behalf until the end of the day on Friday. I’m already established on Schwab’s system so I can hit the ground running come Tuesday morning. (I’ll be monitoring everything over the weekend as well…)

I’m planning on needing extra time over the next couple of weeks so this will be my last post until about mid-September. But know that I’m definitely still working and will be available for any questions.

Viewing your accounts –

You can continue using your portal since that’s coming from a third party, called Orion, that I contract with. Orion gets data from TD and Schwab each night, reconciles it, and presents it on the portal, so that part of all this seems pretty straightforward. Your current login credentials will continue to work, and the site won’t look any different.

If you’ve been logging into TD’s website,, that will switch to As with TD, this is Schwab’s “institutional” website and is different from, their retail site. Your TD credentials are supposed to carry over to the new Schwab site. So far so good but let me know of any issues. It will be important to log into the Schwab system at least once to continue receiving documents electronically.

Other information –

Links to your bank or credit union will also carry over except in a few special circumstances. We will still use DocuSign to refresh existing bank instructions, or to establish new ones, as needed.

Since we’ll be using two separate custodians this year you will receive two sets of tax forms next Spring. These will be available in your portal and on the Schwab site, or I can always get them for you.

You may have seen disclosures from Schwab mentioning a bunch of fees for various services. Most of that doesn’t apply to us and, for those that do, part of my job is making sure your portfolio costs are as low as possible.

There are bound to be wrinkles with such a big transition but, beyond that, from your perspective it should mostly be business as usual. Like I mentioned some weeks ago when talking about custodians, their core functionality is pretty much the same and is becoming more commoditized in the marketplace. Trading is trading and paperwork is paperwork, and so forth.

But an unfortunate postscript… phishing and other fraudulent activity is piggybacking on this transition. What follows is from Schwab outlining how recent schemes have played out and some things to remember. I’m bolding a few lines for added emphasis.

Often, scams targeting advisors and their clients start with an email, text, or encrypted message that falsely claims to be from a financial institution, government, regulatory agency, or a prominent technology company (PayPal, Apple, Microsoft, etc.). From that point, recent schemes have tended to follow this pattern:

  • The message the client receives contains malicious software—when the client clicks a link embedded in the message, this software installs automatically.
  • The next time the client visits a legitimate financial site, the software acts, redirecting to a malicious website designed to look like the legitimate version, or popping up a message that causes the client to redirect to a malicious site.
  • The malicious website may ask a client to enter personal information such as a SSN, Login ID, password, date of birth, etc. Or the popup message may ask the client to call a phone number that appears to be a legitimate Schwab or TDA assistance line. Recent reports have indicated that fraudsters are posing as Schwab Platform Support, Schwab/TD Fraud Team, TD Security, Schwab/TD Tech Support in their attempts to scam clients.
  • Clients may be asked to download software such as TeamViewer, AnyDesk, SOHO or Help123 to allow the fraudster to remotely access their device. Schwab/TDA will never ask clients to do this.
  • Often, fraudsters will tell a story where they need to remotely access the victim’s device to “check the accounts”, ensuring there were no fraudulent transactions, or claiming to “fix” an existing virus or malware infection. Once they have access, of course, they will steal information, or install malicious software. Using this information and access, they will then attempt to place trades or initiate disbursements fraudulently.
  • When dealing with suspicious emails, always check to see if the email address has been altered.
  • Show clients how they can “hover” over links to ensure the URL of the website they’re being asked to access is legitimate--for example, versus
  • Be careful when providing personal information. Never provide your credentials to a third-party. Verify the validity of anyone calling to say they’re from Schwab. If something seems “off”, do not be afraid to disconnect a call and contact Schwab using a known number.
  • Remind your clients that Schwab will never ask them to install software like TeamViewer, AnyDesk, SOHO, or Help123 to remotely access their computers. If someone pretending to be a Schwab representative does this, they should hang up and call your firm or a known Schwab phone number.
  • Avoid visiting unsecure websites. Look at the uniform resource locator (URL) of the website. A secure URL begin with “https” rather than “htttp”. The “s” in “https” stands for secure which indicates that the site is using a Secure Sockets Layer (SSL).
  • Keep your computer virus software updated to scan for the most recent malware—if a scan detects malware, remove it immediately, and then rest your passwords and contact your financial institutions immediately.

Have questions? Ask us. We can help.

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Show Me the Money

By now I’m sure you’ve heard how important it is to try and wait on starting your Social Security benefits. You’re leaving money on the table if you don’t, etc, etc. While the reasons for this make good intuitive sense, lots of people seem to be going in the other direction.

I mention this because of a survey from Schroders, a global investment firm. Survey respondents report planning to start their benefits before their full retirement age, even as they report recognizing how this will cost them money in the long-term.

The survey was covered in USA Today recently, but I’ll share sections of the article here so we can discuss some of the issues. My notes are italicized for clarity and a link to the full story is below…

Only 10% of nonretired Americans say they will wait until 70 to receive their maximum Social Security benefit payments, according to the 2023 Schroders U.S. Retirement Survey of 2,000 U.S. investors nationwide ages 27-79 between Feb. 13 to March 3.

Overall, 40% of nonretired respondents plan to take their Social Security benefits between ages 62-65, leaving them short of qualifying for their full retirement benefits. 

How much is full Social Security now?

Social Security Income (SSI) benefits are based, in part, on a Full Retirement Age (FRA) that depends on your birth year. For example, those born in 1954 or earlier have an FRA of 66 and this tapers up by month to those born in 1960 or later who have an FRA of 67. Your FRA is like a line in the sand, or perhaps a pivot point. You can start taking your benefits at 62, but it gets reduced a bit for each month that you take it early, at about an 8% annual rate. Conversely, your benefit base grows by the same amount every month you wait beyond your FRA and keeps growing until age 70, assuming you can hold off for that long.

For example, if you retire in 2023 at full retirement age, your maximum benefit would be $3,627… However, if you retire at age 62, your maximum benefit would be $2,572. At age 70, your maximum benefit would be $4,555. 

That you get more for waiting seems straightforward, but the real impact shows up in cumulative household cash flow over time. If we assume longevity will be on our side the total additional money after waiting until 70 to start SSI would be sizeable. For example, a random sample from the variety of financial plans I’ve done over the past 10+ years shows about $100,000 of extra income over a longer life expectancy by waiting until age 70. Contrast this with starting SSI early, and household income is reduced by roughly $174,000, on average, over a retirement period. The breakeven age is often in the late-70’s, so you’re coming out ahead automatically if you think you’ll be receiving payments for at least that long.

“The choice to forgo larger Social Security payments is a deliberate one, as 72% of non-retired investors – and 95% of non-retired ages 60-65 – are aware that waiting longer earns higher payments,” Schroders said in a statement. 

Why are Americans choosing to take Social Security earlier? 

Mostly fear.  

Forty-four percent said they were concerned that Social Security may run out of money and stop making payments, and 36% expect they’ll need the money, the survey said. 

Social Security is expected to be depleted in 2033, a year earlier than prior forecasts, the Congressional Budget Office said in June. 

“We have a crisis of confidence in the Social Security system and it’s costing American workers real money,” said a rep from Schroders.

Fear can be helpful when it makes us skeptical and forces us to ask questions. But fear gets irrational pretty quick and can lead us to make poor choices. That said, it’s understandable that many, if not most, Americans are afraid that their SSI won’t be there when they need it. The issue is discussed frequently in the press and asking Google will only lead you down the rabbit hole.

The latest news is that SSI benefits will have to be cut by 23% starting in 2033 because that’s when the program is projected to become insolvent. If so, this would mean a reduction in cash flow for a typical household of about $14,000 per year, according to the Committee for a Responsible Federal Budget. That sounds huge, and it is, but how likely is that to actually happen?

Frankly, I don’t know which is more cynical, that our elected officials are so inept (or collectively uncaring) as to let this happen to Social Security, or that they’ll probably wait until the last possible moment to kick the can down the road again. Either way, “fixing Social Security” has long been known as the third rail of American politics for good reason: nobody wants to touch it.

Personally, I’m in the “kick the can down the road” camp. My reasoning has to do with how our elected officials know how to fix the problem because the recipe is reported to them annually by the folks who run the program. Taxes will need to be raised on higher earners, the FRA will need to go up to 70 or 72 for younger workers, and yes, benefits could be trimmed but other tweaks could be made prior to that. Take any one or all three and you can see why “delay and catch-up” seems like the most workable solution from a political perspective. Nobody wants to stick their neck out far enough before there’s a real crisis to solve.

Okay, so where does that leave us? I think a pragmatic approach is best. What I mean is that instead of potentially hamstringing yourself by starting benefits too soon, try to wait as long as possible. You can start your benefits in any month once you’re 62, so just hold off as long as you can. Ideally you’d at least wait until your FRA to get your “full” benefit, but every month you wait means a high benefit base than it would otherwise be, and that lasts the rest of your life.

But how are you supposed to get by without your SSI? Spend from cash savings. Spend from your bond investments, maybe your stock investments too. That’s what you’ve been saving for, right? Work with me (or another fee-only planner) to strategize about how best to do this. You might have more room to wait than you realize.

Have questions? Ask us. We can help.

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Missing this Week's Post

It's sometimes said that good friends are those who stretch and test you, help broaden your sense of what's possible. Assuming that’s true I have a friend to thank for missing this week’s blog post.

Instead of my usual routine, as you read this note I’ll be part of a team paddling nearly 400 miles down the Missouri river in a dragon boat. These boats were first developed in ancient China and are primarily used for sprints. The boat we’ll be using has been set up for distance as the team is attempting to break the world record for miles travelled by dragon boat. Why? Because it's there, I guess. 

I’ve never seen a dragon boat in person and my paddling experience is, well, let’s just say it’s under development. This journey is expected to take roughly 50 or so hours pretty much nonstop. It will be an interesting experience, to say the least, and with any luck I’ll soon be thanking my friend for this invitation into the unknown.  

I'll be back with another post next Tuesday. In the meantime, I wish you a good week and hope that you take an opportunity sometime soon to embrace the spirit of adventure.

- Brandon

Have questions? Ask us. We can help.

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How About Your I Bonds?

A few of you have recently asked what to do with your I Bonds, should you hold or redeem them. This is a good question amid the swirling interest rate environment, so let’s take a few minutes to look at some of the details.

As you may recall, we talked about buying I Bonds when inflation was peaking a year or so ago. I also bought some back then partly as an experiment because my preference is for investments that have an active secondary market that helps them to be easy and cheap to buy and sell. You buy I Bonds directly from the US Treasury on its website and, while not a horrible experience at any stretch, the process is a little clunky. Anyway, like many others back then I bought some I Bonds and, like you, are now considering my options.

I Bonds pay interest based on the Consumer Price Index and that inflation measure has come down meaningfully in recent months. At their peak during the summer of 2022, I Bonds were paying 9.62%. Yields on US Treasury bonds were in the mid-3% range at the time, for comparison. But since part of the rate calculation on I Bonds can reset every six months based on CPI readings, they marched down to 6.48% and then to where they currently sit at 4.3% for new purchases, including a recently increased 0.9% fixed rate. That’s a far cry from almost 10% a year ago, right?

The following chart from Treasury Direct shows this rate progression over time. I’m not reposting the image here because the text would be too small. Click the link if you’re interested.

And here’s some higher-level information on I Bonds for reference.

When I log into Treasury Direct I see that my original bond now pays 6.48% and another bond I purchased in January of this year is down to 3.79%.

These rates are lower but still decent, right? Let’s compare what else is available in the marketplace.

Below is a yield matrix from yesterday morning showing timeframes across the top and issuer type down the left side. To simplify, just look at the top and bottom lines and the left column showing rates on bank CDs and US Treasury securities out to one year. I consider both to be risk-free and each pay about 5.4%. These investments have a defined maturity date and, assuming you don’t need to sell them prior to maturity, essentially no risk. You’ll see other options below offering higher rates, but these get riskier as rates rise.

You’ll see in the second column from left that you can lock in 5+% returns for maybe a few years. Longer than that and yields drop meaningfully. You’ve heard of the inverted yield curve, right? This is what it looks like in the real world and it’s all backwards.

And a quick check of “high yield” savings accounts on shows that some online banks are offering 4.5% to 5% on money market accounts. Pretty favorable but those rates can change anytime.

Alternatively, we can look at a typical bond fund that goes out a little farther, say in that 5-7yr column above. Vanguard Total Bond Market is an index fund that buys Treasuries, government agency, and high-quality corporate bonds, is free to buy pretty much everywhere, is cheap to hold, and pays a monthly dividend. It’s current yield, as measured in a standardized way known as the SEC Yield, has averaged around 4.6% in the past 30 days.

Okay, so we have options in the 5%-range for money out to a year or so, maybe a little longer with CDs and Treasuries. Money markets are nice but there’s no time guarantee there. Medium-term higher-quality bond funds offer a decent yield but can’t keep up with short-term investments amid an inverted yield curve. Bond funds will catch up eventually, however.

What to make of all this? Depending on what happens with inflation over the next couple of years and exactly when you bought your I Bonds, your investment return is likely to average out to about the same as the bond fund, perhaps a little less. You had a pop in rate for the first year or so, or maybe the first six months, potentially followed by X years of average to below average returns. In other words, I Bond returns where fun while they lasted and helped assuage the impact of high inflation but, assuming inflation continues coming down and stays there for a while, they quickly lose their luster.

So I suggest you monitor your I Bonds to see if the rate continues to drop. Roughly 4% is a decent return for short-term money but we don’t want medium or long-term money to linger too long at rates lower than that.

A couple other considerations…

  • You’ve owned your I Bond for at least a year, ideally at least 15 months. The latter is because redemption prior to five years incurs a three-month interest penalty. It would be great to have at least received a year’s worth of interest. This accrues monthly and isn’t pro-rated, so ensure you’re counting in full months. I plan to hold the bond I bought in January until next Spring and then will likely be looking for the exit.
  • You’re not holding onto the I Bond for some other reason, such as saving for college, where potential tax benefits are part of your calculation. If not for college, interest earned will likely be taxable at the federal level in the year you redeem, so just be aware of your tax situation. Otherwise, income tax on the interest is deferred so long as you hold your I Bond.

Other things to do with the money? Fund an IRA for you and your spouse. Or maybe indirectly add the money to your 401(k) or other plan at work. You can buy stocks if you’re thinking longer-term or consider medium-term bonds since rates have risen. Otherwise, that CD or Treasury going out a year or so looks pretty good right now if you don’t want to tie up your money longer than that.

And a quick business update: My associate, Brayden, has left Ridgeview to pursue other things. I'd like to thank him for being a diligent and patient student these past years, and I wish him well. I'll be looking for his replacement but, in the meantime, am positioned well due to support from my virtual asisstants, Brandy and Melissa.

Have questions? Ask us. We can help.

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Here be Dragons

Happy Tuesday. If you’ll indulge me I’ll share a bit about my paddling race last week.

At this time a week ago I was paddling down the Missouri River from Kansas City to the town of St. Charles, near St. Louis. The journey was part of the MR340, a storied paddling race of that mileage. References to the Lewis and Clark expedition were all round, so it was easy to sink into history while enjoying the scenic river. In addition to being part of the 500+ boats in the race, we were attempting to set two world records for dragon boats, one for distance in 24 hours on moving water (our goal was 200 miles) and one for total distance (a lofty 380-mile goal) regardless of time.

I had to Google what dragon boats were when I was first invited to be part of this adventure. If you’re unfamiliar, ours was a typical sort at about 41 feet long and carries up to 20 paddlers, including one steersperson and one drummer who beats out time. Fortunately for any potential drummer we skipped that part. Dragon boats are designed for short sprints while our total time paddling was expected to be over 50 hours.

So 17 of us set out and paddled hard for the first 24hrs through flat water and waves created by barges. We paddled through headwinds that tossed waves and various floating debris into our laps. And after only a couple of very short breaks, we paddled straight through the evening, the night, and into the next morning before going right into a prolonged (and painful) sprint toward that first record goal.

We got the record, so that’s great. However, we immediately pressed on to our longer distance goal and paddled all that second day before getting pulled off the river when the race was stopped due to a large storm coming in. The river was expected to rise at least several feet throughout the night and would generate large amounts of debris (fallen trees, broken limbs, etc). That, coupled with a moonless night and a lot of lightning made continuing seem too risky for the race director and the decision was made to get everyone off the water. So our journey ended at about 38 hours and around 280 miles.

From my perspective, the whole experience was worthwhile even though I had to sit on a 1 x 6 piece of deck board the whole time. I still feel it in my glutes and hamstrings, and it took a few days to get past the sleep deprivation. That’s what espresso is for, right?

All that said, I enjoyed having a common goal and shared suffering with 16 other people, 15 of which I’d never met before. We all came to the boat with different backgrounds, endurance capabilities, and different paddle strokes in most cases. But we adapted, meshed, and ultimately were able to push as hard as was possible under the circumstances to achieve a world record.

Would we have accomplished our second, longer goal? We lost four team members as the storm approached, but I feel the rest of us would have made it, although it would have been a tough slog.

Would I do it again? I’m inclined toward endurance sports and, as some of you know, have spent time running races from marathon distance and longer, often in mountainous terrain. All my years of running inspired a sense of adventure but, admittedly, I was turning into a one trick pony. I enjoy paddling and participating in this event kindled a similar desire to expand the range of what’s possible in the watery realm. And paddling creates the potential for teamwork that’s simply impossible while running. Okay, but maybe not on a dragon boat for that long again. Ouch!

You can look up pictures of dragon boats on the internet if you’re interested, but here are a couple pics of our boat. As you might imagine, my seat (and thin foam pad) grew to have an outsized significance even as it seemed to shrink. I’m used to running and standing up on a paddleboard, so sitting down for that long had me dreaming of ways to somehow squeeze a hot tub and massage chair into a dragon boat. Maybe next time.

Here's a picture of our boat prior to heading out.

And here’s a picture of my seat, the second row from the front. It’s literally a Trex-type board like you’d buy at a home improvement store. I’ll never look at my deck the same way again. The tire and cooler didn't come with us, fortunately. 

We’ll return to our regularly scheduled programming next week.

Have questions? Ask us. We can help.

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Thinking About Custodians

I hope your week is going well so far. It’s a busy one on my side of things with big companies reporting earnings and the Fed meeting again tomorrow. Bond investors are pricing in a 99% chance the Fed will raise interest rates yet again, so no midsummer slowdown anytime soon.

Additionally, we keep edging closer to the date when Schwab fully absorbs the custodian I’ve been using for nearly ten years, TD Ameritrade. Some of my clients have been asking good questions about this so I thought I’d broaden my responses to include all of you. Maybe it’s too much inside baseball, but this information could provide some understanding of how my industry is structured and how that applies to you even if we’re not managing your investments.

As you may recall, Schwab announced its deal to buy TD Ameritrade way back in 2019. They got the required regulatory approval and planned to start absorbing TD the following year. Then the pandemic hit. Markets and investors went crazy for a while and that blended with myriad other issues to make Schwab push the pause button on merging the two companies and didn’t press play until earlier this year. The final push to integrate the two companies is set for this coming Labor Day weekend, and then what’s been ruefully referred to as Schwabitrade will move forward and TD Ameritrade will be no more.

Let’s look at the current custodial landscape a bit. TD Ameritrade, Schwab, and other firms like Fidelity and Vanguard are good examples of large custodians that serve a fundamental role in my industry and in your financial future as well. They’re custodians of your cash and investments. They’re responsible for keeping your assets safe from theft and fraudulent activity. They process your transactions while keeping track of everything so they (and you) can report that activity to the IRS. They also maintain the structure that lets firms like mine access your accounts, place trade orders, move money to your checking account, and so forth. In short, you couldn’t invest like you do today without a good custodian operating largely in the background. It would be too expensive and risky, as the victims of privately-held investment fraud and Ponzi schemes would grudgingly attest.

The role of custodian has become highly commoditized following Schwab and its main competitors “going to zero” in 2019, which meant they would no longer charge trade fees on the bulk of transactions they processed. This reshuffled the industry and helped fuel a wave of consolidation that we’re dealing with even today. Now the large custodians look very similar to each other and the differences between them are deep in the weeds. As with the big banks and other industries, personal and expert service has given way to impersonal subpar service and a reliance on automation.

So how do you know if you’re at the “right” custodian and how did I, as a fiduciary and “decider” on behalf of my clients, make the choice to merge into Schwab?

As I just mentioned, the big custodians are very similar in the fundamental services they offer. Where they differ has more to do with how you’ll be interacting with them and if you require special services, such as with advanced trading strategies or perhaps holding illiquid investments. There are smaller and boutique custodians that specialize in these areas, but I argue that they’re not for the typical retail investor.

Assuming you’re not interested in these sorts of special use cases, it’s almost a coin flip as to which of the major custodians is best. Here are some of the high points for comparison as they will all offer:

Structural security. Each of your accounts is owned by you even though the account is held by the custodian. Your accounts aren’t comingled and, even if the custodian failed, your accounts wouldn’t be directly impacted. This is an important distinction that I’m asked about frequently, especially in the context of recent bank failures.

Insurance coverage on deposits. Each custodian provides coverage against bankruptcy and fraud or theft at the firm itself up to $500,000 through the Securities Investor Protection Corp and excess coverage through Lloyds of London. These custodians also offer FDIC coverage on cash deposits with their bank or perhaps with an affiliate bank. And for clarity, none of this coverage protects you from losing money on your investments – it’s just about risk of the custodian running into trouble.

A modern website and app. These are table stakes and the large custodians each do this well. Who has a better website or iPhone app? It’s entirely personal preference since you’ll be able to do the same essential things on whichever platform you choose.

Generally poor service with a reliance on digital and automation. Like with the big banks, the service quality you receive depends on who picks up the phone. But how often do you need to interact with them via phone or even in person anyway? Most of the time you’ll rely on their technology and how easy it is to use. Again, I think who is best here is all about personal preference. No large custodians consistently demonstrate great service – it’s the unfortunate reality of the time. Maybe AI helps with this but otherwise they’re all in the same boat for the foreseeable future.

Transferability of your data. I’ve mentioned how the custodians track and store your account data. A positive offshoot of this is being able to move all of that data electronically to another custodian. This is usually handled through the ACAT system, a regulated electronic transfer process that frees you to move between custodians without having to worry about adverse tax consequences or losing your historical data.

A few things the custodians don’t do:

They store your historical data but don’t provide detailed performance reporting. I have to pay a third party to verify client data from the custodian and then independently calculate performance. The custodians could do this themselves and perhaps charge for it, but none do.

They don’t provide investment advice or management services unless you pay for it separately. “Freemium” services abound but none are actually free.

They don’t operate as a non-profit organization. These companies absolutely have a profit motive and squeeze you in multiple ways, even while not charging you for most transactions. They push your cash into their own bank and proprietary funds, or both. They often sell your trade orders to the highest bidder. They consistently try upselling you to expensive products and services. And yes, they do all this while breathlessly telling you how they’re looking out for your best interests.

So again, your choice between the large custodians is all about personal preference since in most ways they’re nearly identical. Take your pick and you can move to another if necessary. You always need to be wary of cost, direct and indirect, but that’s true pretty much everywhere.

How did I choose to allow the upcoming move from TD to Schwab? In short, the other large custodians aren’t different enough from Schwab to justify the move and, among smaller or boutique custodians that cater to firms like mine, there wasn’t enough of a difference either. And in some cases the smaller firms are too new and would indirectly cost my clients money by limiting choice. That’s unacceptable for all the reasons you can imagine. And one solid prospect was bought by an upstart earlier this year as part of the industry consolidation already mentioned. C’est la vie, right?

Am I entirely happy about the move to Schwab? No, because I used to work there and don’t particularly like the culture, but that doesn’t directly impact how well they do their fundamental job of custodian. Maybe the ideal custodian will materialize out of all this someday, but that’s not likely anytime soon. Until then, Schwab presents the best combination of options in an environment that I feel I can successfully navigate on behalf of my clients.

Have questions? Ask us. We can help.

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