Charles Schwab Review
With more than $6 trillion in client assets, Charles Schwab understands how to consistently deliver value to its customers. Highlights include $0 trades, excellent stock research, a diverse selection of trading tools, and an industry-leading offering of financial planning services.
Top Takeaways for 2021
After spending three months testing 11 of the best online brokers for our 11th Annual Review, here are our top findings on Charles Schwab:
- As a full-service brokerage, Schwab has a fantastic, diverse offering of investments that will satisfy any investor. In our nationwide testing, we found Schwab's phone service to be terrific.
- Alongside retirement, where Schwab is our top pick for IRA accounts, Schwab's shining star is its offering of stock market research.
- Schwab trading platforms and tools are robust and will satisfy most traders, making it a respectable choice for day trading and options trading. That said, Schwab's stock trading app lacks real-time streaming quotes.
|Commissions & Fees|
|Platforms & Tools|
|Offering of Investments|
|Ease of Use|
Commissions and Fees
At Schwab, stock and ETF trades are $0, and options trades are just $0.65 per contract. Even better for investors, Schwab is the only broker alongside Fidelity to list the price improvement received on eligible orders, which is important transparency for order execution quality.
Fractional shares: Called Schwab Stock Slices, customers can purchase fractional shares of any company in the S&P 500. The minimum purchase is $5.
Penny stocks: Our research found no additional fees or charges for penny stock trading, which includes OTCBB companies and stocks priced under $1 per share.
Mutual funds: All transaction fee mutual funds cost $49.95 per trade. Note, unlike most brokers, Charles Schwab, alongside Fidelity, only charge for the original purchase. There is no additional charge for selling. For investors seeking No Transaction Fee (NTF), No Load (NL) funds, Schwab offers over 150 OneSource Funds, selected using various quantitative and qualitative factors.
Schwab pricing summary:
|ETF Trade Fee||$0.00|
|Options (Base Fee)||$0.00|
|Options (Per Contract)||$0.65|
|Futures (Per Contract)||$1.50|
|Mutual Fund Trade Fee||$49.95|
|Broker Assisted Trades Fee||$25.00|
Trading Platforms and Tools
Alongside the Charles Schwab website, Schwab offers customers access to two primary platforms: StreetSmart Edge (desktop-based; active traders), and StreetSmart Central (web-based; futures trading). While each platform has its highlights and lowlights, all in all, Schwab will satisfy most traders.
StreetSmart Edge: Schwab's flagship downloadable trading platform, StreetSmart Edge, provides most of the bells and whistles options traders and day traders need to succeed. I find the platform easier to learn than TD Ameritrade and TradeStation, although the latter two provide a richer experience overall. For options traders, Schwab's All-in-one trade ticket, alongside the proprietary Walk Limit order type, are both excellent. In 2021, Schwab finished Best in Class in the Active Trading category.
Trade Source: For casual investors seeking a simple tool that includes clean charting, streaming quotes, and purposely excludes all the bells and whistles desired by active traders, Trade Source is my recommendation. Trade Source is available to Schwab customers through the website and is essentially a standalone platform in its own right.
Futures trading: While futures trading is offered, trading must be conducted on the StreetSmart Central platform specifically. This means you cannot use the main Schwab website, nor StreetSmart Edge, to place futures trades.
Schwab trading platform screenshots:
Charles Schwab provides among the highest quality research of all the brokers I've tested here at StockBrokers.com.
Market commentary: Schwab's in-house research is terrific, thanks to its staff of experts, including Liz Ann Sonders, Randy Frederick, Lee Bohl, and Kathy Jones, among others. Additionally, market commentary found through the Schwab Insights portal is consistently fresh and engaging. As a cherry on top, Schwab delivers live daily broadcasting across 11 shows, a feat matched only by TD Ameritrade.
Stock research: Beyond offering traditional third-party ratings, Schwab's proprietary equity ratings add value to the research experience. Charles Schwab's ratings can be found throughout the platform experience, such as when you view a watch list or stock screener.
ETFs and mutual funds research: Looking at researching ETFs and mutual funds with Charles Schwab, there is a lot to like. Thanks to third-party providers like Morningstar, Charles Schwab covers all the bases, including ratings, reports, and in-depth screening. Also unique to Schwab, using the new Beta Research experience, stocks, ETFs, and mutual funds can all be researched at the same time.
Schwab market research screenshots:
Charles Schwab provides a consistent and generally enjoyable experience for mobile trading, regardless of the device. That said, for active traders, Schwab's mobile apps lack core functionality in two key areas: alerts and quotes.
Market research: Alongside offering full support for trading everything from stocks to mutual funds and complex options, Schwab does a great job with market research, which is thorough. For example, options traders will love the Idea Hub tool, which is unique to Schwab mobile and makes screening and then filtering through options trade ideas a breeze.
Active trading: Mobile app pros aside, the most significant area where Schwab needs to improve is with its use of market data. No stock price alerts can be set, stock quotes are in real-time but require manual refreshing, and watch lists auto refresh once every ten seconds. Comparatively speaking, Schwab's competitors all offer real-time streaming quotes.
Options Trading: When you trade from within the Schwab mobile app, the Options tab comes with over 20 pre-defined strategies, including multi-legged spreads and combinations. The only drawback is the lack of options chains, which means you have to manually select the strike price and expiration date from within the trade ticket window.
Schwab Assistant: Schwab Assistant is an AI-powered tool that lets you use voice commands from within the Schwab mobile app to carry about basic operations, such as checking quotes or market news, and even ask to speak to a live representative. When I asked Schwab Assistant, "tell me something interesting," it suggested I take a look at podcasts and videos with a link to the media center.
Schwab mobile app screenshots:
Offering of Investments
Like other full-service brokers, Schwab delivers a complete suite of products and services. Charles Schwab provides everything from stocks (including fractional shares) and options trading to fixed income and retirement guidance. This includes every account type under the sun, including Individual, Joint, Traditional IRA, Roth IRA, Rollover IRA, Inherited IRA, Custodial IRA, 529 plans, charitable accounts, and even estate and trust accounts. The list goes on and on.
Retirement: As our No. 1 pick for IRA accounts in 2021, account services at Schwab go beyond self-directed investing when it comes to retirement planning. Customers can also elect to have their assets managed through Schwab's robo-advisor service, Intelligent Portfolios. For personal advice, Intelligent Portfolios Premium provides clients unlimited one on one guidance from a Certified Financial Planner (CFP) for $30/month, after a $300 one-time planning fee. At the same time, Schwab offers a free tool called Schwab Plan for retirement planning.
Charles Schwab delivers a thorough educational experience that will satisfy beginners. Through Schwab's Learning Center, all investing topics are covered, from stock trading to retirement. At least 50 free webinars are offered each month to current customers. Webinars are also archived for viewing on-demand. There is a lot to like.
That said, compared to education leader TD Ameritrade, the primary downside of the Schwab's education offering is a lack of enhanced learning functionality. There is no progress tracking available to track what educational content you've completed or where you last left off. Also, no interactive learning tools, such as quizzes, are provided.
Among the bank and brokerage combinations in our annual review, Charles Schwab offers a full suite of services and competes with the best in the industry. With 369 service locations, Charles Schwab is a registered member of the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits up to $250,000.
Loyalty rewards: The downside to banking with Charles Schwab is that the online brokerage offers no loyalty rewards for using multiple products. Loyalty rewards are where Bank of America Merrill Edge reigns supreme.
Having reviewed Schwab for over a decade now, it is clear that Schwab understands what self-directed investors require to navigate the market. While there are numerous highlights to Charles Schwab's offering, its bread and butter remains research.
Meanwhile, investors interested in life planning and making the most of retirement will also find Schwab a great fit. In 2021, Schwab's tagline holds true, "Own Your Tomorrow."
About Charles Schwab
Headquartered in San Francisco, California, Charles Schwab was founded in 1971 and is one of the largest brokerage firms in the United States (1). As of August 2020, Charles Schwab is home to 28 million active brokerage accounts and $6 trillion in total client assets (2). Charles Schwab is also a significant player in the retirement space, and as of year-end 2018, it was the largest provider of custodial services for independent investment advisors (3).
Charles Schwab’s focus is seeing the world “Through Clients’ Eyes,” which means delivering products and services customers want and leading industry trends, instead of following them.
2021 Review Methodology
For the StockBrokers.com 11th annual best trading platforms review published in January 2021, a total of 2,816 data points were collected over three months and used to score brokers. This makes StockBrokers.com home to the largest independent database on the web covering the online broker industry.
Participation is required to be included. Each broker completed an in-depth data profile and offered executive time (live in person or over the web) for an annual update meeting. Our rigorous data validation process yields an error rate of less than .001% each year, providing site visitors quality data they can trust. Learn more about how we test.
About the author: Blain Reinkensmeyer As Head of Research at StockBrokers.com, Blain Reinkensmeyer has 20 years of trading experience with over 1,000 trades placed during that time. Referenced as a leading expert on the US online brokerage industry, Blain has been quoted in the Wall Street Journal, The New York Times, the Chicago Tribune, and Fast Company, among others.