It is not surprising that Charles Schwab continues to do exceptionally well in Bankrate’s evaluation of the best brokerage firms this year. This broker gets so much right for so many customers. No-commission stock trading, ETFs, many mutual funds, excellent research and instructional materials, trading platforms for novice and experienced investors—the list goes on and on. Naturally, the investor-friendly broker also excels at providing round-the-clock customer service and may even be able to get you a respectable bonus if you deposit some funds into the account. When you add it all up, you get one of the top brokers in the business, which is more than enough justification for giving it five stars.
In 2024, according to Schwab, the integration of competing brokerage TD Ameritrade into its business will be complete.
Check out how Schwab stacks up against Fidelity Investments and Interactive Brokers and compare it to the finest in the business. Then compare it to other affordable brokers like Robinhood, if only to check what services Schwab offers for the same cheap fee.
Pros and Cons of Charles Schwab
Pro:
Trading fees and account types
Trades in stocks and ETFs are free at Schwab, but options are $0.65 a contract. If you didn’t want to spend as much money on important services like research, customer service, or fee-free funds, you might locate alternatives that were less expensive. The commissions offered by Schwab, however, are competitive and more than fair given the value you receive. Additionally, there is no account minimum, making it very simple to get started.
Almost every sort of account you can think of is available from Schwab, including trust and charitable accounts, individual, joint, and IRAs, education savings accounts, 529 plans, business accounts like the SEP IRA and solo 401(k), and education savings accounts. Schwab is going to be able to meet your wants as your financial needs develop.
No-commission funds
With almost 7,900 funds accessible without a sales burden, Schwab’s offerings should please investors in mutual funds. Sales loads are a dead loss for mutual fund investors, so they should normally try to avoid them. Schwab offers a wide range of reliable fund options.
However, it goes a step further by providing more than 4,300 funds that are load- and transaction-free, allowing you to purchase and sell without paying a charge. It’s yet another example of how investor-friendly Schwab is.
Fractional shares
Stock Slices, a great feature offered by Schwab for novice investors, lets you purchase any stock in the Standard & Poor’s 500, an index of the roughly 500 largest companies in the United States, even if you can’t afford a full share (which is a real possibility with some high-flying tech stocks).
Any stock in the index may be purchased as a slice for as low as $5, and you may purchase up to 30 slices at once. For instance, you would need at least $50 in order to purchase 10 slices of different stocks.
However, if you only have $25 to spend, you can limit yourself to a maximum of five slices overall or choose just one or two. The Schwab trade interface is user-friendly and allows you to input all of your transactions at once before clicking the trade button. This is a significant improvement over the cumbersome Fidelity interface for buying fractional shares. This program benefits from Schwab’s no-commission stock transaction structure as well.
In contrast to competitors like Fidelity and Interactive Brokers, who literally enable you to buy thousands of stocks on a fractional basis, Schwab restricts you to just 500 or so S&P 500 equities. Hopefully, Schwab broadens this service to cover businesses outside of the S&P 500.
At Schwab, you may reinvest dividends in fractional shares in addition to buying fractional shares.
Research
Investors can rely on Schwab to give them the information they want, both in terms of research and all the tools the broker provides.
Customers may get earnings news from sources like Reuters, Briefing.com, and others, and Schwab also offers market analysis from sources like Morningstar, Argus, and CFRA. Investors seeking for research on particular stocks will discover third-party publications as well as Schwab’s own internal analytical work, such as Schwab Equity Ratings for assessing a stock’s performance.
Investors in mutual funds may access the Morningstar ratings for each one, and ETF traders can quickly sift through the available options with the help of Schwab’s ETF screener and ETF Select List, a list of the broker’s best recommendations. It’s a quick method to narrow down the universe of funds to what you truly want, and the screener makes it simple to identify inexpensive funds. If you’re seeking for funds that engage in socially responsible investing, the screener can even assist you in finding them.
Schwab BondSource is a screener that allows fixed-income traders to sift through tens of thousands of securities and includes ratings from Standard & Poor’s and Moody’s.
High-quality trading platforms
You will be able to trade from anywhere with the help of Schwab’s two trading platforms and mobile app.
Schwab.com web trader: The broker’s basic platform does a lot. In addition to all the essential capabilities, the platform monitors important indices and watchlists, can access options chains and evaluate patterns, and can get financial and trading information about a firm. You may execute straightforward stock trades and even sophisticated options transactions using the all-in-one trade ticket’s single interface. StreetSmart Edge is the next level up if you require even more.
StreetSmart Edge: It is obvious that this is Schwab’s main trading platform. Because of the interface’s extensive customization options, you may configure the system to streamline your trading workflow. While watching news feeds and live CNBC coverage, you may search screeners for trade ideas. On the all-in-one trade ticket, you may place complicated, multi-leg orders and use the platform’s sophisticated charting. The platform is available in desktop and online editions.
Mobile app
The main trading features of the broker’s online trader are available on Schwab Mobile, and you may safely access your accounts thanks to industry-standard encryption. You can use the app to manage your portfolio, place trades (including multi-leg options), read news and real-time market data, look at stock charts, and watch CNBC live. Checks may be deposited into Schwab or brokerage bank accounts, and the app is compatible with Apple Watch.
Additionally, you may use the virtual assistant to give voice commands to access many of the app’s features. Among other things, you may trade, look over your portfolio, deposit checks, and set notifications.
Customer support
Even though it may be a gloomy and rainy night, Schwab’s customer service representatives will be available to accept your call. The Schwab team is accessible for online chats and email round-the-clock in addition to taking calls 24 hours a day, 7 days a week. It’s difficult to improve upon that.
If you want more individualized support, you may always send an email or visit one of the roughly 400 Schwab branches (and now TD Ameritrade stores as well, as Schwab owns that brokerage). Schwab has an edge over online-only brokers like Webull, Robinhood, or Interactive Brokers due to its physical presence.
Integration with the rest of Schwab
Making the decision to work with a titan like Schwab has many advantages, one of which is having almost all of your financial transactions take place there. On the Schwab website, you may quickly open up a bank account if you want to upgrade your connection from only a brokerage account. You’ll receive a reputable bank account and continue to benefit from the company’s first-rate customer support.
The firm also offers Schwab Intelligent Portfolios service if you’re seeking for a robo-advisor to manage your portfolio on your behalf. the real kicker? The business only charges minimal fees for any funds it deposits you in; there are no administration costs.
You might choose to pay a very affordable monthly charge if you need more specialized support from a licensed expert.
Additionally, if you want a direct response to an issue or would rather conduct business in person, you will still have access to Schwab’s physical locations.
Cons:
Transfer-out fees
Targeting the broker’s costs for moving out your account seems nitpicky given all the other investor-friendly benefits offered by Schwab. While a complete transfer used to cost $25, a partial transfer is now free (down from $25). Even though Schwab normally does a fantastic job of not charging you extra sometimes, transfer costs are an exception. Fidelity, a significant rival, managed to avoid levying those costs, so Schwab could certainly do the same.
Investment options
Many of Schwab’s customers will be satisfied with the stocks, ETFs, bonds, mutual funds, and futures that the company offers. Those seeking a little bit more, such as FX or direct cryptocurrency trading, will need to go elsewhere. However, the introduction of that asset class could result from Schwab’s merging with TD Ameritrade, which does provide forex. This is nitpicking once again.
According to criteria important to individual investors, including as commissions, account fees, accessible securities, trading platforms, research, and many other things, Bankrate assesses brokers and robo-advisors. We first prioritize these objective metrics, rate the brokers and robo-advisors based on their relevance, and scale the data to make sure you are viewing the best selections from a pool of reputable firms.
