Charles Schwab Review 2017

Brokers, Investing

Charles Schwab has a good reputation in the investing community for a reason. The broker offers high-quality customer service, competitive trading platforms and a large selection of commission-free exchange traded funds and no-transaction-fee mutual funds.

The company offers its customers two strong trading platforms and has a low minimum investment requirement, making it suitable for both new and active traders.


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Quick Facts

  • Commissions: $4.95
  • Account minimum: $1,000
  • Promotion: $100 referral award for first-time clients
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Get started on Charles Schwab's secure site

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Charles Schwab is best for:

  • Beginner investors.
  • Advanced traders.
  • Investors seeking commission-free ETFs.
  • Those who value no-minimum index funds.
  • Investors who rely on premium research.

Charles Schwab at a glance

CategoryRatingDescription
Overall

Stock trading costs$4.95
Options trades$4.95 + 65 cents per contract
Account minimum$1,000; often waived with automatic monthly transfers of $100 or more
Account fees (annual, transfer, closing, inactivity)No annual or inactivity fee; $50 account closing fee
Trading platformTwo platforms offered with no trade minimums or fees
Mobile appAbove-average capabilities
Mutual fundsMore than 3,000 no-transaction-fee mutual funds.
Commission-free ETFsMore than 200 commission-free ETFs
Research and dataFree and extensive
Tradable securities• Stocks
• Bonds
• Mutual funds
• ETFs
• Options
• Futures
Customer support/branches24/7 phone support; live chat and email support; more than 300 local branches.
Promotion $100 referral award for first-time clients

Where Charles Schwab shines

Commissions and fund expenses: Schwab dropped its trading commission from $8.95 to $4.95 this year, making it one of the lowest-cost online brokers. That cost is especially a bargain considering the company’s high-quality trade platforms and investment selection (more about both below). Schwab also offers some of the lowest expense ratios for index funds and ETFs, and recently did away with mutual funds that carry loads, or initial sales charges. The company waives these charges on the load funds it does carry.

Commission-free ETFs: Schwab comes through here, offering more than 200 commission-free ETFs. That made it NerdWallet’s pick for the best online broker for beginners who want to trade these funds. The company offers an ETF Select List, which features its picks for the best fund in selected categories (more on this below). You can sort the list by feature, including expense ratio, Morningstar category and benchmark index.

There’s also the Schwab ETF Portfolio Builder tool, which guides you in creating a diversified ETF portfolio based on risk tolerance.

Customer service: Like many online brokers, Schwab offers around-the-clock phone support. But the company’s chat support is just as good, and we found it to be a quick way to get answers to our questions. Schwab also has a large network of branches, where you can attend complimentary workshops and meet with financial consultants by appointment. Schwab also has a robo-advisor offering, Schwab Intelligent Portfolios, if you want complete management.

Account and investment minimums: Schwab’s account minimum is mid-range at $1,000. That’s lower than Fidelity and in line with Vanguard. Still, it’s possible to find great brokers that require no minimum, including TD Ameritrade. However, Schwab waives minimums on many of its accounts for customers who agree to automatic monthly transfers of $100 or more.

The real highlight here, though, is that the company recently removed investment minimums on all Schwab index funds. This means you can get into one of these funds even if you have a small amount of money and maintain your momentum with small, regular investments.

Research: Schwab’s research offerings are hard to beat, perhaps the best available from an online broker. The company provides its own equity ratings, along with reports from Morningstar, S&P Capital IQ, Market Edge, Ned Davis and others. News and earnings reports come from Briefing.com and Reuters.

Schwab’s investment screeners are easy to use and let you save your screens. Select Lists, like the previously mentioned one for ETFs, are compiled by the company’s experts and released quarterly to give you a pre-screened selection of mutual funds and ETFs. The funds on the list are divided by category, so you can easily see the company’s picks for, say, large-cap stock mutual funds.

Trading platforms: Schwab offers two trading platforms, both available with no trade minimums or fees.

  • The web platform, StreetSmart.com, is ideal for beginners.
  • The company’s desktop platform, StreetSmart Edge, is the next step up. It’s available for Windows and as a cloud-based solution, accessible online.

StreetSmart Edge is designed for efficiency, with simple navigation and easy customization. It also has many advanced features. The platform lets you create multiple customized trading layouts, as well as multiple charts of the same stock. The Balances Bar gives you a quick overview of your account and buying power, and an account detail window lets you see your portfolio, orders and trade history. Through the platform’s Symbol Hub, you can quickly research a symbol, view streaming market data and news, and enter an order.

Schwab also offers Trade Source, an online feature that lets trading clients monitor their portfolio and the markets, access research and view technical data. Trade Source features an intuitive trade ticket for stock, ETF and options orders that incorporates current market information.

Finally, the company’s mobile trading app pretty closely mirrors the capabilities of the web platform.

» MORE: An introduction to options trading

Where Charles Schwab falls short

Transaction-fee funds: With Schwab’s long list of no-transaction-fee funds, it’s easy to avoid these. But if you want a fund that isn’t on that list, you’ll pay for it at Schwab. The fee to buy transaction-fee funds is a whopping $76, one of the highest charges of all the brokers NerdWallet has surveyed.

The bottom line

Charles Schwab is one of the best online brokers because of its low commissions, high-quality research, strong trading platforms and commission-free ETF selection. Beginner investors will love Schwab’s no-minimum index funds, helpful customer service and in-person educational support.

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Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com. Twitter: @arioshea.

Updated July 14, 2017.

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