Editorial Review

Charles Schwab Review 2020: Pros, Cons and How It Compares

Charles Schwab has educational resources beginners will need to navigate investing, while sophisticated tools and $0 commissions will attract active traders.

Arielle O'SheaMarch 31, 2020

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Our Take

5.0

NerdWallet rating 

The bottom line: Schwab delivers for every type of investor, with $0 commissions, high-quality research and a robust investment selection — including a large selection of no-transaction-fee mutual funds with low or no minimums.

Best Broker for IRA Investing

Charles Schwab

Charles Schwab

Fees

$0

per trade

Account Minimum

$0

Promotion

None

No promotion at this time

Pros & Cons

Pros

  • Two platforms with no minimum or fees.

  • Above-average mobile app.

  • Extensive research.

  • Large fund selection.

  • Commission-free stock, options and ETF trades.

Cons

  • Low default cash sweep rate.

Compare to Similar Brokers

TD Ameritrade
Robinhood
Interactive Brokers IBKR Lite
Fees

$0

per trade

Fees

$0

per trade

Fees

$0

per trade

Account Minimum

$0

Account Minimum

$0

Account Minimum

$0

Promotion

Up to $600

cash credit with qualifying deposit

Promotion

None

no promotion available at this time

Promotion

None

No promotion available at this time

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Full Review

Charles Schwab caters to investors of all stripes: Beginner investors will appreciate the company's $0 account minimum, while the $0 commission for stock, options and exchange-traded funds will appeal to active traders. Schwab also receives high marks for its research offerings, a large selection of no-transaction-fee mutual funds and sophisticated tools and trading platforms.

Charles Schwab is best for:

  • Beginner investors.

  • Advanced traders.

  • Investors seeking commission-free trades.

  • Investors seeking no-minimum index funds.

  • Investors who rely on premium research.

Charles Schwab at a glance

Account minimum

$0

Stock trading costs

$0

Options trades

No base commission; $0.65 per contract

Account fees (annual, transfer, closing, inactivity)

No annual or inactivity fee; $50 for full transfer out of assets; $25 for partial transfer of assets

Commission-free ETFs

All ETFs trade commission-free.

Mutual funds

Over 3,500 no-transaction-fee mutual funds

Tradable securities

• Stocks. • Bonds. • Mutual funds. • ETFs. • Options. • Futures.

Trading platform

Three platforms offered with no trade minimums or fees: StreetSmart Edge (desktop platform), Schwab.com and StreetSmart Central.

Mobile app

Two mobile apps with above-average capabilities: Schwab Mobile and StreetSmart Mobile.

Research and data

Free and extensive

Customer support options (includes website transparency)

24/7 phone support; live chat and email support; more than 300 local branches; some information is difficult to locate on website

Promotion

Referral award for first-time clients

Where Charles Schwab shines

No commissions: Schwab is one of several brokers that now offer commission-free trades of stocks, options and ETFs. Options carry a competitive contract fee of $0.65 per contract, which is in line with other brokers.

Mutual fund selection and expenses: Schwab delivers access to over 3,500 no-transaction fee mutual funds, and within its own proprietary lineup of index funds and ETFs, Schwab now offers some of the lowest expense ratios available. All told, over 600 funds on Schwab's platform have expense ratios of 0.50% or below.

The selection is also easy to navigate. Schwab's ETF Select List helps narrow the choices, featuring 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 Personalized Portfolio Builder tool, designed to help you create a diversified portfolio based on your financial goals, risk tolerance and time horizon.

Research: Schwab’s research offerings are hard to beat, perhaps one of the best available from an online broker. The company provides its own equity ratings, along with reports from Morningstar, Credit Suisse, Market Edge, Ned Davis and others. In addition to real-time news and earnings reports, the broker offers a variety of research reports and market commentary authored by in-house experts, as well as a quarterly magazine free of charge.

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.

The company is also integrated with Google assistant — you can ask Google for stock quotes, general market updates and more — and has an Amazon Alexa skill that provides similar information, including the ability to create and get updates on a watch list.

Account and investment minimums: Schwab has no account minimum, and offers access to over 4,000 funds with minimum investment requirements of $100 or less.

Trading platforms: In addition to the basic trading capabilities on Schwab's website, the broker offers several robust trading platforms, all of which are free and available to all trading services clients.

Its premier offering is StreetSmart Edge, a customizable platform available with downloadable software or via cloud-based technology online. It also has a suite of programs called StreetSmart Central for options trading. Finally, the broker offers mobile trading, available on either the Schwab or StreetSmart Mobile apps.

Both StreetSmart and Schwab.com provide access to research and robust tools catering to various types of traders. Basic trades can be placed on Schwab's website, while the other platforms offer more sophisticated features.

StreetSmart Edge is designed for efficiency, with simple navigation and customization that's designed to match your trading style. The many advanced features include robust charting tools, the ability to trade multiple securities in the same order window (and with a variety of order types), tools to monitor your market exposure and a commercial-free live stream of CNBC. The customizable features of this platform are notable, including the Balance Bar, which gives you a quick overview of your account and buying power, along with the ability to create and edit multiple trading layout. Finally, you can quickly research a symbol, view streaming market data and enter an order.

Schwab.com lets traders monitor their portfolio and the markets, access research and view technical data. It features an intuitive trade ticket for stock, ETF and options orders that incorporates current market information.

» Need some guidance? Read about how to buy stocks

Where Charles Schwab falls short

Low cash sweep rate: Uninvested cash in Schwab brokerage accounts is swept into an account paying less than 0.50%. Investors can opt into the Schwab Value Advantage Money Fund (SWVXX) instead, which pays considerably more and has no minimum, but that is not the default option.

The bottom line

Schwab checks the boxes of every type of investor: Stock traders will appreciate $0 trading commissions and sophisticated platforms, research and tools; beginner and fund investors will benefit from the wide selection of inexpensive and low-minimum mutual funds and index funds. For those who want investment management, Schwab has a robo-advisor offering, Schwab Intelligent Portfolios.

Anna-Louise Jackson contributed to this review.