Charles Schwab Review 2019
Charles Schwab has educational resources beginners will need to navigate investing, while sophisticated tools will attract active traders.
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The Bottom Line: Schwab delivers with low commissions, high-quality research and a robust investment selection.
cash bonus with a qualifying deposit
Pros & Cons
- No inactivity fees.
- Two platforms with no minimum or fees.
- Above-average mobile app.
- Extensive research.
- Strong customer support.
- Higher trade commissions.
Charles Schwab caters to investors of all stripes. Beginners will find the information they need to navigate investing, while sophisticated tools — including robust trading platforms — will attract active traders. Schwab also receives high marks for its research offerings and a massive selection of no-transaction-fee mutual funds. And the company recently announced plans to double the number of commission-free exchange-traded funds offered and reduced its minimum investment requirement to $0, putting it on par with many of its competitors.
There's not much to knock at Schwab, but some customers who go beyond its low-fee fund options may experience sticker shock.
Charles Schwab is best for:
Investors seeking commission-free ETFs.
Investors seeking no-minimum index funds.
Investors who rely on premium research.
Where Charles Schwab shines
Commissions and fund expenses: Schwab is one of the lowest-cost online brokers, offering $4.95 trading commissions. Better yet, investors will pay zero commission fees for an expanded lineup of 500-plus ETFs (up from more than 260) effective March 1 and zero transaction costs or loads (initial sales charges) for more than 4,000 mutual funds that are part of Schwab's OneSource services. With its proprietary lineup of index funds and ETFs, Schwab now offers some of the lowest expense ratios.
Investment selection: Schwab really delivers with a robust array of commission-free ETFs and no-transaction-fee mutual funds, making it affordable for investors to build a diversified portfolio.
Customers benefit in two ways. First, the selection is impressive and 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. Second, Schwab continues to aggressively compete on costs. There's no minimum initial investment for Schwab's mutual funds, and investors pay the same expense ratios on these funds regardless of the amount invested. Meanwhile, expense ratios for Schwab ETFs match or beat those from Vanguard or BlackRock.
Customer service: Like many online brokers, Schwab offers around-the-clock phone support. But the company’s chat support is just as good, and can be an easy way to get answers quickly. Schwab also has more than 350 branches (though there's not a presence in every state), where you can attend complimentary workshops and meet with financial consultants by appointment. And Schwab has a robo-advisor offering, Schwab Intelligent Portfolios, if you want complete management.
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, 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.
Do you have an Amazon Alexa? The virtual assistant now has a Schwab skill, which offers market updates, quotes on securities prices and updates on your watch list.
Account and investment minimums: In late 2018, Schwab reduced its account minimum from $1,000 to $0. That means the broker directly competes with other no-minimum brokers, including TD Ameritrade, and comes in lower than Fidelity.
The real highlight here, though, is that the company has 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.
Trading platforms: In addition to the basic trading capabilities on Schwab's website, the broker offers two robust trading platforms. Its premier offering is StreetSmart Edge, a customizable platform available with downloadable software or via cloud-based technology online. Schwab's online trading platform is called Trade Source. 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 Trade Source are available to customers who opt into the broker's trading services, with no related trade minimums or fees. These platforms 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.
Trade Source lets traders 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.
» Need some guidance? Read about how to buy stocks
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. The fee to buy (or sell) transaction-fee funds is up to $49.95 (recently reduced from $76), which still is one of the highest charges of all the brokers NerdWallet has surveyed — although trades below $100 in principal are exempt from this fee.
Customer experience: The Schwab website has a wealth of information, but it can be difficult to track down what you need. Customers have complained about the wait time (or overall service experience) for issues requiring a specialist's assistance. Meanwhile, some customers find the Schwab app to be lacking, including issues with fingerprint log-in, slow loading times or push notifications that aren't useful.
That said, dissatisfied customers do have recourse thanks to Schwab's satisfaction guarantee. Contact the broker and if your dispute meets certain criteria, Schwab will refund commission or transaction fees, generally within four weeks.