Investing » Broker Reviews » Charles Schwab Review 2021 – should you consider it?
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Charles Schwab Review 2021 – should you consider it?

“Schwab is invested in you” is the slogan of one of the most famous brokerage houses in America and the world. But how exactly does it work in reality?

We may receive compensation from companies that appear on this page. This may impact how and where products appear on a page (including, for example, the order in which they appear). It doesn’t affect our unbiased editors’ opinions. our opinions are our own.

Charles Schwab Review

“Schwab is invested in you” – so runs the slogan of one of the most famous brokerage houses in America and the world. For a company offering financial services in multiple markets and across the globe, Schwab does go a great length to retain and attract customers.

The first thing to strike the eye looking at Schwab is that it split its business into national and international clients. This is a great way to separate entities and brings flexibility in addressing different issues that may appear in time. In short – it offers Schwab agility and ability to move faster when compared to the competition.

Schwab is active in all investment categories one may think of. Either directly or indirectly, Schwab is actively offering financial services in money market funds, ETFs, trust, estate and charitable, and so on. As an investor, it is difficult to expect more from a brokerage house.

Yet, some room for improvement exists.   

Charles Schwab review

On Charles Schwab Secure Website

Account Options

– Stocks / ETFs / Options
– Fixed Income – Bonds, CDs
– Futures and Futures Options
– Mutual Funds / MMF

Minimum Deposit

$100

PROS

CONS

An almost complete broker – fair pricing, international access, wide range of products, no hidden fees. Schwab offers a complete package to all types of investors and traders, with few things to add.

With a strong physical presence in the United States and 24/7 online service, Schwab is one of the brokers that want you to contact and ask anything regarding its services – we cannot say the same for many of its competitors.

Trading Products

Schwab covers the entire range of trading products and some extra investment products such as annuities, insurance, or margin loans. Here is a quick glimpse into Schwab’s main trading products for US residents:

ProductDescription
StocksUS and international stocks from 60 different exchanges in over 35 countries
ETFs2000+ ETFs from a wide range of asset classes
Fixed IncomeBonds, CDs, and other fixed-income products
OptionsCompetitive pricing and sophisticated options tools to take advantage of the options market
Futures and Futures OptionsAccess futures markets on grains, livestock, currencies, cryptocurrencies, indexes, metals, energies, or interest rates
Mutual FundsThousands of no-load and no-transaction fees mutual funds to pick from
Money Market FundsStability of capital, liquidity and current income using Schwab purchased money funds

International clients can open an account with Schwab and access its financial services by using the international version of the company's website. Most of the trading products and fees are the same, with some differences worth mentioning like:

  • Offshore mutual funds

Schwab put together a wide range of well-known fund families around the world and offers the international investor the possibility to invest with firms having a proven track record of managing US mutual funds.

  • American Depository Receipts (ADRs)

The company offers access to over 2400 ADRs belonging to foreign companies that chose to list in the United States.

Last but not least, Schwab gives US residents the opportunity to invest globally, not only in the United States. This way, the company built one of the most comprehensive trading products' packages available to the local and international investors.

Commissions and Fees

Trading stocks and ETFs with Schwab comes at zero cost for online trades. The company does offer the opportunity to trade the market via assisted trading in exchange for a $25 service charge. Moreover, there is an automated phone trading service, but to use it, you will have to pay a $5 service charge too.

There is a $0 base commission for options trading when trading options online, but Schwab charges $0.65/contract. On top of that, add the $5 or $25 service charge when using the automated phone trading service or assisted trading.

Schwab charges a transaction fee per executed trade when trading mutual funds. Because it has a strong presence in the mutual funds industry, Schwab Funds and thousands of other funds through Schwab Mutual Fund One Source are free of charge for both online trading and automated phone trading. Only assisted trading come at the regular $25 service charge. For all other funds (and there are some more), Schwab charges a maximum of $49.95 per purchase for both online and automatic phone trades and the regular service charge for assisted trading.

Having a strong presence in the futures market, with a multitude of contracts on various underlying, Schwab chose to price both futures and futures options similarly – $1.50 on a per-contract, per-side basis.

Bonds, bills, notes, TIPS – const nothing to trade online. As with other product categories, an extra charge applies to fixed income for assisted trading. Other secondary trades such as CDs, Corporate Bonds, Municipal Bonds, Agencies, STRIPS or Zero-Coupon Treasuries, they all follow the $1/bond, $10 minimum, $250 maximum pricing structure.

Basically, we can split Schwab's trading commissions and fees in three main categories:

  • Online trading – free or competitive commissions when compared with the rest of the industry
  • Automated phone trading  – $5 service charge on top of online trading commissions and fees
  • Assisted trading – $25 service charge on top of online trading commissions and fees

It makes it easier to understand what the broker charges you to use its services and ads a feeling of transparency. But that is not all.

The game-changer, when compared with peers, come from account fees. They “account” to something for many rivals, but at Schwab, there is no account fee for the brokerage account, retirement, active trading, and all other accounts offered. By account fees, we talk about account opening and maintenance fees and account minimums.

Like any other broker, there are pros & cons for investors/traders. Here are the main benefits and drawbacks you should know before applying:

Benefits

By dividing its offering into local and international, Schwab saves a lot of time for new customers wanting to open a trading account. Do you accept international investors? – yes, check this page and the available services! Simple, fast, intuitive – a great way to split the domestic and international business.
A wide range of trading products makes Schwab's offer difficult to ignore. The diversification continues within each asset category, starting with stocks and ETFs and continuing with mutual funds, fixed income, or options.
That is a particularly important point on Schwab. Unlike its peers, prices are transparent and uniform. For example, trading futures and futures options comes at a uniform $1.5 per contract. Simple, straight, and easy to understand.
Schwab does not charge a fee for opening an account. Nor for maintaining it. On top of that, there is no minimum funding required to trade with Schwab.
Schwab goes a step further than just accepting international clients. It offers personalized guidance as to what are the benefits of investing in the US, why should you do it as an investor, and lays down the tools to help you in the process.
For all the services offered, there are three ways to trade – online, or using one of the additional services (automated phone trading or assisted trading), albeit against a fee. However, this way, there is no excuse for not missing the next move or not being able to execute a trade due to lack of a good Internet connection or something similar.
Large brokerage houses typically have an in-house developed platform. In other words, to use their services, you need to know the platform’s capabilities, to learn how to use it – there is no standardized features available on all brokers. Schwab solved this issue by offering a free interactive demo for its flagship platform, so traders can have a view of its capabilities, features and tools.

Drawbacks

For such an impressive learning center, it is a shame it is not publicly available. In a way, it is understandable as it may contain strategies and ideas Schwab wants to keep private. But still, this is usually a section available for free at other competitors, while here it is a weak spot.
Another weak point is the lack of demo accounts. For a trader, it is important to see the live quotes, how the trades are executed, speed, slippage, even though it comes in a demo version and, sometimes, for a limited time only. There is no such option with Schwab.

Account Types

With so many options given at the moment of opening an account, one needs to be properly informed before deciding on the type. The main account type categories at Schwab are:

  • brokerage
  • retirement
  • automated and managed portfolios
  • estate and charitable planning
  • banking

To simplify things, we will focus here on the most popular ones – the first three on the list above.

The brokerage and trading account takes literally around ten minutes to set up. The easiest way to open such an account is using the online form, and, in case of extra help, there is a phone number available. Moreover, Schwab has a strong territorial presence in the United States, with over 300 local branches. The brokerage and trading account allows to buy and sell a variety of instruments – ETFs, mutual funds, stocks, or bonds. With no withdrawal limitations or penalties and no restrictions on the dollar amount to invest, this is, by far, the most popular account at Schwab.

For retirement, the broker offers traditional, Roth, and IRA accounts. With no fees to open and maintain the accounts and no account minimums, these accounts have specific tax benefits, but also early withdrawal penalties.

Under the Automated and Managed Portfolios category, Schwab has two solutions – the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium. Literally, these are robo-advisors built portfolios that automatically rebalance based on each customer’s goal. The Premium version comes with additional guidance from a certified financial planner, albeit at an extra cost of $300 at the opening and then $30/month for advisory services.

Trading Platforms

Schwab's premier trading platform, StreetSmart Edge, offers both desktop and web access, and it has an innovative workflow. It includes stocks and ETFs screeners, commercial-free CNBC live TV, and real-time news, among others.

The research and analysis features comprise advanced stock charting, momentum indicators, and watch lists but also fundamental research helping with stock market's valuation (earnings, dividends, ratings, short interest, etc.). On top of that, StreetSmart Edge is fully customizable, includes alerts and order positions tiles, as well as basic to advanced options orders.

The web version features everything the desktop does, and traders on the go can monitor the state of their investments by using the mobile trading solution available on Apple Watches too.

Customer Service

There is always someone available at Schwab – its 24/7 customer service operation indicates it takes this part of its business seriously. The quickest way to contact Schwab is via the Live Chat service, again, available seven days a week.

On top of that, there is a phone number for each service or issue one might need assistance with. If in the United States and feel the need to talk to a representative in person, just visit one of the 300 branches, and your questions are answered in a professional way.

Application Process

Step 1: Visit the Charles Schwab homepage and choose an account type between Brokerage, retirement and Automated & Managed Portfolios.

1_Charles Schwab_homepage

Take for instance, you choose “brokerage account”, choose the type you want, either individual or joint, and then click “Continue.”

2_Charles Schwab_Choose an account

Step 2:  Now, give your personal details i.e. your names, date of birth, and security number.

3_Charles Schwab_Choose type

Step 3: Next, give details of your contact; this includes your mobile phone number and email address, then click “Continue”.

4_Charles Schwab_About you

5_Charles Schwab_Contact information

Then you are done!

Trading Education

The broker divided its trading education or learning center into three main categories:

  • seminars and resources for any level of experience
  • a community with over 10,000 Schwab traders to gain insights from
  • live classrooms to get personalized trading guidance.

Sounds interesting and complete? It is, but it comes with a catch – all these are available after opening a trading account. 

Alternative Brokers

Here are our 3 choices of brokers which can use as a great alternative to Charles Schwab: 

SoFi invest is NOT just another brokerage house into the niche of fractional shares investing. Instead, it is a non-bank extending its services into the investing world. 

SoFi is a good broker for those that do not afford trading with a regular, traditional investing house. High transaction costs and other barriers to entry (e.g., high minimum initial deposit) keep many wannabe investors aside – investors that just cannot afford the services but are willing to take a chance.

For such investors, SoFi is the ideal choice. No commissions or fees for transactions, easy-to-understand products (crypto, stocks, ETFs), one account to trade them all from, a friendly app, and the ability to start investing with as little as $1.

On the other hand, it signals a lack of expertise. It only shows how easy it is to enter the brokerage industry should one has the funds to meet all the compliance required by the SEC. And SoFi does have the funds from the other businesses that generate more cash flow.

Fidelity Investments has millions of customers across the USA and overseas. The company has been around for fifty years and is considered one of the largest brokerage houses in the world. The majority of Fidelity operations are in the USA, and it operates various investor centers and regional offices across the country. 

Fidelity investment products range from annuities, mutual funds, and options through to sector investing and managed accounts, catering to advisors, institutions, employers, and individual investors. However, Fidelity also offers its investment services to international clients, but this is only in a limited number of countries, and it is via a separate, dedicated site. 

Although it is not the cheapest brokerage house, Fidelity does excel in many areas where other companies lack. So, if you are prepared to pay a premium for outstanding trading education and excellent customer service, Fidelity could be the broker for you. 

Fidelity Investments has millions of customers across the USA and overseas. The company has been around for fifty years and is considered one of the largest brokerage houses in the world. The majority of Fidelity operations are in the USA, and it operates various investor centers and regional offices across the country. 

Fidelity investment products range from annuities, mutual funds, and options through to sector investing and managed accounts, catering to advisors, institutions, employers, and individual investors. However, Fidelity also offers its investment services to international clients, but this is only in a limited number of countries, and it is via a separate, dedicated site. 

Although it is not the cheapest brokerage house, Fidelity does excel in many areas where other companies lack. So, if you are prepared to pay a premium for outstanding trading education and excellent customer service, Fidelity could be the broker for you. 

Charles Schwab Best For…

Schwab is the right choice for both domestic and international investors – US residents gain access to the local and international markets, while international investors find a wide range of products and services in the US and abroad.

Once onboard, make sure to check the learning center – it differs from everything you might have seen so far and offers a good excuse for why Schwab does not make it public. This is a broker best for trading the world while using a performant trading platform and accessing a state-of-the-art learning center.

Broker Reviews Methodology

When it comes to working with investors, we want to make sure that you’re getting unbiased reviews and we want to make sure that you can get a good idea of what to expect from online brokers. We also want to make sure that whether you’re new to investing or you’ve been at it for a while you can get what you want. Here are the main things we focus: 

  • Investment Options – What type of options are available and what sort of variety? Are you able to work in ETFs, mutual funds, options, futures and more?
  • Technology – What does the system allow you to do when it comes to software and applications? Can you get data exportation, email updates and even currency support?
  • Fees – What are the costs associated with the service
  • Account Options – What types of products and features are actually available and how can you get the best variety? Where can you get good banking services like loans, checking and more? Can you do all of it in one location or are you going to have to go with different options and locations?
  • Customer Service – Do you get 24/7 responses and support? Are you going to have an easy time getting in touch with a real person for help?
  • Banking products – We look at things like savings accounts, checking accounts, money market accounts and CDs related to things like fees and APY. We also make sure that we’re looking at the best APY without having to worry about qualifications and expensive features. We don’t want to have a difficult usability rating or difficult to use mobile apps, ATMs or restrictions. We want to get it as easy for you as possible.