Charles Schwab Review 2023 (2024)

Top Rated For:

• Best ETF Screeners

Our Take

As one of the largest discount brokerages in the world, Charles Schwab provides a full-service approach for investors, employers, and independent advisors. Charles Schwab has $7.32 trillion in client assets as of November 2022 and continues to experience growth with the acquisition of TD Ameritrade, which it concluded in October 2020. Schwab offers a vast amount of educational content for investors of all levels, and the company has made significant efforts to make more products and tools available to active traders and ESG investors.

Schwab’s customers span the entire range of investor types, from novice to very sophisticated. Not only does Schwab provide the right mix of tools, education, and research to cater to this diverse customer base, but it also does it across its Schwab.com browser-based offering, a powerful and highly customizable desktop workstation, and mobile platforms.

Introduction

Chuck Schwab and his partners formed First Commander Corporation in April 1971 and changed the name of the company to Charles Schwab & Co., Inc. in 1973. The mission of the company is to put the customer at the forefront using their “Through Clients’ Eyes” strategy. In October 2020, Schwab completed an acquisition of TD Ameritrade, with full integration estimated to be largely completed between March and September 2023.

Charles Schwab has experienced continuous growth in customers in recent years and attributes it to a combination of its acquisition strategies, a 5% increase in brokerage accounts year-over-year, customer referrals, new and enhanced products and tools, and retail financial services for employers. As a full-service broker, Schwab provides a robust collection of products and services for investors of any level. At the same time, though, they operate as a discount broker with commission-free stock and ETF trades. For cryptocurrency investors, Schwab offers several indirect crypto investing options rather than crypto spot trading options. With the TD Ameritrade merger, Schwab becomes a good option for forex, futures, margin, and options traders.

Pros & Cons

Pros Explained

• Multiple platforms for a diverse customer base: Schwab has multiple resources for a diverse customer base. Whether you are a new investor or an experienced investor, Schwab provides educational resources, customizable platforms and tools, 24/7 customer service, flexible digital formats, top notch analysis tools, and top-rated screeners.
• Excellent ETF research
• Commission-free stock and ETF trading: Schwab offers free stock and ETF trading. Investors do not have to pay a fee to buy and sell online stocks and ETFs. As part of its order execution, Schwab focuses on improving pricing for 96.6% of investments.
• Robo-advisor and AI features: Schwab offers a robo-advisor and AI features. Schwab’s automated investing tool, Schwab Intelligent Portfolios is a digital investment manager (robo-advisor). Schwab provides a detailed educational overview of what a robo-advisor is, what it does, and how to determine if it is right for you. Schwab offers AI-enhanced voice technology customer service support for advisors. Schwab's mobile App has an AI feature called Schwab Assistant, which allows customers to use voice commands to do things such as set alerts, make trades, find answers to their questions, and more.
• Available ESG ETF: Schwab offers an ESG ETF. In 2021, Schwab launched its first ESG fund, Schwab Ariel ESG ETF. The fund is also Schwab’s first active ETF and is sub-advised by Ariel Investments. A benefit of this fund is that Ariel Investments assigns proprietary ESG-risk ratings to each company in the fund.
  

Cons Explained

• Higher margin rates: Schwab has higher margin rates than some of its competitors. The current base rate is 10.75% as of December 2022 and the effective rates currently range from 10.825% to 12.575%.
• No automated sweep feature: Schwab has no automated sweep feature for accounts that have a sweep feature. This means that excess funds are not automatically swept in these accounts.
• No fractional shares ETF trades: Schwab does not offer fractional shares trading for ETFs. The company offers Schwab Stock Slices, which allows customers to buy fractional shares of stock in any company within the S&P 500.
• No direct investments in cryptocurrencies: For cryptocurrency investors, Schwab offers several indirect crypto investing options rather than crypto spot trading options.
  

Usability

Competition is strong among online brokers. Schwab remains a top performer because the company continues to take in customer feedback and make improvements. Depending on the type of account you want to open, it can take up to 20 minutes to open an account online. Navigating through the various platforms is not complicated for investors of any level. There are various tools on Schwab’s software, mobile, and web platforms.

The platforms include:

• The Schwab.com website
• The Schwab Mobile trading app
• StreetSmartEdge, a customizable trading software for desktops that is also cloud-based
• Schwab Intelligent Portfolios, an automated investing tool that uses a robo-advisor

No matter which platform customers use, they have the ability to check their portfolio performance, deposit checks using any mobile device, receive alerts and push notifications, get breaking news, and make trades. Schwab also creates a holistic experience by allowing its customers to see all of their assets on its site, even assets outside of Schwab’s platform by providing a free aggregation.

Trade Experience

Customers will find many helpful tools and resources to help them navigate through the various platforms that Schwab offers. Innovative technology makes the experience better with access to features such as real-time data streams and the capability to convert screening results to a watchlist. Also, Idea Hub is available to develop ideas for trades using various criteria, and the data is updated throughout the trading day.

Charting capabilities are good overall, but we found the volume-weighted average price (VWAP) tool to be lacking for any active traders that might depend on this popular feature. StreetSmart Edge’s chart analysis features include trend lines and other popular drawing tools. The ability to chart on the Schwab website is limited, but customers are still able to achieve what is needed in helping them make decisions. Additionally, trade orders can be placed inside the chart window in StreetSmart Edge. For users of the mobile app, however, the ability to draw on and place other charting tools on charts is not available.

StreetSmart Edge has undergone recent enhancements to its quote bar and CNBC feed, improving on the platform’s customizability. Customers can create customized searches and save them and change settings to specify the information you see in your account.

Mobile Trade Experience

Having access to your Schwab accounts through a mobile app is convenient. However, it is somewhat limiting because not all of the features in the desktop software platforms and the website platforms are available in the app. There are some limitations on the types of trading orders you can make. As mentioned earlier, there are no drawing and charting tools in the mobile app.

Security features in the mobile app use the latest biometric technology. Customers can access their accounts using face ID, their fingerprint, or a preset passcode. Customers can also make a deposit in the app by taking photos and following the instructions in the app to process the deposit. Customers select the account they want to make the deposit into, enter the amount of the deposit, take a photo of the front and back of the check, review the deposit to verify everything is correct and the photos are clear, and then submit.

The mobile app defaults to the summary view, which shows brokerage and futures totals. From there, you can either click on an account or click positions from the menu at the top left. On the Markets page, you can see an indices graph and can change the available time frames to see the difference in the graph. On this page, you can also see how the investment is performing on various indexes and stock exchanges, and much more. The mobile app does not have as many features as StreetSmart Edge does. However, it may be a perfect option for newer investors and investors who are not as active in reviewing their investments’ performance.

Range of Offerings

As a full-service broker, Schwab offers a diverse range of investments. Schwab continues to add to its existing offerings as technology advances and the demand for other investments such as ESG investments increases. Since Schwab has acquired TD Ameritrade, both companies’ customers now have access to additional investment products. With the completed integration of thinkorswim®, active traders will be able to trade futures and forex.

Schwab’s Offerings Include:

• Stocks (Schwab has over 3,000 U.S. traded stocks)
• Exchange-Traded Funds (ETFs) (Schwab has over 2,000 ETFs in various asset classes)
• Mutual Funds (Schwab offers over 4,000 no-load, no transaction-free mutual funds)
• Penny stocks (OTCBB)
• International stocks (Equity trading is available for over 30 global markets. Customers can trade in seven currencies across 12 global markets.)
• Bonds /Fixed income
• Futures
• Options
• Automated Investing through Schwab Intelligent Portfolios (Automated investing using a robo-advisor.)
  

Order Types

Charles Schwab offers all of the basic order types such as market, limit, stop, and trailing stops. It also offer market if touched (MIT), market on close (MOC), market-on-open (MOO) type orders. Additionally, Schwab offers all or none (AON), fill or kill (FOK), and immediate or cancel (IOC) orders. Customers can use the StreetSmart Edge platform for more advanced orders, such as a limit order with an OCO contingent order.

Trading Technology

Charles Schwab uses a proprietary wheel-based router, providing price improvement for its order management process. This includes real-time execution quality reviews, overseeing exchange outages, and monitoring volatile markets.

Some stock orders and options listed on multiple exchanges are routed to third-party wholesalers. This allows Schwab to maintain its position in price improvement and provide customers with cost savings. Schwab’s Retail Execution Quality Statistics for the 3rd quarter of 2022 indicate an average execution of 0.04 for S&P 500 stocks, with an average savings of $4.71 per order on an order between 100 and 499 shares.

Costs

Charles Schwab’s provides customers with detailed information on the costs for its collection of products and services. An added benefit is that customers have access to a wealth of educational resources, news, and research that is free, including access to third-party research. The company has a track record of reducing fees to keep up with competition, and the recent elimination of the $30/month NASDAQ TotalView® fee is a good example. Schwab does not have the lowest margin trading fees among its competitors, so margin traders may need to do a cost versus benefits analysis to make decisions on this service.

• No commissions for online listed stocks, ETFs, options (base commission)
• Options are $0.65 per contract. Multiple-leg options have fees, and the SEC assesses an exchange process fee and Schwab charges this fee to the customer.
• Fixed Income: No commission for Treasury bonds, Treasury notes, and Treasury inflation-protected securities (TIPS). There is a $1 commission for secondary market bonds such as corporate and municipal bonds. The commission range is $10 to $250.
• Margin rates are based on the debit balance in your account plus Schwab’s base rate. Schwab’s current market rates are kept up to date and shared on the company website. Currently up to $25,000 in margin has a rate of 12.575% while $100,000 is at 10.825%.
• Mutual Funds: There is no commission on the mutual funds in Schwab’s Mutual Fund OneSource platform, but there is a transaction fee up to $74.95 for all other mutual funds. There is no transaction fee for trades under $100.
• International stocks: There is a fee of $6.95 for trades on Canadian exchanges. There is a $50 foreign transaction fee for foreign stock trades placed on the American over-the-counter (OTC) market.
• There are various fees and minimums required for certain accounts. There is no fee and no required account minimum for basic accounts.There are some management fees and minimums for investment accounts such as the Schwab Intelligent Portfolios accounts. There are no commissions or advisory fees for the basic Schwab Intelligent Portfolios account, but there is a $5,000 account minimum. The Schwab Intelligent Portfolios Premium account has a one-time $300 fee, a $30 monthly advisory fee, and the account minimum is $25,000. The fee for the Schwab Wealth Advisory account starts at 0.80% and decreases the higher the amount of assets in the account, and there is a $1 million minimum. For the Schwab Advisor Network account, fees vary by advisor and the account minimum is $500,000.
• There are no fees to transfer funds, but there are fees to wire funds from your Schwab accounts. The wire transfer fee is $25 but if the transfer is completed online, the fee is $15.
• There is a $25 service charge for broker-assisted trades for most of the basic accounts.
• There are no maintenance, inactivity, or software access fees.
• There are no fees to make deposits or withdrawals or to close an account (other than ACAT cost).

How This Broker Makes Money From You and for You

Charles Schwab was one of the first online brokers to offer commission-free trades for stocks and ETFs. This caused some fierce competition in the industry for other brokers to do the same. Now, investors don’t have to pay fees to buy and sell shares, but you should be aware that there are still indirect costs associated with trading. Brokers still have to make money in some way.

• Payment for Order Flow (PFOF): Although Schwab has commission-free trading for stocks and ETFs, there are still costs associated with other types of investments and services. Schwab receives payments for order flow (PFOF). These are rebates from liquidity providers and various exchanges. Schwab discloses these payments in its Report of Routing Customer Orders. The most recent report for the 3rd quarter of 2022 is available. The period we looked at showed around $0.00066 per share of PFOF for stocks and $0.60 for options. The stock number is on the low side, while the option PFOF is above average for the brokers we assessed.
• Portfolio Margining: Some Schwab accounts qualify for portfolio margining, which allows customers to maintain overall margin costs and risks for their portfolios. Schwab’s margin rates are not the lowest of its competitors.
• Securities Lending: Customers who join the Securities Lending Fully Paid program can offer shares to a stock loan program and receive part of the income generated through loaning the stock.
• Interest on Cash Balances: Schwab earns interest on the excess amount of cash held in customers’ accounts. The cash is deposited into regular bank accounts rather than money market funds. The bank account deposits are insured at levels that are higher than FDIC levels through insurance policies that Schwab has with Lloyds of London. Customers can earn higher interest on money market funds and should monitor their accounts to ensure their funds are placed in these accounts rather than regular bank accounts that earn lower interest.
• Price Improvement: Charles Schwab’s Order Execution Advantage is how it meticulously monitor the quality of its order execution process. Schwab is a leader in executing orders at prices that are better than the National Best Bid and Offer (NBB) market prices. Schwab reports that on order sizes for S&P 500 stocks ranging from 1 to 4,999 shares, its price improvement ranges from 94.1% to 98.4% and average execution speed ranges at 0.4 seconds. According to Schwab, its customers received $512 million in price improvement on equity and option orders in the 3rd quarter of 2022.
  

Account and Research Amenities

Charles Schwab is one of the foremost brokerage firms with offerings for a diverse customer base. The company offers a wide-ranging collection of services and support for its customers. Schwab has extensive research capabilities. Customers have access to some of the industry’s best proprietary and third-party research, both at no extra charge. Some of the third-party research organizations are Moody's, Morningstar, Credit Suisse, and Argus. Schwab’s ETF research is so strong that the company has won our Best ETF Screeners category for the past several years.

Stock Screeners

Charles Schwab has screeners with advanced features such as pre-built screening reports. Customers can create customized stock screens based on various criteria such as dividend yield, price performance, analyst ratings, financial strength, and more. On www.schwab.com, there are 11 built-in screens for Stocks/Equities, and StreetSmart Edge has 30 pre-built stock screening reports.

StreetSmart Edge has a feature called Idea Hub. With Idea Hub, customers can generate trade ideas based on their goal and various screening criteria. Idea Hub is a valuable tool for customers whose investing decisions are guided by market volatility, investment earnings, and their income goals.

ETF and Mutual Fund Screeners

Schwab’s ETF screeners are best-in-class. On Charles Schwab’s website, customers have access to 16 built-in ETF screens and 11 screens for mutual funds. The ETF screener is in StreetSmart Edge, and the mutual fund screener is on the website. A great feature of the ETF and mutual fund screeners is the capability to screen for socially responsible investments (SRI). In StreetSmart Edge, customers can customize screens using various criteria. Schwab also has Schwab Select List where customers can search prescreened mutual funds.

Options Screeners

Charles Schwab offers two types of options screeners, customizable screeners and predefined screeners. With the customizable screeners, customers can use specific criteria such as volatility or assigned rate of return. Some of the criteria in the customizable screeners is the same criteria used in the stock screeners. The predefined screeners have 10 predefined strategies, but customers can modify them as needed. Customers can use the trade assessor to find trades based on their own assessment of an investment using various criteria such as profit percentage, max gain or loss, or assigned rate of return. Customers can also place orders within the results. Full Option Chains allows customers to view real-time quotes. The Idea Hub in StreetSmart Edge helps customers identify options trading opportunities.

Fixed Income Screeners

The fixed income screener allows customers to select a bond type, such as corporate, municipal, or treasury. Customers can use secondary menus to review bonds based on industry, sector, or states. Additional filtering options are available for customers such as maturity dates, price, and ratings. Schwab also has a CD and treasury ladder builder, and customers can also screen bond ETFs.

Tools and Calculators

Schwab customers have access to numerous tools and calculators to meet their needs. These tools and calculators cover a wide range of components including tax efficiency, portfolio analysis and allocation, pricing, and retirement. Additionally, customers can easily access various reports such as tax-related reports.

Charting

Schwab has limited charting features on the website and the mobile app. Customers cannot draw on the charts in Schwab Mobile or StreetSmart Mobile. However, StreetSmart Edge’s chart analysis features include trend lines and chart drawings. Schwab provides a short tutorial on how to use StreetSmartEdge for charting. In StreetSmart Edge, from a created chart, a customer can open an order window using an order entry tool. Recognia is a third-party website embedded in StreetSmart Edge that allows customers to identify chart patterns, price targets, and time horizons. Customers can also maintain a trading journal and use Schwab’s Strategy Tester tool for backtesting.

Trading Idea Generator

The Idea Hub can be used by customers to obtain ideas about different areas of the market utilizing predefined screens. Some of the criteria in the screens are volatility, earnings calendar, and volume. Schwab also offers an options strategy finder based on a customer’s expectations for an investment related to risk, volatility, price movement, timing, and more.

News

In StreetSmartEdge, customers can enjoy an enhanced CNBC feed, get streaming news, information, and quotes. In the mobile app, customers can get real-time breaking news and market data. Associated Press, Business Wire, GlobeNewswire, and briefing.com are among the offerings. Other news and research is also available for a fee, and many of these services have extended trial periods available.

Third-Party Research

All of Schwab’s platforms have a research component, including third-party research organizations, such as Moody’s and Morningstar. Additionally, customers can find analyst ratings for investments.

Cash Management

Charles Schwab offers two cash management options for customers: savings and investment cash and everyday cash. The savings and investment cash options are a high yield savings account, money market fund accounts, and certificates of deposit (CDs). The everyday cash options are uninvested cash in your Schwab brokerage and retirement accounts and a high yield checking account that is linked to a Schwab One brokerage account.

Some accounts have a sweep feature, but not exactly as you’d like. Some money fund accounts have a sweep feature; however, Schwab no longer offers the sweep feature for most new and existing accounts. For accounts with a sweep feature, excess funds are not automatically swept into the accounts unless you set it up. Schwab’s bank sweep feature for employee benefit plans does automatically sweep excess funds into a Schwab Trust Bank account.

Fractional Dividend Reinvestment Plan (DRIP)

Schwab customers can determine whether or not they want to reinvest the dividends they earn from their dividend paying investments. Schwab allows customers to make fractional dividend reinvestments rather than requiring enough cash to buy a full share.

SRI/ESG Research Amenities

Schwab has options for customers who are seeking socially responsible investments (SRI). Schwab’s advanced mutual fund and ETF screeners have an SRI filter. Using the SRI filter, customers can create customized searches that limit their results to socially responsible investments. Schwab also has separately managed accounts that focus on socially responsible investing.

Portfolio Analysis

Charles Schwab has an array of portfolio analysis tools, including various types of calculators. Account balances are available on all of Schwab’s platforms. All account balances and portfolio performance analysis are in real-time. A portfolio performance analysis tool, Portfolio Checkup, is available on the Schwab website. The good news is that customers can integrate external accounts into the Portfolio Checkup tool. Additionally, customers can use the tool to compare their portfolio’s returns to market targets, perform risk-return analysis, and check the performance of individual investments.

Customers can also maintain a trading journal and use Schwab’s Strategy Tester tool for backtesting. Customers looking for robo-advisors and AI features can use the Schwab Intelligent Portfolios tool, an automated investing tool that uses a robo-advisor. The robo-advisor consistently monitors your portfolios and automatically rebalances them when necessary.

Education

Charles Schwab provides a wide variety of educational resources in various formats including webinars, articles, videos, and live branch events. The educational resources span multiple trading and investing topics. Podcast lovers will be happy to know that Schwab produces two podcasts, Choiceology and Financial Decoder. Schwab launched the Schwab Starter Kit in 2021, allowing new investors to receive top-notch investment education all while receiving $101 when they open and fund an account. Schwab Live Daily is an online collaboration with existing thinkorswim® celebrities that is livestreamed on the Schwab website Monday-Friday at 10 am ET. The show is hosted by Schwab employees who specialize in various areas of investing and trading.

Customer Service

For anyone who may be overwhelmed by all the information on the website, help is not far away. Schwab has 24/7 customer service available by phone or live chat. Schwab Assistant is available on the mobile app, allowing customers to use voice commands to find needed information or get answers to questions. Most product pages have FAQs and links to additional information and resources.

• Customer service is available by phone, chat with a live person 24/7, and at a branch.
• Customers can speak with a financial advisor or a broker for broker-assisted trades. There is a fee for this service, and pricing is based on the type of trade.
• The chat feature provides helpful and timely support. We had a pleasant customer service experience through Chat. It took less than two minutes for a live representative to connect after we entered in information and submitted it.
• Most of the product pages on the website have a Common Questions section near the bottom of the page. There are also links to additional information and resources also.
• Schwab offers a satisfaction guarantee for customers. If a customer isn’t satisfied with services received, Schwab will refund eligible fees associated with the customer’s dissatisfaction. Eligible fees include programs fees, commission fees, and other fees that are listed in Schwab’s pricing guide.
  

Security and Reliability

Schwab’s platforms are secured to meet industry standards.

• Two-factor authentication is available on the Schwab website and mobile app. Customers can access their accounts on the mobile app using their fingerprint, face ID, or a preset passcode.
• Schwab’s voice ID feature allows customers to use their voice to access their accounts. Customers only have to say “At Schwab, my voice is my password.” Voice ID uses biometric voice technology that stores a digital version of a customer’s voice using a proprietary algorithm.
• Unfortunately, Schwab experienced a security breach between May and December 2021 and began sending out letters in March 2022 to inform customers about the breach.

Transparency

Schwab provides detailed, clear information on its pricing structures and fees. The broker also provides deeper details about the specific investing costs associated with each type of investment. An explanation of each type of cost is provided, in addition to a breakdown of the costs that Schwab customers pay. Schwab even lets everyone see how they stack up against their competitors using comparison charts. Website visitors can see the comparison in pricing, service, choice, and trading.

Schwab dedicates a whole section to information about margins and margin loans. In this section, you will find videos explaining what margin trading is and the benefits and risks of margin trading, a hypothetical example that includes both gain and loss scenarios and a scenario without margin, Schwab’s current margin rates, Schwab’s margin requirements, common questions, and more. Schwab also provides updates on its adjustments to margin requirements.

Schwab provides details about its order routing process, including its focus on putting the customer first and getting the best execution through its proprietary order routing system. Schwab discloses its real-time price improvement and payment for order flow (PFOF) data in its Report of Routing Customer Orders.

Available Account Types

Charles Schwab has a multitude of accounts and services to meet the needs of a new investor or an experienced investor. Based on your specific needs and goals, you can certainly find an account that will fit into your plans. There are 12 overall account types, covering everything from trading to saving for education, and Schwab provides details about each account type and their benefits. Schwab’s account types include:

• Individual taxable
• Global account (access to 12 international markets in local currency)
• Traditional individual retirement accounts (IRAs)
• Roth IRAs
• Inherited IRAs
• Simplified employee pension (SEP) IRAs
• Individual and business 401(k) plans
• 529 college savings plan and education savings accounts (ESA)
• Trusts
• Custodial accounts

Final Verdict

Charles Schwab is a top-rated brokerage offering services and products to customers online and in its branches. Schwab made a solid investment themselves when it acquired TD Ameritrade in 2020. The combination of both companies’ offerings will meet the needs of every type of investor, including active traders, those who only want to use robo-advisors, and anyone who is passionate about investing in socially responsible companies. It is impressive how Schwab manages to keep its finger on the pulse of innovation as well as changes in the environment, changes in the economy, and social changes. It is reflected in the wide range of diverse products and services the company provides and the types of clients it targets.

A new investor may get overwhelmed by all the content provided on the Schwab website, but there is no shortage of high-quality assistance available through multiple methods. Although Schwab provides many valuable solutions, there is still room for improvement as the broker does not offer fractional shares trading for ETFs, its margin rates are higher than other brokers’ rates, and it does not have an automated sweep feature for excess funds. That said, key elements recently brought over from the widely popular thinkorswim® platform show how Schwab is taking the right steps to remain a top online broker and a solid choice for any investor.