Charles Schwab Review 2018

By Jean Folger  | January 7, 2018

Iconic brand with extensive account protection, robust trading platform and abundant research.

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Overall Rating

4.6/
5.0
Products & Fees
3.9
Trust
5.0
Special Features
5.0
Desktop Experience
5.0
Mobile Experience
4.2
Customer Support
5.0
Research & Insights
4.7
Education
3.2
Banking
5.0

Schwab Fast Facts

The Charles Schwab Corp. is a financial services company founded in April 1971 that offers online brokerage, investing, and advisory and banking services. Some 10 million self-directed traders and investors use Schwab's web-based, pro-level, and mobile trading platforms to research, buy, and sell stocks, ETFs, options, mutual funds, bonds, and other securities, making it one of the largest brokerage firms in the U.S. For those wanting a little help with their investment decisions, Schwab offers advisory services, including personal planning, automated investing, and portfolio management.

pros

  • Commission Free Products
    Hundreds of commission-free ETFs and thousands of no-load, no-transaction-fee mutual funds
  • Third-Party Analysis
    Excellent commentary and analysis from Schwab and trusted third-party providers
  • Schwab Intelligent Portfolios
    Robo-advisor service with no advisory fees, account service fees, or commissions
  • Multiple Platforms
    Automatic syncing of account activity across website, desktop, and mobile trading platforms (available for any iOS/Android mobile device - including your Apple Watch)
  • Customer Support
    Live support 24/7, secure messaging, or online help via live chat and social media
  • Advanced Trading
    StreetSmart Edge, an intuitive platform that offers advanced charting and trading features

cons

  • Minimum Deposit
    A minimum deposit of $1000 is required to open an acccount (waived with automatic $100 monthly deposits or if you open a Schwab Bank High Yield Investor Checking account)
  • Product Offerings
    No forex trading, and Schwab is currently not opening new futures accounts
  • Learning Center
    Educational offerings are limited and not as well organized as those of some competitors
  • Mutual Fund Commissions
    You'll pay $76 to buy a mutual fund that's not on Schwab's OneSource Funds list
$2.9 Trillion
Client Assets
10 Million
Active Accounts
1973
Founded

Products & Fees

3.9

Schwab customers have access to a wide array of investment products, including stocks, ETFs, options, bonds and other fixed-income securities, mutual funds, and preferred stocks. Missing from the lineup are forex and futures trading. Customers also have access to IRAs and various types of annuities, including variable annuities and single-premium immediate annuities. Stock/ETF commissions are a flat $4.95; options trades cost $4.95 plus $0.65 per contract. Phone and broker-supported trades cost an additional $5 and $25, respectively. ETF and mutual fund investors can trade free by choosing from Schwab's 200+ commission-free ETFs and 3,000+ no-load, no-transaction-fee mutual funds. If you're not happy with a commission or fee you've paid, you can request a refund for any reason.

  • Stocks
    $4.95
  • ETFs
    $4.95
  • Schwab OneSource ETFs
    Free
  • Options
    $4.95 + $0.65 per contract
  • Mutual Funds
    $76 per buy, $0 per sell
  • Schwab OneSource Mutual Funds*
    Free
  • Treasuries
    Free
  • Bonds (secondary trades)
    $1 per bond, $10 minimum
  • CDs
    $1 per bond, $10 minimum
  • Annuities**
    Base fee of 0.65%
  • Phone Trade
    Commission + $5
  • Broker-assisted trade
    Commission + $25
  • Futures***
    Not Available
  • Forex
    Not Available

Trust

5.0

Schwab has a solid reputation backed by numerous industry awards and accolades. The company is doing all the right things when it comes to protecting customer assets and information: It's a member of FINRA, FDIC, and SIPC; adheres to the SEC's Customer Protection Rule; and is a member of the National Business Coalition on E-Commerce and Privacy, a partnership of major financial services companies that works for "robust and consistent data security, security breach notice, privacy, and consumer protection regulation." The company is proactive about corporate social responsibility.

$150.5 Million
Total Securities Guaranteed
($150M 3rd Party Insurance + $500K SIPC)
$1.4 Million
Total Insurance for Cash
($1.15M 3rd Party Insurance + $250K SIPC)

What you need to know

As a member of FINRA, FDIC, and SIPC, Schwab offers customers multiple layers of protection if the firm goes under. In compliance with the SEC's Customer Protection Rule, all customer securities, including stocks and bonds that are fully paid for or excess margin securities, are segregated from Schwab's securities - which means that if Schwab became insolvent, your assets would be protected against creditors' claims. Additionally, the SchwabSafe security guarantee provides that "Schwab will cover 100% of any losses in any of your Schwab accounts due to unauthorized activity." The firm has a long history of corporate social responsibility, including financial education programs, employee volunteerism, and community involvement.

Special Features

5.0
Special Features

Schwab is a full-service broker that offers tools for self-directed investors and traders, plus services for those who want help making investing decisions. Schwab Intelligent Portfolios is a robo-advisor service that builds, monitors, and automatically rebalances a diversified portfolio of ETFs - starting with as little as $5,000. It's available to all customers and has no advisory fees, account service fees, or commissions. Customers also have access to dedicated financial advice and portfolio management services. The company has a solid record of providing fast execution at competitive prices. Schwab.com offers basic functionality, but you'll have to use StreetSmart Edge to access certain features such as fully customizable charting and advanced trading tools (including conditional orders).

Robo-Advisor
Free
StreetSmart Edge
Free

What you need to know

Schwab offers versatile tools and services to fit the needs of self-directed investors as well as those looking for varying degrees of help with their investment decisions. The trading platform at Schwab.com is ideal for casual investors and novice traders. Those looking for advanced charting and trading capabilities can use Schwab's StreetSmart Edge free, with no account or trade minimums. The firm offers a range of investment advice options, including automated investing (Schwab Intelligent Portfolio), dedicated financial advice (Schwab Private Client and Schwab Advisor Network), and a blend of personal planning and automated investing (Schwab Intelligent Advisory).

Desktop Experience

5.0
Desktop Platform Experience

Schwab customers have access to three platforms that automatically sync with one another to provide a seamless trading experience: web trading on Schwab.com; StreetSmart Edge (Schwab's flagship advanced trading platform); and Schwab Mobile, an app available for iOS and Android devices. This review focuses on the web trading platform, which is appropriate for casual investors and newer active traders who want basic functionality and a platform that is intuitive and easy to use. Users can create watchlists and alerts, and customize charts with basic indicators, studies, and drawing tools. Traders and investors interested in a more robust platform experience can use Schwab's StreetSmart Edge desktop-based platform, with no account or trade minimums.

Pros

- An intuitive interface that's ideal for casual investors and newer active traders
- A range of research tools consolidated into one convenient place: Click the Summary tab for any symbol to view charts, news, ratings, earnings, statements, ratios, and more on one screen
- Customizable watchlists and alerts to keep you up-to-date on changing market conditions
- The ability to manage accounts, view balances, transfer funds, and make payments directly from the web trading platform

Cons

- Charts must be refreshed to view current prices, which is inconvenient but not typically a problem for casual investors
- Customization options are limited (for example, you can select an open-high/low-close or a candlestick chart, but you can't customize the colors or layout)
- Advanced order types aren't supported, though customers can access both more sophisticated charting and advanced orders by using StreetSmart Edge, which is free

Mobile Experience

4.2
Mobile Platform Experience

Schwab Mobile is available for Android and iOS devices, including the Apple Watch. It syncs seamlessly with Schwab's other platforms, so any activity you perform on the app - whether it's placing trades or creating a new watchlist - automatically shows up in the desktop platform. The app is well designed, intuitive, and easy to use, and it offers nearly the same functionality you'll find when you log into your account on Schwab.com. In addition to accessing your brokerage account, you can use the app to manage your Schwab Bank, 401(k), and other accounts.

Pros

- The app is easy to navigate. Tabs on every screen offer quick access to your account summary, watchlists, research, and the trade order interface.
- Commercial-free live streaming news from CNBC TV is available 24 hours a day, every business day.
- Options traders will enjoy Idea Hub, a tool that lets you explore options trading ideas.
- The Trade Calculator shows the potential profit or loss for your options strategy.
- With Mobile Deposit, you can use your smartphone to quickly deposit checks anytime

Cons

- Like Schwab's web trading platform, the mobile app offers limited customization options and does not support advanced order types. To access these features, you'll need to use the free StreetSmart Edge platform.

Customer Support

5.0

Schwab has earned industry recognition for its customer service (it was rated No. 1 in customer service in Investor's Business Daily's Best Online Brokers survey for 2017). Live phone help is available around the clock, and you can get assistance via live chat, secure messaging, snail mail, fax, social media (Facebook Messenger), and in person at 330+ branch locations. Schwab also offers accessibility services, including telecommunications relay, statement alternatives (braille, audio, and large print), sign language interpreters, reader services, and website accessibility.

What you need to know

Schwab has a well-deserved reputation for excellent customer service. Log into your account on Schwab.com and click the Contact Us button at the top of any page to view support options, which include around-the-clock live phone support, live chat, secure messaging, and addresses for snail mail (select your state for the fastest service). Note that you won't find an email address (customers can use secure messaging), and there's no SMS support either, so emailers and texters will have to connect with customer support using one of the other options.

Research & Insights

4.7

Schwab scores high in research tools and insights, making it easy for customers to analyze potential investments. You'll have access to analyst ratings, market commentary, research reports, and buy/hold ratings. There are also screeners for stocks, ETFs, options, mutual funds, and fixed-income securities. Research and insights come from Schwab and third-party providers, including Credit Suisse, Ned Davis Research, Argus, and Morningstar. News feeds are updated throughout the trading session and are searchable by keyword, symbol or company, date, source, sector, and topic. The web-based platform provides in-depth fundamental analysis with charts, news, ratings, earnings, ratios, and more on a single screen, plus a variety of basic technical analysis tools. StreetSmart Edge offers more robust charting and technical tools.

Product Screeners
Scan for potential investments based on your specific criteria
Analyst Rating and Reports
Third-party research ratings, detailed stock reports, and focus lists
Indicators & Studies
Dozens of technical indicators and drawing tools
Recommendations
Schwab Equity Ratings, a proprietary method for rating performance
Economic Calendar
Track market-moving events with calendars from Econoday and Briefing.com
Fundamental Analysis
View a variety of fundamentals, including earnings and growth trends, net income, dividend growth and payments, and more

Pros

Charles Schwab has excellent research tools. Schwab was rated a Best Online Broker for research tools by Investor's Business Daily in 2017 and has earned industry recognition as a leading research provider. Charles Schwab provides third-party analysis. Investors can count on quality commentary and analysis from Schwab's in-house research team and trusted third-party providers, including Credit Suisse, Morningstar, and Ned Davis Research. You'll find rich fundamental analysis with one click: Select the Summary tab for any symbol to view charts, news, ratings, earnings, ratios, and more on one screen. Stay up-to-date with news from the Associated Press, Reuters, Briefing.com, Market News International, and others (mobile app users get a live stream of CNBC TV).

Cons

Unlike many of its competitors, Schwab doesn't yet offer social sentiment or discussions.

Education

3.2

Schwab has a great deal of educational content on its website to help investors learn about stocks, ETFs, options, bonds, and other fixed-income products. Its Learning Center provides FAQs, articles, and videos on beginner topics such as "Order Types: Getting to Know the Basics" and "Bond Ladders: A Useful Tool for Retirement Income." The Insights & Ideas section of the Schwab.com website (accessible before you log into your account) has a larger selection of educational content - including articles, videos, slide shows, podcasts, and infographics - covering market commentary, "Washington Watch" (write-ups about policies and regulations that may affect investors), personal finance and planning, and retirement. Schwab also offers in-person workshops on topics such as "7 Fundamentals You Need for Investing Success" and "Why Everyone Needs an Estate Plan." (You can sign up on the website.)

FAQs, Articles, Videos, and Podcasts
Diverse Selection
In-person workshops
Workshops
Education on Products and Investments
Education

What you need to know

While Schwab offers a wide selection of educational content - including articles, videos, and podcasts - you might have trouble finding what you're looking for because it is not organized in one place. Some content is filed in the Learning Center, while other materials are in the Insights & Ideas section of Schwab.com. On the plus side, Schwab offers in-person educational events at its branches - more than 330 in 46 states.

Banking

5.0

Schwab offers a variety of banking services, including checking accounts, savings accounts, college banking, credit cards, debit cards, and mortgage loans and home equity lines of credit (provided by Quicken Loans).

Checking, Savings, Credit and Debit Cards
Multiple Banking Services
Mortgage Loans and Home Equity Credit
Home Loans
In person, Online, or via Mobile
Sync Seamlessly

What you need to know

Schwab makes banking easy. You can manage your accounts and access a variety of banking services in person (by visiting one of Schwab's branch locations), on Schwab.com, or by using Schwab Mobile for iOS and Android. Online bill pay is available free, and you can link your other bank accounts to your Schwab brokerage account to easily transfer funds. Select paperless statements and tax forms for convenience, security, and 24/7 access. Investor Advantage Pricing offers interest rate discounts up to 0.250% on eligible home loans offered by Schwab Bank's home loan provider, Quicken Loans.

Bottom Line

Some 10 million self-directed investors and traders use Schwab's quality research, diverse trading tools, and intuitive trading platforms. Schwab customers have access to a variety of investment products, including stocks, ETFs, options, bonds and other fixed-income securities, mutual funds, and preferred stocks. Schwab recently lowered its stock/ETF commissions to a flat $4.95 (from $8.95), making it one of the least expensive online brokers in the U.S. Options trades cost $4.95 plus $0.65 per contract. ETF and mutual fund investors can trade free by choosing from Schwab's 200+ commission-free ETFs (from 16 leading providers) and 3,000+ no-load, no-transaction-fee mutual funds. While Schwab provides plenty of tools for self-directed investors, it also offers a range of investment advice options, including automated investing (Schwab Intelligent Portfolio), dedicated financial advice (Schwab Private Client and Schwab Advisor Network), and a blend of personal planning and automated investing (Schwab Intelligent Advisory). In addition, clients have access to banking services (including checking and savings accounts, mortgages, and home equity loans), as well as retirement products such as IRAs and annuities.

About Charles R. Schwab

Charles R. Schwab unveiled the country's first discount brokerage firm. Thanks to Schwab, the stock market opened to a constituency of individuals and new investors without easy access to the stock market. Schwab himself saw a huge return on his venture. Today, he serves as executive chairman and largest shareholder of the brokerage.

Investing in Investors: Schwab's Rise


Unsatisfied with his position at a local investment advisory service in Stanford, California, Schwab left to work for himself despite being promoted to vice president. Schwab teamed up with two friends in 1963 to launch an advisory newsletter for investors, the "Investment Indicator," which grew quickly, pulled in 3,000 subscribers at its peak and branched out to include a $20 million mutual fund. The business met troubles following the 1969 market crash, incurring a $100,000 debt from a court battle with the state of Texas. Luckily for Schwab, his uncle Bill paid off his debts and offered him a matching loan that allowed him to establish the San Francisco based traditional brokerage firm First Commander Corp. in a two-room office in 1971. After buying out his partners and assuming the company's debt two years later, he changed the company's name to Charles Schwab & Co., Inc.

In 1975, Schwab saw an opportunity to separate himself from his competition in the broker field as he observed competitors taking advantage of a new Securities and Exchange Commission (SEC) ruling that scrapped the fixed-rate system for buying and selling stocks in favor of negotiated rates. The new unregulated system saw lower rates adjusted for large institutional clients and higher, inflated rates for the individual investor with little focus on the small-investor market. Schwab identified and targeted an untapped market, and in the process he established his niche in the newly minted discount brokerage industry.

Schwab implemented fast transactions and dramatically low commission and trading fees - as much as half that of his competition - for the same services offered by traditional brokerage firms. Further extending his reach to individual markets, Schwab participated in client seminars, introduced the industry's first 24-hour, weekday quote service for orders and invested in technology. Schwab became an e-commerce pioneer when he became one of the first brokers to launch online products and deliver stock quotes directly to customers via computer-based systems.

Schwab opened branch offices in forty cities and offered additional personal investment services. Both his clients and his employees grew exponentially, and by 1981 his brokerage was bringing in annual revenue of $42 million. As costs mounted, Schwab sold his company to Bank of America (BAC) for $57 million worth of the B of A's stock only to buy it back six years later for an unprecedented $230 million and turn to the IPO market for capital. The Charles Schwab Corporation (SCHW) (Charles Schwab & Co.'s parent corporation) went public in 1987 completing an IPO of eight million shares at $16.50.

Ahead of the internet boom, Schwab rolled out e.Schwab in 1995, one of the internet's first online discount brokerage sites. Three years later e.Schwab completed more than half the firm's trades and took the top spot as the number-one online trader with 1.8 million accounts. Today, Schwab's footprint is international, with an Asian, European, and Caribbean offices in addition to over 300 in the United States. The company has also expanded into a fully-functioning financial institution providing banking services and products. 2003 saw the launch of the Charles Schwab Bank, which was set up as a modest consumer bank to keep the company steady in the event of a market panic, and saw record breaking profits in 2008 when the market did meltdown and customers flocked to Schwab from the big-name banks.

The "King" of Online Brokers


The 77-year-old pioneer has amassed quite a sizable fortune from his tenure as founder and chairman of the Charles Schwab Corporation. As the single largest shareholder, Schwab's net worth is approximately $10.3 billion as of January 2018.

About the Charles Schwab Corporation (NYSE:SCHW)

The Charles Schwab Corporation is one of the most well-known and largest retail brokerage firms in the world, offering individual clients access to financial markets and advisory services. Founded in 1971, Schwab is still considered one of the "new kids" on the block by older incumbents such as Morgan Stanley (founded in 1935) and Merrill Lynch (founded in 1914).

As the first "discount" brokerage, Schwab provided many of the same services offered by traditional brokerage firms but for half the cost. Moreover, Schwab has from the beginning strived to educate their client base, participating in client seminars and financial literacy programs.

As of year-end for 2017, the company had nearly $3.4 trillion in client assets under management in more than 10 million client brokerage accounts. Schwab also manages retirement plans for 1.6 million workers and provides basic banking services to a million more. 2017 revenues for Schwab rose 15% year-over-year to $8.6 Billion, while net income grew 25% to $2.4 Billion, both setting records for the company. The continuing growth for Schwab can be attributed to its core focus on the retail segment coupled with efforts to capture more clients from the under-40 demographic. In January of 2018, shares of SCHW hit an all time high of $56.25, and now commands a market capitalization of $74 billion.

In 2015 Charles Schwab launched an in-house roboadvisory platform known as Intelligent Portfolios, offering automated investing management and personal finance guidance including access to its internal team of financial advisors. According to Schwab's website, "Clients must enroll a combined minimum of $25,000 in the SIA Program, which can be met through one or more SIA Accounts. Each enrolled Account must meet an initial minimum requirement of $5,000." By converting some of its existing customers and luring in new money, the robo unit has grown to more than $20 billion in assets under management, making it one of the largest roboadvisors out there.

Intelligent Portfolios primarily uses Schwab's own suite of low-cost index ETFs, which now have some of the lowest fund fees in the market. In fact, Schwab in the past two years has emerged as a dominant player in the index ETF space and has challenged longstanding rivals with ultra-low fees. For instance, the expense ratios on the Schwab S&P 500 Index Fund ETF (SWPPX) and the Schwab Small-Cap Index Fund (SWSSX) are 0.03% and 0.06%, respectively, less expensive than their counterparts at iShares or even Vanguard. On the fees front, in 2017 Schwab also lowered their commission rates for trades executed via their online brokerage platform to $4.95 a trade (from $6.95) and options trades to $0.65 per contract.

Schwab began with the retail segment in mind, providing quality service and affordable access to the everyday investor. By investing in technology, cutting costs, and providing an excellent customer experience, the company has been able to sustain record growth even in today's highly competitive and technologically driven financial sector.

Jean Folger
Reviewed by Jean Folger

Jean Folger is co-founder of PowerZone Trading, a company that has developed high-performance software and tools for active traders and investors since 2004. She is a regular contributor to Investopedia, and writes about active trading, investing, real estate, retirement, travel and other personal finance topics.

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