Compare Charles Schwab versus Vanguard - IRA, commissions, fees, trading tools, differences, pros and cons. Which online broker is better?

Vanguard vs. Schwab Overview

Schwab or Vanguard, which one has the better investment services? While Vanguard emphasizes low-cost index investing, Schwab has better software and more tradable assets. For the full scoop, keep reading.

Commissions and Account Minimums

Vanguard Brokerage Review Charles Schwab Review
Rating Vanguard brokerage company rating Charles Schwab rating
Stocks $0 $0
Options (per contract) $1.00 $0.65
Mutual Funds $20 buy and sell $49.95 buy and $0 sell
Initial Funding Requirement $0 $0
Inactivity Fee $0 $0
IRA Annual Fee $20* $0
IRA Termination Fee $0 $50

For Customer Service, Schwab Wins

Since Vanguard went to $0 commissions, its customer service has really declined. There are now many complaints online, and we are disappointed by the lack of service options on its website. There is no online chat, for example, and we didn’t find an internal messaging widget, either (messages can be received).

Although Schwab has gone to zero commissions, too, it nevertheless has retained the quality of its customer support. The broker’s website still has an online chat tool, and its phone support is available around the clock (unlike Vanguard’s). Although it’s not possible to send messages on the website, there is a very good self-service section with many features. To top it all off, Schwab has hundreds of branch locations, and these are invaluable for old-school investors.

For Available Investments, Schwab Also Wins

Self-directed traders at both firms can buy and sell these investment vehicles:

Schwab vs Vanguard

  • Equities
  • Option contracts
  • Closed end funds
  • Exchange traded funds
  • Mutual funds
  • Bonds and bond equivalents

Vanguard, but not Schwab, has eliminated its over-the-counter stock service. Only Schwab clients get to trade futures contracts. Schwab also has a global trading account for foreign assets that won’t be found at Vanguard.

For Stock Research, Schwab Wins Easily

Security profiles at Schwab have lots of data on them, including:

  • Peer comparisons
  • Schwab Equity Ratings®
  • Dividend history
  • Financial statements
  • Earnings histories

Research reports are available from the following analysts:

  • Morningstar
  • Charles Schwab
  • Argus
  • CFRA
  • Thomson Reuters
  • Vickers
  • Credit Suisse

Vanguard uses just two sources: Argus and MarketGrader. And Vanguard doesn’t offer as much data on its security profiles. For example, it only uses two sources for news articles. Schwab, by comparison, has no less than eight, and these are searchable.

The picture looks much the same for stock screeners. Schwab’s tool is easier to use but yet has more search criteria.

For Robo Accounts, It’s Pretty Even

Schwab charges zero fees for its automated account service with a $5,000 deposit requirement. The company’s robot keeps a large percentage of account assets in cash, which is why it’s free. The program trades a variety of funds from families like Invesco and SPDR.

Vanguard’s robot doesn’t keep a large percentage in cash. The fee is 20 basis points per year with a $3,000 requirement. But only Vanguard funds are used.

For Website Technology, Schwab Is Way Ahead

Schwab’s website is easy to use thanks to a well-designed menu at the top. Highlights include:

Schwab or Vanguard

  • Charting with drawing tools and lots of plot styles
  • Trade ticket with discrete sell short button
  • Economic calendar
  • Trade bar with a small chart and real-time data
  • Tax center
  • Educational resources

Vanguard’s site isn’t nearly as simple to navigate. Resources are not organized as logically, and the top menu is not organized very well, either. Nevertheless, there are some trading resources:

Vanguard versus Schwab

- Charts with no drawing tools and 4 plot styles
- Order ticket with discrete sell short button

No Comparison for Mobile Apps

Vanguard has trimmed down its mobile app to the point that there’s not much on it. It has no graphs and no equity profiles. Other mobile perks like check deposit and video news are missing in action. Calls and puts cannot be traded.

Vanguard or Schwab

Schwab has two apps. Combined, they deliver quite a punch:

Schwab versus Vanguard

  • Video news, courtesy of CNBC
  • Other multimedia market news, including podcasts and audio market updates
  • Mobile check deposit
  • Bill pay
  • Options trading
  • Artificial Intelligence
  • Heat maps
  • Advanced orders, including contingent and OTO (one triggers other)

Charts on Schwab’s main app are decent, although not great. There are comparisons, company events (dividends and splits only), and about 30 technical indicators. Surprisingly, there are 7 plot styles, including bar chart and % change fill chart.

Schwab Is the Only Option for More Advanced Software

Vanguard customers won’t find a browser-based trading platform, a smartwatch app, or a desktop program.

At Schwab, the story is the exact opposite. The broker-dealer has all three. The watch platform shows an account’s watchlist with green entries representing securities that are recently up and red entries for the day’s losers. A stock’s profile can be shuffled between trade data and a small graph.

Schwab’s browser platform is on a very high level with a sophisticated trade ticket and very good charting tools. A graph can be detached to form its own window, and this is a requirement for drawing tools. We found lots of these, including:

  • Trendlines
  • Gann Fan Up
  • Fibonacci Retracement
  • Trone Levels
  • And more...

Schwab clients who don’t find what they’re looking for on the browser system can download and install the broker’s flagship desktop program StreetSmart Edge. It has some features that the website and browser platform don’t have. These tools include:

Schwab or Vanguard

  • Direct-access routing
  • Level 2 quotes
  • Live streaming of CNBC

For Mutual Funds, Schwab Is Our Pick

Both Schwab and Vanguard manage their own mutual funds. And they offer mutual funds from other companies. Vanguard is often associated with low expense ratios, although Schwab has some really low management fees as well. For example, Vanguard’s S&P 500 Index fund (VFIAX) charges 4 basis points per year, while the same fund at Schwab (SWPPX) charges half that amount.

Schwab’s mutual fund screener is more user-friendly than Vanguard’s with more search criteria. Schwab also provides more predefined screens.

Now for the numbers: Schwab’s screener returns 6,073 funds available to new investors. Vanguard’s search tool displays 6,846. About half of Vanguard’s funds have no transaction fee, while Schwab has nearly eliminated transaction fees from its list (6,069 without).

It’s Pretty Even in the Margin Category

Both brokerage firms offer cash and margin accounts. An IRA with either company can be margin-enabled, which means it can day trade.

Schwab starts its margin schedule at %, while Vanguard begins at 12.25%. At a margin debit of $250,000, both firms charge -1.8%.

Only Schwab’s website shows margin details for a specific asset.

It’s easy to upgrade a cash account to a margin account on either website. On Vanguard’s, click on Profile & account settings at the very top and scroll down to Margin settings.

On Schwab’s website, the appropriate link (Account Settings) is under the Service tab.

Schwab Gets Bonus Points for Going the Extra Mile

There are several miscellaneous financial services that make Schwab look even better overall.

For example, Vanguard has discontinued its cash management service (VanguardAdvantage) that offered checks and a debit card. Schwab continues offering these banking tools at no cost.

Schwab offers extended-hours trading (both morning and evening sessions). Vanguard customers only get the evening session.

Schwab has a fractional-share service for some equities. Vanguard does not. Same for Initial Public Offerings. Schwab’s IPO Center is easy to use and displays upcoming offerings along with educational information on how to participate in imminent stock offerings.

Schwab customers can sign up for systematic purchases of mutual funds. Vanguard restricts this service to only Vanguard-branded funds.

Both brokerage firms offer IRAs and DRIP service.

Recommendations for Specific Investors

For retirement savers and long-term investors, we lean towards Schwab for its annuity offerings and fewer retirement account fees.

For equity traders, Schwab is the easy pick for its software and fractional-share service.

For beginning investors, either broker’s automated service gets our endorsement.

For small self-directed accounts, we recommend Schwab because Vanguard still has several policies in place that are designed to benefit large accounts. For small robo accounts, Vanguard has the lower minimum investment amount.


Vanguard vs Charles Schwab Judgment

For most investors, Schwab will easily deliver a better investing experience.

Updated on 4/25/2022.

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