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Charles Schwab is one of the largest brokerage firms in the United States. But deep pockets don’t necessarily translate into exceptional performance for clients. This article will analyze Charles Schwab in vital investing categories, and then evaluate the company’s performance against some of its major rivals.


Range of Investment Vehicles

Charles Schwab Investments Rating

Charles Schwab currently offers trading in equities, warrants, fixed-income securities (including brokered CD’s), stock IPO’s, currencies, futures (including bitcoin futures), ETF’s, closed-end funds, and mutual funds. Many stocks can be traded during extended hours, and some ETF’s are tradable 24 hours a day, 5 days a week.

Precious metals and contracts for difference are not available at Charles Schwab. The brokerage house also doesn’t have any significant emphasis on global trading. American Depository Receipts that trade on U.S. exchanges are available, but there’s no access to foreign markets.


Financial Research and Education

Charles Schwab Research Rating

Charles Schwab’s site contains a large assortment of learning materials. These can be found by clicking on the ‘Education’ tab in the top menu. The ‘Research & Ideas’ and ‘Planning & Retirement’ tabs also contain lots of good information.

For general investing education, we found numerous videos, self-guided course, webinars, and articles on a wide range of topics. These include how to build a bond ladder, the basics of trading futures, and how to use technical analysis. Besides common securities like stocks, and bonds, there are also resources on currencies and futures contracts.

Security profile pages at Charles Schwab contain tremendous amounts of important data. During our research, we found third-party stock reports available for download free of charge in pdf format. News articles are listed for each security, company events are posted, and comparisons are listed for a stock’s peers. The Charles Schwab site also posts earnings for a stock, and relevant tweets are pulled from Twitter.


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Screeners on the broker’s website have the ability to scan the markets for potential investments. During our testing, we found them easy to use. The ETF scanner is able to search by Morningstar style box, portfolio turnover, SEC 30-day yield, geographic region, sector exposure, and many other variables.


Cash Management

Charles Schwab Cash Management Rating

Charles Schwab clients can add a debit card and checks to a brokerage account free of charge. There are no monthly charges, checks are free, and there is no limit on the number of checks that can be written. A bill pay service is included at no charge, and the broker reimburses ATM fees nationwide, although not globally.

Charles Schwab partners with its affiliate TD Bank to provide an FDIC sweep program with twice the amount of regular insurance. That’s $500,000 of protection instead of $250,000. Interest is also paid on free cash balances. Currently, the APR ranges from 0.07% to 0.50%, depending on balance.

The cash management features at Charles Schwab do not create a separate bank account. Rather, under the broker’s system, the original account remains an investment account with a core cash position linked to the checks and debit card.


Exchange-Traded Funds

Charles Schwab ETF Rating

All US-listed exchange-traded funds are available for trading at Charles Schwab. All of them have $0 commission. Investors are offered all popular fund families - ProShares, WisdomTree, and SPDR.


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A very extensive ETF center on Charles Schwab’s website hosts fund commentary by Morningstar, a fund comparison tool, and fund recommendations by CFRA.


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Mutual Funds

Charles Schwab Mutual Funds Rating

Mutual fund investors have equally good resources. Using the broker’s screener, we found 13,000 funds available for new purchases. Of these, roughly 4,200 are available with no transaction fee. Most of these also come with zero load when purchased through Charles Schwab.

As with ETF’s, there is a very good mutual fund center on the broker’s website, with a Premier List available courtesy of Morningstar. The list is updated quarterly and recommends investments in funds that meet stringent criteria.

Other highlights on the mutual fund center include quick pre-defined searches, a chart with funds by category (such as core equity, regional, or income), fund commentary, and an x-ray tool that examines holdings in a fund.


Charles Schwab Pricing

Charles Schwab Pricing Rating

Stock and ETFs transactions cost $0 each at Charles Schwab. Using a live broker over the phone costs $25.

Mutual funds with a load are always free to trade. No-load funds that don’t appear on the broker’s no-transaction-fee list cost $49.99 per trade (buy and sell both).

Fixed-income securities are usually priced on a markup/markdown basis. If Charles Schwab acts as a broker instead of an agent, the price is $1 per bond with a $10 minimum and a $500 maximum.

Futures contracts are $2.25 each. Exchange and regulatory fees are passed onto the customer. For forex, the broker charges $0.10 per 1,000 currency units with a minimum commission of $1.

Margin loans tend to be on the pricey side as well. Currently, a debit under $10,000 costs 13.575%.

A brokerage account at Charles Schwab has no regular fees. The broker imposes no maintenance, low-balance, or annual charges. There is no fee to close any type of account, and there is also no minimum deposit for any account.


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Customer Support

Charles Schwab Customer Rating

Charles Schwab has representatives on the phone available all hours of the day and night, 365 days a year. In addition to English, the broker-dealer provides service in a few other languages, including Chinese and Spanish.

When Charles Schwab took over Scottrade, the new enterprise shut down some local branches, but incorporated others. Currently, Charles Schwab has about 360 locations, which is one of the largest networks of any online discount broker. Most of these offices are open during the weekday.

The Charles Schwab website has a digital assistant named Ted. He’s able to answer many investment questions, but if a response doesn’t answer your question, there is usually a link posted to a human chat service. What we don’t like about this service is that customers are required to go through Ted first.

We were impressed with the self-help section on the broker’s website. It’s possible to perform many account-related functions here, such as report a security issue, refer a friend, modify communication preferences, download a form, and more.


Website

Charles Schwab Website Rating

The website doesn’t disappoint in other areas, either. The broker’s clients get to buy and sell securities with some user-friendly tools. The first highlight is SnapTicket, a powerful trade bar at the bottom of the browsing window. During our testing, we were able to submit orders for stocks and ETF’s. Conditional orders, such as one cancels another, have to be submitted on web pages.

Charles Schwab recently retired its browser platform Trade Architect due to browser incompatibility issues. While this is disappointing, the website itself offers decent charting. We found comparisons, technical studies, multiple graph styles, and company events. A chart can be detached and displayed full screen.

The broker’s site offers many more helpful features, including alerts, triggers, and a watchlist. Bonds can be traded through the website, although futures and forex have to be traded on the firm’s desktop software, which we’ll look at shortly.


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Mobile Apps

Charles Schwab Apps Rating

There are 3 mobile apps available to Charles Schwab customers. Why does the broker offer 3? Probably because a single combined app would be too large for one download. The apps offer different functions, although two of them are pretty similar. Designed for equity, futures, and forex trading, they provide powerful charting tools (one of them has over 400 technical studies) and sophisticated trading tickets with many advanced choices. Alerts and watchlists can be set up as well. A simulated trading feature is another plus.

The third app offers mutual fund trading, mobile check deposit, market videos courtesy of Reuters, and a very good economic calendar. One app offers free streaming of CNBC. Security research is possible, and facial recognition can be enabled.


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Desktop Software

Charles Schwab Trading Rating

Although Charles Schwab has eliminated its browser platform, it thankfully has retained its desktop software. Called thinkorswim, it offers many powerful trading features, including sophisticated charting with hundreds of technical studies, direct-access routing, Level II quotes, security screeners, and a practice trading mode. thinkorswim is capable of placing trades for stocks, ETF’s, futures, and currencies. Dealing boxes make buying and sell forex a straightforward process. Other great features include a heat map, live streaming of CNBC, an internal customer service contact, and an economic calendar.


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Other Tools

Charles Schwab Tools Rating

Besides all the great software already mentioned, Charles Schwab self-directed clients can use an app for Apple Watch. It is able to display market data, a watchlist, and trading information on a ticker symbol. Managed accounts clients can use Apple or Android watches.

The brokerage firm has a skill for Amazon Echo as well. The skill is unusual in its ability to provide not just market info, but also trading capability based on voice command.

With an Apple phone, it’s possible to send an iMessage to a Charles Schwab associate. Missing in this category is an app for Apple TV.


Retirement and Education Accounts

Charles Schwab IRA Rating

In addition to taxable accounts, Charles Schwab offers a wide selection of nontaxable accounts for retirement and education planning. The broker’s IRA selection includes Traditional, Roth, Rollover, Minor, SEP, and SIMPLE varieties. Self-employed 401(k) plans are available, along with UTMA/UGMA, Coverdell, and 529 plans. Charles Schwab does not charge any fees for these accounts. This generous policy includes no fee to close an account.

Using Charles Schwab’s mutual fund screener, we found 585 target-date mutual funds designed for retirement saving. About half of these have no transaction fee. Some of the available fund families include Allianz, Fidelity, BlackRock, and Goldman Sachs.


Charles Schwab Review Recommendations

We recommend Charles Schwab for pretty much everything except global investing.


Charles Schwab Review Judgment

Hands down, Charles Schwab is one of the best brokerage firms in the industry.


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