Betterment versus Charles Schwab brokerage firm comparison: IRA, fees, commissions, benefits, pros and cons. Which investing service to choose?

Overview of Charles Schwab and Betterment

While Betterment is widely known for its robo investment management, Charles Schwab also has a digital advisor. Moreover, Schwab customers get other services that Betterment customers may want to take notice of.

Range of Tradable Assets

Betterment customers get a selection of exchange-traded funds with low expense ratios. There are no other investments available. These ETF’s will have stocks and bonds in them.

Schwab offers ETF’s with low expense ratios, high expense ratios, and everything in between. Moreover, the broker also provides mutual funds, stocks, options, futures, options on futures, cryptocurrency futures, IPO’s, and bonds.

Looks like Schwab is our pick in this category.

Investment Services

Betterment does not offer any self-managed accounts. It offers managed accounts only—and there are two packages. The first is a robo-only service that charges 0.25% per year and carries a $0 minimum. The second is a hybrid system that combines the software manager with a human advisor who provides assistance in important financial areas, such as marriage and retirement. In this second package, it is still the digital advisor that makes trading decisions. The cost is 40 basis points per annum with a $100,000 starting requirement.

Schwab delivers both self-directed and managed accounts. Its self-directed accounts carry zero fees and zero minimums. There are several managed account choices. The first is a robo service that charges 0.00%. It is able to do this because Schwab makes money from cash positions and the ETF’s that are traded. There is a $5,000 minimum.

Next is a hybrid system that imposes a $25,000 minimum and costs $30 per month. Finally, there are old school packages without the computer algorithm placing trades. These range from 0.65% to 1.35% with minimums starting at $100,000.

Schwab offers the larger range of options, so it’s our pick in this category, too.

Financial Education and Security Research

With Betterment’s automated-only investing services, there’s not much on the broker’s website in terms of financial education or research. There are no stock or ETF profiles, for example. During our research, we also didn’t find any resources on general investing topics. We did find tools to analyze a portfolio held at the brokerage firm.

Schwab offers much more. There are stock and ETF profiles with enormous amounts of information, including analyst reports, trading data, earnings histories, and much more. Videos and articles cover a wide territory of investing topics, such as how to place an options trade to planning for retirement.

Betterment loses again.

Websites

During our investigation, we didn’t find much of a website at Betterment. This shouldn’t be all that surprising, given the company’s style of investing. The site is easy to navigate and offers several important portfolio management tools. But there are no charts, trade tickets, or other tools one would expect from a self-directed firm.


Betterment vs Schwab


Schwab provides a very different experience. The company’s website by itself provides lots of trading resources, from graphs with tools to a trade bar to an order ticket. There is a browser platform available at StreetSmartCentral.com that offers tick-by-tick charting and futures trading.


Schwab versus Betterment


Schwab once again is our choice.

Mobile Apps

Betterment’s mobile platform is about as simple and user friendly as its website. Like the website, there aren’t any self-directed trading tools, only account management tools. We were disappointed not to find any advanced features, like mobile check deposit; although Touch ID is enabled for Apple devices.

Moving onto Schwab, we do get a lot of advanced trading tools (in addition to Touch ID). Our research revealed a trading ticket with DRIP settings, multiple order types, several duration choices, and order addendums like all-or-none. Charting comes with horizontal mode, multiple graph styles, and technical studies. Mutual funds and option contracts can be traded on the platform, and we especially like the incorporation of mobile check deposit.

Schwab is top dog again.

Other Tools

Besides its iPhone app, Schwab also has an app that functions on iPad. Betterment does not. Another tool Schwab customers get is a platform for Apple Watch. It can provide a watchlist and a small chart. Finally, Schwab has a skill for Amazon Echo devices. It has the ability to deliver audio quotes, market updates, and information on a watchlist.

We have to give the victory here to Schwab.

ETF’s

Although Betterment specializes in ETF trading, Schwab clients also get access to US-listed ETF’s. In fact, Schwab offers more funds as Betterment uses a select list of ETF’s that have low expense ratios. Furthermore, Schwab has a list of 500+ commission-free ETF’s. While Betterment doesn’t charge any commissions, it does charge an annual asset-based fee, which Schwab doesn’t do in either self-directed accounts or its base robo package. Besides the availability of funds, Schwab has a lot more ETF resources on its website.

Once again, Schwab is the winner.

Other Services

Both Schwab and Betterment provide dividend reinvestment services. Schwab’s is the traditional type that takes dividends from an individual security that pays them and reinvests the funds into that security. Betterment, on the other hand, purchases shares of a portfolio’s assets that are underperforming.

IRA’s are available at both brokers. Schwab offers more types. Schwab also offers free automatic mutual fund investments, which Betterment obviously doesn’t provide.

Victory once again goes to Schwab.

Recommendations

If you’re new to the world of investing, we suggest you go with Schwab. You can open either a managed account or a self-directed account or both. Schwab’s customer service is also better than Betterment’s, and this will help beginners.

If you plan to actively trade stocks and ETF’s, once again we suggest Schwab.

If you plan to set up a retirement account, or need assistance with retirement, or just plan to take a long-term view with a taxable account, we recommend Schwab.

If you need cash management tools like checks and a debit card, definitely go with Schwab.

Charles Schwab vs Betterment - Final Thoughts

Betterment is known for its low-cost ETF service, but that doesn’t mean it’s a superior service to what else is out there. .


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