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Our Take

As considered one of the biggest discount brokerages on the earth, 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 an unlimited amount of educational content for investors of all levels, and the corporate has made significant efforts to make more products and tools available to lively traders and ESG investors. 

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

Introduction

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

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

Pros & Cons

Pros Explained

• Multiple platforms for a various customer base: Schwab has multiple resources for a various customer base. Whether you’re a brand new investor or an experienced investor, Schwab provides educational resources, customizable platforms and tools, 24/7 customer support, flexible digital formats, top notch evaluation tools, and top-rated screeners. 
• Excellent ETF research
• Commission-free stock and ETF trading: Schwab offers free stock and ETF trading. Investors should not have to pay a fee to purchase and sell online stocks and ETFs. As a 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 an in depth educational overview of what a robo-advisor is, what it does, and the way to determine if it is true for you. Schwab offers AI-enhanced voice technology customer support support for advisors. Schwab’s mobile App has an AI feature called Schwab Assistant, which allows customers to make use of voice commands to do things similar to 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 can be Schwab’s first lively ETF and is sub-advised by Ariel Investments. A good thing about this fund is that Ariel Investments assigns proprietary ESG-risk rankings to every company within the fund.

Cons Explained

• Higher margin rates: Schwab has higher margin rates than a few of its competitors. The present 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 which have a sweep feature. Which means that excess funds aren’t mechanically swept in these accounts. 
• No fractional shares ETF trades: Schwab doesn’t offer fractional shares trading for ETFs. The corporate offers Schwab Stock Slices, which allows customers to purchase fractional shares of stock in any company throughout the S&P 500.
• No direct investments in cryptocurrencies: For cryptocurrency investors, Schwab offers several indirect crypto investing options relatively than crypto spot trading options.

Usability

Competition is powerful amongst online brokers. Schwab stays a top performer because the corporate continues to soak up customer feedback and make improvements. Depending on the sort of account you wish to open, it may well take as much as 20 minutes to open an account online. Navigating through the varied platforms just isn’t complicated for investors of any level. There are numerous 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 can be cloud-based
• Schwab Intelligent Portfolios, an automatic investing tool that uses a robo-advisor

Irrespective of which platform customers use, they’ve the power to ascertain 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 beneficial tools and resources to assist them navigate through the varied platforms that Schwab offers. Revolutionary technology makes the experience higher with access to features similar to real-time data streams and the aptitude to convert screening results to a watchlist. Also, Idea Hub is offered to develop ideas for trades using various criteria, and the info 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 lively traders which may rely on this popular feature. StreetSmart Edge’s chart evaluation features include trend lines and other popular drawing tools. The power to chart on the Schwab website is restricted, but customers are still in a position to achieve what is required in helping them make decisions. Moreover, trade orders might be placed contained in the chart window in StreetSmart Edge. For users of the mobile app, nonetheless, the power to attract on and place other charting tools on charts just isn’t 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 alter settings to specify the data you see in your account.

Mobile Trade Experience

Gaining access to your Schwab accounts through a mobile app is convenient. Nonetheless, it’s somewhat limiting because not all the features within the desktop software platforms and the web site platforms can be found within the app. There are some limitations on the forms of trading orders you’ll be able to make. As mentioned earlier, there are not any drawing and charting tools within the mobile app.

Safety features within the mobile app use the most recent biometric technology. Customers can access their accounts using face ID, their fingerprint, or a preset passcode. Customers may make a deposit within the app by taking photos and following the instructions within the app to process the deposit. Customers select the account they have the desire to make the deposit into, enter the quantity of the deposit, take a photograph of the back and front of the check, review the deposit to confirm all the things is correct and the photos are clear, after which submit. 

The mobile app defaults to the summary view, which shows brokerage and futures totals. From there, you’ll be able to either click on an account or click positions from the menu at the highest left. On the Markets page, you’ll be able to see an indices graph and may change the available time frames to see the difference within the graph. On this page, you may as well see how the investment is acting on various indexes and stock exchanges, and far more. The mobile app doesn’t have as many features as StreetSmart Edge does. Nonetheless, it might be an ideal option for newer investors and investors who aren’t as lively in reviewing their investments’ performance.

Range of Offerings

As a full-service broker, Schwab offers a various range of investments. Schwab continues so as to add to its existing offerings as technology advances and the demand for other investments similar to ESG investments increases. Since Schwab has acquired TD Ameritrade, each corporations’ customers now have access to additional investment products. With the finished integration of thinkorswim®, lively traders will give you the option 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 offered 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 fundamental order types similar to market, limit, stop, and trailing stops. It also offer market if touched (MIT), market on close (MOC), market-on-open (MOO) type orders. Moreover, 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, similar to a limit order with an OCO contingent order.

Trading Technology

Charles Schwab uses a proprietary wheel-based router 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 permits Schwab to keep up its position in price improvement and supply customers with cost savings. Schwab’s Retail Execution Quality Statistics for the third quarter of 2022 indicate average execution of 0.04 for S&P 500 stocks, with a median 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 prices for its collection of services and products. An additional advantage is that customers have access to a wealth of educational resources, news, and research that’s free, including access to third-party research. The corporate has a track record of reducing fees to maintain up with competition, and the recent elimination of the $30/month NASDAQ TotalView® fee is a great example. Schwab doesn’t have the bottom margin trading fees amongst its competitors, so margin traders may have to do a price versus advantages evaluation 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 shopper.
• Fixed Income: No commission for Treasury bonds, Treasury notes, and Treasury inflation-protected securities (TIPS). There may be a $1 commission for secondary market bonds similar to 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 thus far and shared on the corporate website. Currently as much as $25,000 in margin has a rate of 12.575% while $100,000 is at 10.825%. 
• Mutual Funds: There is no such thing as a commission on the mutual funds in Schwab’s Mutual Fund OneSource platform, but there may be a transaction fee as much as $74.95 for all other mutual funds. There is no such thing as a transaction fee for trades under $100.
• International stocks: There may be a fee of $6.95 for trades on Canadian exchanges. There may be a $50 foreign transaction fee for foreign stock trades placed on the American over-the-counter (OTC) market.
• There are numerous fees and minimums required for certain accounts. There is no such thing as a fee and no required account minimum for basic accounts. There are some management fees and minimums for investment accounts similar to the Schwab Intelligent Portfolios accounts. There are not any commissions or advisory fees for the fundamental Schwab Intelligent Portfolios account, but there may be 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 reduces the upper the quantity of assets within the account, and there may be a $1 million minimum. For the Schwab Advisor Network account, fees vary by advisor and the account minimum is $500,000.
• There are not any fees to transfer funds, but there are fees to wire funds out of your Schwab accounts. The wire transfer fee is $25 but when the transfer is accomplished online, the fee is $15.
• There may be a $25 service charge for broker-assisted trades for many of the fundamental accounts.
• There are not any maintenance, inactivity, or software access fees.
• There are not any fees to make deposits or withdrawals or to shut an account (apart from ACAT cost).

How This Broker Makes Money From You and for You

Charles Schwab was considered one of the primary online brokers to supply commission-free trades for stocks and ETFs. This caused some fierce competition within the industry for other brokers to do the identical. Now, investors don’t must pay fees to purchase and sell shares, but you need to be aware that there are still indirect costs related to trading. Brokers still must generate income indirectly.

• Payment for Order Flow (PFOF): Although Schwab has commission-free trading for stocks and ETFs, there are still costs related to other forms 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. Essentially the most recent report for the third quarter of 2022 is offered. The period we checked out 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 choice PFOF is above average for the brokers we assessed.
• Portfolio Margining: Some Schwab accounts qualify for portfolio margining, which allows customers to keep up overall margin costs and risks for his or her portfolios. Schwab’s margin rates aren’t the bottom of its competitors. 
• Securities Lending: Customers who join the Securities Lending Fully Paid program can offer shares to a stock loan program and receive a part of the income generated through loaning the stock.
• Interest on Money Balances: Schwab earns interest on the surplus amount of money held in customers’ accounts. The money is deposited into regular bank accounts relatively than money market funds. The checking account deposits are insured at levels which can be higher than FDIC levels through insurance policies that Schwab has with Lloyds of London. Customers can earn higher interest on money market funds and may monitor their accounts to make sure their funds are placed in these accounts relatively than regular bank accounts that earn lower interest. 
• Price Improvement: Charles Schwab’s Order Execution Advantage is the way it meticulously monitor the standard of its order execution process. Schwab is a pacesetter in executing orders at prices which can be higher than the National Best Bid and Offer (NBB) market prices. Schwab reports that on order sizes for S&P 500 stocks starting 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. Based on Schwab, its customers received $512 million in price improvement on equity and option orders within the third quarter of 2022.

Account and Research Amenities

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

Stock Screeners

Charles Schwab has screeners with advanced features similar to pre-built screening reports. Customers can create customized stock screens based on various criteria similar to dividend yield, price performance, analyst rankings, 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 helpful tool for purchasers 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 web site. An excellent feature of the ETF and mutual fund screeners is the aptitude 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 forms of options screeners, customizable screeners and predefined screeners. With the customizable screeners, customers can use specific criteria similar to volatility or assigned rate of return. A few of the criteria within the customizable screeners is identical criteria utilized 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 seek out trades based on their very own assessment of an investment using various criteria similar to profit percentage, max gain or loss, or assigned rate of return. Customers may place orders throughout the results. Full Option Chains allows customers to view real-time quotes. The Idea Hub in StreetSmart Edge helps customers discover options trading opportunities.

Fixed Income Screeners

The fixed income screener allows customers to pick a bond type, similar to corporate, municipal, or treasury. Customers can use secondary menus to review bonds based on industry, sector, or states. Additional filtering options can be found for purchasers similar to maturity dates, price, and rankings. Schwab also has a CD and treasury ladder builder, and customers may screen bond ETFs.

Tools and Calculators

Schwab customers have access to quite a few tools and calculators to fulfill their needs. These tools and calculators cover a big selection of components including tax efficiency, portfolio evaluation and allocation, pricing, and retirement. Moreover, customers can easily access various reports similar to tax-related reports.

Charting 

Schwab has limited charting features on the web site and the mobile app. Customers cannot draw on the charts in Schwab Mobile or StreetSmart Mobile. Nonetheless, StreetSmart Edge’s chart evaluation features include trend lines and chart drawings. Schwab provides a brief tutorial on the way 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 permits customers to discover chart patterns, price targets, and time horizons. Customers may maintain a trading journal and use Schwab’s Strategy Tester tool for backtesting.

Trading Idea Generator

The Idea Hub might be utilized by customers to acquire ideas about different areas of the market utilizing predefined screens. A few of the criteria within 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. Within the mobile app, customers can get real-time breaking news and market data. Associated Press, Business Wire, GlobeNewswire, and briefing.com are among the many offerings. Other news and research can be available for a fee, and plenty of of those services have prolonged trial periods available.

Third-Party Research

All of Schwab’s platforms have a research component, including third-party research organizations, similar to Moody’s and Morningstar. Moreover, customers can find analyst rankings for investments.

Money Management

Charles Schwab offers two money management options for purchasers: savings and investment money and on a regular basis money. The savings and investment money options are a high yield savings account, money market fund accounts, and certificates of deposit (CDs). The on a regular basis money options are uninvested money in your Schwab brokerage and retirement accounts and a high yield checking account that’s 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; nonetheless, Schwab not offers the sweep feature for many recent and existing accounts. For accounts with a sweep feature, excess funds aren’t mechanically swept into the accounts unless you set it up. Schwab’s bank sweep feature for worker profit plans does mechanically sweep excess funds right into a Schwab Trust Checking account.

Fractional Dividend Reinvestment Plan (DRIP)

Schwab customers can determine whether or not they wish to reinvest the dividends they earn from their dividend paying investments. Schwab allows customers to make fractional dividend reinvestments relatively than requiring enough money to purchase a full share.

SRI/ESG Research Amenities

Schwab has options for purchasers who’re in search of 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 individually managed accounts that give attention to socially responsible investing.

Portfolio Evaluation

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

Customers may maintain a trading journal and use Schwab’s Strategy Tester tool for backtesting. Customers on the lookout for robo-advisors and AI features can use the Schwab Intelligent Portfolios tool, an automatic investing tool that uses a robo-advisor. The robo-advisor consistently monitors your portfolios and mechanically rebalances them when crucial.

Education

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

Customer Service

For anyone who could also be overwhelmed by all the data on the web site, help just isn’t far-off. Schwab has 24/7 customer support available by phone or live chat. Schwab Assistant is offered on the mobile app, allowing customers to make use of voice commands to seek out needed information or get answers to questions. Most product pages have FAQs and links to additional information and resources. 

• Customer support is offered 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 may be a fee for this service, and pricing is predicated on the sort of trade.
• The chat feature provides helpful and timely support. We had a nice customer support experience through Chat. It took lower than two minutes for a live representative to attach after we entered in information and submitted it.
• Many of the product pages on the web site have a Common Questions section near the underside of the page. There are also links to additional information and resources also.
• Schwab offers a satisfaction guarantee for purchasers. If a customer isn’t satisfied with services received, Schwab will refund eligible fees related to the shopper’s dissatisfaction. Eligible fees include programs fees, commission fees, and other fees which can be listed in Schwab’s pricing guide.

Security and Reliability

Schwab’s platforms are secured to fulfill industry standards.

• Two-factor authentication is offered 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 make use of their voice to access their accounts. Customers only must 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 started sending out letters in March 2022 to tell customers in regards to the breach.

Transparency

Schwab provides detailed, clear information on its pricing structures and costs. The broker also provides deeper details in regards to the specific investing costs related to each sort of investment. A proof of every sort of cost is provided, along with a breakdown of the prices 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, alternative, and trading. 

Schwab dedicates a complete section to details about margins and margin loans. On this section, you can see videos explaining what margin trading is and the advantages and risks of margin trading, a hypothetical example that features each 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 give attention to putting the shopper first and getting the most effective 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 mess of accounts and services to fulfill the needs of a brand new investor or an experienced investor. Based in your specific needs and goals, you’ll be able to definitely find an account that can fit into your plans. There are 12 overall account types, covering all the things from trading to saving for education, and Schwab provides details about each account type and their advantages. 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 worker 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 mix of each corporations’ offerings will meet the needs of each sort of investor, including lively traders, those that only wish to use robo-advisors, and anyone who’s captivated with investing in socially responsible corporations. It’s impressive how Schwab manages to maintain its finger on the heart beat of innovation in addition to changes within the environment, changes within the economy, and social changes. It’s reflected within the big selection of diverse services and products the corporate provides and the forms of clients it targets. 

A brand new investor may get overwhelmed by all of the content provided on the Schwab website, but there isn’t a shortage of high-quality assistance available through multiple methods. Although Schwab provides many helpful solutions, there remains to be room for improvement because the broker doesn’t offer fractional shares trading for ETFs, its margin rates are higher than other brokers’ rates, and it doesn’t have an automatic sweep feature for excess funds. That said, key elements recently brought over from the widely popular thinkorswim® platform show how Schwab is taking the precise steps to stay a top online broker and a solid alternative for any investor.