Schwab at a glance
What Charles Schwab is
You may have seen the "Talk to Chuck" ad campaign from Charles Schwab and wondered who the heck the firm's namesake founder is. Well, in a nutshell, Schwab is a longtime advocate of small-time investors who has fought on their behalf for better service at lower prices.
Back in the 1970s, Schwab advocated a radical new concept of slashing fees and paying his employees based on their workload – not commissions from products they sell to customers who may not even need them. It sounds an obvious business model now, and the appeal is one reason Charles Schwab & Co. grew from one Sacramento office to a global investing powerhouse, but few firms in that time were eager to give up their juicy fees at the time.
The populist and low-cost philosophy shines through even today in the company's online brokerage platform, which offers some of the lowest per-transaction fees out there without shortchanging investors on either customer service or the quality of research and educational resources.
What Charles Schwab costs
While there are a few ways to get cheaper commissions out there based on your specific habits or other perks, Schwab is among the most affordable platforms for the typical investor.
Standard pricing for stock trades is $4.95 and options are $4.95 plus an additional $0.65 per contract. When it comes to the competition, that's at the low end of all pricing models across online brokers.
Above and beyond that is a list of 200+ commission-free ETFs that are available to all account holders, and can drive costs even lower. The details of those ETFs make them even more attractive, as Schwab doesn't charge redemption fees for swing trading (other brokers can charge as much as $19.99 if you sell within 30 days after buying a commission-free fund). The suite of ETFs is also high quality and not peopled with niche funds or duplicates, spanning 15 different fund families including SPDR, Powershares and Pimco in addition to its in-house Schwab offerings.
Oh, and lest you think Schwab is aggressively pushing people to its products for no reason, keep in mind it undercuts even low-cost leader Vanguard on these ETFs. Consider its Schwab U.S. Large-Cap ETF (SCHX), an index fund that holds 760 of the biggest U.S. corporations like Apple (AAPL) and Walmart (WMT). This diversified ETF charges measly 0.03% annually in expenses – just $3 a year on every $10,000 invested. That's literally the cheapest fee structure for a large cap fund that I know of!
Whether you're a buy-and-hold investor looking for funds or a more active trader looking to make tactical bets, Schwab is flexible and affordable.
What Charles Schwab offers
Some discount brokers offer a tough choice. Do you want to keep your cost structure really low, or do you want a powerful platform with great research that is easy to understand and use?
Schwab doesn't make you pick one, however. Despite its incredibly affordable commissions, it also offers some of the best research and most user-friendly tools out there.
Just a few features of note include:
What Charles Schwab lacks
It's really hard to find a fatal flaw with Schwab, because it does so many different things well. However, one area of frustration came from technological hiccups.
For instance, Schwab offers some next-level tools for active traders that run on Java and weren't native to my laptop's browsers, Chrome or by Microsoft Edge. You can install a plugin or download a different version like Firefox that is supported, but Schwab simply should have used a different protocol than Java if it cared about making these tools accessible.
Also, these pro-level tools -- Level II and StreetSmart Edge among them – are out of reach for most customers as they demand 120 or more trades in a year, or $1 million in Schwab balances lest you pay a maintenance fee. Given the high quality research that's native to the standard platform and first-time investors, that seems like a major hurdle to get over before you can upgrade.
Similarly, it was a bit clunky to use Schwab's mobile interface with charts that try to do too much on a small screen.
All in all, however, these are minor problems. The vast majority of investors looking to do real research on a desktop via standard tools and just look for updates or on-the-go trading via mobile will be more than satisfied.
Charles Schwab is best for...
Schwab is quite honestly a great platform for anyone and everyone.
If you're a new investor, there's plenty of educational resources to tap and a very user-friendly interface that puts common destinations prominently in the top level navigation. But if you're a seasoned trader, there is a great archive of research reports and screening tools to find new ideas.
If you want to actively trade, the standard cost structure is among the best out there for both stocks and options. But if you just want to own funds, the huge list of commission-free ETFs and low-expense ratio Schwab offerings make this platform as cost effective as Vanguard and other low-cost shops.
In many ways, this flexibility is the biggest selling point of all. As you grow and evolve as an investor, either through education or simply because your life situation changes, Schwab is very well equipped to grow and evolve with you.