Vanguard vs. Charles Schwab: Brokerage Review and Comparison (2020)

Vanguard vs Schwab: Broker Comparison

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Decidedly two of the best stock brokerage firms in existence today, both Charles Schwab and Vanguard are household names.

While both platforms offer benefits to larger accounts, they have very different styles when it comes to investing with an online broker.

If you want the full breadth of services and tools, Schwab definitely provides a full-service approach. Vanguard has options as well, but they are not as robust or as fresh as the latest tools and mobile options from Charles Schwab.

Schwab is also making big moves. In November 2019, the online broker announced that it was taking over TD Ameritrade in 2020. So how will Schwab rate against old school Vanguard?

Overview of Vanguard vs. Schwab

Vanguard

  • For folks who want to retire and are looking to invest in steady mutual funds, Vanguard has shown to increase earnings after taxes for its clients.
  • Higher fees for stocks and ETFs is a huge setback in an industry that is now mainly commission-free on these products.
  • Some education and research tools, such as stock screeners and retirement planners.

Charles Schwab

  • More education resources and updated courses will help beginner and advanced investors learn about different methodologies.
  • Commission-free stock, ETF, and per-leg options trades are available through Charles Schwab.
  • 24/7 customer support is available for all clients.
  • Mobile apps available with streaming quotes and customizable charts, as well as complex market orders.

Trading Experience: Vanguard vs. Schwab 

Vanguard deals mostly with higher wealth clients and retirement plans. Long-term investments matter more to this brokerage, so trading technology is a bit behind.

Active traders who rely on streaming quotes and customizable charts will not find any of that with Vanguard. However, they do have a mobile app and offer the ability to trade on mutual funds at a reasonable rate.

In comparison, Schwab has a variety of tools and platforms to trade on. You can use their website to check in on your trades or place orders, or there is always the StreetSmart Edge platform, which delivers some of the best trading technology and streaming real-time data. You can customize charts to show you any kind of data set with Schwab’s toolkit.

The “All-in-One-Trade” tool on Schwab is another feature that makes it easy to build orders using asset classes. This is an innovative way to save time and ensure that your trades are executed all at once.

Schwab also monitors trade execution quality and provides a report on every trade to show price improvements. In addition, the broker announced it was creating an Intelligent Income Tool in 2020.

A quick comparison clearly shows the advantages of Charles Schwab:

With Vanguard:

  •  No active trader shortcuts or tools
  •  No complex options orders
  •  No streaming quotes or real-time data
  •  Very simple trading for retirement and long-term investors
  •  More advantages for larger accounts

With Schwab:

  •  Several platforms to trade stocks, ETFs, mutual funds, options, and more
  •  All-in-One-Trade Ticket platform allows you to build automated orders in any asset class
  •  Improve your price points with trade execution reports from Schwab
  •  Intuitive mobile app and customizable charts

Mobile Platform and New Technology

Charles Schwab Mobile Trading Platform

Vanguard offers some simple apps for Android, iOS, and Kindle Fire users. While it’s easier to use than the clunky website, it’s generally not made to do much more than check your balances, add funds, and place trade orders without any streaming data.

While the app does display quotes, these are delayed and need to be updated. If you have a question about anything, you’ll need to look online to find answers, as there is no customer service chat or other tip functionality.

Meanwhile, Charles Schwab offers syncing across platforms through its cloud mobile apps. It has lots of customizable features and elements, allowing users to customize their trades, watchlists, and charts.

Everything streams in real-time, and you can access education and webinars through the mobile as well. Trading tools such as options analysis are built into the StreetSmart mobile app. This rich feature-set is one of the reasons Schwab’s app is one of our favorites for buying and selling stocks.

For those who like to use mobile to trade every day, you might not be satisfied with Vanguard’s simple offering.

Vanguard mobile app includes:

  • Simple interface that allows you to check your portfolio and make long-term trade decisions
  • No streaming quotes or real-time data
  • Upload funds through mobile check deposit

Charles Schwab’s mobile app includes:

  • Customization options that sync up across platforms
  • Streaming quotes and real-time data
  • Streaming video and education materials
  • Perform complex analysis and use other tools with the StreetSmart app

Education, Research, News, and Stock Trends

There are a few stock screeners available with Vanguard. These allow you to review stocks and see a page of information, and there is a separate ETF screener. However, these do not use streaming data, so these pages may not be accurate.

You also can only look at options chains when performing research, and it’s less informative than what investors find on other brokerage websites. You can use retirement calculators and planning tools to ensure that you get the right mutual funds and manage some risk with your long-term portfolio.

Charles Schwab goes a bit overboard with the amount of tools they offer, but is that really a bad thing? If you’re like me, you like having options. And with Schwab, there are all kinds of options for research including Suisse, MarketEdge, Reuters, CFRA, Morningstar, and many others.

For real-time trends and news, you can check out articles from Globe Newswire, Associated Press, Business Wire, MT Newswires, and more.

Schwab rates each tool and generates grades for each associated company. There are over 3,000 partner companies to choose from. You can use the Idea Hub on the StreetSmart platform to generate options trading ideas, and investors can initiate a deeper analysis to ensure that the trade is good before placing an order.

In addition, charts use streaming real-time data through the StreetSmart platform, and you can click on any stock to place a trade at that price.

In essence, Vanguard offers some retirement tools including:

  •  Screener tools for stocks, ETFs, and mutual funds
  •  Retirement calculators and planning tools for long-term investors
  •  Basic charting and some analytical data that you have to manually refresh

Charles Schwab offers the following tools for retirements and IRAs:

  •  Tons of research tools and screeners for all assets
  •  Use the Idea Hub to generate trading strategies and new options trading ideas
  •  StreetSmart platform offers customizable charts with streaming data

In comparison to Vanguard, Charles Schwab really goes above and beyond to ensure that their investors have the tools to succeed whether they are beginners or intermediate traders. It has streaming videos, resources, webinars, and tutorials. The brokerage giant also started Schwab Live Daily, which offers 4 to 7 hours of videos each and every trading day.

Schwab recently started the Choiceology podcast, which includes information about behavioral economics and how investors can make better strategic decisions. Schwab also publishes “On Investing” four times a year to help its investors with tips and trends.

The Schwab Learning Center offers pretty comprehensive learning sources for all skill levels as well. Trading Paths offers smaller lessons that combine videos, articles, and workbooks to help clients get a better understanding of complex trading strategies and topics.

Beginner investors and large retirement accountholders will get the most out of Vanguard’s education, which includes:

  •  Basic education and tutorials for long-term, retirement investing
  •  Occasional webinars and older videos for mutual funds and retirement

Charles Schwab offers more education tools and an entire learning center that helps with:

  •  Beginner, intermediate, and advanced trading philosophies
  •  Schwab Live Daily provides up to 7 hours of video content per trading day
  •  Deep range of tutorials and courses with workbooks for more in-depth understanding

Retirement and Mutual Funds

Vanguard offers a plethora of retirement calculators and over 16,000 mutual funds. So, how does Charles Schwab stack up?

Schwab has over 3,000 no-transaction-fee mutual funds, as well as its own proprietary indexes and ETFs. While it’s expense ratios are not as low as Fidelity or Vanguard, there are over 600 funds on Schwab’s platforms with a 0.50% or lower interest rate.

You can also use the Personalized Portfolio Builder tool to create a more diverse portfolio based on risk tolerance, time horizon, and financial goals.

Security

Both Vanguard and Charles Schwab offer secure logins and security challenges when a login is not recognized. However, Schwab offers a security guarantee that covers 100% of any losses if unauthorized activity caused the issue.

Customer Support

Vanguard offers the basic phone and email support options with hours set from Monday through Friday, 9:00 AM to 10:00 PM. There are no chat bots or live help offerings on the website or mobile app.

If you have an issue, you may spend time on the phone trying to reach someone during the day unless you have a large account. Vanguard uses tiered support to address issues, so if you have an account with less than $50,000, you may have a harder time getting help.

Charles Schwab offers free and managed account services, but one thing is true: Schwab has excellent customer service and offers 24/7 support to all customers.

Charles Schwab Customer ServiceYou can also get live help on the website or in the mobile app. If you want to talk to someone, you can quickly pick up the phone and get help in minutes. However, you will be charged extra for broker-assisted services as this is considered part of their full-service account options.

FAQs About Vanguard and Schwab

Which brokerage is better for retirement: Vanguard or Schwab?

Vanguard and Charles Schwab offer traditional IRAs, Roth IRAs, and rollover IRAs, as well as individual 401ks, SEP IRAS, and SIMPLE IRAS. Both of these online brokers offer retirement planning and mutual funds.

They also have managed account options. Vanguard was shown to be one of the best when it comes to ROI after taxes, however.

When it comes to tools, Schwab has better retirement and risk analysis software. You can use MarketTrack Portfolios to watch index funds, for example, and it will show you different risk tolerance levels.

Which brokerage has more ETFs: Vanguard or Schwab?

Charles Schwab is considerably better when it comes to ETFs. Schwab offers 2,000 plus ETFs across several asset classes and mutual fund companies. However, Vanguard only offers 1,800 ETFs from around 100 companies.

Does Charles Schwab charge a maintenance fee like Vanguard?

No, Charles Schwab does not require a minimum deposit or charge a maintenance fee. However, Vanguard does charge a $20 per year maintenance fee that is waived if you have at least $10,000 in Vanguard ETFs.

Which Costs More: Vanguard vs. Schwab

Currently, Vanguard has not changed its commission schedule like most other brokers from October 2019. After TD Ameritrade reduced commission fees to $0, so did Charles Schwab and many others.

Today, you’ll pay $7 per equity trade and $7 plus $1 per options contract under Vanguard. In addition, Vanguard charges considerably high interest for margins.

Schwab took away all commission fees for stock and ETFs, as well as per-leg fees for options. If you like penny stocks, you’ll be surprised to know that Schwab also eliminated commissions for OTCBB stocks.

Options are only $0.65 per contract. While margin rates are slightly higher than Interactive Brokers, they are lower than Vanguard, TD Ameritrade, and E*Trade.

Verdict

While both of these brokerages offer incentives for large accounts, the best option is likely Charles Schwab due to its vast library of resources, commission-free trades, and 24/7 customer support.

If you’re new to investing and looking for a reliable broker for beginners, there is no question in my mind that Charles Schwab has a more beginner-friendly platform.

You can find answers to all of your questions, and they have built an intuitive education system that includes videos and worksheets to help investors learn basic and advanced trading methodologies.

Even though Vanguard has been shown to increase investments for long-term, large account holders, Charles Schwab has also shown that it helps investors manage their risk and earn more with their long-term portfolios as well.

Ultimately, investors get a better experience with Schwab than Vanguard in this match-up.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (protechcap.com).