Charles Schwab: Services Offered, Fees, Comparison to Peers

Charles Schwab is one of the biggest financial institutions in the United States. The company has a market capitalization of more than $47 billion and annual revenue of more than $8.6 billion. The company was started 45 years ago and has more than 365 branches in the US and more than 1,200 financial consultants. As of 2018, the company had more than $3.25 trillion in assets under management, 11.6 million active accounts, 1.3 million banking accounts, and 1.7 million retirement plan participants.

What Services Does Schwab Offer?

As described above, Schwab is a big financial company that offers many services to its clients. Its size enables it to make money through commissions it charges its investors, asset management and administrative fees, and interest from the customer deposits. The company has 6 main products and services:

  • Brokerage services. In these services, the company allows its customers to buy and sell various financial assets.
  • Mutual funds. The company allows investors to invest in third party mutual funds through its Mutual Fund Marketplace and Mutual Fund OneSource service.
  • Exchange-Traded Funds. This service allows investors to invest in the company’s ETFs and others provided by third party providers.
  • Advice solutions. The company offers investment advice and managed portfolios to its customers.
  • Banking. Schwab offers checking and savings accounts to its customers. It also offers mortgages and lines of credit.
  • Trust. In this, the company offers trust custody services, personal trust reporting, and administrative trustee services.

What Assets Can You Invest With Schwab?

Schwab is the biggest discount brokerage in the United States. Through the company’s services, you can invest in several financial assets. Some of these assets are:

  • Stocks. These are shares of publicly listed companies. The company offers both local and international stocks. Examples of stocks are those of Apple, Google, and Microsoft.
  • ETFs. An ETF is a fund that can be traded in an exchange. There are hundreds of ETFs in the United States. Some of these ETFs have been created by Schwab. A good example of an ETF is the VanEck Vectors Gold Fund.
  • Mutual Funds. A mutual fund is an investment vehicle made up of a pool of funds from many investors. These funds invest in stocks, bonds, and other securities.
  • Bonds. With Schwab, you can invest in bonds and other fixed income products like CDs, money market funds, and annuities.
  • Options and futures. These are sophisticated financial products that allow investors to invest based on the future. For example, a call option gives you the right to buy an asset at the strike price.

What is the Pricing of Schwab?

Schwab makes money primarily from the commissions and trades that it operates. Unlike other brokers, Schwab does not charge account and transfer fees. Its commissions for trades are relatively affordable as well. For stocks that are executed online, the company charges a commission of $4.95 per trade. For automated phone call trades, investors pay an additional fee of $5. The same pricing is applied for third-party ETFs. However, Schwab ETFs don’t have any execution fees.

For mutual funds, the company has no charges for those funds bought through the Schwab Mutual Fund OneSource. However, for third-party mutual funds, the company charges up to $49 per trade.

For options, the company charges $4.95 + $0.65 per contract. For those made through the phone, the company charges $5 more.

For futures and futures options, the company charges $1.50 per a futures contract. For fixed income products like bonds and commercial paper, the company charges rates between $0 to $4.95. The table below compares the charges of Schwab compare to those of other companies.


What is Schwab Intelligent Portfolios?

Schwab Intelligent Portfolios is a robo-advisor product that was formed in 2017. The product was launched as part of the company’s reaction to the emergence of other robo-advisor companies like Betterment and Wealthfront. These companies use algorithms to buy and sell investments. To use the Schwab Intelligent Portfolios, all you need to do is answer a few questions and then get a diversified portfolio based on your risk tolerance and timeline. After doing this, the algorithms will continue to monitor and rebalance the portfolio as shown below.

SchwabSource: Schwab


If you are thinking of investing in the US financial market, Scwab is one of the companies you can use. The Intelligent Portfolios product is ideal for people who don’t have the experience in investing. It is also ideal for people who want to diversify their earnings. However, if you want to invest in stocks and ETFs, we recommend that you use a company like Robinhood that charges no transaction fees. While the $4.95 charged by Schwab is not all that high, the reality is that the costs can add up, especially when you make several trades per day.

Crispus (BSc and MBA) is a finance professional with more than a decade experience as a financial analyst, writer, researcher, and trader. Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, Investing Cube and Seeking Alpha. He also runs a forex education firm. Follow him on Twitter: @crispusnyaga and read more about us.