Investment firms: Vanguard vs. Charles Schwab
Quick Verdict
Vanguard is suitable for passive, long-term investors focused on low-cost index funds and ESG investing, while Charles Schwab is better for active traders seeking diverse investment options and comprehensive trading platforms.
- Vanguard excels in low-cost index funds and ESG investing options.
- Charles Schwab offers a wider array of investment products and robust trading platforms like thinkorswim.
- Vanguard's customer service has a reputation for being unresponsive, while Charles Schwab offers 24/7 support.
Key features – Side-by-Side
| Attribute | Vanguard | Charles Schwab |
|---|---|---|
| Investment Options | Stocks, bonds, ETFs, mutual funds; over 160 no-transaction-fee Vanguard mutual funds and more than 3,000 funds from other companies; specializes in index funds. | Stocks (with fractional shares), ETFs, mutual funds, options, bonds, CDs, futures and forex (via thinkorswim), spot Bitcoin and Ethereum ETFs (no direct cryptocurrency trading) |
| Account Minimums | No minimum to open an account; mutual funds typically have minimum investments ($3,000 for Admiral Shares, $3,000 for Investor Shares, $1,000 for Target Retirement Funds and STAR Fund); ETFs have no minimums. | No minimum for most accounts, $25,000 for non-US clients, $5,000 for Schwab Intelligent Portfolios |
| Expense Ratios & Fees | Average expense ratio for ETFs and mutual funds is 0.07%, industry average is 0.44%; no trading commissions for stocks, ETFs, and Vanguard mutual funds online; $25 annual fee applies to brokerage and mutual-fund-only accounts. | No account opening or maintenance fees, no inactivity fees, commission-free trading on stocks and ETFs, $0.65 per contract for options, up to $74.95 for some mutual fund purchases (thousands of funds available without transaction fees), $25 service charge for broker-assisted trades, $6.95 for OTC trades, $1 per bond (min $10, max $250), $25 for wire transfers, $49.95 short-term redemption fee, $50 full account transfers |
| Trading Platform & Tools | Designed for long-term, passive investors; limited features; lacks real-time news, quotes, and charts; redesigned main menu and support center. | Schwab.com, Schwab Mobile, thinkorswim (desktop, online, mobile app) |
| Customer Service | Phone service and online help library; reputation for being unresponsive at times; tiered service based on investment amount. | 24/7 live chat and phone support, generally competent, knowledgeable, and friendly |
| Mobile App Functionality | User-friendly; check balances, track performance, make trades, deposit checks, and review transaction history; lacks price alerts; cannot trade the full range of Vanguard products. | Schwab Mobile app and thinkorswim app available |
| ESG Investing Options | Variety of ESG funds across different asset classes; mutual funds that invest in companies with strong ESG practices; several exclusionary ESG products across equity and fixed income. | Not available |
Overall Comparison
Vanguard: Low-cost, ESG focus; Schwab: Diverse options, robust platforms
Pros and Cons
Vanguard
Pros:
- Wide array of investment options
- Affordable access to diversified funds
- Lower-cost portfolios tend to outperform higher-cost ones
- Low expense ratios
- Commission-free trading for stocks and ETFs
- User-friendly mobile app
- Educational resources available
- Offers various retirement account options
- Offers tax-advantaged investing options
- Offers ESG investing options
Cons:
- Mutual funds have minimum investments
- Trading platform has limited features
- Web trading platform can be difficult to navigate
- Customer service can be unresponsive
- Mobile app lacks price alerts and full range of tradable products
- Hidden costs due to portfolio turnover
- Transaction fees for some non-Vanguard fund families
- $100 processing fee for account closure or transfer
Charles Schwab
Pros:
- Wide array of investment products
- No minimum balance requirements for most accounts
- Commission-free trading on stocks and ETFs
- Multiple trading platforms including thinkorswim
- Extensive research and education resources
- 24/7 customer service
- Various tax-advantaged accounts available
Cons:
- Options trades have a $0.65 per contract fee
- Some mutual fund purchases can cost up to $74.95
- Broker-assisted trades have a $25 service charge
- OTC trades have a fee of $6.95
- Web and mobile app experiences can be clunky
- Some customers have reported long hold times and uninformed representatives
- Mobile app is more limited than the website
- Hidden fees in robo-advisor product (Schwab Intelligent Portfolios) in the past
User Experiences and Feedback
Vanguard
What Users Love
- Mobile app is user-friendly with a modern design
- Vanguard app is clearly laid out and gives you all the information you'll need on your accounts
- New Snapshot feature allows you to check your account balances and other important info straight from the login screen
Common Complaints
- Vanguard's platform is designed for long-term, passive investors.
- The platform has limited features and lacks real-time news, quotes, and charts.
- The web trading platform can be difficult to navigate.
- Vanguard has a reputation for being unresponsive at times.
- Vanguard's customer service number is hard to locate for personal investors, and it takes a long time to get a representative on the phone.
Value Perception
- Lower-cost portfolios tend to outperform higher-cost ones.
- Vanguard's average expense ratio for ETFs and mutual funds is 0.07%, while the industry average is 0.44%.
- Vanguard's U.S. average fund-weighted expense ratio is 8 basis points, while the industry average is 47 basis points.
Charles Schwab
What Users Love
- Customer service is often praised for being competent, knowledgeable, and friendly.
- The Schwab Mobile app is generally considered highly functional and reliable.
- The thinkorswim platform is highly regarded by advanced traders.
- Schwab receives high marks for its research offerings and educational resources.
Common Complaints
- Some customers have reported being put on hold for extended periods, transferred multiple times, and encountering uninformed or rude representatives.
- Some users find the app clunky compared to more mobile-first brokers.
- The mobile app is even more limited than the Schwab.com website.
Value Perception
- Schwab is generally considered low-cost, with no commissions on stocks and ETFs and no inactivity fees.
- Schwab waives account minimums for clients who commit to depositing $100 or more each month via direct deposit or Schwab MoneyLink.