Charles Schwab Review



Charles-Schwab-LogoThere can’t be an investor on the planet who hasn’t heard of Charles Schwab, they have to be one of the best known names amongst all the discount brokers.

These days they’re much more than just a broker, they now offer a full range of financial products, everything from brokerage services to bank accounts from a network of over 300 local branches.

They were the first true discount broker, transitioning from a standard full service broker in 1975. Since then they’ve gone on to become a multinational corporation managing many billions of client’s funds.

But big doesn’t necessarily mean better, so we’ve taken a closer look at this stockbroking powerhouse. We’ve tested their platform, carried out test trades and checked their prices against the competition. So read our review to find out if Charles Schwab is the right broker for you.

 

Fees & Commissions

  • Stocks and ETFs: $8.95
  • Options: $8.95 plus $0.75 per contract
  • Mutual funds: $49.95. Mutual Fund OneSource® Funds – free
  • Minimum deposit required to open account: $1,000

Website & Sign-Up

A quick look at their website and it would appear that Schwab are still living in 1993. They have a poorly laid out screen which is squashed into one corner. It could nearly fit on my iPhone full size and this is not the mobile version.

This website is in serious need of a makeover, it looks and feels dated not to mention difficult to use,  it desperately needs to be optimized for a more modern screen resolution. I think most of Schwab’s potential customers will have moved to a flat panel monitor by now.

But beauty is in the eye of the beholder, so lets find out what its actually like to use. To fully test out their service I signed up for an individual brokerage account, the sign-up process was pretty straight forward. If you’ve never opened a brokerage account before, this is what you’ll need.

  • Your social security number
  • Your driver’s license
  • Your employer’s name and address (if applicable)
  • Statement information for assets or cash you may want to transfer

Once you’re account is open all you have to do is fund it and your ready to start trading. Unlike most other brokerage firms Schwab don’t offer a virtual trading facility, so there’s no way of testing out their platform before you commit any real money.

Fortunately we’ve given their platform and trading tools a thorough going over to save you the trouble of finding out the hard way.

Trading Tools

Charles Schwab offers three platforms to choose from, there’s the standard simplified online trading platform which is suitable for beginners or smaller traders, this comes complete with basic stock screeners, charts and options strategy finder.

Then you get the enhanced web trading platform streetsmart™ which is the one I choose to use, this is similar to the simplified platform but adds streaming news, customizable watch lists and interactive charting to the mix.

Finally you get streetsmart EDGE™, this is a top of the range platform that comes complete with chart pattern recognition which automatically scans charts for predefined chart patterns and notifies you of their occurrence.

Schwab-Platform

 

There are a number of other nice tools bundled with streetsmart EDGE™ but to access them you’ll need to keep a balance of $50,000 or more, so I’ll concentrate this review on the much more accessible streetsmart™ platform.

Streetsmart™ is a fairly basic platform on its own; it’s fairly easy to use and navigate around and has a nice feel to it. There are no fancy graphics to distract you; it’s just a good honest platform that’s fairly intuitive and easy to navigate around.

It doesn’t have one click trading like our favorite optionsXpress platform, but executing a trade is a fairly easy process. Just as a side not Charles Schwab now own optionsXpress so hopefully they’ll integrate some of their platforms features into future updates of streetsmart™.

But as it stands the streetsmart platform is a little on the basic side, I would have liked to see some of the more advanced tools and features that streetsmart EDGE™ offers included with this platform.

 

Pros

  • Excellent customer service
  • Over 300 local offices with 24/7 telephone support
  • Large selection of investment products
  • Low minimum balance requirement $1000
  • Free Dividend reinvestment

Cons

  • Expensive commission’s and fees
  • Below average trading tools for smaller traders
  • Out dated website
  • Lack of a user community, useful for both beginners and seasoned traders.

 

Summary

Charles Schwab is a very accomplished broker there’s no doubt about it, they have an excellent reputation a local branch presence and excellent customer support, but there are a number of things that let them down.

First of all there’s no virtual trading facility, there is no way I would I join a broker that didn’t offer this as I use it a lot for developing new trading strategies. I really don’t understand why a broker of Schwab’s size can’t find the time to develop a virtual trading platform.

Secondly there’s no real trading community, a trading community is vital for two reasons, first of all trading is a fairly lonely experience so keeping in touch with other traders Is good for your soul, but also having the opportunity to bounce trading ideas around is something that shouldn’t be overlooked, especially if you’re a beginner.

And finally there’s no getting away from it, Charles Schwab are expensive. There are a number of other brokers that are both cheaper and have better trading platforms than Schwab do.

If you’re a beginner then Charles Schwab are not the broker for you, they do offer education but its set at a high level and not suitable for beginners, the lack of a trading community and virtual trading facility also rules them out. If you’re a beginner you’d be better off choosing either Zecco or TradeKing.

For intermediate traders who like the comfort of dealing with a large multinational corporation, then TD Ameritrade is a better choice. Their basic platform is much more advanced and they offer cheaper trading costs to boot.

So is it worth joining Schwab? I really can’t think of a compelling reason to do so, there are other brokers that offer much more for much less no matter what kind of trader you are.




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