Charles Schwab vs. E*TRADE



Charles Schwab vs E*TRADE Range of Offerings
Asset Charles Schwab E*TRADE
Short Sales  Y Y
No-Load, No-Fee Mutual Funds  7,600+ 4,400+
Bonds  60,000+ 50,000+
Futures/Commodities  Y Y
Futures Options  Y Y
Complex Options  Y Y
Robo Advisory Y Y
Cryptocurrency  Bitcoin Futures Only Bitcoin Futures Only
International Exchanges Y N
Forex  N Y
Fractional Shares  Y Only through dividend reinvestment program
OTCBB and Penny Stocks Y Y

Order Types

The Charles Schwab and E*TRADE platforms both provide multiple order types. Schwab offers one-triggers-other (OTO), one-triggers-two orders (OTT), one-cancels-other (OCO), and market-if-touched (MIT), market-on-open (MOO), and orders contingent on spread price, price, volume, and time on its desktop platform. StreetSmart Edge, Schwab’s desktop workstation also offers traders an opportunity to enter more sophisticated orders, such as a limit order with an OCO contingent order and stop loss and profit taking levels.

E*TRADE offers contingent, bracketed, OTO, OCO, one-triggers-a-one-cancels-other (OTOCO) on its website and desktop platforms, and contingent and OTO orders on its mobile platforms. We give Schwab the slight edge because of the specialized orders available through its desktop application.

Trading Technology

Schwab provides price improvement on more than 96.6% of its orders by using their own proprietary order routing system with average execution speed of 0.04 seconds and a savings to investors averaging $27.68 per order. E*TRADE also uses its own system for order routing and the average time to fill an order is approximately 0.08 to 0.10 seconds depending on the shares, with price improvement of $8.62-5.44 per order.

Both firms offer portfolio margining, but Schwab offers fractional shares while E*TRADE only offers fractional shares in its dividend reinvestment and robo-advisor offerings. Both fill their orders quickly, but Schwab gets the small edge over E*TRADE for trading technology.

Costs

Both Schwab and E*TRADE were quick to adopt commission free trading, so neither company charges commissions for stock and ETF trades. E*TRADE charges options traders with less than 30 trades per quarter $0.65 per contract and $0.50 per contract for active traders with over 30 trades. Schwab charges $0.65 per options contract for all traders. For those trading over the counter stocks, Schwab does not charge anything, while E*TRADE charges $6.95 for less active investors and $4.95 for more active account holders. Neither company charges inactivity or minimum fees, and both charge $25 for broker assisted trades.

In fixed income, Schwab does not charge commissions for T-Bills, Notes, bonds, TIPS, and new certificate of deposit (CD) issues. At E*TRADE, secondary market transactions for corporate, municipal, agency, and zero coupon bonds, and CDs are $1 per bond, with a $10 minimum and $250 maximum commission. E*TRADE is less expensive for trading mutual funds outside of the no transaction fee program, with E*TRADE charging $14.95 per trade compared to $49.50 at Schwab. 

At Schwab, margin rates are lower than E*TRADE’s 9.70% for account balances of $10,000. Schwab charges by account size with these breakpoints: Under $25K 8.575%; $50K 8.075%; $100K 7.125%; $250K 7.075%; $500K 6.825%. Both companies also have stock loan programs allowing account holders to benefit from lending their shares. For futures traders, E*TRADE and Schwab both charge $1.50 per contract, per side, with the exception to this E*TRADE’s $2.50 per side fee for Bitcoin futures.

Finally, the robo-advisor portfolio minimum is just $500 at E*TRADE, and charges 0.30% on assets, compared to Schwab’s $5,000 minimum for the basic program that does not charge fees and $25,000 for the premium platform along with a one-time $300 setup fee and monthly advisory fee of $30.

While it is a bit of a mixed bag in regards to which products you specifically trade, Schwab offers lower margin rates and fixed income fees, giving it the edge in costs. E*TRADE may still appeal to lower balance account holders that want robo-portfolios. Traders focusing on options trading are likely to find Schwab and E*TRADE pricey in comparison to lower cost brokers catering to this market.

Account and Research Amenities

Both E*TRADE and Schwab have excellent research, news, account analytics, screeners, calculators, and tax reporting tools for account holders. We found Schwab to have the better ETF screener, but both brokers had strong screeners in addition to options specific screeners. E*TRADE’s charting offering is better than Schwab’s because it has better drawing tools and you can visually see orders and positions on charts. While you can open a trade ticket from charts on Schwab, it’s really just opening an order ticket, with no levels, orders, and no integration with the chart. E*TRADE’s charting also had more technical studies. We give E*TRADE the edge here because of the better charting, but both platforms have strong offerings for customers relative to account and research amenities. 

Portfolio Analysis

Both Schwab and E*TRADE have excellent suites of analytics for accounts, margin, and buying power, in addition to calculators covering retirement and long term planning. They also offer all the tax reporting tools an investor needs. The brokers are both excellent in this category, but Schwab’s overall suite of offerings has the small edge over E*TRADE.

Education

Again, both platforms have a broad range of educational offerings, including many articles, videos, and classes. E*TRADE has a lot of good information for new investors covering long-term investing, tax planning, and options and futures. E*TRADE also recently introduced Virtual Learning Environments, which are full-day structured online events with targeted learning objectives, such as beginner options. Schwab also has a very robust array of educational offerings.

Both E*Trade and Schwab increased the volume of webcasts and online events as a result of the Covid pandemic, but Schwab offers more of this programming than E*Trade. Schwab also has a branch network to assist customers further, while E*Trade only has 29 branches. We give the edge to Schwab in the education category because of the volume of information, including five hours of dialing live programming, and a branch network with professionals that can also educate investors.

Customer Service

Both E*TRADE and Schwab offer customer service to account holders and potential customers with 24/7 support by phone and via chat with a live person. The support received is generally good, and customers can speak with live brokers and financial advisors. The average hold time at Schwab is 102 seconds. At E*TRADE, this had been 44 seconds to reach someone from 2017 through 2019, but the significant increase in customers and trading activity since the Covid pandemic has resulted in a higher hold time.

E*TRADE is working to ramp up their capacity, but Schwab’s customer service is better, and they also have a branch network that can provide service. Schwab has the advantage in customer service. 

Security

Schwab and E*TRADE are tied when it comes to security. Both Schwab and E*TRADE both have strong security that includes two-factor authentication for all platforms, and neither company suffered any serious platform outages in 2020.

Our Verdict

While E*TRADE and Schwab are very competitive with each other, we give the nod to Schwab by the smallest of margins. This is because Schwab has better customer service, a larger breadth of educational offerings, superior screeners, and lower commissions for fixed income. That said, the competition was very close, and other investors may find E*TRADE the better choice should they prioritize better charting and lower options commissions for active traders.

Both brokers are excellent choices for the majority of investors and traders, with the exception being highly sophisticated traders that want control over routing their own orders and lower options commissions. 

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Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.

Read our full methodology.



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