Schwab and Scottrade are two well-known brokers who oversee millions of accounts and offer a wide range of investment services. So which firm offers its customers the better value? The following analysis will reveal the answer.
Scottrade vs Schwab: Fees and Account Minimums
Trading ETF's and stocks at Scottrade and Schwab costs $7 and $4.95 respectively. Derivative traders pay an extra $0.70 and $0.65 per contract at these firms. Using a human broker at Scottrade is $32, while Schwab charges a slightly higher $33.95.
Schwab offers a list of more than 200 exchange-traded funds, called OneSource ETF's, that are free to trade. The list includes funds from WisdomTree, PowerShares, and
State Street Global Advisors. Disappointingly, Scottrade does not offer any commission-free ETF's.
Both firms charge no account maintenance fees or inactivity fees. Scottrade requires a minimum initial deposit of $2,500 to open an account. Schwab has a minimum of $1,000.
However, this requirement can be waived by opening a Schwab checking account along with the trading account.
For clients thinking about retirement, both firms offer no-fee IRA's.
This category goes to Charles Schwab.
Charles Schwab vs Scottrade: Mutual Funds
Schwab offers its clients more than 3,500 OneSource mutual funds, which have no load and no transaction fee. Mutual funds that do have a transaction fee are a steep $76
on the purchase side, although there is no charge to sell.
Scottrade clients are able to trade over 14,000 mutual funds. Almost 3,000 come with no transaction fee and no load. No-load funds that do have a transaction fee are $17
to buy and sell. Load funds are free to buy, although they cost $17 on the sell side.
Because of much lower commissions Scottrade wins here.
Research and Education
At Schwab, investors can access third-party reports for free. Clients also receive the very helpful Schwab Equity Ratings, which analyze over 3,000 U.S. equities and give them an A, B, C, D, or F grade. The firm also publishes report cards on mutual funds, which customers can access at no cost.
Research and educational tools are on the meager side at Scottrade. The broker offers no research reports for its clients. Scottrade does provide an investment education page on its website entitled Knowledge Center. Here, traders will find articles and videos on various securities topics.
Schwab wins this category.
Customer service reps at Schwab can be reached over the phone 24 hours a day, 7 days a week. The broker currently has over 325 branch locations. Schwab also has customer service in Chinese. Furthermore, the broker has phone numbers for clients who travel outside the U.S.
Scottrade advertises its many brick-and-mortar locations. The broker currently has more than 500 branches throughout the United States. Unfortunately, phone service is not available around the clock.
Too close to call in this category.
Scottrade’s website is fairly simple. Traders must remember their account number to log in, because the website has no capability to create a user ID. For traders who want a trading platform, Scottrader Streaming Quotes is available. The broker's most sophisticated platform is ScottradeELITE, a desktop trading platform available to active traders.
Schwab's web site is more advanced, but easy to navigate nevertheless. Available within the web site is Trade Source, a web-based trading system. The broker’s most advanced
platform is StreetSmart Edge, available both in cloud and desktop formats. Clients who have an account balance of at least $1,000 can use StreetSmart Edge at no cost.
This category goes to Schwab.
Schwab has apps for Android, Apple, Kindle Fire, and mobile web. The app is easy to use. Traders can transfer funds, make a mobile check deposit, connect with customer service, place trades, or even pay bills.
Scottrade clients can trade on Apple, Android, and mobile web. Features include options research, account and position data, and market news. Disappointingly, some features are
missing, such as the ability to make a mobile check deposit, or reach out to customer service.
Pretty close in this category.
Schwab has its own FDIC-insured bank. A checking account comes with checks and a Visa debit card, both free of charge. ATM fees are reimbursed internationally, and the account comes with the regular $250,000 insurance. The broker recently made Schwab Bank the standard core account for Schwab brokerage accounts.
Scottrade also has its own bank with FDIC insurance. It provides both savings and checking accounts with the standard protection of $250,000. A checking account comes with checks
and a debit card free of charge. When opening a Scottrade bank account, clients must have at least $500 in a Scottrade brokerage account.
Schwab and Scottrade are even in this category, also.
By accessing Schwab's Global Investing Services department, investors can trade stocks in foreign markets using a regular securities account. The firm also offers a single
international account where users can trade stocks in 12 foreign markets using 8 currencies.
Scottrade does not offer global investing opportunities. However, it provides a much more useful for most investors
Flexible Dividend Reinvestment Program that allows clients to invest dividends into stocks of any company.
The brokers are tied here.
Charles Schwab Versus Scottrade: Results
There were four ties, Schwab (full review) came out ahead in three categories, and Scottrade
(full review) won in one category. But based on significantly lower commissions on mutual funds, which
for active investors could mean big savings over the years, Scottrade has an edge over Charles Schwab for many investors.