Is Charles Schwab a Scam?
Are you thinking about opening an account with Charles Schwab? If you're worried about its reliability, make sure to read our research before you decide.
Is Charles Schwab Safe?
Charles Schwab is monitored by several regulatory agencies that ensure it adheres to the law. The SEC, or Securities and Exchange Commission, is a government agency that makes sure companies like Schwab follow financial rules. They can fine companies or take them to court for breaking these rules. Schwab has been registered with the SEC since 1971, which shows it has been around for a long time.
Schwab is also part of FINRA, the Financial Industry Regulatory Authority, which sets and enforces rules for brokerage firms. Being a member of FINRA, Schwab has to comply with these rules. Its FINRA ID for brokerage services is 5393.
Schwab's advisory services are separate and have their own FINRA ID, which is 151739.
Schwab's BrokerCheck profile, maintained by FINRA, lists 289 disclosures, which are claims from clients about various issues. Schwab typically settles these claims through arbitration without admitting or denying the allegations.
Beyond the SEC and FINRA, Schwab's futures trading activities are regulated by the National Futures Association (NFA), with an NFA ID of 0477394.
Free Charles Schwab Account
Visit Schwab Website
Charles Schwab BBB Review
The Charles Schwab Corporation, which includes their banking, securities, and futures operations, has a profile on the Better Business Bureau (BBB) site but is not BBB accredited. Companies are not required to seek BBB accreditation.
Schwab has had 93 complaints resolved by the BBB in the last year, involving issues like unresponsive customer service and account locks. For more information, click here.
Despite these complaints, Schwab has an A+ rating from the BBB, which is their highest rating.
Insurance
Schwab's bank accounts are insured by the FDIC up to $500,000 per customer, with Schwab Bank’s FDIC ID being 57450.
Securities accounts are protected by SIPC, the Securities Investor Protection Corporation, which covers up to $500,000 per customer, including up to $250,000 in cash. Schwab also has extra insurance through Lloyd’s of London that covers up to $150 million per account, with a cash limit of $1.15 million.
Futures accounts are not insured, which means they carry more risk.
Free Charles Schwab Account
Visit Schwab Website
Is Charles Schwab Safe Judgment
Charles Schwab is not a scam. It's a legitimate, well-established brokerage firm. Like any investment, there's always a risk of losing money, but Schwab is as secure as they come. If you're comfortable with the usual risks of investing, continue reading for more details on what Schwab offers.
Charles Schwab Review
Schwab provides comprehensive services to help investors manage their finances. Here’s our assessment of what Schwab offers:
Schwab Investments Choices Review
At Schwab, investors can choose from two main types of accounts: one where professionals manage the portfolio and another where investors make their own trading decisions. There are many different account types available, including accounts for small businesses, trusts, estates, minors, retirement savings, and charity donations.
Those who prefer to trade on their own can invest in a wide range of assets, including:
- Stocks from the U.S. and other countries
- Bonds and other income-generating investments
- Options
- Futures and options on futures
- Annuities
- Forex
- Various types of funds like mutual funds, closed-end funds, and exchange-traded funds (ETFs)
Schwab does not offer trading in cryptocurrencies.
Managed accounts have fewer investment choices but include the guidance of professional advisors. The least expensive managed option is a digital advisor, which is free if you maintain a large balance. For $30 a month plus a one-time fee of $300, you can add personalized advice from a human advisor.
More traditional investment management services are also available with fees ranging from 0.30% to 0.80% of your account balance each year.
Customer Service
Schwab's clients can talk to a representative on the phone any time, day or night, all week long. The futures trading department also offers 24-hour support, but only on weekdays. Banking services are available during more limited hours. Schwab provides support in multiple languages, including Spanish and Chinese.
On Schwab’s website, there's a chat feature available 24/7 and a tool for uploading documents directly.
Additionally, Schwab’s website offers many self-service options. The company also has a large number of physical branches across the U.S. and a few international locations, which are great for face-to-face service.
Website Tech
Schwab's website is user-friendly, allowing access to futures, banking, and investment accounts all with one login. The site includes a permanent trading bar at the bottom of the screen, which shows a pop-up chart. However, you can't place orders directly from this bar, which is a limitation.
The trading ticket on the site lets you buy, sell, short sell, and cover. It supports basic order types like market and limit orders. There's also a menu for switching between stock and options trading with several preset trading strategies.
- Iron butterfly
- Vertical put
- Rollout spread
The website offers useful charting tools, though it lacks a full-screen view. This is compensated by the Thinkorswim platform, which includes advanced charting and order types, available from Schwab’s Trading Hub.
Charles Schwab App Review
Schwab offers two mobile apps. The Thinkorswim Mobile app is designed for advanced trading but has some display issues. It is specifically for futures trading.
The main Schwab app offers a better trading experience but doesn't support futures. It includes specific features for trading options and mutual funds. Highlights of the app include:
- Artificial intelligence features
- Mobile check deposit
- Bill payment capabilities
- Personal watchlist
- Access to media like podcasts and CNBC
- Advanced charting tools
The main drawback of the regular Schwab app is that it doesn’t provide alerts.
Desktop Software
Thinkorswim is Schwab’s advanced desktop trading software. It includes additional features like Level II quotes, profit-loss diagrams, and direct-access routing. Other benefits include:
- Easy account switching
- Advanced technical analysis tools
- Diverse charting options
- Sophisticated trade ticket with conditional orders
Thinkorswim also includes a practice mode, which is great for learning the platform without financial risk. There are no minimum requirements to use Thinkorswim.
Pricing for Self-Directed Accounts
Self-directed traders at Schwab don’t pay regular account fees, and there are no minimum balance requirements. There are no commissions for trades of U.S.-listed stocks and ETFs. However, commissions do apply for over-the-counter securities and international stocks.
The cost for trading over-the-counter stocks is generally $6.95. If the stock is from a foreign country, the commission is $50. Fees for trading on international exchanges vary, for example, ¥2,000 in Japan and €19 in Germany.
Mutual fund trades cost $49.95 or $74.95, depending on the fund. There are no fees for selling mutual funds. Options cost $0.50 per contract, and futures are $2.25 per contract. Bond transaction costs vary.
Charles Schwab Margin Review
Both cash and margin accounts are available. Retirement accounts can also include margin trading, allowing day trading.
Schwab’s website and app show the required maintenance margin for securities, which is helpful for traders.
Schwab provides excellent educational materials for learning about margin trading, but the margin rates can be high. For small account balances, the rates are high but decrease as the balance increases.
Open Charles Schwab Account
Visit Schwab Website
Investment Education
Schwab offers a wealth of educational resources on its website and app, covering a broad range of topics. Here are some examples:
- Financial planning tools
- Guides on thematic investing
- Consultations with financial experts
- A welcome center for new clients
- Market insights and analysis
- A tax information hub
- Educational podcasts
- A digital newsletter with investment insights
The mobile app also features educational podcasts, YouTube playlists, and live CNBC streaming.
Miscellaneous Services
DRIP Availability: Schwab automatically reinvests cash dividends into more shares at no extra cost.
Cash Management Features: Schwab’s bank offers checking and savings accounts. The checking account comes with a debit card that has no foreign transaction fees and offers unlimited ATM fee rebates.
Extended Hours Trading: Schwab provides trading sessions before and after the standard market hours.
Initial Public Offerings: Schwab clients can access new stock offerings early through the IPO hub on the website.
Fractional Shares: Investors can buy fractional shares of the 500 companies in the S&P index.
Recurring Mutual Fund Purchases: Schwab allows investors to set up automatic, periodic purchases of mutual fund shares.
Individual Retirement Accounts: Schwab offers several types of IRAs.
Recommendations
ETF and Stock Trading: With advanced tools, automatic dividend reinvestment, and the ability to buy fractional shares, Schwab is a solid choice. Fidelity also offers a wide range of fractional-share investments.
Retirement Savers and Long-Term Investors: Schwab provides a comprehensive suite of services including target-date funds, annuities, specialized retirement accounts, education savings plans, and in-depth financial planning.
Beginning Investors: Schwab’s digital advisor is an excellent start for newcomers. Using Thinkorswim in demo mode can also provide valuable trading experience.
Small Accounts: Schwab’s digital advisor service requires a $5,000 initial deposit, and personalized advice services start at higher balances. For small investors, a self-directed account with no minimum balance is recommended.
Mutual Funds: Schwab offers a vast selection of over 6,000 mutual funds, many without purchase or sale fees, along with robust research tools.
Free Charles Schwab Account
Visit Schwab Website
Charles Schwab Review Judgment
Schwab is a trustworthy investment firm offering a wide array of tools for traders and investors of all skill levels.
Updated on 6/28/2024.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
|