Overview of Schwab and Interactive Brokers
If you have plans to open an investment account soon, be sure to consider Charles Schwab and Interactive Brokers (IBKR). Both companies provide a lot of
financial services, and you’ll definitely want to examine everything they offer before choosing a brokerage firm. We’re going to scrutinize
these two in important categories and then make some recommendations for you.
Commissions
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
Charles Schwab
|
$4.95
|
$76 ($0 to sell)
|
$4.95 + $0.65 per contract
|
$0
|
$0
|
|
IB
|
$1+
|
$14.95
|
$0.25+ per contract
|
$0-$240**
|
$30
|
|
Firstrade
|
$0
|
$0
|
$0
|
$0
|
$0
|
Services
Promotions
Interactive Brokers: Open account and get $200 for a friend you refer.
Charles Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.
Firstrade: $0 commissions + up to $200 in transfer fee rebates.
Trading Software
The Interactive Brokers website is used mostly for account management, investor education, and hosting a lot of helpful resources. Trading takes place on the company’s advanced desktop platform Trader Workstation. During our research, we found a lot of great tools that even professionals will enjoy. For example, direct-access routing is incorporated into the software, and several venues are available. We also liked the ability to specify an order for extended hours only.
Other great features include the ability to trade investments on foreign exchanges. After entering a ticker symbol, the software returns all possible markets where investments are trading. For instance, entering “GM” in the quote box returned bond, futures, stock, and option choices.
We also liked the platform’s very advanced charting capabilities. Right-click trading is available, and we were able to use drawing tools, many technical studies, and comparisons. The ability to show a chart full screen is another strength.
Read TWS review »
When we looked at Schwab, we were also very impressed. In some areas, Schwab actually outperforms IB. The Schwab website can be used to buy and sell securities, and there’s a handy trade bar near the bottom of the browsing window. Although trades can’t be placed directly on it, it does provide useful and quick info.
If you didn’t want to use the trade bar or website, you could open up StreetSmart Central, which is a user-friendly and browser-based trading environment. Because it is borrowed from optionsXpress, there are many good derivative features.
On top of all these great trading tools, Schwab also offers StreetSmart Edge, which is a desktop program. It doesn’t quite measure up to Trader Workstation, which has a professional and global feel to it. StreetSmart Edge is designed to be more user-friendly for non-professionals. Nevertheless, it has advanced charting, option chains, streaming video news (which Trader Workstation doesn’t have), direct-access routing, and Level II quotes.
Read StreetSmart Edge review »
Mobile Platforms
Interactive Brokers didn’t stop with its sophisticated desktop platform. It knew its customers would need to trade on-the-go, which is why it offers a very advanced mobile app. The platform incorporates a watchlist that shows a list of stocks and the amount of price change since the previous day’s close.
Charting on the app offers multiple graph styles, multiple intervals, and multiple time periods. We especially liked the ability to rotate a graph horizontally and use technical studies.
There are several order types on the app’s trade ticket. We found exotics such as if-touched orders. On the down side, we didn’t find any streaming business news or a check deposit function. Options can be traded on the app, but not mutual funds.
Schwab’s mobile app does have a check deposit tool. Furthermore, it offers CNBC and mutual fund trading. However, we didn’t find the ability to buy and sell futures, warrants, or CFD’s. These can be traded on the IB app. Neither platform offers direct-access routing, which will disappoint professional-level traders.
In the charting department, Schwab offers full-screen horizontal charts, comparisons, company events, and technical indicators. Multiple graph styles are available. The platform’s trading ticket offers several order types and time-in-force choices. Option chains are available as well.
Schwab’s greatest strength here is market news, which includes not only CNBC, but also European and Asian versions of the news channel.
Customer Support
Charles Schwab offers customer service all hours, and this policy includes weekends. The broker-dealer offers foreign language support and on-line chat. There are hundreds of Schwab brick-and-mortar locations as well. There is a self-help section inside the very well-designed Schwab website that allows customers to perform all sorts of account management functions.
Interactive Brokers offers customer service for American clients from 7 till 7, CST, Monday through Friday. More limited hours are available on Sunday, and the broker is closed on Saturday. Because IB caters to global traders, there are also customer support channels available to international clients. The IB website has a chatbot that is able to answer basic questions. There is also a human chat service for account holders. One difference between Schwab and IB in this category is IB’s lack of physical locations.
Mutual Funds and ETF’s
Although Interactive Brokers focuses more on stock and option trading, the company does offer over 10,000 mutual funds. Many have zero load and zero transaction fee, another impressive feat.
Schwab, which manages its own mutual funds, only offers 5,700 total funds. We found more than 3,000 that were no-load, no-transaction-fee securities.
For ETF traders, both brokerage houses provide access to US-listed funds. Interactive Brokers goes a step further by offering access to global ETF’s. Schwab, on the other hand, has created a large list of commission-free ETF’s; something which IB has neglected.
Promotions
Interactive Brokers: Open account and get $200 for a friend you refer.
Charles Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.
Recommendation
If you think you’re going to buy and sell mostly exchange-traded funds, then we will recommend Schwab here. The broker’s list of commission-free products is hard to pass up.
We also endorse Schwab if customer service is important to you. The company’s 24/7 service and nationwide branch locations aren’t matched by Interactive Brokers.
For global investors, we have to suggest Interactive Brokers over Schwab. The latter doesn’t offer near the access to foreign markets that IB customers have. If you plan to trade warrants, contracts for difference, or futures, then Interactive Brokers is the better choice as well.
In the technology department, Trader Workstation seems to have the edge over Schwab’s platform. If you don’t plan to use a desktop system, Schwab’s website-based tools will be a wise choice.
Interactive Brokers vs Charles Schwab Outcome
Charles Schwab and Interactive Brokers both offer a lot of great investment resources. Knowing beforehand what assets you plan to trade will help you pick the right firm.
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