Robinhood vs Charles Schwab For 2020
In 2013, Robinhood shocked the brokerage world by launching zero-commission equity trading. But now Schwab has
followed suit. So which firm is the better value today? If you read the remainder of this article, you’ll find
out.
Commissions
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
Charles Schwab
|
$0
|
$49.95
|
$0.65 per contract
|
$0
|
$0
|
|
Robinhood
|
$0
|
na
|
$0
|
$0
|
na
|
|
WeBull
|
$0
|
na
|
$0
|
$0
|
$0
|
Services
1st Category: Available Securities
At Schwab, we discovered a very considerable assortment of investment vehicles. The unusual lineup of stocks, bonds, funds (including mutual, exchange-traded, and closed-end), and options is available. On top of these, the brokerage firm also provides access to IPO’s, penny stocks, over-the-counter stocks, and futures contracts (including bitcoin futures).
Robinhood customers have access to equities, ETFs, closed-end funds (but not mutual funds), option contracts, and seven cryptocurrencies. The company does not offer trading in fixed-income products, futures, and most OTC stocks.
Overall, we like Schwab better here.
2nd Category: Global Trading
Schwab customers can open an international trading account called the Schwab Global Account™. It offers access to 12 foreign exchanges. Trading is conducted in the local currency. Some of the exchanges include the Tokyo Stock Exchange, the Hong Kong Stock Exchange, and the Toronto Stock Exchange. Currencies include the Euro, the Australian dollar, and the British pound. The account comes with no fees, although Schwab’s $0 pricing schedule no longer applies.
Robinhood offers no foreign trading and so loses the second category.
3rd Category: Learning Materials
During our research, we found a ton of materials at Schwab devoted to security research and investment education. The broker’s screeners are able to look for investments based on many criteria. We found the tools effective and easy to use.
Stock profiles have lots of information. Earnings histories, financial statements, peer comparisons, news articles, option chains, and dividend information are just some of the important details shown. Analyst reports can be downloaded from 7 sources.
For general investment education, there are podcasts, articles, videos, seminars at hotels and branch locations, and infographics. Some of the topics we found include valuation of equities and taxation of Social Security benefits.
Robinhood does not offer any stock reports. The broker’s stock profiles have much less information than Schwab’s. Robinhood does have a basic stock/ETF screener; although it doesn’t have nearly the same number of search variables as Schwab’s. We did find a decent FAQ on Robinhood’s site that will help new customers.
Schwab easily wins here.
4th Category: Mobile Apps
Schwab’s mobile app has several good features that traders will like. First, there is streaming video news (courtesy of CNBC). There are also audio market updates (courtesy of Schwab). News articles are displayed, and more information is available on security profiles. For money management, the app provides a check deposit tool, bill pay, and funds transfer.
Charting comes with several tools, and horizontal viewing is possible. The order ticket has market, limit, stop, and stop limit orders. Trades can be placed for options and mutual funds. A second app offers even more advanced features, but we found it buggy.
Robinhood has one app, but it doesn’t have video news or mobile check deposit. Charting is on a pretty rudimentary level with no tools or horizontal mode. We did find news articles for individual securities. The app’s order ticket has limit, market, stop loss, and stop limit varieties. Cryptocurrencies and options can be traded.
Schwab takes the victory here.
5th Category: Websites
Now we will look at desktops and laptops. Schwab’s website has enormous amounts of good-quality info on it; but somehow it remains easy to navigate. A trade bar sitting at the bottom of the screen displays up-to-the-second trade data on any entered ticker symbol. The tool can also display a small chart and a list of news articles. Alerts, multiple watch lists, and option chains also make an appearance.
Charting on Schwab’s site offers company events, comparisons, lots of technical studies, and several drawing tools. A chart can be detached and saved but not displayed the full width of the monitor.
Traders who aren’t satisfied with Schwab’s very good website can instead use StreetSmart Central, the company’s browser platform. It offers full-screen charting with tick-by-tick price history, 12 display styles, multiple drawing tools, lots of technical studies, and a nice-looking interface.
Robinhood doesn’t have a browser platform. Instead, customers place trades on its website, which is pretty basic. It is easy to use, but charting doesn’t have any drawing tools, and there are only 2 display styles. The site does have a good watchlist, but there are no alerts.
Again, Schwab.
6th Category: Other Tools
Both brokerage firms in this challenge have apps for Apple Watch. Robinhood doesn’t have a skill for Amazon Echo devices, but Schwab does. Robinhood also fails to deliver a desktop platform, something that Schwab customers can use with no account requirements. Called StreetSmart Edge, the software delivers a lot of useful tools that aren’t available on the broker’s other platforms (e.g., direct-access routing).
Schwab here, too.
7th Category: Option Trading
While derivative trading is available at both brokerage houses, the quality of tools is strikingly different. Options can be traded on Robinhood’s website and mobile app, but there are no traditional chains. Multi-leg strategies are available on the mobile app, but not on the website.
At Schwab, traders can buy and sell contracts on the broker’s website, browser platform, desktop program, and both mobile apps. Greek values, Level II option quotes, and multi-leg strategies are available on some platforms.
Our pick is Schwab.
8th Category: Other Services
Schwab, but not Robinhood, has a DRIP service for cash dividends from securities. Same goes for IRA’s and automatic deposits into mutual funds.
Unquestionably, it’s Schwab.
Our Recommendations
Mutual Fund Traders: Schwab is the only pick here.
Long-Term Investors and Retirement Savers: Without mutual funds and IRA’s, Robinhood doesn’t strike us as a very good choice for retirement saving. Also, Schwab offers financial planning services and managed accounts, which some retirees could benefit from.
Beginners: Again, we have to go with Schwab. The broker’s learning materials are second to none; and we like its branch locations and 24/7 customer service. There’s a human chat service, too.
Stock and ETF Trading: Because both companies offer the same zero-dollar commissions for stock and ETF trades, this one comes down to educational resources and software. Schwab is hands down the better choice in both areas; so we once again recommend it over Robinhood.
Promotions
Charles Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.
Robinhood: Get one free $3-$7 value stock when you open an account.
Charles Schwab vs Robin Hood: Which is Better?
Robinhood may have been first to offer $0 equity commissions; but it isn’t the only one to do so today. With
similar (but not exact) pricing schedules, Schwab is clearly the better value. Value oriented clients will
find a better deal at the completely
$0 commission broker, Webull.
|