Comparison Introduction
E*Trade and Schwab offer a lot of investment services at low cost with great software. A more
detailed inspection, however, reveals that one has an edge over the other.
Cost
| Broker Fees |
Stock/ETF
Commission |
Mutual Fund
Commission |
Options
Commission |
Maintenance
Fee |
Annual IRA
Fee |
|
Etrade
|
$0
|
$0
|
$0.65 per contract
|
$0
|
$0
|
|
Charles Schwab
|
$0
|
$49.95 ($0 to sell)
|
$0.65 per contract
|
$0
|
$0
|
Services
| Broker Review |
Cost |
Investment Products |
Trading Tools |
Customer Service |
Research |
Overall Rating |
|
Etrade
|
|
|
|
|
|
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Charles Schwab
|
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Promotions
Charles Schwab: $0 commissions + satisfaction guarantee at Charles Schwab.
E*Trade:
Get zero commission on stock and ETF trades.
Category #1: Investment Methods
E*Trade:
Both managed and self-directed accounts will be found at E*Trade. The broker’s robo service costs 30 basis points per year. Traditional packages start at 35 basis points.
Self-directed customers pay no annual fees and get a larger selection of tradable assets. These include:
- U.S. stocks
- Bonds
- Funds (mutual, closed end, and exchange traded)
- Options
- Futures
E*Trade also offers life insurance through a partnership with Covr Financial Technologies, Inc.
Schwab:
Self-directed traders at Schwab have the same list of investment vehicles that E*Trade offers plus annuities and foreign stocks. Like E*Trade, Schwab sells life insurance through its website, but it goes a little further than E*Trade with offerings for disability insurance and long-term care insurance.
Schwab’s robo program costs nothing (because it keeps an oversized portion in cash). Its human-managed accounts start at 0.20%, although it takes a million dollars to get to that price point.
Winner: Schwab
Category #2: Customer Service
E*Trade:
Since being acquired by Morgan Stanley, E*Trade’s customer service has really gone downhill. Its website no longer has an internal messaging widget, and human chat has also been removed. In its place, the brokerage firm has inserted a robo chat bot. During our testing of the tool, we found it to be worthless.
A customer service rep can be reached over the phone around the clock. During our testing of this channel during the weekday, it took us on average an hour to get anyone on the line.
Despite the bad news, E*Trade’s website does still have a useful self-help section, and the brokerage firm continues to manage 29 branch locations throughout the U.S.
Schwab:
Schwab manages hundreds of brick-and-mortar offices throughout the U.S. and even has a few international sites.
Despite moving to $0 commissions, Schwab continues to offer human chat on its website. It does not have outgoing internal messaging, however. The account servicing section on the website is very extensive with many tools.
Like E*Trade, Schwab offers phone support 24/7. Schwab seems to have a greater emphasis on Chinese language support, although both brokerage firms do have customer service reps who speak Chinese.
Winner: Schwab
Category #3: Mobile Apps
E*Trade:
E*Trade customers get to use two mobile apps. One is a trading app, and the other is a basic app that offers trading and account management tools. Combined, the two platforms offer:
- Mobile check deposit
- Security screener
- Level 2 quotes
- Advanced order types
- Simulated trading
- Multi-leg option trades (custom built only)
- Horizontal charting with tools
- Bloomberg TV
Schwab:
Schwab also has two apps. Both of them have integrated option spreads, which E*Trade’s apps don’t have. But neither Schwab app has Level 2 quotes.
Highlights we really liked on Schwab’s apps include:
- Artificial Intelligence
- Very good horizontal charting with tools
- Order ticket with sell short button (same ticket from website)
- Check deposit
- Bill pay
- Learning center with videos, podcasts, and CNBC
Winner: Too close to call
Category #4: Websites
E*Trade:
E*Trade’s website is well-designed and easy to use. Multiple sections in the top menu make navigation fairly straightforward.
The broker’s order ticket has 7 trade types and 7 duration choices. A chart can be detached into its own window and almost displayed full screen. There are many tools, including lower comparisons and several plot styles.
Schwab:
Over at Schwab, we found another excellent website. There are more tabs in the top menu compared to its rival’s website with more drop-down choices.
Schwab also has a trade bar at the bottom of the screen, something we wanted to see at E*Trade but didn’t find.
Schwab’s order ticket has fewer trade types and time-in-force choices although it has more customization features, like do not reduce.
Similar to E*Trade’s website, Schwab’s website has charts with pop-out graphs and tools. But the graphs cannot be displayed full screen.
Winner: Schwab
Category #5: Other Software
E*Trade:
Besides its mobile apps, E*Trade also has a browser-based trading platform, a desktop program, and an app for Apple Watch.
The browser platform is easy to launch from the website and can be used to trade futures contracts. The software has some really advanced order types that the website doesn’t have, like hidden and One-Triggers-OCO. Multi-leg option strategies are integrated, too. Perhaps the best feature is a practice mode.
The broker’s desktop software requires a $1,000 account balance and has live financial news, profit-loss diagrams, Level II quotes, direct-access routing, and overall delivers a professional-level experience.
Schwab:
Schwab comes up with the same three additions that E*Trade has: watch app, desktop platform, and
browser system. While all three are quite advanced, the major difference here is that Schwab’s
desktop software has no account value requirement. It also has a practice mode, which E*Trade’s
desktop system lacks.
Charting and order entry are on a high level on Schwab’s browser program. The biggest advantage that Schwab has over E*Trade is that a simple trade ticket is integrated on a full-screen chart. On E*Trade’s software, you have to click on a bid or ask price and go back to the regular trade ticket on the dashboard.
Winner: Schwab
Category #6: Margin
E*Trade:
E*Trade’s website has a very good margin section that displays information on buying power and margin requirements. It can be found by going through these clicks: Accounts -> Portfolios -> Margin.
The brokerage house currently charges between 14.2% and 12.2% for loans.
Schwab:
Schwab’s website doesn’t quite have the same details on margin as E*Trade’s. Nevertheless, an asset’s profile does have a link for margin requirements. The link is underneath the Trade button in the upper-right corner of a security’s profile.
Schwab’s margin schedule starts at 13.575% and drops to 11.825%
Winner: Pretty close overall
Category #7: Miscellaneous Services
Initial Public Offerings: Both broker-dealers have IPO sections on their websites. They both have lots of information on public offerings along with details on how to sign up. E*Trade’s is underneath the Trading tab on its website, while Schwab’s will be found under the Trade tab.
Banking Tools: Both firms also operate their own FDIC-insured banks. Schwab has lower fees and more perks.
Extended Hours Trading: Once again, it’s available at both brokerage houses. E*Trade beats Schwab by a few minutes of total trade time.
DRIP Service: Also available at both firms free of charge.
Fractional Shares: Here, there is a difference. Only Schwab offers fractional-share trading in stocks (although just 500 in total).
Recurring Mutual Fund Purchases: It’s possible to enroll in systematic mutual fund trading at either firm.
Individual Retirement Accounts: Both firms have IRAs. E*Trade has something called the Complete IRA, which is only for customers over the age of 59½. But E*Trade has more IRA fees, such as a $25 early withdrawal fee.
Winner: Small advantage to Schwab
Our Recommendations
Mutual Fund Traders: We recommend E*Trade because it has more funds than Schwab (7,000+ versus 6,000+).
Beginners: Schwab has better learning materials. Plus, it has much better customer service. Its desktop platform also has a practice mode, which E*Trade’s desktop software lacks.
Retirement Savers: Both firms have target-date mutual funds, financial-planning services, and educational materials on retirement. Schwab doesn’t have the Roth version of the solo 401(k), although it does offer annuities, which are missing in action at E*Trade.
Small Accounts: For automated accounts, E*Trade has a lower deposit requirement ($500 versus Schwab’s $5,000). For the self-directed variety, neither has any minimums. For IRAs, we recommend Schwab because it doesn’t charge any fees.
ETF and Stock Trading: We endorse Schwab, primarily for its fractional-share trading of the S&P 500 stocks.
Promotions
Charles Schwab: $0 commissions + satisfaction guarantee at Charles Schwab.
E*Trade:
Get zero commission on stock and ETF trades.
Charles Schwab vs E*Trade - Results
Although E*Trade beats Schwab in some areas, the latter is the overall outperformer in this survey.
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