M1 Finance

Charles Schwab vs Wealthfront (2021)


Compare Wealthfront vs Charles Schwab Intelligent Portfolios: cost, brokerage robo investing fees, IRA accounts, and differences. Which firm is better?



Overview of Schwab and Wealthfront


Wealthfront and Schwab offer deep discounts to help investors save for tomorrow. That’s about the only thing they have in common, though, as many differences abound. Here are the details:


First Category: Tradable Assets


Because Wealthfront is a robo advisor, it only offers ETFs. Moreover, only low-cost ETFs make it on the broker’s list; so there are many ETFs that are unavailable.

Schwab customers have access to every US-listed ETF. Furthermore, the brokerage firm provides futures, options, options on futures, crypto futures, IPO’s, fixed-income securities, mutual funds, stocks, and closed-end funds.

Schwab wins the first category.


Charles Schwab vs Wealthfront


Second Category: Style of Investing


Schwab provides both managed and self-directed accounts. The latter option charges no fees. The managed route starts at 0.00% for the company’s robo package and goes up for human-advised plans. There are several to choose from. The account minimum is $5,000 or higher.

Wealthfront only offers robo-managed accounts. The cost is 0.25% per year with a $500 starting balance. There are no self-directed accounts and no traditional packages.

Looks like Schwab has the edge here.


Third Category: Education and Research


Wealthfront’s website hosts many articles (and a few videos) that explain how its investment program works. Because there are no self-directed accounts, there is no information on individual securities, which is obviously a major flaw. A Help center on the site (support.wealthfront.com) answers a lot of questions that new customers will have. There’s also a home buying guide on the company’s site.

Because Schwab offers self-directed accounts, it has a lot of resources on security research. Screeners are able to look for stocks, options, mutual funds, ETFs, and bonds. During our testing, we found them easy to use with lots of criteria. Stock profiles have enormous amounts of data, including free stock reports.

Wealthfront loses another category.


Wealthfront vs Schwab


Fourth Category: Software


The Wealthfront site doesn’t have a lot of tools on it. This shouldn’t be all that surprising given its robo-only approach. There is no trade bar, no browser platform, and forget about a desktop platform. The site hosts mostly account management tools.

Schwab’s website has a trade bar that delivers updated trading info on an entered ticker symbol. StreetSmart Central is a browser platform with advanced charting and futures trading. A more sophisticated desktop platform offers Level II data, live streaming of CNBC, and some good option tools.

Another loss for Wealthfront.


Fifth Category: Mobile Apps


The mobile app Wealthfront clients get has mostly the same tools as its website cousin. There is an ACH transfer feature, but no self-directed trading tools. Alerts are integrated.

Over at Schwab, we found advanced charting with several graph styles, horizontal viewing, and technical indicators. The software is capable of trading mutual funds and options. Bill pay and ACH transfer are integrated. Another really nice feature is mobile check deposit.

Schwab is our pick again.


Sixth Category: Exchange-traded Funds


Wealthfront has some good ETFs. We found VTI, the Vanguard Total Stock Market fund, and MUB, the iShares National Muni Bond fund. But there isn’t much information on them, and there aren’t many more funds. Over at Schwab, ETF profiles offer lots of details, including free ETF ratings from Market Edge. Schwab also has a list of 500+ commission-free ETFs for self-directed accounts and a very good fund screener.

Schwab is the outperformer here.


Other Services


Both brokerage houses in this contest offer Individual Retirement Accounts. We found more types at Schwab; plus the broker offers a self-employed 401(k) plan.

Schwab offers its customers a traditional DRIP service, while Wealthfront has an automated system that uses cash dividends to buy more shares of underperforming assets.

As for automatic investing in mutual funds, Schwab is the only company in this survey to offer the service. Wealthfront does offer recurring deposits, however.

Both firms offer cash accounts. Wealthfront has a very high interest rate (currently 2.32%) without checks or a debit card, while Schwab offers checks, a debit card, and global ATM fee rebates.

Overall, we have to take Schwab again.


Recommendations


Beginners: If you’re a newbie, definitely go with Schwab. You’ll be able to use its large library of learning materials, 24/7 customer service (including both phone and chat options), and robo service if you want. When you’re ready for self-directed trading, you can open a separate account.

Retirement Saving: Schwab’s target-date mutual funds and human-advisory service make it the better option here.

Long-Term Investing: Schwab’s larger selection of ETFs and mutual funds prompt us to recommend it in this area.

Stock and ETF Trading: Only Schwab has trading tools, so it’s the obvious pick here.


Competitors


Broker Review Promotion
Offer
Stock/ETF
Commission
Mutual Fund
Commission
Maintenance
Fee
Annual IRA
Fee
TD Ameritrade $0 commissions + transfer fee reimbursement. $0 $49.99 $0 $0
Sofi Wealth 0% SoFi management fees. Plus, unlimited access to financial planners. $0 na $0 $0
WeBull Get 2 FREE stocks valued up to $1,850. $0 na $0 $0


Charles Schwab vs Wealthfront - Final Thoughts


Wealthfront rolled out a robo service in 2008, but it hasn’t rolled out much since. Other companies have matched its automated system, which means they offer the whole picture.