Charles Schwab vs. Vanguard (2024)

Charles Schwab and Vanguard are multitrillion-dollar titans in the investment universe. In fact, each company boasted assets under management of or near $7.7 trillion as of the spring of 2023.

Given their heavyweight status, Schwab and Vanguard are fairly evenly matched when it comes to some investment offerings. However, the two investment giants drift apart in other areas.

Charles Schwab vs. Vanguard: Similarities

Investment Offerings

Investment offerings that the companies have in common include:

• Stocks
• Bonds
• Options
• Mutual funds
• Money market funds
• ETFs
• IRAs
• 401(k)s
• CDs

Commissions

Schwab charges no commissions for online trades of U.S.-listed stocks and ETFs and no base commission for options trades. Similarly, Vanguard charges no commissions for online trades of stocks, ETFs and Vanguard mutual funds.

Robo-Advisors

Each company supplies its own basic and premium robo-advisor tools for automated investing.

Basic Robo-Advisor

Schwab’s basic tool, Schwab Intelligent Portfolios, enables investing in an array of ETFs. Trades are carried out with no advisory fees or commissions.

Vanguard’s basic tool, called Vanguard Digital Advisor, allows investing in a selection of Vanguard ETFs. Digital Advisor charges no commissions, as well as no advisory fees for the first 90 days. After that, you pay up to 0.20% in advisory fees for all-index investment options or 0.25% for a mix of active and index investment options.

Premium Robo-Advisor

Schwab steps up its robo-advising game with Schwab Intelligent Portfolios Premium, an automated tool that invests in ETFs. The minimum investment to sign up for the premium product is $25,000, which gives you one-on-one access to a certified financial planner. The service isn’t cheap: There’s a one-time planning fee of $300 and a $30-per-month advisory fee.

For higher-end investors, Vanguard offers the Vanguard Personal Advisor Services robo-advisor. The account minimum is $50,000, and the annual advisory fee is 0.35% for all-index investment options and 0.40% for a mix of active and all-index investment options. Aside from automated investing, this tool gives easy access to real-life Vanguard investment advisors.

The Verdict

How do Schwab and Vanguard stack up against each other in the robo-advisor realm?

Forbes Advisor ranks Vanguard Digital Advisor the best robo-advisor for beginning investors and Vanguard Personal Advisor Services the best robo-advisor for investors with higher balances. But neither Schwab Intelligent Portfolios nor Schwab Intelligent Portfolios Premium shows up at the top of the Forbes Advisor list of best robo-advisors in all categories.

Cryptocurrency Trading

Neither Schwab nor Vanguard enables direct trading of cryptocurrency.

SIPC Insurance

Schwab and Vanguard are members of the Securities Investor Protection Corp., which protects securities and cash in clients’ brokerage accounts. SIPC insurance is limited to $500,000 per customer, which includes a $250,000 limit for cash.

Longevity

Schwab and Vanguard are both Gen Xers. Vanguard is slightly younger, though: Schwab was founded in 1971, four years before Vanguard.

Charles Schwab vs. Vanguard: Differences

Account Fees

Schwab charges no fees for brokerage accounts or IRAs. Meanwhile, Vanguard charges a $25 annual fee for each brokerage and mutual-fund-only account. It also charges fees for IRAs and 401(k) plans. Vanguard does waive fees for customers who meet certain asset thresholds.

Futures Trading

Schwab permits futures trading, while Vanguard does not.

Fractional Shares

Schwab allows the purchase of fractional shares of S&P 500 stocks, while Vanguard allows the more limited purchase of fractional shares of Vanguard ETFs.

Annuities

You can purchase annuities directly from Schwab, but not from Vanguard.

Branches

Schwab operates more than 300 branches, enabling in-person customer service. That’s not an option at Vanguard, which has no customer-facing branches.

Minimum Investment for Robo-Advisor

Vanguard requires a minimum investment of $3,000 to gain access to its basic robo-advisor, which is $2,000 less than the minimum investment—$5,000—for Schwab’s basic robo-advisor.

Who Should Choose Charles Schwab?

Charles Schwab stands tall among full-service investors and self-directed investors. Plus, the company earns kudos for its customer service, and it operates more than 300 branches if you’re in need of in-person customer service.

But Schwab doesn’t shine in other categories. For example, it requires a hefty $5,000 minimum to invest through its robo-advisor, provides limited access to fractional shares and offers no direct trading of cryptocurrency.

In light of all that, Schwab might be an ideal choice if you’re not a robo-advisor fan or a cryptocurrency enthusiast.

Pros:

• No commissions for online trades of listed stocks, listed ETFs and options
• No minimum investment for brokerage account
• No maintenance fees for brokerage accounts or traditional, Roth or rollover IRAs
• Nationwide network of branches

Cons:

• High investment threshold for robo-advisor
• Limited availability of fractional shares
• No direct trading of cryptocurrency
• Futures trading requires separate account

Who Should Choose Vanguard?

Vanguard has a lot to offer. It provides ETFs that are highly rated by Forbes Advisor and a selection of widely popular mutual funds. It also earns the highest satisfaction score from DIY investors in the latest J.D. Power study.

However, while Vanguard stands out in some areas, it falls short in others. It operates no branches, allows no trading of futures, and permits no direct trading of cryptocurrency. Schwab also does not enable direct trading of crypto, but it does operate branches and allows trading of futures.

Perhaps most importantly, Vanguard charges fees for brokerage accounts and IRAs—fees that are eligible for waivers—while Schwab doesn’t charge fees for brokerage accounts or IRAs.

If you’re okay with the fees and the lack of amenities like branches and futures trading, and if you’re a DIY investor who’d like access to a wide variety of investment funds, Vanguard could be a solid option.

Pros:

• No commissions for online trading of stocks and ETFs
• More than 160 no-transaction-fee mutual funds
• Lower minimum investment for basic robo-advisor platform than Schwab
• Up to $1.25 million in FDIC insurance for individual savings and cash deposit accounts

Cons:

• Brokerage account and IRA fees
• No branches
• No futures trading
• Limited trading of fractional shares