Charles Schwab offers a more comprehensive investment platform with superior research tools, while Robinhood caters to beginners with its simplified app and focus on commission-free trading.
If you're searching for an online broker that is reliable and user-friendly for trading stocks, forex, options and beyond, this comprehensive comparison of Charles Schwab and Robinhood is a must-read. This detailed article examines both brokers across multiple factors to help you determine which one best aligns with your individual needs and preferences.
Charles Schwab vs. Robinhood: Overview
Who is Charles Schwab?
Charles Schwab is one of the U.S.'s largest and most established online brokers. It was founded in 1971 and has over 34 million active brokerage accounts and $8.52 trillion in client assets. Charles Schwab offers a vast range of securities for trading, including stocks, exchange-traded funds (ETFs), mutual funds, options, futures, forex, bonds and cryptocurrencies. Some of the most noteworthy features of Charles Schwab include:
- No commissions on online stock, ETF and option trades
- No account minimums or hidden fees
- Access to four trading platforms: the web platform, thinkorswim (a desktop platform for advanced traders), Trade Architect (a web-based platform for intermediate traders) and Mobile Trader (a mobile app for trading on the go)
- A rich selection of research and educational resources, such as articles, videos, webinars, courses, podcasts and live events
- 24/7 customer service via phone, email, chat and social media.
Charles Schwab, a foremost financial services firm, announced its acquisition of TD Ameritrade for $26 billion in 2019.
Pros
- A comprehensive and diverse offering of securities and trading platforms
- A wealth of research and educational tools for traders of all levels
- A reliable and responsive customer support
Cons
- Higher fees for some services such as broker-assisted trades ($25-$75)
- Some features are only available on certain platforms or require a higher account balance or trading activity
- Some users have reported technical glitches or delays during high-volume periods
Who is Robinhood?
Robinhood is an online broker launched in 2013 that gained popularity for its innovative approach. With over 13 million users and $62 billion in assets under management, Robinhood allows users to trade stocks, ETFs, options, cryptocurrencies and fractional shares. Some of the standout features of Robinhood include:
- Zero commissions on all trades
- No account minimums or maintenance fees
- A straightforward and intuitive mobile app that allows you to trade anytime and anywhere
- A social network feature that lets you follow other traders and see their portfolios and performance
- A cash management feature that enables you to earn interest on your uninvested cash and access it with a debit card
Pros
- A low-cost and accessible way to trade securities
- A user-friendly and modern mobile app
- A fun and engaging social network feature
Cons
- A limited offering of securities and trading platforms
- A lack of research and educational tools for traders
- Questionable customer support that is only available via email or in-app message
Comparing Schwab vs. Robinhood
Here's an in-depth comparison of the two brokers based on specific factors that affect your trading experience.
Pricing and Fees
Schwab charges $0 commissions for most online trades, including stocks and ETFs. However, it does charge $0.65 per contract for options trades and a $6.95 fee for online trades of over-the-counter (OTC) stocks. Broker-assisted mutual funds come with a $49.99 trade fee.
Robinhood offers commission-free trading for stocks, ETFs, options and cryptocurrencies without charging fees for OTC stocks or broker-assisted trades. The broker doesn't provide direct market data access, leading to potential delays or inaccurate prices. Robinhood doesn't offer price improvement, meaning you might not receive the best possible price for your trades.
Winner: Robinhood. If you are looking for a low-cost broker that does not charge commissions or fees.
Usability
The ease of use of a broker’s platform and tools affect the overall user experience. Schwab offers various investment platforms and tools to cater to different levels of investors. Its web-based platform, Schwab.com, is perfect for beginner investors with its simple and intuitive interface for researching, trading and managing portfolios. Its desktop platform, thinkorswim, for more advanced investors, offers customizable charts, technical analysis tools, backtesting and simulated trading.
Robinhood provides a web-based platform and mobile app that are user-friendly but limited in functionality and features. Robinhood offers no research or analysis tools, educational resources or customer support options. The platform only allows basic orders like market, limit and stop orders. Trading complex instruments such as options spreads or futures is not possible.
Winner: Schwab is a top choice for investors seeking a broker with various platforms and tools. But if you prefer a straightforward, no-frills platform for quick and easy trading, Robinhood is worth considering.
Education
Online brokers offer educational resources and guidance to enhance your investing skills. Schwab's education center is extensive, providing articles, videos, webinars, courses and events on various investment topics. It also provides schwabnetwork.com, which offers real-time analysis and insights driven by data. Schwab's robo-advisor, Schwab Intelligent Portfolios®, creates and manages a diversified portfolio based on your goals and risk tolerance.
Robinhood lacks educational resources, but its blog, Under the Hood, shares news and updates on products and features without providing investment advice or guidance.
Winner: Schwab. It has a wealth of educational resources and services to help you become a better investor.
Customer Support
Schwab has 24/7 customer service by phone, chat or email, as well as in-person consultations at 275+ U.S. branches. Its media platform offers advice from experts and other users. Robinhood also has the same customer support via email, phone and chat during market hours. It also has 11 physical locations.
Winner: It's a tie. Both Schwab and Robinhood have a variety of ways to contact and communicate with their customer service team, as well as a network of branches.
Offerings
Schwab offers many investment options, including stocks, ETFs, options, futures, forex, mutual funds, bonds, CDs and annuities. It provides margin trading, cash management, retirement planning and portfolio analysis.
Robinhood offers limited investment options, including stocks, ETFs, options and cryptocurrencies. Cash management is unavailable.
Winner: Schwab. It has a more comprehensive and diverse offering than Robinhood.
Mobile App
Schwab offers two mobile apps: Schwab mobile for simplified trading and account management and thinkorswim mobile for advanced features like charts and scanners.
Robinhood's single mobile app is similar to its web platform and allows for trading and monitoring accounts on the go, but it lacks additional tools and features.
Winner: Schwab. It has two mobile apps that cater to different levels of investors and provide more functionality and capabilities than Robinhood's mobile app.
Account Types
Schwab has various account options, such as individual, joint, IRA, trust, custodial, corporate and partnership accounts. Most account types don't require a minimum deposit or balance and come with free access to the platforms and tools.
Robinhood only offers one account type: an individual taxable brokerage account. While it doesn't require a minimum deposit or balance, account holders don't receive free access to platforms or tools.
Winner: Schwab. It has more account types than Robinhood and has no minimum requirements for most of them.
Charles Schwab vs. Robinhood: Which Broker is Right for You?
When choosing an online broker, Schwab and Robinhood are options with unique strengths and weaknesses. Schwab is an ideal choice for traders in terms of comprehensive and diverse offerings of securities and trading platforms and reliable and responsive customer support. If low-cost trading and a user-friendly mobile app with social network features are what you are looking for, Robinhood may be more suitable. Ultimately, the decision depends on your trading goals, preferences and budget. It may be worth trying both brokers to see which one works best for you.
Frequently Asked Questions
Is Schwab better than Robinhood?
Schwab and Robinhood have pros and cons, and the better option for you as a trader depends on what factors you value the most. Schwab offers a wide range of securities and trading platforms, research and education and customer support, while Robinhood provides low costs, simplicity and social networking.
Is Schwab good for beginners?
Yes. Schwab offers tons of resources to help beginner traders improve their skills, including virtual trading options, educational materials and customer support.
Can I transfer my stocks from Schwab to Robinhood?
Yes. You can transfer your Schwab stocks to Robinhood, but it has fees and limitations. You’ll need to initiate an ACATS transfer from your Robinhood app and pay a $75 fee to Schwab, and you can only transfer supported securities.