Charles Schwab vs. Robinhood

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.

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

Source: Robinhood.com

Comparing Schwab vs. Robinhood

Charles Schwab and Robinhood have different approaches to online trading. Charles Schwab is a well-established brokerage. It offers a range of financial services and research tools. This attracts both new and experienced investors. Robinhood is known for its easy-to-use mobile app. It offers commission-free trading, appealing to younger, tech-savvy users. Both platforms allow stock and ETF trading without traditional commission fees. However, they differ in customer support and user experience. In the following sections, we will compare both platforms to help you choose the best one for your investment strategy.

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.

Schwab vs. Robinhood: Similarities

Schwab and Robinhood are both important players in online brokerage. They provide tools for buying and selling stocks, ETFs, and other investments. Schwab has a long history and offers many services. Robinhood is favored by younger investors for its user-friendly app and commission-free trades. Both platforms allow commission-free trading and make investing easier. Traditional firms like Schwab are adjusting to compete with newer companies like Robinhood. Understanding their similarities can help you pick the right platform for your investing style and goals.

Commission-Free Trading

Charles Schwab and Robinhood have adopted commission-free trading, enabling investors to buy and sell stocks, ETFs, and options without transaction fees. This option is particularly beneficial for active traders and individuals with smaller portfolios, as it allows them to make trades without concerns about accumulating costs. The transition to zero-commission trading has now become a standard in the industry, making it more equitable for retail investors.

Mobile Trading Platforms

Both Schwab and Robinhood focus on mobile-first trading experiences. Robinhood's platform is known for its sleek and intuitive design. It is aimed at novice investors. This makes it easy to trade, track investments, and access educational content. Schwab has traditionally served more experienced investors. However, it has also created a user-friendly mobile app. This app offers advanced trading tools, real-time data, and research reports. Both platforms allow investors to trade from anywhere. This provides flexibility and convenience for users on the go.

Access to Diverse Investment Options

Schwab and Robinhood offer access to various investment options. However, there are some differences between the two. Robinhood lets investors trade individual stocks, ETFs, options, and cryptocurrencies. It primarily targets younger and more risk-tolerant users. Schwab provides a broader range of investment products. This includes stocks, ETFs, mutual funds, bonds, futures, and managed portfolios. Both platforms help users build diversified portfolios. This allows investors to manage risk and potentially increase returns through a mix of assets.

Schwab vs. Robinhood: Differences

Charles Schwab and Robinhood have different investing approaches. Schwab is well-established and respected. It offers a variety of investment products, research tools, and personalized services. This makes it suitable for both new and experienced investors. Robinhood, on the other hand, uses a mobile app. It disrupts the traditional brokerage model by providing commission-free trading. Robinhood targets younger, tech-savvy investors. This comparison highlights key differences between the two platforms. It covers services, fees, trading options, educational resources, and user experience. This information helps investors make informed choices based on their goals and preferences.

Target Audience

Charles Schwab serves a wide range of investors. This includes beginners, experienced traders, and high-net-worth individuals. Schwab offers many financial advisory services, retirement planning, and wealth management solutions. It is ideal for those with complex financial needs. Schwab appeals to both self-directed investors and those seeking professional help.In contrast, Robinhood targets younger, tech-savvy investors who are new to the market. Its design is simple and easy to use. This has attracted many beginners looking to start trading. Robinhood's minimalistic interface suits people who prefer a hands-off investing approach.

Investment Products

Schwab offers a wide range of investment products. These include stocks, ETFs, mutual funds, bonds, and futures. They also provide financial services like retirement accounts and managed portfolios. Schwab's traditional offerings support long-term financial planning and diversification. Clients can receive tailored advice and access many investment options. They can choose self-directed trading or work with financial advisors. In contrast, Robinhood mainly focuses on stocks, ETFs, options, and cryptocurrencies. It has fewer traditional investments, such as mutual funds or bonds. Robinhood appeals to investors interested in short-term trading and more volatile assets. However, it does not offer the comprehensive investment products that Schwab provides, like advanced retirement solutions and wealth management tools.

Research and Education

Charles Schwab offers users extensive research tools and market insights. It provides research reports from known companies like Morningstar and Credit Suisse. Schwab also includes valuable educational content. This makes it suitable for investors who want informed decisions based on data and expert analysis. The platform supports users in deepening their understanding of financial markets. In contrast, Robinhood has limited research tools and education. It provides basic market data and news but lacks the comprehensive resources that Schwab offers. Robinhood caters to users who prefer quick and simple trades. Its focus is on facilitating transactions rather than providing in-depth research and learning resources.

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