TD Ameritrade vs. Charles Schwab

When choosing a stock broker for your investment needs, TD Ameritrade and Charles Schwab are two popular and highly regarded online brokers to consider. Both offer a wide range of products and features to accommodate different types of investors. This TD Ameritrade vs. Charles Schwab comparison provides a thorough review of the similarities and differences between these two brokerage giants to help you decide which is the better one for you.

TD Ameritrade vs. Charles Schwab

Who is TD Ameritrade?

TD Ameritrade is a well-known U.S.-based online stock broker with over 11 million customers and $1.3 trillion in assets under management. Founded in 1975, it began as a discount brokerage firm and now offers a full range of investment products and services such as bonds, stocks, options, mutual funds, exchange-traded funds (ETFs), futures, forex, foreign ADRs and IPOs for qualified accounts and crypto coin trusts. TD Ameritrade stands out with its award-winning trading platforms (TD Ameritrade web and thinkorswim), 15 research and data providers, 24/7 customer support across multiple channels and investor education and advice resources.

Pros

• No account minimum or trading commissions for stocks, ETFs and options
• Extensive range of investment products and markets
• Advanced trading platforms with powerful tools and features

Cons

• Higher fees for some products and services
• No direct access to cryptocurrencies
• No fractional shares (only Stock Slices for S&P 500 companies)

Who is Charles Schwab?

Charles Schwab, a top U.S. online broker, has grown from a discount brokerage firm founded in 1971 to a full-service provider of investment products and services. It boasts over 31 million customers and $8.09 trillion in assets under management. Charles Schwab's offerings include stocks, bonds, options, mutual funds, ETFs, futures, foreign stocks and robo-advisors. Key features include low-cost index funds with no minimums, premium third-party research, 24/7 customer support across multiple channels and an all-digital investment advisor, Schwab Intelligent Portfolios.

Pros

• No minimum balance or trading fees for stocks, ETFs and options
• Large selection of investment products and markets
• Premium research from third-party providers

Cons

• Complex fee structure for mutual funds
• No direct access to cryptocurrencies or IPOs
• Limited fractional shares available

Comparing TD Ameritrade and Charles Schwab

Although similar in some ways, TD Ameritrade and Charles Schwab have strengths and weaknesses that may affect your decision depending on your investment needs and preferences. 

Pricing and Fees

TD Ameritrade and Charles Schwab offer zero commissions for stocks, ETFs and options trades, making them excellent choices for cost-conscious investors. However, they charge fees for mutual funds, futures, forex, broker-assisted trades and margin rates. TD Ameritrade tends to have higher fees than Charles Schwab, except for forex (where TD Ameritrade has lower spreads) and margin rates (where TD Ameritrade has lower rates for balances under $25,000). 

Winner: Charles Schwab. The brokers have similar pricing and fees for trading stocks, ETFs and options. But for other products or services, Charles Schwab may be more cost-effective.

Usability

TD Ameritrade and Charles Schwab have highly user-friendly and intuitive platforms, with both web-based and desktop versions. TD Ameritrade shines with TD Ameritrade web and thinkorswim, while Charles Schwab has Schwab.com and StreetSmart Edge. While both platforms are excellent, TD Ameritrade's thinkorswim platform is widely regarded as one of the best in the industry. With powerful tools and features, including charting with hundreds of indicators and studies, screeners and scanners for stocks, options, futures and forex, paper trading with virtual money, backtesting with historical data, social sentiment analysis, live news and video, thinkorswim offers an edge over StreetSmart Edge, which has charting with over 40 indicators and studies, screeners for stocks, ETFs, mutual funds, options and bonds, trade simulator with virtual money, market commentary from Schwab experts, live news from Reuters and Bloomberg TV. 

Winner: TD Ameritrade. Its thinkorswim platform has more depth and breadth than StreetSmart Edge.

Education

Both TD Ameritrade and Charles Schwab provide extensive educational resources on investing and trading, such as articles, videos, webinars, podcasts, newsletters and blogs. TD Ameritrade trumps with over 200 videos on its YouTube channel and 13 courses on options trading on its website. It offers personalized guidance from financial consultants to help you plan your investment goals and strategies, which is available for free. Charles Schwab also offers guidance and advice from financial consultants but requires a minimum account balance of $25,000 to access the service. 

Winner: TD Ameritrade. It has higher quality and a variety of educational resources and personalized guidance.

Customer Support

TD Ameritrade and Charles Schwab offer excellent 24/7 customer support through phone, email, live chat, social media, Apple Business Chat, Amazon Alexa and local branches. They also have online help centers and FAQs to address common issues. However, TD Ameritrade edges out Charles Schwab regarding customer support as it offers more options, such as text and video support. With text support, customers can receive a prompt reply via text message. Video support also allows for a face-to-face conversation with a representative via video chat. 

Winner: TD Ameritrade. It offers more customer support options

Offering

TD Ameritrade and Charles Schwab provide stocks, bonds, options, mutual funds, ETFs, futures and foreign stocks. However, there are differences in their offerings that may affect your decision depending on your investment interests and preferences. TD Ameritrade offers forex trading, foreign ADRs and IPOs for qualified accounts. 

Charles Schwab offers robo-advisors that use algorithms and technology to manage your portfolio based on risk profile and goals. Schwab Intelligent Portfolios robo-advisor has no advisory fees or account minimums, while Schwab Intelligent Portfolios Premium robo-advisor offers unlimited access to a certified financial planner for a one-off fee of $300 and a monthly fee of $30. 

Winner: For trading forex, foreign ADRs or IPOs, TD Ameritrade may be the better choice. If you want to simplify and automate your investing process, Charles Schwab's robo-advisors may be the way to go.

Mobile App

TD Ameritrade and Charles Schwab offer mobile apps for trading and account management on smartphones and tablets. These apps have user-friendly interfaces and provide most of the features available on the web and desktop platforms, including charting, research, news, alerts, watchlists, transfers, deposits and withdrawals. TD Ameritrade has two mobile apps: the TD Ameritrade mobile app for beginners and casual investors and the TDA thinkorswim app for experienced and active traders. The latter offers more advanced tools such as screeners, scanners, paper trading, backtesting, social sentiment analysis, live news and videos from CNBC. 

On the other hand, Charles Schwab has a single comprehensive and versatile mobile app with unique features like fingerprint login, voice recognition and mobile check deposit. 

Winner: TD Ameritrade may be better if you prefer more mobile app options and features. But if you choose a more straightforward and secure mobile app, Charles Schwab may be ideal.

Account Types

TD Ameritrade and Charles Schwab offer standard brokerage accounts like individual, joint, custodial and trust accounts, as well as retirement accounts like traditional and Roth IRAs. However, TD Ameritrade offers additional options like education accounts such as 529 plans, Coverdell ESA and UGMA/UTMA accounts, as well as specialty accounts like margin accounts, managed portfolios and annuities. Charles Schwab provides charitable accounts like donor-advised funds and charitable trusts, as well as business accounts like corporate, partnership and sole proprietorship accounts. 

Winner: You may prefer TD Ameritrade for education, margin, portfolio management and annuity accounts or Charles Schwab for charitable or business accounts.

Charles Schwab Acquisition of TD Ameritrade 

In November 2019, Charles Schwab announced its acquisition of TD Ameritrade for $26 billion in an all-stock deal. As of August 2023, both brokers still operate independently, allowing customers to continue using their existing accounts and platforms. However, batches of accounts are being merged and customers will be notified when their accounts are ready to be transferred to Schwab. The merger is expected to be completed by the end of 2023.

The merger will forge a combined entity with more scale, resources and capabilities than either broker alone. The merged broker will offer a wider range of products, services and features, including access to forex trading, foreign ADRs, IPOs and robo-advisors from one platform. The merged broker will offer lower fees and better pricing for some products and services than either broker alone. Customers will receive better customer service and support that includes more local branches, phone lines and live chat agents.

However, some users might find it inconvenient to switch platforms or applications. They could also lose access to some of the functionalities or features they previously used or enjoyed. The transition process may also result in certain technical issues or glitches.

TD Ameritrade vs. Charles Schwab: Which Broker is Better for You?

TD Ameritrade and Charles Schwab are reliable brokers that offer great value and quality to investors. While they share similarities, their differences may cater to the needs and preferences of certain investors. There's no one-size-fits-all answer as to which broker is better for you. Your situation and goals will ultimately determine which one is the best fit.

Frequently Asked Questions