Charles Schwab and Vanguard are two of the largest investment companies in the world. Schwab has 33.3 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $6.8 trillion in client assets. Vanguard is even larger, with more than 30 million investors and $6.2 trillion in global assets under management.

Founded in 1971, Charles Schwab helped revolutionize the brokerage industry just four years later when it became one of the first firms to offer discounted stock trades. Today, the company offers multiple trading platforms and an array of tools and services designed to appeal to all investing levels. Vanguard was introduced in 1975 by its late founder, John C. Bogle, who is credited with creating the first index fund in 1976. Interestingly, the fund was ridiculed as “un-American” and “a sure path to mediocrity.” Today, the fund (now Vanguard 500 Index Fund) is one of the industry’s largest.

In our 2020 Best Online Brokers reviews, Charles Schwab earned higher scores than Vanguard in every category we ranked, which includes Best Overall, Best for Beginners, Best Stock Trading App, Best for Day Trading, Best for International Trading, Best for Low Cost, and Best for ETFs.

Still, that doesn’t mean Charles Schwab is a better option for every investor. Overall, we found that Schwab is a great choice for self-directed investors and traders who want access to multiple platforms, plenty of tools, and full banking capabilities. Vanguard works well for buy-and-hold investors who may not be as tech-savvy and who want access to professional advice.

Usability

Charles Schwab offers three web-based platforms, including Schwab.com, StreetSmart Edge (its premier trading platform), and StreetSmart Central. Two mobile apps—Schwab Mobile and StreetSmart Mobile—round out its platform offerings. It’s easy to open and fund an account, and you can do so online, via mobile app, by phone, or in person at one of its 300+ branches.

You can open an account online with Vanguard, but there is a several-day wait before you can log in. And like most brokers, if you want to trade options or have access to margin, you have to fill out more paperwork. The website is a bit dated compared to many large brokers, though the company says it’s working on an update this year. You can trade stocks, ETFs, funds, and some fixed income products online, and you can call a broker to place orders with Vanguard’s other available asset classes.

On the mobile side, Charles Schwab offers a straightforward, intuitive app. You can trade all of Schwab’s available asset classes on the app, and you can even place conditional orders. The news is solid, but the fundamental research and charting are limited compared to the standard platforms. Vanguard’s mobile app is simple to navigate, and it’s easy to enter buy and sell orders. It’s light in terms of features and seems to work best for buy-and-hold investors who want to check positions and enter simple trade orders.

Trade Experience

Desktop Experience

Schwab’s intuitive All-In-One Trade Ticket works across platforms. There aren’t many customization options on the website, but you can set hotkey trading defaults by asset class in StreetSmart Edge. Streaming real-time quotes are standard on all platforms. You can stage orders and submit multiple orders on Schwab.com. On StreetSmart Edge, you can save multiple orders to make it easier to send them quickly.

Vanguard’s platform is basic in comparison, but keep in mind that it’s meant for buy-and-hold investors, not active traders. You need to jump through a few hoops to place trades, and you have to open a trade ticket to get real-time quotes (and even then, you need to refresh the screen to update the quote). Overall, the trading platform works for buy-and-hold investors, but it falls predictably short for traders and investors who would want a robust, customizable experience.

Mobile Experience

Schwab provides robust mobile apps that offer streaming real-time quotes, trade tickets, multiple order types (including conditional orders), in-app research, and charting—including indicators, but no drawing tools. You can trade the same asset classes on any of the platforms, and your watchlists are the same on web and mobile (unless you use the downloadable version of StreetSmart Edge and save the watchlist to your local device). 

Vanguard offers a mobile app, too, but it’s outdated and light in terms of features compared to Schwab’s. You won’t find any options for charting, and the quotes are delayed until you get to an order ticket. Still, you can monitor your positions, analyze your portfolio, read the news, and place basic orders, which may be enough for buy-and-hold investors.

Range of Offerings

Charles Schwab offers all the investments you’d expect from a large broker, including equities, bonds, futures, Forex, options, and access to cryptocurrency (through Bitcoin futures and funds only). Vanguard’s offerings are comparatively limited, but they should be adequate for most buy-and-hold investors.

Order Types

Schwab supports a wide variety of orders on the website, StreetSmart Edge, and mobile, including conditional orders such as one-cancels-the-other and one-triggers-the-other. You can stage orders for later entry and select the tax lot when you close part of a position (e.g., average cost, FIFO, LIFO, etc.). Vanguard, predictably, only supports order types that buy-and-hold investors typically use: market, limit, and stop-limit orders. It doesn’t support staging orders for later entry; however, you can select specific tax lots (including partial shares within a lot) to sell.

Trading Technology

Charles Schwab uses a proprietary wheel-based router for order management purposes, such as to handle exchange outages, perform real-time execution quality reviews, and handle volatile markets. Most stock and options orders are routed to third-party wholesalers (this balances execution quality with Schwab’s cost savings). Quarterly information regarding execution quality is published on Schwab’s website.

Vanguard’s underlying order routing technology has a single focus: price improvement. The company reports price improvement on stock orders of $0.023 per share—a very high figure for the industry. Neither broker offers a trade simulator or supports backtesting capabilities.

Costs

Charles Schwab and Vanguard offer $0 commissions for online equity, options, and ETF trades for U.S.-based customers, with per-contract options fees of $0.65 and $1, respectively. You will pay more at Schwab to buy mutual funds outside the no-fee list ($49.95 versus Vanguard’s $20), depending on your account balance). Broker-assisted trades are $25.00 with Schwab and between $0 and $25 (depending on your account balance) at Vanguard.

The two brokers generate interest income from the difference between what you’re paid on your idle cash and what they earn on customer balances. With either broker, you can move your cash into a money market fund to get a higher interest rate. Currently, you’ll earn considerably more at Vanguard: 0.53% versus just 0.25% at Schwab. However, Schwab has a stock loan programs in which you can share the revenue it generates from lending the stocks held in your account to other traders or hedge funds (usually for short sales). Vanguard doesn’t share the revenue it generates.

Research Amenities

Charles Schwab offers flexible screeners to help you research your next trade, including an ETF screener with more than 150 criteria including asset class, fund performance, distribution yield, Morningstar category, regional exposure, and top ten holdings. You’ll also find calculators, idea generators, and a set of technical analysis charting tools. Schwab StreetSmart Edge software includes fundamental research with real-time news, company earnings, dividends, and ratings.

Vanguard offers basic screeners for stocks, ETFs, and mutual funds, and you can view fixed-income products in a sortable list. All research is proprietary, and market news is provided by MT Newswires and the Associated Press. There are several tools focused on retirement planning. Charting is limited, and no technical analysis is available, which is expected for a broker that focuses primarily on buy-and-hold investing.

Portfolio Analysis

Charles Schwab’s portfolio analysis offerings include access to real-time buying power and margin information, plus real-time unrealized and realized gains. You can link holdings from outside your account to get a full picture of your finances, calculate the tax impact of future trades, and calculate the internal rate of return (IRR). One shortfall is that you can’t view your expected income from dividends and interest (you can with Vanguard).

Vanguard has similar portfolio analysis tools. You can access real-time buying power and margin information, internal rate of return, unrealized and realized gains, and tax reports. You’re able to combine holdings from outside your account to get an overall financial picture. One thing that’s missing is that Vanguard doesn’t let you calculate the tax impact of future trades.

Education

Schwab offers extensive investor education with its Schwab Live Daily broadcasts, research from the Schwab Center for Financial Research, an array of articles on the Insights & Ideas page, as well as webinars and in-person events for investors and traders. The company offers thousands of live events including many trader-focused ones. Vanguard’s educational content is focused on helping you set and reach your financial goals. Most content is in the form of articles, and hundreds are added each year

Customer Service

Charles Schwab offers 24/7 phone line support with access to live brokers, plus 24/7 online chat with a live agent. You can also visit one of its over 300 branch locations for in-person help.

At Vanguard, you can access phone support (customer service and brokers) from 8 a.m. to 8 p.m. (Eastern) Monday through Friday. Live chat isn’t supported, but you can send a secure message via the website after logging into your account. Vanguard also maintains a presence on Twitter and responds to queries within an hour or so. Vanguard says its average wait time varies by client service group and trading desk.

Security

Charles Schwab and Vanguard’s security are up to industry standards. You can log into any app using biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity. Schwab carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers with an aggregate limit of $600 million, limited to a combined return to any customer of $150 million, including cash of up to $1.15 million. Vanguard’s excess SIPC coverage is not clearly disclosed.

Neither brokerage had any significant data breaches reported by the Identity Theft Research Center.

Our Verdict

Charles Schwab and Vanguard are two of the largest brokers in the business, but it’s important to note that they cater to different types of investors. Due to its wide array of services and tools, Charles Schwab is a great choice for self-directed investors and traders who want a customizable trading platform. Buy-and-hold investors who value simplicity over bells and whistles, and who want access to professional advice and some of the best (and lowest cost) funds in the business, may prefer Vanguard.