Vanguard vs Schwab may be most popularly known as assets managers, but as the investing world continues to evolve, they can both be referred to as brokers capable of processing millions of trades consistently. The two are a good choice if you are planning on opening a brokerage account. However, like anything else to do with investment especially online, analysis and research is very important to the last detail. In this article we will review the two brokers and see how they compare to each other.
Overview: Vanguard vs Schwab
Vanguard was introduced by Jack Bogle with the intention of assisting individual investors find success in their investing journey. Vanguard provides videos, articles and podcasts that their clients information about the market helping them to make informed financial decisions that will benefit them in the long run. Over the years Vanguard has built a reputation for itself and has become the biggest no-load mutual fund organisation in the world. Moreover, in January Vanguard joined some other brokers in removing commissions on options, online stocks as well as ETF trades. Vanguard offers fixed and variable annuities, financial planning, educational account services, trust services as well as asset management.
Charles Schwab on the other hand is an established investment firm that has the right technology to cater for all kinds of investors in their diversity and needs. Schwab can comfortably provide full services to a variety of investors including; self-directed investors that manage their own investing, active traders, as well as clients that are in need of portfolio management and investment advice. However, future traders need to open a separate account and different from other platforms clients can actually access that asset class.
Vanguard and Schwab are quite similar when it comes to security; They both have secure logins and when logins are not recognised there are security measures put in place to make sure the client’s information is not compromised. Both companies have made sure that their $1.3 million cash and more depositors have SPIC insurance, and general large investor accounts also have additional insurance. Vanguard and Schwab have a security guarantee for their clients that provides 100% cover for any losses incurred by unauthorised activity. Both platforms can be considered safe as they have not had any material security breaches.
Trading platforms and features
Both Vanguard vs Schwab have well set up platforms suitable for majority of long-term investors. Nevertheless, the platform that Schwab has, offers features that are more appealing to active investors, like its mobile platform. However, both its mobile platform and desktop StreetSmart Edge platform are available for investors of all account sizes.
However, Vanguard is a little different, its trading platform programmed for more long-term investors who wish to occasionally place a buy or sell order. So, in a nutshell, both Vanguard and Charles Schwab can satisfy the needs of Long-term investors; but an active investor and one who trades frequently may find Schwab as a more fruitful option. At the end of the day your preference will depend on your personal opinion of the two.
The Schwab mobile experience is robust and clients can enjoy the streaming of real-time quotes, multiple order types, trade tickets, in-app research as well as charting, however no drawing tools are included. Schwab allows you to trade the same asset classes using either of the platforms, and whether web or mobile your watchlist will remain the same.
Vanguard also has a mobile app available, even though it is a little bit out of date and has a lot less features than Schwab, it still is available for clients to use. The app does not offer options for charting and there is a delay on quotes until you are at an order ticket. What you can do though is keep an eye on your positions, read the news, evaluate your portfolio, place basic orders.t that being said, this app may be more suitable for buy-and-hold investors.
Schwab has quite the customer support team, it doesn’t matter when, it doesn’t matter how they will always be available to take your call. Moreover, Schwab is open to live online chats 24/7 as well. Other way in which clients can contact Schwab is by email. Furthermore, for more personal help Schwab allows you to physically show up at any of their 300 branches available; this is definitely a great advantage over most brokers who are solely online.
On the other hand, Vanguard supports its clients via phone and email from Monday to Friday between 9:00AM and 10:00PM. Unlike Schwab Vanguard does not offer any assistance via live chats on their website nor on their mobile app. With Vanguard if you have an account that has below $50,000 you will be at a disadvantage as you may find yourself stuck on the phone during the day trying to get some assistance with not much success. Whereas, with a larger account you will get help a lot easier because Vanguard uses a tiered support system to address any issues.
Comparing the fees and commission
Schwab has a more ‘across the board’ method to how they structure their fees when it comes to fees. Whereas, Vanguard’s approach has more variation in terms of ETF and stock transactions.
Schwab charges a commission on standard online equity trades of $4.95 each or a fee of $25 to trade on the phone with one of Schwab’s agents. These commissions are the lowest in the industry and are favourable to short-term traders like day traders.
For options Schwab charges $0.65 per contract and for options account transfer the fee is $50 for complete transfer and $25 for a partial transfer. The cost for futures and otpions on futures is $1.50 for each contract.
With Mutual Funds that are not part of the “Schwab One Source” group there is an additional commission of $75 which is one of the most expensive amongst mutual fund brokers. Bills, treasury bonds, notes, TIPS and other Government securities have no charge.
Secondary trades like corporate bonds, CDs, government agencies, municipal bonds, STRIPS and zero-coupon treasuries, Schwab’s charge is $1 per bond with a minimum of $10 and a maximum of $250; there is also a $25 additional service charge.
Vanguard on the other hand has a fee of $7 for the first 25 online trades. From then on the charge increases to $20 for trades that are under $50,000. The charge for phone trades is $25 and there is no charge on ETFs. For options the cost is $7 per transaction and $1 per contract. Vanguard charges $2 per transaction for options in a flagship, Voyager Select and Flagship Service account plus $1 for an option contract.
One can purchase Vanguards Mutual Funds and ETFs shares with no charge. However, the other Mutual funds will cost you $35 if you have a standard account and $20 if you have a Voyager and Voyager select account, and for a Flagship account a charge of $8.
Vanguard also charges $2 per $1000 on corporate bonds and CDs in a standard and Voyager account. And with a Flagship and Flagship Select account as well as a Voyager select account the charge is $1.
Research and tools comparison
Generally, you can never have too much information, the more there is the better. Vanguard vs Schwab both have a lot of research material as well as tools that include; fund and stock screeners, news obtained directly from the wires and some exclusive features for their customers only.
As mentioned in the beginning of this article, both Brokers have a lot going for them. Although they cater to slightly different traders, they have more pros than cons in their respective areas. We can compare the two brokers as we just did but the choice is ultimately yours in the end, what your opinion is and which broker best satisfies your needs. I hope this article has helped you.