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When it comes to size and reputation, E*TRADE and Charles Schwab both play in the big leagues. In fact, each company holds more than $1 trillion in customer assets.
However, these investment titans aren’t mirror images of each other. For example, Schwab charges no annual advisory fee for its robo-advisor service, while E*TRADE imposes a 0.30% annual advisory fee. On the other hand, E*TRADE’s robo-advisor requires only a $500 minimum investment, compared with $5,000 at Schwab.
Let’s take a side-by-side look at E*TRADE and Schwab to help you determine which one might be most suitable for your investment needs.
E*TRADE vs. Charles Schwab: Similarities
Range of Products
Schwab holds a slight edge over E*TRADE in terms of the breadth of product offerings.
Here’s the general range of investment products available from E*TRADE:
- Stocks
- Bonds
- Mutual funds
- ETFs
- Options
- Futures
- Traditional IRA
- Roth IRA
- Rollover IRA
- 401(k)
- Education savings accounts
- Custodial accounts
Here’s the general range of investment products available from Schwab:
- Stocks
- Bonds
- Mutual funds
- ETFs
- Money market funds
- Options
- Futures
- Annuities
- Traditional IRA
- Roth IRA
- Rollover IRA
- Inherited (beneficiary) IRA
- Custodial (minor) IRA
- 401(k)
Managed Investment Accounts
E*TRADE and Schwab offer their own versions of robo-advisors, which automate investors’ portfolios.
Known as Core Portfolios, E*TRADE’s robo-advisor requires a minimum investment of just $500 and charges an annual advisory fee of 0.30% of your assets. No additional commissions are charged.
Core Portfolio allows for further customization of its ETF options by offering two categories: Smart Beta and Socially Responsible. Smart Beta ETFs focus on funds with historically healthy returns. Socially Responsible ETFs feature funds that incorporate ESG (environmental, social and governance) practices. However, an investor can also pick a portfolio with more or less risk than the recommended portfolio.
Schwab’s robo-advisor, called Intelligent Portfolios, enables a customer to automate their investing with a minimum investment of $5,000. Intelligent Portfolios charges no advisory fees and no commissions.
The Schwab platform bases investment decisions on a customer’s preferences, which can include one of three strategies and one of six risk profiles. Intelligent Portfolios permits investments in a suite of 51 ETFs.
SIPC Coverage
Investment accounts at both E*TRADE and Schwab are insured by the Securities Investor Protection Corp. (SIPC). The limit is $500,000, which includes a $250,000 limit for cash.
Broker-Assisted Trades
Both E*TRADE and Schwab charge $25 for broker-assisted trades.
Research and Education
E*TRADE’s research and education offerings are top-notch. Among the many methods for learning about investing are webinars, online courses, articles, videos, calculators and widgets. The platform’s investment screening tools and research materials are especially worthy of praise.
Schwab provides an equally robust learning experience. Its research and education features include podcasts, webinars, slideshows, videos and in-person events. To top that off, Schwab provides a variety of research from in-house and third-party experts.
Fractional Shares
Fractional trading lets investors buy less than a full share of stock, and both E*TRADE and Schwab allow it. However, E*TRADE limits purchases of fractional shares to ETFs purchased through automated investing. Schwab restricts fractional purchases to stocks in S&P 500 companies.
Cryptocurrency
Neither E*TRADE nor Schwab permits direct trading of cryptocurrency.
Longevity
E*TRADE and Schwab aren’t newcomers to the investment world.
E*TRADE, founded in 1982, gained traction as an early innovator in online trading. Schwab started in 1971 as a traditional broker, but three years later the company evolved into an early entrant in the discount brokerage business.
Mergers
As a result of recent mergers, E*TRADE and Schwab have broadened their reach.
Financial services giant Morgan Stanley scooped up online trading trailblazer E*TRADE in 2020. As of July 2023, Morgan Stanley was still incorporating E*TRADE into its system. Schwab, at the same time, was still folding TD Ameritrade into its operations after buying the rival broker in 2020.
E*TRADE and TD Ameritrade currently operate as subsidiaries of their parent companies. But Schwab began transferring TD Ameritrade customers to the Schwab platform in 2023.
E*TRADE vs. Charles Schwab: Differences
Pricing and Fees
As you might imagine, E*TRADE and Schwab charge their fair share of fees. However, their fee structures aren’t the same. Here’s a sampling of their pricing and fees.
Stocks and ETFs
- E*TRADE: No commission for trades of U.S.-listed stocks and ETFs
- Schwab: No commission for trades of U.S.-listed stocks and ETFs
Mutual Funds
- E*TRADE: No commission for no-load, no-transaction fee mutual funds; fees apply to load funds
- Schwab: No commission for mutual fund trades through the Mutual Fund OneSource service but up to $74.95 per trade for other mutual fund purchases
Options
- E*TRADE: No commission but 65-cents-per-contract fee
- Schwab: No commission but 65-cents-per contract fee
Over-the-Counter Stocks
- E*TRADE: $6.95 per trade for over-the-counter stocks
- Schwab: $6.95 per trade for over-the-counter stocks
Futures
- E*TRADE: $1.50 per contract, per side, plus fees
- Schwab: $2.25 per contract
Size
As measured by customer assets, Schwab vastly overshadows E*TRADE’s parent company.
Schwab held $7.65 trillion in customer assets as of May 31, 2023. By contrast, Morgan Stanley reported $1.36 trillion in customer assets at the same point in time.
Branch Network
Schwab clobbers E*TRADE in the branch department as well.
Schwab maintains more than 300 branches where customers can conduct business in person. By comparison, E*TRADE customers can only visit one of Morgan Stanley’s 63 branches.
Who Should Choose E*TRADE?
Are you still learning the ropes of investing? If so, E*TRADE might be the way to go.
Forbes Advisor names E*TRADE’s basic app the best investment app for beginners. It also offers an app for investors who’ve graduated to the advanced level. Furthermore, Forbes Advisor crowns E*TRADE as the best online broker for ease of use.
Beyond that, E*TRADE’s educational resources are geared toward investing newbies as well as seasoned traders.
E*TRADE Pros
- High J.D. Power satisfaction score for self-directed investors needing guidance
- Solid app for beginning investors
- High marks for ease of use among online brokers
- Free access to financial specialists
E*TRADE Cons
- Lower Forbes Advisor rating than Schwab
- Advisory fee for robo-advisor
- Limited availability of fractional shares
- Small network of branches
Who Should Choose Charles Schwab?
If you’re looking for a full-service investment broker, Schwab might be worth considering.
In the J.D. Power 2023 U.S. Full Service Investor Satisfaction Study, Schwab ranked highest in overall investor satisfaction with a score of 752. Morgan Stanley, E*TRADE’s parent, received a below-average score of 717.
Forbes Advisor also ranks Schwab as the best online broker for customer service, including 24/7 phone support and chat support. And the company operates more than 300 branches in case you need in-person service. This is compared with only 63 branches for E*TRADE and its parent company, Morgan Stanley.
Charles Schwab Pros
- Higher Forbes Advisor rating than E*TRADE
- High J.D. Power satisfaction score from self-directed investors needing guidance
- No advisory fee for robo-advisor
- Sizeable network of branches
Charles Schwab Cons
- High investment threshold for robo-advisor
- Limited availability of fractional shares
- Futures trading requires separate login
- No direct trading of cryptocurrency
