Betterment vs. Charles Schwab: what’s the difference?

1 min readLast updated May 31, 2024by Unbiased team

Learn about Betterment and Charles Schwab's differences in their investment strategies, fees, and customer service to make an informed investment decision.


  • As of the end of February 2024, Betterment's recorded AUM was over $45 billion. 

  • The Betterment Robo-Advisor has received multiple awards for excellence and being the best of its kind. 

  • At the end of 2023, Charles Schwab Asset Management managed about $1 trillion on a discretionary basis. 

  • Charles Schwab is the third largest provider of index mutual funds. 

Betterment vs. Charles Schwab: what’s the difference?  

Betterment and Charles Schwab are two prominent players in the financial services industry, each with strengths and weaknesses. Betterment’s financial services are known for its award-winning, user-friendly platform and low fees, and its automated investment service appeals to those looking for a hands-off approach to managing their finances.  

On the other hand, Charles Schwab’s advisors offer a wide range of financial services, including banking, brokerage, and retirement accounts. While Charles Schwab’s fees are slightly higher than Betterment's fees, it provides extensive customer services and a wealth of resources for investors. Furthermore, Schwab's human financial advisors offer personalized guidance for those who prefer a more hands-on approach to investing. 

What are Charles Schwab and Betterment’s specific investment strategies? 

When comparing Charles Schwab vs Betterment, it’s easy to see they employ different investment strategies tailored to meet their investors' needs: 

Charles Schwab offers various investment options, including actively managed funds, individual stocks, and bonds. It also provides tools and resources for self-directed advisors and those seeking guidance from financial advisors. Charles Schwab's advisor approach allows for customization and flexibility in crafting investment portfolios that align with specific goals and risk tolerances. 

In contrast, Betterment's financial planning primarily focuses on investing through its automated platform. It utilizes Modern Portfolio Theory to create diversified portfolios of low-cost index funds. Betterment emphasizes long-term growth through a hands-off approach, rebalancing portfolios automatically. 

What fees can I expect from Betterment and Charles Schwab?  

Betterment vs Schwab’s distinct fee structures reflect their respective services. Betterment fees include an annual management fee of 0.25% based on assets under management (AUM) or a monthly $4 charge. This fee covers automated investment management and portfolio rebalancing. 

Charles Schwab fees vary according to the services offered, and they've recently lowered their costs as they've adopted automated financial service software. This means specific trading commissions are 0%, but if you're using a broker to help you with trading, you will pay a $25 service charge. Schwab may levy other fees, such as transaction fees for mutual funds or account service fees. 

Regardless of the firm, investors should be aware of potential industry-related fees, like trading commissions and inactivity fees, which some firms may impose. While Betterment and Schwab aim to minimize these costs, investors should consider all potential fees when evaluating their investment options. 

Is Betterment or Charles Schwab better? 

Choosing between Schwab vs. Betterment depends on individual preferences and investment goals. While both firms offer investment services, they cater to different needs. With that, let's compare the pros and cons of each firm next: 

Pros of Betterment 

  • User-friendly platform: Betterment's automated user interface makes investing simple and accessible. 

  • Low fees: Their transparent fee structure and low-cost index fund options appeal to cost-conscious investors. 

  • Passive investing approach: Betterment's focus on passive investing aligns with long-term growth strategies. 

  • Goal-based investing: Their approach enables investors to tailor portfolios to specific financial objectives. 

Cons of Betterment 

  • Limited investment options: Betterment primarily offers passive investment strategies, limiting customization for some investors. 

  • Less human interaction: Some investors prefer more personalized guidance from human financial advisors. 

Pros of Charles Schwab  

  • Wide range of services: Schwab offers a comprehensive suite of financial services, including banking, brokerage, and retirement accounts. 

  • Extensive investment options: Schwab provides access to various investment choices, including actively managed funds and individual securities. 

  • Robust customer support: Schwab's customer service and financial advisory services are highly regarded in the industry. 

  • Investor education resources: Schwab offers a wealth of educational content and tools to help investors make informed choices. 

Cons of Charles Schwab  

  • Higher fees: While Charles Schwab’s fees were recently reduced, some services still have higher costs than competitors like Betterment. 

  • Complexity: Schwab's vast array of services and investment options may overwhelm novice investors. 

Betterment or Charles Schwab: which should I choose? 

Deciding between Betterment vs. Charles Schwab depends on your specific needs and circumstances. Researching each firm's offerings, fees, and services will help ensure that you choose the one that best suits your investment goals and preferences. 

As well as fees, investment strategy, and various pros and cons, here are some other questions you should ask yourself when choosing between Betterment’s financial services and Charles Schwab’s financial advisors: 

How do Charles Schwab and Betterment remain competitive and adapt to changing market conditions? 

Charles Schwab and Betterment stay competitive by adapting and innovating to adjust to market shifts. For example, Charles Schwab advisors offer robust support for its different services and recently lowered its fees to remain competitive. Betterment continues to focus on user-friendly automation and low costs, appealing to novice investors or those who prefer a hands-off approach to investing. 

Which platform provides better customer service and support? 

Charles Schwab's customer service and support tend to be better due to its extensive branch locations and highly regarded financial advisors. However, Betterment customer service offers responsive online assistance and automated tools, catering to those who seek digital-first solutions. 

Can I access my Betterment or Charles Schwab accounts through their websites and mobile apps? 

Betterment and Charles Schwab offer websites and mobile apps for accessing accounts. Betterment's app emphasizes simplicity and automated investing, while Charles Schwab's app provides comprehensive features, including trading and financial planning tools, catering to a broader range of investment needs. 

Get expert financial advice  

Betterment and Charles Schwab are well-known advisory firms in the US, but they differ in their investment strategies, fee structures, and customer service. While Betterment fees are lower and they excel in simplicity, Charles Schwab financial advisors offer a broader range of services and robust customer support. Investors should research each firm to choose the one that aligns best with their investing vision and needs.  

Remember, if you're looking for excellent financial advice, you can find a professional SEC-regulated advisor via Unbiased. 


Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.