Vanguard vs Schwab: what’s the difference?

1 min readLast updated December 5, 2023by Rachel Carey

Covering similarities and differences, fees, pros and cons, accounts, and other factors, we take a look at Vanguard vs Schwab.

Summary 

  • Vanguard and Charles Schwab are major brokerage firms. 

  • Both firms have attractive fee structures and offer a range of account types.  

  • Vanguard and Schwab have different pros and cons, which can help you decide which firm to choose.  

  • A financial advisor can help you decide which option is best. 

Vanguard vs Schwab: what’s the difference?  

Vanguard and Charles Schwab are two of the largest, best-known, and most popular brokerage firms. They’re known for offering a wide range of financial and investment management products and services, as well as web- and app-based trading portals.  

However, there are some important differences between these two firms. You can see these differences in their fees, financial services, research resources, and pros and cons. Delve deeper with us as we take a closer look at Vanguard vs Charles Schwab. 

What fees should I expect from Vanguard and Schwab?  

The aim of investing is to make your money work for you as you save for various goals. This means it’s important that you know what fees you can expect to pay and how to determine what you’re actually getting for those fees. Know that when you compare Schwab and Vanguard, affordability isn’t the key factor.  

Some investment firms and online trading platforms typically charge four different types of fees. These include: 

  • Trading fees: Any fixed charge attached to each of your trades – this is either based on the difference between an asset’s buying and selling price or a flat fee. 

  • Trading commissions: A charge for each of your trades – this is based on a percentage of each trade’s value or volume. 

  • Inactivity fees: Fees for not trading – some brokers charge fees if you hold assets or keep money in a brokerage account instead of trading. 

  • Non-trading/other fees: Any fees or charges associated with the platform not covered by those mentioned above – examples include deposit/withdrawal and additional service fees. 

In terms of fees, is Schwab or Vanguard better? Both firms have a competitive fee structure, and they offer $0 trading for exchange-traded funds (ETFs) and stocks.  

However, Vanguard offers more expensive options, trading at $1.00 per contract to trade, compared to Charles Schwab’s $0.65 per contract. Vanguard also offers a number of free options trades to investors with more than $1 million in assets, and it offers cheaper trading in mutual funds than Schwab. 

Charles Schwab charges $49.95 to trade mutual funds that aren’t on the firm’s no-fee list. The list includes several thousand mutual funds, which you can trade for no cost. All Vanguard-managed funds are free, and the firm also has a no-fee list of several thousand funds. The firm charges a $20 fee for all others. 

Neither Vanguard nor Schwab charges inactivity or non-trading fees, and neither requires a minimum balance to open an account. 

Is Schwab or Vanguard better? 

With the two brokerage firms being similar but with different offerings, the question remains – is Schwab or Vanguard better? The answer depends largely on your unique needs and preferences, so it’s good to familiarize yourself with the pros and cons of both firms. 

Pros:

Vanguard:

  • Low-cost fund leader 

  • Large selection of mutual funds 

  • High interest rate on uninvested cash 

  • High-order execution quality 

  • Commission-free stock, options, and ETF trades 

Schwab:

  • Excellent mobile app 

  • Extensive research and data available 

  • Four trading platforms with no fees or minimum 

  • Commission-free options, stock, and ETF trades 

  • Large selection of funds 

Cons:

Vanguard:

  • Limited data and research offered

  • Basic trading platform

  • Best deals for the wealthiest traders

Schwab:

  • Low interest rate on uninvested cash

  • Trading platform confusing for new investors

Vanguard or Schwab: which should I choose? 

When it comes to deciding whether to choose Vanguard or Schwab, it’s important to consider your circumstances, needs, and goals carefully. It’s also helpful to remember that Vanguard was designed with long-term retirement investors rather than active traders in mind. Charles Schwab is suitable for beginners as well as advanced traders. 

One of these firms may suit your needs better than the other. A regulated financial advisor can help you navigate this decision, as well as many others. 

What types of accounts can I open with Vanguard and Charles Schwab? 

The Vanguard vs Charles Schwab comparison evens out in terms of account types you can open. Both firms offer a wide range of account types, such as individual brokerage accounts, education savings accounts, retirement accounts, and others.  

Each account type has a specific purpose and different features, so ensure that you familiarize yourself with them so that you can make the best decisions for your money. 

Which platform offers better customer service and support? 

Most investors who compare Schwab and Vanguard in terms of customer service and support find that they prefer Charles Schwab’s offering. The firm offers more extensive data, research, and other educational resources than Vanguard does. This makes it an attractive option if you want guidance and support.  

It’s also worth noting that Vanguard’s app doesn’t offer some of the detailed technical analyses that some investors rely on, although you can find those analyses on the firm’s website. 

Like other investors, you may also find that Schwab’s customer support contact details are more easily accessible than Vanguard’s. That said, both firms offer support via live chat, email, and telephone, and both firms’ websites are relatively easy to navigate. 

Can I transfer my existing investments from one platform to the other? 

Yes, you can transfer your existing investments from one platform to the other. Both Vanguard and Charles Schwab offer services to help you transfer your investments from one platform to the other without liquidating your assets. 

Need more information? 

Investing is an important decision, which is why you should carefully consider Vanguard vs Schwab. While affordable fees at one firm sound good, you might get significantly more out of slightly higher fees at the other brand.  

Weigh up the pros and cons of both firms, and let us match you with an SEC-regulated advisor who can share expert financial advice to help you learn more about investment firms.

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.