When investing in ETFs, mutual funds, or other assets that require a lot of study, Charles Schwab is a great option for novice and experienced investors. Options trading at Charles Schwab is commission-free and costs $0.65 a contract, while stock and ETF trades cost nothing. No minimum deposit, maintenance, or dormancy charges apply.
While Betterment’s automated investing service begins with a 0.25 percent yearly fee for your account balance, the latter charges no minimum. There is no minimum opening deposit and no-account opening cost. Automatic rebalancing, tax loss harvesting, and access to financial advisors are included in all account balances.
As a result, investors may choose from a wide variety of robo-advisor services, which is good news. Unfortunately, having so many choices may be confusing and stressful at times. Choosing between Schwab and Betterment, two robo-advisors we like and recommend is challenging. Charles Schwab offers a digital adviser, albeit Betterment is more well-known for its robo-investing services. Betterment investors may wish to take note of the additional options available to Schwab clients.
Charles Schwab Overview
In 1971, Charles Schwab launched “The First Independent Brokerage,” a precursor to its current name. The broker utilized cutting-edge IT to deliver cutting-edge services, benefiting the firm and its clientele. When many other brokerage houses were only getting their feet wet, it had already established itself as a reliable brand.
In addition to traditional brokerage services, Schwab offers financial planning and investment guidance. Trading in mutual funds is only one of their many offerings; they also help with retirement and education savings programs.
Individuals can go to Charles Schwab for brokerage, banking, and other financial services. It also supports independent financial planners, assists businesses with retirement plan administration, and funds outreach initiatives to improve citizens’ understanding of money management.
Though their services are more expensive than average, they stand out from the competition by providing the highest level of customization available. This company is a national powerhouse with thousands of employees and several locations.
Schwab, in contrast to Betterment, offers robo-advisors as an additional feature. Their reputation is more akin to that of a traditional brokerage.
Schwab evaluates your unique financial position and recommends the type or combination of account types it believes will help you achieve your objectives. This applies to both established and prospective clients.
To maximize savings, the Schwab Intelligent Portfolio takes advantage of all possible tax deductions. One of the platform’s best features is the sophisticated method they use to reduce tax liability, which includes harvesting losses to offset profits and cutting down on capital gains taxes. Read Ally vs Charles Schwab review.
Betterment Overview
Developed by Jon Stein and Eli Broverman, Betterment debuted in 2010 at TechCrunch Disrupt NYC. Betterment is now the largest standalone robo-advisor because of its consistent and rapid expansion.
Betterment is a robo-advisor, an automated online financial service that handles all aspects of your finances on your behalf. To determine your investing goals, time horizon, and risk tolerance, you will be asked to fill out a questionnaire when you sign up for the program. Based on this information, Betterment creates a stock and bond portfolio for you.
Betterment is redefining the investment landscape, for better or worse. After serving just New York residents, the business recently made its automated, no-cost investing service available nationwide.
What we’ve coined “robo-investment” appears to be here to stay and might become the norm for investing soon.
The Betterment service is an automated investment manager that considers the user’s risk tolerance and financial objectives. Read Acorns vs Betterment review.
| Features & Services |
 |
 |
|---|---|---|
| Rating | ||
| 401(k) Assistance | yes | yes |
| Advice Options | Automated & Personal | Automated |
| Socially Responsible | No | |
| Online Platform | yes | yes |
| iPhone App | ||
| Android App | ||
| Banking | yes | No |
| Taxable Accounts | yes | yes |
| 401k Plans | yes | No |
| IRA Accounts | yes | yes |
| Roth IRA Accounts | yes | yes |
| SEP IRA Accounts | Yes | Yes |
| Trust Accounts | Yes | No |
Charles Schwab vs. Betterment Service & Feature Comparison
Costs
You won’t have to worry about paying any fund-specific fees when you invest with Betterment. Betterment offers access to a wide variety of exchange-traded funds (ETFs). Still, an annual charge of 0.35 percent is required to cover the ETF provider’s costs.
The main benefit of using Betterment or Charles Schwab is that you can get free investment management on ETFs that mirror U.S.-listed ETFs. Meaning exchange-traded funds (ETFs) that track an index are listed in the United States.
Betterment’s fees are lower than Schwab’s. Creating an account with Schwab requires a hefty $5,000 deposit.
In addition, the premium service has a $300 startup charge and an extra $30 each month if you want access to certified financial advisers.
As with Betterment, there is the issue of ETF expense ratios, which can vary from 0.08% to 0.15%.
Account Types
When comparing Betterment vs. Charles Schwab, it is evident that the conventional brokerage has the upper hand regarding the number and variety of investment accounts and the assets accessible for those accounts. When it comes to all-inclusive investment services, they are unparalleled. You may be confident that they provide various investing options and account types to suit your needs.
Charles Schwab is a full-service bank that provides investment advisory services like Betterment. Besides its stock brokerage services, Charles Schwab also provides a wide variety of banking options.
Both brokers offer basic trading accounts that are geared toward making investing simple. With its numerous valuable tools, you may quickly diversify your portfolio, cut costs, and start investing right now. The account’s flexibility allows you to invest whenever you have spare cash or a particular savings goal. There are no charges or minimum balances for using any of these functions.
Education and Research
Since Betterment’s primary focus is on automating the investing process, the broker’s website is light on information for those who want to learn more about the stock market and personal finance. Not a single stock or exchange-traded fund (ETF) profile is available. During our investigation, we also came up empty on sites covering broad areas of interest related to investment. The brokerage business did provide us with the means to examine a portfolio.
There is a lot more to be had at Schwab. Analyst reports, trade data, earnings history, and much more may all be found on the profiles of individual stocks and ETFs. Articles and videos offer various investing-related subjects, from retirement savings strategies to options trading.
Range of Investments
At Betterment, investors may choose from many ETFs with relatively modest management fees. There aren’t any alternate investing options. There will be both equities and bonds in these ETFs.
Schwab provides various exchange-traded funds (ETFs) with varying cost ratios. Mutual funds, stocks, options, futures, options on futures, cryptocurrency futures, initial public offerings, and bonds are available through the broker.
Customers of both Betterment and Schwab have access to all US-listed ETFs, even though Betterment is an ETF specialist. Betterment only invests in a handful of low-cost exchange-traded funds (ETFs). At the same time, Schwab has a much more comprehensive selection. Additionally, Schwab offers access to more than 500 commission-free ETFs.
Betterment, unlike Schwab’s self-directed or basic robo packages, charges a yearly asset-based fee but no commissions. Schwab’s website offers a wealth of other ETF information besides those listed.
Managed Accounts
Currently, Betterment does not provide access to self-directed investment accounts. Only managed accounts are available, with two different plans to choose from. The first is a purely automated option that costs 0.25 percent annually with no starting balance requirement. The second is a hybrid setup, which includes a software manager and a human adviser to help with significant life events and financial decisions like marriage and retirement. The second bundle retains the use of the digital adviser to make trades. With a minimum initial investment of $100,000, the cost is 40 basis points each year.
Both self-directed and managed accounts are available from Schwab. There are no minimums and no fees associated with its self-directed accounts. Investors can pick from several managed account options. The first is a totally free automated service. Schwab can do this because it profits from its customers’ cash balances and the sale of exchange-traded funds. The lowest possible payment is $5,000.
The next option is a hybrid system that charges $30 a month and has a $25,000 minimum. There are still programs available that don’t rely on a computer algorithm to execute deals. These start at $100,000 and go up to 1.35 percent, with a 0.65 percent minimum.
Trading Technology
Betterment didn’t have much of a web presence, in our opinion. Given the firm’s investment strategy, this is to be expected. The site is user-friendly and provides access to various helpful portfolio management resources. However, the typical resources for a self-directed business, such as charts and trade tickets, are absent.
The experience you get from Schwab is unique. As it is, the firm’s website is loaded with helpful trading features, including graphs with tools, a trade bar, and an order ticket. StreetSmartCentral.com provides a browser-based platform for futures trading and tick-by-tick graphing.
Mobile Apps
The Betterment app is as simple to use on a mobile device as on a computer. There are no self-directed trading tools, just account management capabilities, much like the website. Although Touch ID is supported on Apple devices, we were dismayed to see no sophisticated capabilities like mobile check deposit.
As we switch to Schwab, we have access to Touch ID and many other cutting-edge trading tools. According to our findings, traders may customize their orders with DRIP settings, different order types, different duration options, and order addendums like “all-or-none.” It’s possible to see charts in a horizontal orientation, choose from various graph types, and conduct in-depth technical analyses. Trading in mutual funds and options contracts is made more accessible with this platform. Mobile check deposits are a fantastic addition, and we appreciate your attention to that detail.
Customer Service
You may contact customer care through chat, phone, or email at Schwab. Although you can also schedule a no-cost comprehensive financial assessment with a certified planner. Compared to traditional financial advisers, you don’t need to schedule an appointment to ask them questions about your profile by email or phone.
Compared to Schwab, whose customer care is available around the clock for all members, Betterment delivers just a small quantity. They’re always willing to lend a hand whenever asked.
Portfolios – Robo Investing
It would be misleading to say that Schwab Intelligent Portfolios and Betterment are identical because they are both goal-based robo-advisors. Questions about the investor’s risk tolerance, desired retirement age, and other life events that might influence their financial situation are typically asked by robo-advisors that use a goal-oriented approach.
Based on the answers to these preliminary questions, these robo-advisors then construct individual investment portfolios. Each robo-advisor will propose a different mix of assets based on your unique situation and savings goals. With the introduction of the “Cash Reserve” feature, Betterment now offers clients a place to set aside money for immediate needs and aspirations. Although Schwab accounts generally consist of some cash holdings.
Clients of both Schwab Intelligent Portfolios and Betterment have access to human financial advisors. At the same time, the latter’s availability is far more extensive. Learn about your Schwab and Betterment financial planner alternatives in this in-depth article.
There are several similarities between Schwab Intelligent Portfolios and Betterment. Goals-based portfolio choices and tax-loss harvesting are features shared by both.
My Preference: Betterment for Me
Betterment is well-known for allowing customers to enter the investing market without initial investment needs. Minimum account balances apply, but fee-conscious investors may use Schwab’s Intelligent Portfolios, a digital investment advisor with no management fees. At first sight, Betterment and Schwab Intelligent Portfolios seem very similar. However, several key differences may be used to your advantage when choosing between the two.
Betterment is the most incredible alternative for those who are just starting out. The firm makes it easy to establish an automated portfolio owing to its straightforward UI and excellent customer service lines. When it comes to automated investments, there is no better option than Betterment; thus, we have no qualms recommending them to any and all investors.
Charles Schwab vs. Betterment: The Bottom Line
If you’re an investor, you should look at Betterment and Schwab. Both provide several account options and are known for their helpful customer care teams. Considering your investing goals and level of comfort with risk, choose a choice.
Schwab is the best if you’re looking at the variety of accounts available and the breadth of its portfolio. Still, the hefty fees make it difficult to invest with them.
Betterment is an inexpensive alternative to conventional banks that can get you started saving immediately, no matter how little money you have. Betterment is a tool that helps people who want to save money but aren’t good with money keep track of their progress and remain on track.
In sum, you can find suitable investment opportunities with either firm. Stock commissions from both firms are minimal, at only.5 to 6 percent. There are zero monthly or annual service fees with Betterment. You’ll be eligible for free trades if you deposit a particular amount into your Schwab account.
FAQ
Is Charles Schwab or Betterment better?
If you are on a tight budget, I recommend looking at Betterment as a possible solution. They may provide the highest ROI in the long run, but you'll need the patience to reap the fruits of your labor.
The most important thing to remember is that these robo-advisors are excellent and use the same asset allocation method. They spread risk across various possible outcomes by exposing their clients to large-cap stocks, foreign stocks, and other asset classes.
Is Charles Schwab a decent place to invest?
If you're an investor, you should look at Betterment and Schwab. Both provide several account options and are known for their helpful customer care teams. Your decision should be based on your risk tolerance and investment strategy.
Schwab is the best if you're looking at the variety of accounts available and the breadth of its portfolio. Still, the hefty fees make it difficult to invest with them.
Is Charles Schwab suitable for individual retirement accounts (IRA)?
In addition to traditional brokerage services, Schwab offers financial planning and investment guidance. Trading in mutual funds is only one of their many offerings; they also help with retirement and education savings programs.