Charles Schwab vs. Robinhood

Charles Schwab and Robinhood are two of the most popular brokerages, letting clients buy and sell stock, options, exchange-traded funds and more. Millions of people trust these names to help them access the market, track investments and research stocks, among other things.

Charles Schwab has a long-deserved reputation as an investor-friendly broker that helps smaller investors, using a range of research and tools. It regularly ranks highly in Bankrate’s reviews of the industry’s best, and it garnered Bankrate’s award for best overall broker in 2023.

But Robinhood has taken the investment community by storm in the last decade, quickly growing into the name that many think of when they think of mobile trading. It’s been a boon for many investors due its support for fractional shares and low trading costs, especially for options.

So which is better for you? That comes down to the broker’s features but also what you really need from a broker. Here’s how they stack up on the most important features.

Schwab vs. Robinhood: Costs

In several areas on the cost front, it’s a dead heat, but Schwab edges out its rival overall.

Both Schwab and Robinhood offer stocks and ETFs with no commission (but so does every other major online dealer). Robinhood stands out for its no-cost options trading, a real rarity in the sector and something that an options trader may find especially worthwhile. Schwab can’t match it, and instead offers the industry standard commission of $0.65 per contract.

That said, Schwab offers something that Robinhood doesn’t – some 4,300 mutual funds without a transaction fee. That’s a solid offering, too, and Robinhood doesn’t offer mutual funds at all.

And when it comes to other fees, Schwab notches ahead again. It charges a $50 transfer-out fee if you’re moving securities, compared to Robinhood’s $100.

Edge: Schwab

Schwab vs. Robinhood: Tradable securities

Here’s a place where Charles Schwab outdistances Robinhood due to the breadth of its offerings.

At Schwab, you can trade a number of different securities, including stocks, bonds, options, ETFs, mutual funds and futures. It’s a wide selection that offers investors a ton of access to the most popular investment types, enough that virtually all investors are going to be satisfied.

Robinhood still offers a solid core of available investments – stocks, ETFs and options – but not other popular types such as mutual funds. The differentiating factor is that it offers trading in cryptocurrency alongside its other securities, something that most traditional brokers don’t.

So if you want a wider selection of securities, Schwab makes the better pick, while if you want the core with the addition of crypto, then Robinhood is your winner.

Edge: Schwab, for its wider selection of traditional securities

Schwab vs. Robinhood: Account types

In terms of account types, there’s little contest between Schwab and Robinhood.

Schwab offers all the fundamental types – individual and joint taxable accounts, IRAs (traditional, Roth and rollover), custodial account, business accounts and trust accounts, among other less typical types. If you’re looking for a managed portfolio, Schwab offers that through its Schwab Intelligent Portfolios robo-advisor service at no additional fee. It’s quite a range.

In contrast, Robinhood offers individual taxable accounts and has just begun offering IRAs (traditional, Roth and rollover). The broker actually has a neat bonus feature for its IRAs, giving you a 1 percent bonus of whatever money you bring to the table, including for rollovers.

If you want to do more with your broker than what Robinhood offers, you need to go elsewhere.

Edge: Schwab

Schwab vs. Robinhood: Fractional shares

When it comes to fractional shares, Robinhood clearly outclasses Schwab.

Robinhood is an excellent pick if you’re intending to invest in fractional shares. You can not only place orders for fractional shares, but you can also reinvest any dividends in partial shares, too. That combination is not something you see at many brokerages, only the best for fractional shares. At Robinhood you can buy partial shares for as little as $1, and the range of available stock is huge – all but the smallest stocks and those trading for less than $1 – to keep the riff-raff out.

You can buy fractional shares as part of Schwab’s Stock Slices program, but its range of supported stocks is narrower – just the 500 or so names in the S&P 500 index. You’ll need to invest at least $5 for each purchase, and you can buy up to 30 stocks at a single time, making it a fairly easy-to-use interface if you want to buy a lot of stocks at once (in contrast to Fidelity’s interface.) However, you’ll be able to reinvest your dividends for other stocks that pay them.

So Schwab’s fractional share program is decently broad, but not quite as broad as Robinhood’s.

Edge: Robinhood

Schwab vs. Robinhood: Customer support

Schwab’s customer service is one of its strongest suits, and it really is that good.

Schwab regularly receives high marks for its helpful and friendly customer support. You can get to a human in under a minute without getting lost in the telephone maze. Schwab has 24/7 support across phone, chat and email, and you can still go to one of 300+ branches. In our experience, it’s been as good as you can reasonably expect customer support to be.

Robinhood has recently upgraded its support, moving from what used to be essentially a self-help page, email support and a deeply buried phone number. Now you’ll get those plus 24/7 callback support for your issue. You leave your concern and Robinhood gets back to you within 24 hours. It’s worlds better than it had been, surely, but Schwab really tops this game. Of course, as an app Robinhood doesn’t offer a branch network if you have that pressing question.

Edge: Schwab

Bottom line

Given that it’s an upstart with pockets not nearly as deep as its rival’s, Robinhood does a surprisingly good job in a handful of categories, compared to the well-funded and deeply experienced Charles Schwab. But Schwab ends up being too polished in too many categories, and it takes an investor-friendly approach to so much of what it does. Still, those looking for a specific feature such as free options trading may find Robinhood a more apt choice.