Intro: Vanguard vs. Schwab Matchup


When you’re looking for an investment management company, two well-known leaders in the industry are Charles Schwab and The Vanguard Group. Vanguard is one of the top Charles Schwab competitors.

If you haven’t done a lot of investing beyond your 401(k), then you may be wondering who should win your business in a Vanguard vs. Schwab matchup.

Both are well-respected, and each has its strengths and weaknesses, but in order to really know who would come out ahead for your personal finance needs, you need to review a Schwab vs. Vanguard side-by-side comparison.


Comprehensive Review of Schwab vs Vanguard

AdvisoryHQ has researched both companies to come up with a comprehensive Charles Schwab vs. Vanguard analysis.

We will go through the history of where each company started, the details on their main investment products, their standard fees, reviews and rankings, other Charles Schwab competitors, and, ultimately, give you a complete Vanguard vs. Charles Schwab guide to help you choose the best investment company for your needs.

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What Is Charles Schwab?

Charles Schwab Corporation is a brokerage and banking company based in San Francisco, California. The company was started by Charles “Chuck” Schwab and two partners who, in 1963, launched an investment advisory newsletter. They incorporated their firm, first known as First Commander Corporation, in 1971 and offered conventional broker-dealer securities.  

Image source: Charles Schwab

Today, the company has grown to a full service wealth management business with four main divisions: investing, wealth management, banking, and trading.

According to its About Us page, it currently manages:

  • $2.58 trillion in client assets
  • 1.5 million corporate retirement plan participants
  • 1.1 million banking accounts
  • 7,000 RIAs served

It is a public company on the New York Stock Exchange: SCHW and currently trading, as of May 25, 2016, at $30.64 per share.

Now, for the other contender in our Schwab vs. Vanguard matchup…

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What Is Vanguard?

The Vanguard Group is an investment management company based in Malvern, Pennsylvania. The company started in 1975 by founder John C. Bogle who named the company after a distinguished 18th century sailing vessel. It was founded on the idea that a mutual fund company should be managed in the sole interest of its fund shareholders.

Image source: Vanguard

Today, the company has grown to one of the world’s largest investment management companies and provides an array of investment products, including mutual funds and exchange-traded funds (ETFs). 

According to its Who We Are page, it currently manages:

  • More than $3 trillion in global assets
  • More than $20 million investors
  • 175 U.S. funds
  • 145 additional funds in markets outside the U.S.

It is a private company with no outside owners, other than its funds which are owned by its shareholders.

So, although both have been around for about the same amount of time and there’s not a huge difference in the amount of assets, we’ve already identified one big difference in the Vanguard vs. Schwab comparison: Schwab is a public company and Vanguard is private.

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 Charles Schwab vs. Vanguard – Investment Products and Fees

Whether you are new to investing or a well-seasoned pro, the fees that companies charge and the investment offerings they have are at the top of the list when you’re doing a comparison. No matter how great someone looks on paper, the bottom line is what they can do for your personal wealth management and what it will cost you.

Let’s take a look at a head-to-head Schwab vs. Vanguard comparison of certain fees and products.

Stock and ETF Fees

Schwab:

Stocks & non-OneSource ETFs: $8.95 per online trade / +$5 for automated phone / +$25 broker-assisted

Vanguard:

Stocks & non-Vanguard ETFs: $7 per online trade (first 25 only); after 25, it goes to $20 per trade / $25 by phone all trades

Mutual Fund Fees

Schwab:

Mutual Fund One Source Funds: Free for online trades and automated phone trades. $25 charge for broker-assisted trades.

Transaction-Fee Funds: $76 per buy, $0 per sell for both online and automated phone. +25 for broker-assisted trades.

Vanguard:

No-transaction-fee (NTF) funds: Free

Transaction-fee (TF) funds: Standard is $35 per trade, Voyager and Voyager Select is $20 per trade, Flagship and Flagship Select is $8 per trade.

Options Fees

Schwab:

Online trades: $8.95 + $0.75 per contract / +$5 for automated phone / +$25 for broker-assisted trades

Vanguard:

Standard: $20 + $1 per contract / Voyager Services: $7 + $1 per contract / Voyager Select, Flagship and Flagship Select Services: $2 + $1 per contract

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Vanguard vs. Charles Schwab – Awards and Rankings

Now that we’ve taken a look at the Vanguard vs. Schwab comparison of the numbers on their variety of investment products, let’s learn a little more about how others around the industry feel. This will give us a little more insight into their corporate strengths and possibly their weaknesses.

Image source: Big Stock

J.D. Power Investor Satisfaction Study (2016)

  • #3 was Charles Schwab with 5 stars on overall satisfaction
  • #4 was Vanguard with four stars on overall satisfaction


NerdWallet Reviews – Schwab vs. Vanguard

Charles Schwab review: 5 stars out of 5

Best for:

  • Beginner investors
  • Advanced traders
  • Commission-free ETFs
  • Low-minimum mutual funds
  • Premium research

Vanguard review: 4 stars out of 5

Best for:

  • Retirement investors
  • Low-cost investments
  • Index funds and ETFs
  • High account balances


Vanguard vs. Schwab – Their Awards

So what awards does each company proudly list on their own websites?

Schwab Accolades:

Vanguard Accolades:

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What Are Investors Saying About Vanguard vs. Charles Schwab?

If you really want to learn about a company, you need to take a look around the investor message boards. Now, these are personal opinions, so they all should be taken with a grain of salt, but, ultimately, you can get some really great insights by seeing what investors think.

Bogleheads.org has a really interesting forum topic titled, “Schwab vs. Vanguard” on its message board. Here are some of the points investors are making; many of them have in the past or continue to invest with both:

  • Both offer low-cost index ETFs
  • Vanguard offerings may have a slight tax advantage over Schwab’s
  • Schwab has excellent customer service with late night hours
  • Vanguard has high-quality funds and high integrity managers
  • It’s best to use more than one firm for your investing
  • Overall, the investors like both firms for different reasons

Reddit.com has fast become the place where you can find knowledgeable people talking about every topic under the sun. In its Financial Independence subreddit, there is a thread about Charles Schwab vs. Vanguard. Here are some of the key points made:

  • Their fees are very similar
  • People like the fact that Vanguard is a private company rather than public because it has its clients’ interests in mind
  • Schwab’s minimum investment is lower than Vanguard’s


Summing up the Matchup – Schwab vs. Vanguard

After doing an in-depth analysis of the Charles Schwab vs. Vanguard matchup, it looks like there are clear reasons to invest with one or both. While it looks like Schwab caters to a younger clientele, having late customer support hours and a lower minimum investment, Vanguard looks to be incredibly well-respected for its integrity and the high quality of its funds.

Both are ranked fairly well on various industry magazine lists and have won awards. Charles Schwab seems to come out slightly ahead in some of the rankings, like the J.D. Power Satisfaction Study, but Vanguard ranked higher on the CNBC Top 50 Money Management Firms List. So when it comes to industry accolades, they’re fairly even.

Charles Swab is built for any size investor, from small to large, and does its best to make the whole process of investing user-friendly.

Vanguard caters to the larger or retired investor, with its different fee levels; however, its high-quality funds attract everyone.

So in the final analysis of Schwab vs. Vanguard, after reviewing the data, rankings, reviews, and what investors say, it looks like both companies are a good bet, and many investors put their trust and money in both companies. Read the reviews, look over your finances and goals, and decide which one (or both!) of these great companies is the right one for you.



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