Yahoo Finance Interactive Brokers vs. Schwab: Fees & Features
Interactive Brokers and Schwab offer similar products aimed at two very different segments of the market. With Interactive Brokers you will get a full-featured trading platform designed for professional and institutional investors. Schwab also offers a full-featured trading platform, but one designed with individuals and retail investors in mind. Here’s how they stack up. If you prefer hands-on investing advice, a financial advisor could help you create a financial plan for your investment goals.
Overview: Interactive Brokers vs. Schwab
Interactive Brokers and Schwab both offer full-service investment platforms. This means that each allows you to invest and manage your portfolio independently, rather than having your portfolio managed by a third-party or an algorithm. With both services you can invest in all mainstream financial assets, and both support taxed and tax-advantaged portfolios (such as an IRA).
The main difference between these products is their complexity and audience. Interactive Brokers was originally designed for professional traders. While the company has made some attempts to reach the retail investor market, it remains an extremely sophisticated product. For technical traders and experienced investors, this is one of the better trading platforms that you can find. Retail investors, however, will likely find its sheer volume of information confusing and somewhat overwhelming.
Schwab, on the other hand, is a full service trading platform built for the upper end of the individual market. Charles Schwab’s pedigree is as a financial advising firm with brick-and-mortar locations, and that design philosophy continues. This is a solid trading platform that provides you with a broad range of both technical indicators and fundamental information about your assets, while also offering access to its broker services. While professional investors will likely find its interface limiting, it is a good option for sophisticated investors who don’t quite need to pay for a professional suite.
Fees: Interactive Brokers vs. Schwab
Schwab offers a fee structure in line with most trading platforms today. The firm has no minimum balance and does not charge regular fees for keeping an account; for example there are no monthly maintenance fees. It costs nothing to trade stocks or ETFs and $0.65 per option to trade options contracts. Like most online brokerages, Schwab offers a list of no-fee mutual funds. For funds that are not on that list Schwab charges a $50 fee per trade. While this is a relatively high fee, Schwab’s no-fee mutual fund list has several thousand options. Most individual investors will find mutual funds on this no-fee list that meet their needs.
Interactive Brokers has a different fee structure, which matches the platform’s different audience. Investors who use the firm’s reduced-feature Interactive Brokers Lite platform pay nothing for stock and ETF trades. Beyond that, the firm has a variety of fee structures that are tied to your own trading patterns. Investors who trade more often will get lower fees based on this increased activity. For example, you can trade options contracts for between $0.15 and $0.65 per contract, with tiered pricing based on your activity.
Investors can also choose fixed-price plans, which tend to set prices at higher rates and are usually good for lower-volume traders.
Services and Features: Interactive Brokers vs. Schwab
While Interactive Brokers offers a web-access Lite product, this really isn’t a strong option for most investors. If you’re an Interactive Brokers user, the Lite web access is a nice feature, but it doesn’t provide anything that you can’t get with an ordinary full-service brokerage.
The real feature of Interactive Brokers is its desktop client. This is a professional trading environment built on the mosaic-window interface common to sophisticated traders. With this product you can create your own trading interface, building windows based on the assets and technical information that’s relevant to your own portfolio and financial needs.
And there is little that you cannot access through Interactive Brokers. This platform supports all forms of technical indicators familiar to this reviewer, and trades all mainstream financial assets including stocks, ETFs, bonds, mutual funds, options contracts, futures contracts and FOREX.
Schwab, on the other hand, is built as a web-based trading platform. In this regard the product that it offers is very similar to other major online brokerages. This brokerage supports most mainstream financial assets, including stocks, ETFs, bonds, mutual funds, options contracts, futures contracts and some FOREX markets. The platform stands out in this regard, as most trading platforms do not support futures, commodities or currencies.
You can find a full suite of technical indicators on Schwab’s brokerage. While not as comprehensive as the data available through Interactive Brokers, it is more than enough for even well-informed investors. High volume investors can also use the firm’s companion platform called Street Smart, which is built with tools particularly for that category of investors.
Online and Mobile: Interactive Brokers vs. Schwab
Interactive Brokers does have a web-based option, but it is best thought of as a companion to the firm’s flagship desktop software. This platform is meant as a standalone trading environment. The app has similar ratings on the Apple App Store (2.9 rating) and Google Play (2.8 rating).
The desktop environment is an extremely well designed professional platform. The Interactive Brokers trading screen is fully customizable, allowing you to pull out windows based on the technical indicators, fundamental data and financial assets relevant to your own portfolio. However this is also an overwhelming experience for anyone who is not familiar with it. Even highly experienced investors will likely find Interactive Brokers both intimidating and, likely, more complex than necessary.
Schwab also offers a well-designed trading experience, and one that will also primarily benefit more sophisticated investors. This is a web-based trading platform. It does have an app, which works very well, but you can find and manage information more easily through the full website. The app is highly rated with a 4.8 rating on the Apple App Store and a 3.8 rating on Google Play.
Among the full-service trading platforms, Schwab stands out for the depth of its technical information and research. You can more easily find complex data, and can more easily customize your trading screen, with Schwab than with most other platforms. The Schwab All-In-One Trading Ticket lets you create a snapshot of your trades before executing them. While this trading ticket adds a potentially unnecessary step to making simple trades, it’s a great tool for building multi-step financial positions.
Which Should You Use? Interactive Brokers vs. Schwab
Both Interactive Brokers and Schwab are excellent tools for sophisticated investors, two of the best on the market, and neither are likely the right choice for newcomers to finance or casual investors. Schwab is a better choice for novice or retail investors, although those consumers may still be better off starting with something like E*Trade or Fidelity. But it is a terrific choice for experienced investors who don’t necessarily need, or want to pay for, a professional environment.
For professional or institutional investors, Interactive Brokers is generally considered one of the best products on the market. If the scale of this platform’s information is valuable, and if their higher fees are worth paying, this is a terrific choice.
Bottom Line
Interactive Brokers and Schwab both offer sophisticated products aimed at experienced investors. The Interactive Brokers platform is great for professional-level investors who will get value from its higher fees. Schwab, on the other hand, is an excellent choice for sophisticated investors who may not necessarily need the depth of Interactive Brokers.
Tips for Investing
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