Online brokers come and go but the true hallmark of an industry great is consistent excellence. Exceptional all-around performance and best-in-the-business customer service have helped Charles Schwab once again win an apex spot in Investor's Business Daily's 10th annual Best Online Brokers survey.
IBD's Best Online Brokers survey determines from investor responses what they consider the most important broker characteristics. It then ranks brokers based on how thousands of investors rank their primary brokers on those key characteristics.
Schwab again placed among the top three Best Online Brokers overall, just behind Fidelity and ahead of E-Trade, reflecting strong customer ratings across a number of categories. Schwab and Fidelity are the only firms to rank as Best Online Brokers in all 10 years of IBD's investor survey, and Schwab is the only one to always place in the top three. (Some years recognized five Best Online Brokers.)
Of the 15 broker characteristics that investors indicated were important to them, customer service was among the top five in importance. Charles Schwab took top honors for customer service in the latest Best Online Broker survey, with a gap between its rating and the rest of the field.
You can view the full results of the 2022 Best Online Brokers survey here
Schwab placed among the top three in 11 of the 15 performance categories. Aside from Customer Service, they scored high ratings in Trade Execution Speed/Price, Website Security, Equity Trading Platform, Site Performance, Research Tools, Investment Research, Portfolio Analysis & Reports, Incentives/Discounts/Pricing, Availability Of Account Types (Roth IRAs, etc.), and Educational Resources.
Barry Metzger, Schwab's managing director and head of trading and education, told IBD that delivering the best-possible customer services is the thing that matters most. "Customer service and satisfaction is at the center of everything we do, and we believe every investor deserves to work with a firm they can count on," he said.
Metzger pointed out Schwab is the only large investment firm to offer a satisfaction guarantee, a feature introduced in 2017. "If for any reason a client is not completely satisfied, we'll refund their fee or commission and work with them to make things right," he said.
Given Charles Schwab's history, it makes sense serving customers would be the main driver of the business. Its roots go back to founder Charles R. Schwab's Investment Indicator newsletter, with the brokerage being founded in 1971 to serve subscribers.
As the industry deregulated and commissions were slashed, Schwab passed on savings to customers by becoming the first discount brokerage.
Discount Legacy Remains
Customers contacted by IBD hailed Schwab for the value offered by its trading platform. Trade execution, in which Schwab ranked second in the 2022 Best Online Broker Survey, was highlighted as a strength.
"Very often I have had trades come in under what my limit was on a purchase," said Clayton White, who has used the firm for around eight years.
Phillip Ranelli has been a Schwab customer since the mid-1980s. He has found the firm's fees to be lower than other brokers he used in the past, such as Bank of America, Equity Trust and Solomon Smith Barney.
In his experience, Schwab's fees tend to be more competitive, while price fills on limit good-till-canceled, or GTC, orders were also better.
"Many times, I get a better price than what I placed as my limit," Ranelli said.
Meanwhile, William Kasper, a Schwab customer for around 40 years, said he was pleased by the fact the firm offered "very low or no commissions." With its educational background, Schwab is seen as a firm that is always ready to offer a helping hand.
"I make my own investment decisions, but my assigned financial advisor is excellent and clarifies questions that I periodically have," Kasper said.
Charles Schwab Account Features |
|---|
| Minimum to open an account: $0 (Schwab One brokerage account) |
| Number of accounts: 33.2 million (including TD Ameritrade accounts) |
| Shorting restrictions: Must consent to a margin and short account agreement |
| Margin restrictions: Must have $2,000 in cash or marginable securities in account |
| Commissions: $0 for online trades; $0 for options trades plus $0.65 per contract |
| Special features: Satisfaction guarantee refunds fee or commission if not completely satisfied |
| Website: Schwab.com |
Schwab Integration With TDAmeritrade
The online brokerage world was rocked when Charles Schwab acquired TD Ameritrade for $26 billion in 2020.
Metzger said the integration is "going well" and remains "on track."
The firm is expecting account conversion to occur somewhere between April and September of 2023 for most accounts.
Charles Schwab accounts are set to benefit from even more powerful features in the future due to the merger.
"For Schwab clients, we have already announced plans to adopt Thinkorswim and integrate its award-winning trading platforms, education and tools," Metzger said. "We're fully committed to continuing to provide a best-in-class trading experience, along with the innovation, education and service investors expect from both Schwab and TD Ameritrade."
These New Features Target Young Investors
In the exciting world of online brokering, resting on one's laurels is a surefire recipe to fall behind the opposition.
In light of this, Schwab now has a laser focus on serving young and new investors. Metzger said growth in this area has been a "significant trend" over the last year and a half.
From 2016 through today more than half of new retail households at Schwab are under 40 years old. The firm is working hard to make sure the customers are well served. This is underlined by the December launch of the new Schwab Starter Kit.
The kit provides beginning investors with $50 to split across the top five stocks in the S&P 500 in the form of fractional shares, along with access to tailored, easily digestible educational content designed for the starting investor and curated easy-to-use investing tools and resources.
Schwab's Slice Of Success
Products and services like Schwab Stock Slices and subscription-based digital financial planning have resonated. A high yield checking account has also been popular with younger customers.
"Schwab Stock Slices, our fractional shares offer, continues to resonate with clients and recently passed $1 billion in assets," Metzger said. "We're also seeing continued growth and interest in digital advice with client assets managed by our digital advisory solutions totaling $71.7 billion through the end of Q3 2021, up 42% year-over-year."
Digital advice refers to the firm's suite of robo advisory, automated investing services.
But not all improvements are aimed at young investors. Another focus area for the firm due to increased volumes is trading platform stability. This will benefit customers of all ages and levels.
Metzger said safeguarding its systems and ensuring clients have reliable access to their accounts is a top priority. To achieve this Schwab is concentrating on the scalability and resiliency of its tech infrastructure, including taking steps to manage spikes in trading volume
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
