Who Are Charles Schwab’s Main Competitors?

Charles Schwab (SCHW) is a financial services company that operates through various subsidiaries to provide asset management, discount brokerage, banking, and advisory services.

Its closest competitors in the discount brokerage sector include Fidelity and Interactive Brokers. Schwab’s asset management and advisory services pit it against firms such as Goldman Sachs. Its mutual fund offerings are increasingly competitive on cost versus well-known players like Vanguard.

Charles Schwab: An Overview

In its early days, Charles Schwab gained prominence as one of the world’s first and leading discount broker services, and this segment remains a large part of the company’s business. The company continues to offer a full array of brokerage services through its subsidiary, Charles Schwab & Co. It also operates Schwab Bank, a federal savings bank in Reno, Nevada, established in 2003.

Schwab also manages a line of mutual funds and exchange-traded funds (ETFs). These funds can be purchased through any accounts Schwab offers, including brokerage accounts, individual retirement accounts (IRAs), or 529 college savings accounts. Schwab serves customers over the phone, online, or in branch offices.

The financial institution expanded aggressively into asset management and investment advisory services. In 2020, Charles Schwab acquired TD Ameritrade, adding approximately 12 million client accounts, $1.3 trillion in client assets, and $5 billion in annual revenue. As of February 2023, Schwab held $7.38 trillion in assets under management (AUM). Some of its other notable figures include:

• 34 million active brokerage accounts
• 2.4 million corporate retirement plan participants
• 1.7 million banking accounts

The company reported annual net revenue of $20.76 billion and net income of $7.18 billion for fiscal year 2022.

Charles Schwab: Assets Under Management

Schwab leads its competitors in total client AUM. The company holds $7.38 trillion in assets compared to its competitors:

• Fidelity, which manages $10.3 trillion
• Interactive Brokers, which has $11.6 billion in equity capital
• Goldman Sachs reports assets under supervision, which includes AUM. As of the end of 2022, the financial services company reported more than $2 trillion in AUS, significantly less than Charles Schwab. While Goldman doesn’t offer discount brokerage services, it does compete with Schwab in banking and advisory services.

Charles Schwab: Mutual Funds and ETFs

Schwab offers clients 2,000 ETFs, including 29 listed in the U.S., and thousands of OneSource mutual funds, which carry no loads and transaction fees.

By contrast:

• Fidelity offers clients more than 400 ETFs (Fidelity and iShares) and over 10,000 mutual funds
• Interactive Brokers provides access to more than 46,000 mutual funds

Charles Schwab: Research

Through Schwab, customers gain access to free stock reports from experts and third parties, including Morningstar and Argus. Fidelity also offers a suite of research tools with high-quality research. TD Ameritrade offers the largest selection of independent, third-party investment research from several firms, such as Morningstar and Standard & Poor’s (S&P). Clients of Interactive Brokers can also access free and paid research services.

The Bottom Line

Charles Schwab is one of the world’s largest discount brokerage firms. It provides a range of products and services to its clients and remains one of the most competitive in the market. Its move to cut commissions from certain trades for products like stocks and ETFs led others to follow suit. Charles Schwab continues to lead the industry, with more than $7.38 trillion in assets under management.

Correction—May 1, 2023: The article was amended to remove TD Ameritrade as a direct competitor of Charles Schwab following the acquisition of TD Ameritrade by Charles Schwab in 2020.