Charles Schwab vs. Betterment: Which Broker Is Right for You?

Whether you're looking to invest for retirement or another goal, two top brokerages are Charles Schwab and Betterment. Schwab is a behemoth financial services company and full-service broker that offers a bevy of choices no matter what your level of investment savvy. Meanwhile, Betterment is a leader in robo-advisor services and simplifies things by limiting its investment menu to about a half-dozen prebuilt portfolios.

Read on to learn the differences between Schwab vs. Betterment, including commissions and fees, account types, and what you can invest in.

Charles Schwab has no minimum investments or maintenance fees for its accounts, whereas Betterment charges a 0.25% annual fee or a $4 monthly membership. You'll be switched from the $4 monthly fee if your balance reaches $20,000 or you set up a recurring monthly direct deposit of $250. On a $10,000 investment, Betterment's 0.25% annual fee amounts to $25, which is reasonable.

However, it's not quite an apples-to-apples comparison. Betterment is a robo-advisor and proponent of passive investing. You can't select your own stocks or exchange-traded funds (ETFs). Once you sign up, you'll answer some questions about your goals and choose from around a dozen premade ETF portfolios. You'll only need $10 to get started. Betterment will then automatically rebalance your investments as needed if you have at least $50 in your accounts.

Schwab also offers robo-advisor services through its Schwab Intelligent Portfolios -- but there's a $5,000 minimum. Though there's no advisory fee, the upfront minimum could be a high barrier if you're a beginning investor who wants to put things on autopilot.

Both brokerages also offer access to human advisors. Schwab customers with at least $25,000 invested can upgrade to Schwab Intelligent Portfolios Premium® and get unlimited access to a team of Certified Financial Planners™ on top of robo-advisory services. But the premium plan also requires a $300 one-time planning fee and a $30 monthly advisory fee. Betterment Premium also gives you CFP® access, but you'll need at least a $100,000 balance and pay an extra 0.15% annual fee (0.40% total).

Schwab is clearly the better platform for DIY investors. You can invest in pretty much any security under the sun, including individual stocks, bonds, mutual funds, and ETFs, and you also have the ability to trade options. One notable exception is crypto: Though you can invest in ETFs and mutual funds with crypto exposure, including new spot Bitcoin ETFs that won U.S. Securities Exchange Commission (SEC) approval in January 2024, you can't directly buy and sell individual cryptos through Schwab.

Your choices are a lot simpler with Betterment: You can't invest in individual securities; you'll choose from prebuilt managed portfolios instead. Its Core Portfolio, which consists of thousands of stocks and bonds, is the default if you're investing for retirement. You can also choose a 100% bond portfolio for fixed income or a high-yielding Betterment Cash Reserve account. Other Betterment portfolios focus on certain themes, like technology, climate change, and undervalued stocks. The robo-advisor also offers three managed cryptocurrency portfolios.

Not surprisingly, Schwab offers more types of investment accounts than Betterment -- but Betterment still has a robust selection of accounts, including individual and joint brokerage accounts, Roth and traditional IRAs, and SEP IRAs (for self-employed people). At Schwab, you'll find all of the above, plus a wider selection of retirement accounts. Schwab also offers some of the best custodial accounts for minors.

One area where Betterment stands out is its Betterment Cash Reserve account, which paid more than 10 times the national savings account APY as of this writing. Though Schwab offers the Schwab Bank Investor Savings Account™, it only pays an average APY.

Schwab's primary platforms are Schwab.com and the Schwab mobile app that allow you to manage your account and access investing and trading tools, and the thinkorswim platforms available through desktop and a mobile app. These offer charting and trading tools. Both apps are highly rated in the App Store.

The thinkorswim platforms are tailored specifically for active traders with live financial news, Level 2 stock data, and advanced charting. You can also use thinkorswim's paperMoney® Virtual Stock trading to simulate trades without putting actual money at risk.

Betterment also lets you manage your account through its desktop version or top-rated app. You can transfer money, manage your account, and connect outside accounts to track your overall financial picture with either platform. But because Betterment is designed for passive investing and isn't a stock trading brokerage, its platforms don't provide real-time market information or trading simulations. You will find limited educational resources on both the desktop and mobile app, though.

Both Charles Schwab and Betterment are top robo-advisors, though Betterment's low minimum investment makes it easier for beginning investors to get started with automated investing. Schwab offers robo-advisor portfolios, but the $5,000 minimum to create one may be a difficult hurdle.

You'll get far more investment options with Schwab, though. You can invest in practically any security of your choosing and avoid commissions and fees. If you're a DIY investor, Schwab is clearly the better choice. But if you're a mostly hands-off investor who's investing with retirement or another long-term goal in mind, Betterment deserves consideration, particularly if you crave simplicity.