Are you an adviser? Go to Unbiased Pro

Vanguard vs Charles Schwab: what’s the difference?

6 mins read
by Unbiased Team
Last updated January 30, 2025

Learn how Vanguard and Charles Schwab offer unique advantages for different types of investors.

Uncover the key differences between Vanguard and Charles Schwab.

Understand their services to find strategies to optimise your investments.

Key takeaways
  • Vanguard offers low-cost index and exchange-traded funds (ETFs), ideal for passive, long-term investors.

  • Charles Schwab provides a broader range of products, including mutual funds, stocks, and options.

  • Vanguard’s fees feature a transparent structure, with a £4 monthly minimum fee for smaller accounts from 28 February, while Charles Schwab’s fees include commission-free US-listed trades but may have extra charges for American depositary receipts (ADRs) and borrowing stock.

  • Unbiased will match you with a financial adviser to help you achieve your investment goals.
Get financial advice
We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.
Find a financial adviser

What is the difference between Vanguard and Charles Schwab?

Both Vanguard and Charles Schwab offer various financial services tailored to individual and institutional investors. While the firms cater to investors globally, they have distinct philosophies and focuses. 

Vanguard is widely regarded as a pioneer in low-cost investing, emphasising simplicity and affordability. Its core philosophy centres on helping investors build wealth over the long term via diversified, low-cost index funds.

Vanguard’s financial services are particularly popular among passive investors and are well-known for their range of mutual funds and ETFs.

Index funds and ETFs (exchange traded funds) are two of the easiest ways to begin investing in the stock market.

They can out-perform higher risk investments in the long term and remove the hassle of picking specific stocks. However, they’re not without risks.

Learn more: how to invest in index funds and ETFs

On the other hand, Charles Schwab combines traditional brokerage services with modern technology. It has a strong presence in the US but also provides services to international investors, including those in the UK.

Charles Schwab's financial services include a wide array of products, including mutual funds, ETFs, stocks, and options, making it a versatile choice for active traders and long-term investors with various goals. 

In terms of charges, Vanguard’s fees are typically lower, but it may no longer be the lowest-cost platform due to a new £4 minimum monthly fee, which will be introduced on 28 February. 

Charles Schwab, while competitive, offers a more comprehensive suite of tools and research, which may appeal to those seeking a hands-on approach. 

Both companies provide innovative platforms, but Vanguard’s simplicity suits passive investors, whereas Charles Schwab’s expansive offerings are better for those who want flexibility and active management options.

Vanguard vs Charles Schwab: how do the fees compare?

Vanguard and Charles Schwab’s fees are important considerations when deciding between the two.

Vanguard fees

Vanguard is known for its transparency and affordability when it comes to fees.

From 28 February 2025, Vanguard will charge a £4 monthly minimum fee for accounts under £32,000, transitioning to a 0.15% annual fee for accounts exceeding this threshold, capped at £375 annually.

The managed ISA management fee is being reduced from 0.3% to 0.2%, effective from 31 January. 

So, under the new monthly fee,  an account with £5,000 would incur a flat £4 monthly fee, amounting to £48 annually. This straightforward structure makes Vanguard attractive to investors who want clarity over fees, but it may not be the cheapest for those with smaller portfolios.

Vanguard does not charge for fund switching, withdrawals, or closing an account. However, trading ETFs using Vanguard’s optional quote and deal service costs £7.50 per trade.

For investors seeking to start small, Vanguard requires a minimum initial investment of £500 or monthly payments of £100, ensuring accessibility without overwhelming upfront costs.

Fees such as fund management costs (ranging from 0.06% to 0.79%) and fund transaction costs (up to 0.46%) also apply, depending on the fund. Overall, Vanguard prioritises simplicity, making it ideal for passive investors building long-term portfolios.

Charles Schwab fees

Charles Schwab’s fees are competitive but structured differently.

Schwab charges no commission for online trades of US-listed stocks and ETFs. Options trades come with a fee of $0.65 per contract, with no additional base commission. For trades assisted by a broker, a fee of $25 per transaction applies.

UK investors can access European-domiciled UCITS ETFs through Charles Schwab, offering diversified investment options designed to meet the needs of European investors.

Depending on the specific investments, additional charges such as exchange process, ADR, and stock borrowing fees may be applicable.

Charles Schwab has no minimum account balance requirement, which appeals to newer investors, but specific funds may have their own investment minimums.

For example, investing £5,000 in one of Charles Schwab's ETFs incurs no trading fees, but the ongoing expense ratios of funds should be considered, averaging around 0.19%.

The firm's broader offering includes access to research tools, which justify slightly higher costs for some services. Charles Schwab's fee structure may better suit larger portfolios or active traders seeking diverse investment options.

Is Vanguard or Charles Schwab better?

Here’s how Vanguard and Charles Schwab compare in various aspects and offerings.

Range of investments

Vanguard offers a curated selection of over 85 ETFs and more than 100 index funds in the UK, emphasising low-cost, diversified investing. Its focus on simplicity ensures its offerings align with passive, long-term strategies.

Charles Schwab provides a broader range, with over 3,000 ETFs, mutual funds, and other securities. Its extensive product catalogue is ideal for active investors or those seeking niche opportunities unavailable via Vanguard.

Research and guidance

Vanguard provides basic tools, including a cost calculator and portfolio guidance, tailored for investors who prefer straightforward advice. Vanguard also offers financial advice through its digital adviser and personal adviser services.

Charles Schwab excels in research and guidance, offering tools such as real-time data, advanced charting, and personalised insights. Charles Schwab's financial services also include a robust educational platform, which suits investors seeking in-depth resources to guide decision-making.

Brand reputation

Both firms have strong reputations. Vanguard is renowned for revolutionising low-cost investing and promoting passive strategies, while Charles Schwab is praised for innovation and customer-centric services.

Charles Schwab's customer service is often highlighted for its responsiveness and extensive support channels. Similarly, Vanguard’s customer service receives praise for its simplicity and clarity, aligning with the firm’s overarching philosophy of putting investors first.

Get financial advice
We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.
Find a financial adviser

Can you open accounts with both Vanguard and Charles Schwab?

Yes, investors can hold accounts with both Vanguard and Charles Schwab.

This approach can provide access to more diversified investments, enabling individuals to take advantage of Vanguard’s low-cost funds and Charles Schwab’s expansive investment options.

Having dual accounts allows investors to access both firms’ strengths, catering to varied strategies, such as passive and active investing.

However, managing multiple accounts requires careful tax planning. Exceeding UK allowances, such as capital gains, could lead to unexpected liabilities.

Monitoring fees across accounts is also essential to avoid unnecessary costs. For disciplined investors, using both platforms enhances flexibility and portfolio diversification.

Which is better for passive, long-term investing?

For passive, long-term investors, Vanguard is an ideal option. Its transparent fee structure, extensive range of index funds, and emphasis on long-term wealth creation align with a buy-and-hold approach. Vanguard’s financial services simplify investing, making it accessible even for beginners.

While Charles Schwab also supports passive strategies, its more diverse offerings and robust tools are geared towards active management. Investors who prefer automation without sacrificing flexibility may still find the company appealing, but Vanguard’s focus on simplicity makes it the clear choice for passive investing.

Research by Statista shows that the vast majority of active funds did not manage to outperform a passive alternative.

Less than 20% of global funds outperformed passive investments on a 10-year rate of return, showing that active management doesn’t always mean higher returns.

How do their investment philosophies differ?

Here’s how each firm’s investment stances differ:

Charles Schwab’s philosophy

Charles Schwab operates on the principle of empowering investors through access and education. The firm blends technology with personalised advice, ensuring a seamless investment experience. 

Charles Schwab’s philosophy revolves around providing investors with comprehensive resources to make informed decisions. It accommodates all types of investors, from beginners to experienced traders, through a vast product range and innovative tools.

Vanguard’s philosophy

Vanguard champions a low-cost, client-first philosophy. Founded on the idea of helping investors build long-term wealth, it focuses on indexing and passive management. Vanguard is structured as a mutual company, meaning its investors are also its owners. 

This unique model aligns the firm’s interests with its clients, resulting in consistently lower costs and a strong value-based emphasis.

Get expert financial advice

When comparing Charles Schwab and Vanguard, the choice depends on your investment approach and financial goals. Vanguard’s financial services stand out for their low-cost options and suitability for passive, long-term investing. 

Meanwhile, Charles Schwab's financial services offer a wide range of investment products and tools, ideal for active investors seeking flexibility.

Understanding the unique features of each platform will help you make an informed decision that aligns with your strategy.

Let Unbiased match you with a professional financial adviser to guide your investment decisions and grow your portfolio.

Get financial advice
We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.
Find a financial adviser
Author
Unbiased Team
Our team of writers, who have decades of experience writing about personal finance, including investing, retirement and pensions, are here to help you find out what you must know about life’s biggest financial decisions.