Charles Schwab brokerage review UK

How we rated Charles Schwab's investment features

Charles Schwab is a US brokerage that’s been expanding globally and has reached the UK. It’s more of an old-fashioned hands-on broker than the newer app-based platforms that have been taking over the UK retail investing scene.

Charles Schwab could be a cheap option for certain types of investors but it’s hard to look past its limitations when there are much more well-rounded platforms available here in the UK.

What or who is Charles Schwab?

Charles Schwab is an established US brokerage that’s been around since the 1970s, has over 35 million customers and manages over $9 trillion (about $7 billion) in assets.

The man behind the name, Charles Robert Schwab, is an American investor who pioneered low-cost selling of US securities (investments) back in 1975 – embracing automation technology to make investing cheaper.

Charles Schwab fees

When it comes to fees, Charles Schwab is a bit of an oddball. If you want to invest in US stocks, there’s no commission to pay, meaning this broker can compete with some of the best trading platforms in the UK.

However, if you stray outside the US when looking for investments, you’ll be in for a nasty surprise. Looking just north of the border, it will cost you $6.95 per trade to buy or sell Canadian shares. And if you want to explore ETF investments this side of the pond, you’ll need to cough up a substantial $50 commission fee for accessing UCITS-compliant funds.

So, sticking to US stocks is advisable if you’re using Charles Schwab. But here comes the next kicker. Because everything is denominated in US dollars, you’ll have to pay a conversion fee each time you want to exchange your pounds. And this fee starts at 1% (for trades up to $100,000), which is quite expensive compared to the other platforms that let you invest only in US stocks.

The reason why you’d want to use Charles Schwab over a similar, cheaper broker remains slightly unclear. This is a shame because it seems as though the original concept back in the 1970s was to make investing cheaper for ordinary investors, but sadly this brokerage hasn’t kept up pace with newer low-cost platforms.

Charles Schwab investment choice and stocks

With a Charles Schwab brokerage account, the main draw is US stocks. You can invest in any publicly listed US company. For certain large stocks, you can invest and buy fractional shares from just $5. For less-popular stocks, you’ll have to fork out for a whole share.

You are able to invest in ETFs on Charles Schwab, but due to UK regulations, you can’t buy US ETFs. So, you’re restricted to European and UK ETFs that have been authorised as compliant with Undertakings for Collective Investment in Transferable Securities (UCITS) under EU and UK rules.

Here’s what that financial jargon means – if you want to invest in ETFs, it will cost you a whopping $50 “foreign transaction fee”. Considering many platforms will let you trade exchange-traded funds (ETFs) for nothing (or a small fee), this cost is way above what you’d expect.

The other key asset types you can invest in and trade are bonds and options. Here’s how the fees are structured for each asset.

Bonds

Options

These prices are for online trades and if you want a “broker-assisted trade” where Charles Schwab helps you place the trade, there’s an additional $25 fee.

Charles Schwab says it can offer other assets at varying prices. You’ll need to contact the company if you want to discuss these.

Is Charles Schwab safe and legit?

Charles Schwab is regulated by the Financial Conduct Authority (FCA) in the UK. However, because its operations are based in the US, one major downside is that Charles lacks FSCS protection.

Instead, it does offer additional insurance and protection. Because Charles Schwab is regulated in the US by the Financial Industry Regulatory Authority (FINRA) and a registered member of the Securities Investor Protection Corporation (SIPC), your US securities are protected up to the value of $500,000 (and cash up to $250,000) should Charles Schwab fail.

It has extra insurance on top of this provided by Lloyd’s of London, which should give you additional protection of up to a $150 million per customer (but there’s a total limit of $600 million across the company) in the event that SIPC limits are exhausted. You can read more about how your money is protected on the UK Charles Schwab website.

Although as always when you invest, your capital is at risk.

Charles Schwab account types and products

Unfortunately, Charles Schwab offers UK investors access only to a general investment account (GIA). This is fairly common practice among international companies launching platforms in the UK – Robinhood and Webull also don’t offer an ISA – and is definitely a downside compared to most UK-based share trading platforms.

So, you’ll need to look elsewhere if you want to make the most of UK tax-efficient “wrappers” like a stocks and shares ISA for investments, a self-invested personal pension (SIPP) for your retirement, a lifetime ISA (LISA), or a junior ISA (JISA)/junior SIPP to invest on behalf of your kids.

With a Charles Schwab account, you can invest as much as you like. However, you should be aware that if your portfolio grows, any potential gains may be subject to UK tax.

In the 2024/2025 tax year, you have a capital gains tax (CGT) allowance of £3,000 – any profit over this amount could mean handing over some of those hard-won investing gains to the taxman.

Similarly, if you hold any stocks or shares that pay dividends, anything over £500 could also be taxed. These allowances can change each tax year and tax is subject to your individual situation.

You should also brush up on US tax rules. When you sign up and submit your W-8BEN, you make a declaration that you’re not a US tax resident, so you don’t need to file a tax return there. However, dividends from US stocks will automatically be subject to a 15% withholding tax (WHT) – Charles Schwab will handle this on your behalf.

Is Charles Schwab easy to use?

This is a category where Charles Schwab has some mixed results. You can get hold of the support team through email, phone or post (if you’ve got time to pen a letter). For investing, you’re able to invest on a desktop app, a web browser or on an app for your mobile device, but the interface isn’t the slickest (not the worst either).

On the UK App Store, Charles Schwab scores an impressive 4.8 out of 5 (from over 2,500 reviews), but unfortunately Android users don’t share this positive sentiment and Google Play customer reviews for Charles Schwab were a less positive 3.6 out of 5 from over 26,000 reviews (as of September 2024).

Trustpilot reviews for Charles Schwab gave it a “bad” 1.5 out of 5 rating, but this is mostly international reviews and only around 400 reviewers (as of September 2024).

Charles Schwab tools, resources and features

Charles Schwab does have some excellent tools and resources available to investors and traders using the platform, such as:

• thinkorswim platforms. Charles Schwab investors get access to a platform called “thinkorswim” available on desktop or mobile and includes plenty of charting and analysis tools along with the ability to tailor the platform to your investing preferences.
• Schwab Network. This is a media service that gives you real-time insights during market open hours to help you interpret data and livestream the latest market movements.
• SnapTicket. Get quotes and place trades with a streamlined trade ticket that lets you make investments without leaving a page, collapsing and expanding the ticket without losing information.
• Order types. Different trading order types let you automate trades.

You’ll also get access to features like watchlists, stock screeners and advanced price charts.

When it comes to learning materials, there’s loads for you to dig into, including:

• Market updates
• Investing videos
• Guides and articles
• Podcasts
• Webinars and workshops

The only thing that’s missing is social features or a community forum to interact with other investors and share ideas.

Who might Charles Schwab suit?

We think Charles Schwab is best suited to those who have some experience researching stocks themselves or placing trades and are looking only to invest in US securities. Charles Schwab also offers some specialist support (for people moving from the US to the UK for example) and the ability to work with a “financial consultant” (for free if you’ve over $1 million).

So you might like Charles Schwab if you want some help and guidance or you’re a high net worth investor with a complex portfolio or tax arrangement.

If that’s not you, why not compare share trading platforms to find the right fit to match your style.