When it comes to picking the right brokerage firm, you might want to find a good balance between online features, low fees and the ability to consult human advisors. Scottrade and Vanguard fill very different niches in the worlds of investment and trading, so let’s compare them to see how they fare.
Features, Fees & Ratings Comparison Table
|Customer Service||24/7 email and chat support; phone support; 500 local branches||Phone support for investor and client information, brokerage services, etc.|
|User-Friendliness||Easy for beginners, with flat rates and lower ceiling for premium features ($2,500)||Real broker assistance; online interface is comparatively limited|
|Flexibility||$2,500 minimum balance for brokerage; advanced trading platform to personally handle trades; third-party research||High $50,000 account minimum; personal advisors provide personalized advice|
|Fees||Flat $7 rate per trade; $0.70 fee per options trade||Variable rates depending on account size; $0 to $20 for commissions, mutual funds, ETFs|
|Features||Flat commission fee; ScottradeELITE platform for semi-regular traders with $25,000 balance; 2,500+ no transaction fee mutual funds||Comparatively affordable human trade advisors, manages 401(k)s; commission-free ETFs|
Features & Primary Uses
Both Scottrade and Vanguard are investment brokerage firms that allow customers to invest in low-cost assets, whether through online or through human brokers. While Scottrade relies more on online trading platforms and the like, Vanguard’s bread and butter is its personal brokerage service, in which teams of investors look over your portfolio and recommend trades if you meet a certain minimum.
Vanguard, in particular, is notable for specializing in index funds, which are cheap, diversified funds that provide low risk and extremely stable returns on investment. Vanguard innovated the index fund in fact, as the Vanguard 500 Index Fund is thought to be the first of its kind.
Not only that, Vanguard innovates in that their company is structured in such a way as to turn their shareholders into the company’s owners. Customers are able to get better rates, as the company is incentivized to offer them the best funds at low cost to keep them happy.
In terms of online trading tools, Scottrade has a bevy of features for their customers to use in their trading. Their web-based interface is uncomplicated, but it gets the job done; they even include Scottrader Streaming Quotes to allow traders to track their investments and take advantage of swings in the market.
Scottrade’s major advantage in this category, however, is their advanced trading platform, ScottradeELITE. A desktop-based software program, it is made available to traders who are extremely active and fulfill a minimum of traders during a 12-month period.
One major caveat to ScottradeELITE, however, is that Scottrade customers require a balance of $25,000 to access the program. This can turn off a lot of beginner investors, as they may not have that kind of scratch on them; still, if you are willing to invest that much, you’ll have the benefit of one of the most advanced trading platforms out there.
Vanguard, meanwhile, relies greatly on their personal advisor service to provide hands-off investment management; as such, their trading tools are pretty sparse. While their website is a slight improvement over Scottrade’s in terms of features, there is no advanced trading platform like ScottradeELITE to speak of. Because of that, Scottrade wins in terms of trading tools.
Both Vanguard and Scottrade do have some mobile solutions for their customers, however, providing a measure of connectivity to their funds when they’re out and about. Scottrade’s mobile apps offer account and position data, market news and options research, but lacks customer service contacts and mobile check deposit, both features boasted by Vanguard’s app.
Each of these companies provides some research tools to their customers to aid them in their investment decisions. Vanguard’s research includes free MarketGrader and Argus analyst reports, as well as investor education blog articles and PDFs.
Scottrade, meanwhile, has comparatively slim pickings when it comes to research — they have a Knowledge Center that has a fair number of financial education sources, including articles and videos. They also provide equity reports from Thomson Reuters, S&P Capital IQ and more. Vanguard is clearly the better pick for traders who want research into the best trades to use.
Between their differing focuses, features and trading tools, Scottrade is the better option for active traders who want a fully featured trading platform, while Vanguard is the better option for research and passive maintenance of accounts with human brokers.
Both Scottrade and Vanguard have admirable investment options, between stocks, bonds, options, mutual funds, and ETFs. Vanguard’s major focus is on ETFs and mutual funds, which can be allocated in taxable accounts or multiple types of IRAs.
With Scottrade, customers can count on access to over 14,000 mutual funds, of which almost 3,000 are no-transaction-fee, no-load. Those that require fees require $17 to buy, sell or exchange. Unfortunately, there are no commission-free ETFs.
Vanguard, on the other hand, has over 16,000 mutual funds to choose from, with plenty of them being no-fee, no-load. Otherwise, mutual funds cost $35 to trade for clients with a balance less than $50,000, or as low as $8 if they have more. Vanguard has 55 commission-free ETFs, which, in addition to their larger mutual fund selection, makes them the winner of this category.
When it comes to stock and ETF trades, Scottrade has a flat $7 commission rate, which is on the lower end of the spectrum. Vanguard, meanwhile, has a tiered commission structure between $0 and $20, in which the first 25 trades are $7 and $20 for each one after that. This is, of course, if Vanguard customers have less than $50,000 in their balances, which is usually the case.
Options trading also requires extra fees; Scottrade charges $0.70 per contract for an options trade, while Vanguard costs $1 per contract, in addition to a base charge of up to $20 if your account is below $50k.
When it comes to human brokers, Scottrade charges $32 for these guided trades; Vanguard customers, again, have a varied fee based on the size of their account.
Luckily, neither company charges to maintain your account, whether through inactivity or maintenance fees. While Vanguard requires no minimum deposit to open an account, Scottrade requires a $2,500 initial deposit for brokerage accounts.
Looking at all of these varying fee schedules, particularly Vanguard’s complex array of fees based on account balance, Scottrade wins out in this regard due to sheer simplicity.
In order to diversify your portfolio for the most consistent, low-risk rewards, Scottrade provides a number of reputable asset allocation tools to assist investors in finding the best ways to divide their portfolio. Criteria for these tools include your time horizon and risk tolerance, creating targets and an action plan to change your asset allocation depending on the markets.
Vanguard, meanwhile, offers more remote, hands-off asset allocation, given that their personal advisor service handles a lot of the work for you. Rather than trusting automated analysis like with Scottrade, their teams of advisors look after your account(s) and adjust them accordingly.
Furthermore, Vanguard provides a number of portfolio allocation models that let traders decide how far they might want to grow their investments, or if they are more concerned with earning money in the short-term. With this in mind, Vanguard’s asset allocation is more reliable and requires less work from the trader, though both options are perfectly reputable.
Which Should You Pick? Who Is Each Good For?
Choosing between these two companies can be really tough, depending on what you’re looking for — they both excel in their respective niches within the brokerage market. Scottrade’s active trader incentives and advanced trading platform make it perfect for active traders who want the most control over their account and the simplest fee structure.
Scottrade’s low, flat $7 commission rate makes trades easy to justify and calculate, and it’s one of the more affordable rates out there, making it even more attractive to traders of all kinds.
Vanguard, meanwhile, has the better ETF options, which is always nice, and their personal advisor service for high-balance investors is a great way to keep your investments smart while not having to micromanage your accounts. However, it can be a bit of a struggle for beginner traders, as their education tools are lackluster and the fee structure is very complicated.
Traders looking for thorough customer service might want to go with Scottrade — they provide admirable phone support during business hours, as well as more than 500 physical branches in which customers can seek in-person help with their accounts.
Vanguard, meanwhile, lacks physical branches, and their phone service hours are even more limited. Despite the ostensible help that their personal advisor service provides, they pale in comparison to Scottrade when it comes to customer service.
Whether you’re a more active trader, or want a hands-off approach that might cost you more, Scottrade or Vanguard might well suit your trading needs. Just be sure to pinpoint what kind of trader you are and go with the company that’s best for you.