Empower Retirement vs Charles Schwab

A Comprehensive Comparison

As someone who’s spent countless hours researching retirement plan providers, I’ve gained valuable insights into two industry giants: Empower Retirement and Charles Schwab. In this detailed comparison, I’ll share my findings to help you make an informed decision about your retirement savings.

Company Backgrounds

Empower Retirement

Empower Retirement entered the financial services arena in 2014, formed through a merger of several established companies. Despite it’s relatively short history, Empower has quickly become a major player in the retirement industry.

They serve over 12 million participants and further expanded their reach in 2020 by acquiring MassMutual’s retirement plan business.

Charles Schwab

Charles Schwab has been a fixture in the financial services world since 1971. Initially a pioneer in discount brokerage services, Schwab has evolved into a comprehensive financial services company.

Their 2020 merger with TD Ameritrade created a financial powerhouse managing over $6 trillion in client assets.

Investment Options

Both Empower and Schwab offer a wide array of investment choices, but each has it’s own strengths and focus areas.

Empower Retirement’s Offerings

Empower specializes in employer-sponsored plans such as 401(k)s, 403(b)s, and 457 plans. This focus has allowed them to develop tools and services tailored specifically to workplace retirement plans.

They also offer personal retirement accounts (IRAs) and other investment services.

Empower’s investment options include:

Mutual funds
Exchange-traded funds (ETFs)
Individual stocks and bonds
Target-date funds
Stable value funds

Charles Schwab’s Investment Lineup

Schwab’s broader financial services background translates into a more diverse range of products. In addition to retirement accounts, they provide personal brokerage accounts, allowing clients to manage various aspects of their financial lives in one place.

Schwab’s investment options include:

Mutual funds
ETFs (including their popular low-cost index funds)
Individual stocks and bonds
Options
Futures
Forex

Schwab is particularly known for it’s low-cost index funds and ETFs, which have gained popularity among retirement investors looking to minimize fees.

Fees and Expenses

Understanding the fee structure is crucial when choosing a retirement plan provider. Even small differences in fees can significantly impact your long-term savings.

Empower Retirement’s Fee Structure

Empower’s fee structure can vary depending on the specific plan and services chosen by the employer. They offer different fee models, including:

Per-participant fees
Asset-based fees
A combination of both

This flexibility can be useful for employers but may make it more challenging for people to compare costs directly. It’s essential to review the fee disclosures provided by your specific plan to understand the total cost of your investments.

Charles Schwab’s Pricing Model

Schwab is known for it’s competitive pricing, particularly for it’s index funds and ETFs. They also offer commission-free trading for stocks and ETFs in their brokerage accounts.

This transparent and low-cost approach has been a key factor in Schwab’s popularity among cost-conscious investors.

Some key points about Schwab’s fees:

No account minimums for most accounts
$0 commissions for online stock and ETF trades
Low expense ratios on Schwab-branded index funds and ETFs

Online Tools and User Experience

Both Empower and Schwab offer robust online platforms and mobile apps, but there are some notable differences in their features and user experience.

Empower Retirement’s Digital Platform

Empower’s online platform includes:

Personalized retirement readiness score
Interactive retirement income projections
Financial wellness resources
External account integration for a holistic financial view

Their mobile app allows users to check balances, make trades, and access educational content on the go.

Charles Schwab’s Online Experience

Schwab’s platform offers:

Advanced trading and research tools
Comprehensive retirement planning calculators
Extensive educational resources
Integration with third-party financial planning software

Schwab’s mobile app is generally considered more user-friendly and feature-rich, especially for those who actively manage their investments.

Customer Service

While online tools are important, sometimes you need to talk to a real person. The quality of customer support can significantly impact your experience, especially when dealing with complex retirement planning issues.

Empower Retirement’s Support

Empower offers:

Phone support
Online chat
In-person consultations through their network of financial advisors
AI-powered chatbots for quick answers to common questions

In my interactions with Empower, I’ve found their support team to be knowledgeable about retirement-specific issues.

Charles Schwab’s Customer Service

Schwab provides:

24/7 phone support
Online chat
Access to local branch offices for in-person consultations
Virtual appointments with financial consultants

Schwab’s broader financial services background means their support team can often help with a wider range of financial questions beyond just retirement planning.

Financial Wellness and Education

Both Empower and Schwab recognize the importance of financial education in improving retirement outcomes, but they approach it differently.

Empower’s Financial Wellness Programs

Empower has made financial wellness a cornerstone of their offering. They provide comprehensive programs that address various aspects of financial health, including:

Budgeting
Debt management
Emergency savings
Insurance needs
Retirement planning

This holistic approach can be particularly useful for those who want to improve their overall financial situation alongside their retirement planning.

Schwab’s Educational Resources

Schwab offers a wealth of educational resources, including:

Articles
Videos
Webinars
Podcasts
In-person workshops

These resources cover a wide range of financial topics, from basic investing concepts to advanced trading strategies. Schwab also provides personalized advice through their Schwab Intelligent Portfolios Premium service.

While their educational content is extensive, it’s not as tightly integrated into the retirement planning process as Empower’s wellness programs.

Adapting to Different Scenarios

Your retirement needs may change over time, so it’s important to choose a provider that can adapt to different scenarios.

Empower’s Flexibility

Empower’s focus on employer-sponsored plans means they’re well-equipped to handle transitions between jobs. They offer robust rollover services and can help you manage multiple retirement accounts from different employers.

This can be particularly useful if you change jobs often or have a complex employment history.

Schwab’s Adaptability

Schwab’s broader range of services makes it easier to adapt your retirement strategy as your overall financial situation evolves. For example, you can easily combine your retirement planning with other investment strategies or financial goals.

This can be useful if you’re looking for a more comprehensive approach to your finances.

Building on Basics: From Retirement Novice to Savvy Investor

Both Empower and Schwab offer resources to help you grow from a retirement planning novice to a savvy investor, but their approaches differ.

Empower’s Educational Approach

Empower’s educational resources are primarily focused on retirement planning and financial wellness. They offer tools and calculators that can help you understand concepts like:

Compound interest
Asset allocation
The impact of fees on your retirement savings

As you become more knowledgeable, you can take advantage of their more advanced planning tools and potentially explore self-directed investment options.

Schwab’s Learning Path

Schwab provides a broader range of educational resources that cover not just retirement planning, and:

General investing principles
Market analysis
Advanced trading strategies

This can be useful if you’re interested in taking a more active role in managing your investments over time. Schwab’s platform allows you to start with basic retirement planning and gradually expand your knowledge and involvement in your investment strategy.

Comparing Investment Performance

While past performance doesn’t guarantee future results, it’s still worth considering how each provider’s investment options have performed historically.

Empower’s Investment Performance

Empower offers a range of investment options, including proprietary funds and those from other fund families. Their performance can vary widely depending on the specific funds chosen.

It’s important to review the performance of the specific funds available in your plan, as well as any target-date or managed account options.

Schwab’s Investment Track Record

Schwab is known for it’s low-cost index funds and ETFs, which generally aim to match the performance of their benchmark indexes rather than outperform them. However, Schwab also offers actively managed funds and other investment products.

Their Schwab Intelligent Portfolios robo-advisor service has generally performed well compared to it’s peers, but as with any investment, results can vary.

Both Empower and Schwab take cybersecurity seriously, but their approaches and protections may differ.

Empower’s Security Measures

Empower employs multiple layers of security to protect your account, including:

Two-factor authentication
Encryption of sensitive data
Regular security audits
Fraud monitoring

They also provide education to help participants protect their accounts from common threats like phishing attacks.

Schwab’s Security Protocols

Schwab offers robust security features, including:

Two-factor authentication
Biometric login for mobile devices
Advanced encryption
24/7 fraud detection and monitoring

Schwab also provides a Security Guarantee, which covers 100% of any losses in your Schwab accounts because of unauthorized activity.

Regulatory Compliance and Oversight

Both Empower and Schwab are subject to regulatory oversight, which helps confirm they’re operating in compliance with applicable laws and in the best interests of their clients.

Empower’s Regulatory Framework

As a retirement plan provider, Empower is subject to oversight from:

The Department of Labor (DOL)
The Securities and Exchange Commission (SEC)
State insurance regulators (for certain products)

They must comply with ERISA (Employee Retirement Income Security Act) regulations for many of their plans.

Schwab’s Regulatory Environment

As a broker-dealer and investment advisor, Schwab is regulated by:

The SEC
FINRA (Financial Industry Regulatory Authority)
Various state securities regulators

They’re also subject to banking regulations for their banking products.

International Capabilities

If you’re an expatriate or planning to retire abroad, the international capabilities of your retirement provider could be crucial.

Empower’s International Services

Empower’s focus is primarily on the U.S. market, but they do offer some support for expatriates through their multinational pooling arrangements. However, their international capabilities are generally more limited compared to some global financial institutions.

Schwab’s Global Reach

Schwab offers more robust international capabilities, including:

Global investing options
Support for U.S. expats
Currency exchange services

They also have a dedicated international investing section on their website with resources for global investors.

Environmental, Social, and Governance (ESG) Investing

ESG investing has gained popularity in recent years, with many investors seeking to align their portfolios with their values.

Empower’s ESG Options

Empower offers a selection of ESG-focused funds in many of their plans. They’ve also developed tools to help participants understand and incorporate ESG factors into their investment decisions.

Schwab’s Sustainable Investing Approach

Schwab provides a range of ESG investment options, including:

ESG-focused ETFs and mutual funds
Schwab Intelligent Portfolios with sustainable investing themes
Research and screening tools for ESG factors

They’ve also published extensive educational content on sustainable investing to help clients make informed decisions.

Retirement Income Solutions

As you approach retirement, the focus shifts from accumulation to distribution. Both Empower and Schwab offer tools and products to help you generate income in retirement.

Empower’s Income Strategies

Empower provides several retirement income solutions, including:

Annuity options
Systematic withdrawal plans
Retirement income calculators
Personalized advice through their managed account service

Their tools can help you estimate how much income you’ll need in retirement and develop a strategy to achieve it.

Schwab’s Retirement Income Approach

Schwab offers a range of retirement income solutions, such as:

Annuities
Dividend-focused investment strategies
Bond ladders
Schwab Intelligent Income (a feature of their robo-advisor service)

They also provide comprehensive retirement income planning tools and resources to help you develop a sustainable withdrawal strategy.

Key Takeaways

Empower specializes in employer-sponsored plans, while Schwab offers a broader range of financial services.
Both providers offer a wide range of investment options, but Schwab is particularly known for it’s low-cost index funds and ETFs.
Fees can vary significantly between plans and providers, so it’s crucial to carefully review fee disclosures.
Both companies offer robust online tools and mobile apps, but Schwab’s tend to be more comprehensive because of their broader financial services focus.
Empower has a strong focus on financial wellness programs, while Schwab offers extensive educational resources across various financial topics.
Schwab generally offers more flexibility for person investors, while Empower excels in the employer-sponsored plan space.
Both providers have strong cybersecurity measures, but Schwab’s Security Guarantee may provide extra peace of mind.
Schwab offers more robust international capabilities, which could be important for expatriates or those planning to retire abroad.
Both providers offer ESG investing options, but Schwab provides more extensive resources in this area.
When it comes to retirement income solutions, both providers offer a range of options, but the best choice will depend on your person needs and circumstances.