Fidelity Investments vs. TD Ameritrade

Fidelity and TD Ameritrade are among our top-ranking brokers for 2020. Both have websites packed with helpful features, news feeds, research, and educational tools. The two brokers also offer intuitive web-based, mobile, and desktop platforms to address the needs of both casual investors and frequent traders.

Fidelity, founded in 1946, built its reputation on its mutual fund business. Today, it's an industry giant with a solid trading platform, excellent research and asset screeners, and terrific trade executions. TD Ameritrade is also a significant force in the industry. Founded in 1975, it offers outstanding educational content, live events, and robust trading platforms.

In our 2020 Best Online Brokers reviews, Fidelity earned higher scores than TD Ameritrade in our Best Overall, Best for International Trading, Best for Low Cost, and Best for ETFs categories. Meanwhile, TD Ameritrade nudged out Fidelity in our Best for Beginners, Best Stock Trading Apps, and Best for Options rankings. Fidelity won Investopedia's Best Overall award for 2020 (just edging out Interactive Brokers), while TD Ameritrade took home top honors in Best for Beginners.

We found Fidelity to be quite user-friendly overall. It offers three platforms, including a web version, the downloadable Active Trader Pro, and Fidelity Mobile App. Opening an account is straightforward, and as with many brokers, you need to fill out additional paperwork to enable such features as margin and options trading.

TD Ameritrade supports four platforms: a web version, thinkorswim (its advanced platform for active traders), and two mobile apps—TD Ameritrade Mobile Trader and thinkorswim Mobile. It's easy to get started, and you can open and fund an account online or via the mobile app. Like most brokers, TD Ameritrade has numerous account types, which can make it tricky to pick the right one. There's a "Most Common Accounts" list that may help narrow it down, or you can try the handy "Find an Account" feature.

Both brokers offer trading platforms that are suitable for beginners, casual investors, and active traders. It's worth noting, however, that Fidelity doesn't support futures, options on futures, or cryptocurrency trading—which could be a deal-breaker for some active traders. The two brokers have put effort into creating well-designed mobile apps with decent functionality. On Fidelity, you can trade the same asset classes on mobile as you can on its standard platforms, except for bonds. TD Ameritrade supports the same asset classes across all platforms.

Fidelity's web platform is reasonably easy to use. You can set a few defaults, such as whether you want to use a market or limit order, but you make most choices when you place a trade. Active Trader Pro is, not surprisingly, more powerful and customizable. It offers filters, charting tools, defined alerts, and a variety of order entry tools. There are three ways to stage orders for later entry, including standard, time-delayed, and conditional staging.

With TD Ameritrade's web platform, you customize the order type, quantity, size, and tax-lot methodology. Of course, its thinkorswim interface is more intuitive, easier to navigate, and you can create custom analysis tools using thinkScript (its proprietary programming language). It's easy to enter trade orders, stage orders, send multiple orders, and trade directly from a chart. Streaming real-time quotes are standard across all platforms, and you also get free Level II quotes if you're a non-professional—a feature you won't see with many brokers (including Fidelity).

Fidelity's mobile app is easy-to-use. You can manage your orders, check pending transactions, and place trades. Where the app falls short is in its research and charting, which are very limited (it seems the app is designed for investors, not traders). Mobile watchlists are shared with desktop and web applications. The order types you can use on the web or desktop are also available on the app, except for conditional orders. 

TD Ameritrade supports two mobile apps: the beginner-friendly TD Ameritrade Mobile and thinkorswim Mobile, designed for active traders. Both are robust and offer a great deal of functionality, including charting and watchlists. Streaming real-time data is included, and you can trade the same asset classes on mobile as on the other platforms.

TD Ameritrade offers all the usual suspects you'd expect from a large brokerage firm. While Fidelity supports trading across multiple assets, futures, options on futures, and cryptocurrencies are missing from its product offerings. However, if you're a mutual fund trader, it might interest you that Fidelity has more no-load, no-fee funds in its lineup: 3,540 versus just 1,955 for TD Ameritrade.

You can enter a wide variety of orders on Fidelity's web platform and Active Trader Pro, including conditional orders such as one-cancels-the-other (OCO) and one-triggers-the-other (OTO). Conditional orders are not currently available on the mobile app. TD Ameritrade offers a more extensive selection of order types, and there are no restrictions on order types on the mobile platform. Both brokers allow you to stage orders for later.

Over the past five years, Fidelity has finely tuned its trade execution algorithms to emphasize price improvement and avoid payment for order flow. On average, more than 96% of orders are executed at a price better than the national best bid or offer. Fidelity indicates that clients who execute a 1,000-share marketable order can expect to save an average of $16.66 compared to the quote at order entry. That's $13.86 better than the industry average, according to Fidelity's internal statistics.

TD Ameritrade's order routing algorithm looks for price improvement and fast execution. The company publishes price improvement statistics that show most marketable orders get slightly more than 1½ cents per share ($0.015) in price improvement, on average. TD Ameritrade receives some payment for order flow but claims its order execution engine does not prioritize it. The company received, on average, $0.0012 per share in payment for order flow in the third quarter of 2019. 

Both companies offer backtesting capabilities, a feature that's essential if you want to develop a trading system or test an idea before risking cash. Fidelity's backtesting is done in Wealth-Lab Pro, a premium feature available to clients who have a minimum $25,000 account balance and who place at least 36 stock, bond, or options trades a year. If your balance is at least $100,000 and you place at least 500 trades, you can qualify for automated trading in Wealth-Lab Pro.

Fidelity and TD Ameritrade offer free commissions for online equity, options, and ETF trades for U.S.-based customers. Both have per-contract options fees of $0.65, and both charge about $50 ($49.95 and $49.99) for mutual funds outside the no-fee list. TD Ameritrade will set you back more for broker-assisted trades ($44.99 versus Fidelity's $32.95)

The two brokers generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. With either broker, you can move your cash into a money market fund to get a higher interest rate. Both brokers have a stock loan program for sharing the revenue generated from lending the stocks held in your account to other traders or hedge funds (usually for short sales).

While each platform offers unique features, they're comparable in terms of research. Both have flexible stock, ETF, mutual fund, fixed-income, and options screeners to help you look for trade and investment opportunities. Options traders will appreciate TD Ameritrade's Option Hacker and Spread Hacker, tools on its thinkorswim platform that allow you to search for simple and complex options strategies. And if you trade ETFs, Fidelity has a powerful screener that lets you search by themes and customize your screens using nearly 100 ETF criteria.

In addition to screeners, both brokers offer the tools, calculators, idea generators, news offerings, and professional research that you would expect from large brokerages.

Fidelity and TD Ameritrade offer similar portfolio analysis tools. With both, you have access to real-time buying power and margin information, internal rate of return, and unrealized and realized gains. Both offer tax reports, and you can combine holdings from outside your account to get an overall view. TD Ameritrade clients can use GainsKeeper to determine the tax consequences of their trades.

Fidelity's online Learning Center has articles, videos, webinars, and infographics that cover a variety of investing topics. There are regular webinars and online coaching sessions for more advanced topics, and learning programs aimed at beginning investors on the app.

TD Ameritrade sets a high bar for trading and investing instruction. In addition to a robust library of educational content, TD Ameritrade offers an average of 500-plus webinars a month and more than 1,500 live events each year. The website uses artificial intelligence to suggest content and give clients a personalized experience. 

Both brokers offer excellent customer service. Fidelity has a 24/7 phone line, an online chat feature (limited hours), and a secure email portal. You can use the Virtual Assistant, a chatbot designed to help you find answers to your questions.

TD Ameritrade offers 24/7 phone support, as well as chatbots on Twitter, Facebook Messenger, Apple Business Chat, and WeChat (in Asia). Live chat is supported on its app, and a virtual client service agent, Ask Ted, provides automated support online.

Fidelity and TD Ameritrade's security are up to industry standards. You can log into the apps using biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity.

Fidelity carries excess Securities Investor Protection Corporation (SIPC) insurance with a per-customer limit of $1.9 million on cash awaiting investment, the maximum excess SIPC protection currently available in the brokerage industry. There's no per-customer dollar limit on coverage of securities, but the total aggregate excess policy is $1 billion. TD Ameritrade's excess SIPC insurance provides each client with $149.5 million worth of protection for securities and $2 million of protection for cash, with an aggregate limit of $500 million.

Through Nov. 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.

Fidelity and TD Ameritrade are well-respected industry powerhouses. Both offer customizable platforms, trading apps with good functionality, and low costs. Fidelity offers excellent value to investors of all experience levels, and it may be a good fit for some active traders (remember, it doesn't support futures trading). 

Due to its comprehensive educational offerings, live events, and intuitive platforms, TD Ameritrade is our top choice for beginners. Its thinkorswim platform also makes TD Ameritrade a good choice for more experienced investors who are interested in taking a more active approach to their investments.