Fidelity and Vanguard are two of the largest investment companies in the world. As of 2019, Fidelity boasts 30 million individual investors and $8.3 trillion in total customer assets, while Vanguard has more than 30 million investors and $5.6 trillion in global assets under management. Both brokers have solid industry reputations and offer a large selection of low-cost mutual funds, ETFs, advice, and related services.
- Account Minimum: $0
- Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Founded in 1946, Fidelity offers a solid trading platform, excellent research and asset screeners, and terrific trade executions. Vanguard was introduced in 1975 by its late founder, John C. Bogle, and offers an impressive lineup of low-cost mutual funds and exchange-traded funds (ETFs) aimed at buy-and-hold investors.
In our 2020 Best Online Brokers reviews, Fidelity earned higher scores than Vanguard in every category we ranked, which includes Best Overall, Best for Beginners, Best Stock Trading App, Best for Day Trading, Best for International Trading, Best for Low Cost, and Best for ETFs. Of course, it's challenging to compare two brokers that have such different business models: Fidelity caters to investors and traders who want a more high-tech experience, while Vanguard is designed to appeal to buy-and-hold investors who may not be as tech-savvy.
We found Fidelity to be user-friendly overall. It offers three platforms, including a web version, the downloadable Active Trader Pro (its premier trading platform), and Fidelity’s Mobile App. Buy-and-hold investors will find Fidelity's web-based platform more than sufficient for their needs. If you trade or invest more frequently, Active Trader Pro provides a deeper feature set, with charts, screeners, news, and alerts. Still, it's worth noting that you can't trade futures, options on futures, or cryptocurrency with Fidelity—which could be a deal-breaker for some active traders.
It's easy to open and fund an account at Fidelity, and as with many brokers, you need to fill out extra paperwork to enable features like margin and options trading.
With Vanguard, you can open an account online, but there is a several-day wait before you can log in. And like Fidelity, if you want to trade options or have access to margin, you need to sign more documents—and wait a bit longer. The website is out of date compared to many other large brokers, though the company says it’s working on an update this year. You can trade stocks, ETFs, funds, and some fixed income products online, but you have to call a broker to place orders for other asset classes.
On the mobile side, Fidelity offers a well-designed app with decent functionality. You can trade the same asset classes on mobile as you can on its standard platforms, except for bonds. Vanguard's mobile app is simple to navigate, and it's easy to place buy and sell orders. However, there are few features for researching investments beyond the basic data.
Fidelity's web platform is user-friendly. 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 the 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.
Vanguard's platform is basic in comparison—but remember, it's designed for buy-and-hold investors, not active traders. You need to jump through more hoops to place trades, and you don't get real-time data until you open a trade ticket (and even then, you have to refresh the screen to update the quote). Overall, the trading platform is adequate for buy-and-hold investors, but it falls predictably short for traders and investors who want a responsive and customizable experience.
Fidelity's mobile app is easy to navigate, and you can manage orders, check pending transactions, and place trades. Where the app falls short is in its fundamental research and charting, which are very limited. Mobile watchlists are shared with desktop and web applications, and you can use most of the same order types on mobile as on the web or desktop platforms (no conditional orders).
Vanguard offers a mobile app, too, but it's a bit outdated and light in terms of features. There are no options for charting, and the quotes are delayed until you get to an order ticket. Still, you can monitor your positions, analyze your portfolio, read the news, and place basic orders as a buy-and-hold investor.
Range of Offerings
With Fidelity and Vanguard, you can trade most of the usual suspects you'd expect from a large brokerage firm, including equities, bonds, options (including complex options), OTCBB, commission-free ETFs, and thousands of no-load, no-fee mutual funds. Neither broker supports futures, options on futures, or cryptocurrency trading, and only Fidelity offers Forex.
You can enter a 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. Predictably, Vanguard supports only the order types that buy-and-hold investors normally use, including market, limit, and stop-limit orders. You can't stage orders for later entry (you can with Fidelity), and both brokers let you select specific tax lots before placing orders.
Fidelity has finely tuned its trade execution algorithms to enhance price improvement and avoid payment for order flow. More than 96% of orders, on average, are executed at a price better than the national best bid or offer. Fidelity says clients who execute a 1,000-share marketable order can expect average savings of $16.66 compared to the quote when the order was placed. That's $13.86 better than the industry average, according to Fidelity's internal research.
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.
Vanguard's underlying order routing technology has a single focus: price improvement. The company reports price improvement on stock orders of $0.85 per share. Unlike Fidelity, Vanguard doesn't offer backtesting capabilities, which is not surprising considering its focus on buy-and-hold investing (and not on active trading).
Fidelity and Vanguard charge $0 commissions for online equity, options, OTCBB, and ETF trades for U.S.-based customers. Fidelity has a $0.65 per contract option fee; it's $1 at Vanguard. Fidelity will set you back more for broker-assisted stock trades ($32.95 versus Vanguard's sliding fee of $0 to $25, depending on your account balance). Fidelity charges $49.95 for broker-assisted mutual fund trades that fall outside the no-transaction-fee family; Vanguard has a separate sliding fee of $0 to $50.
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. Fidelity has 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). Vanguard does not share the revenue it generates.
Fidelity's research offerings on the website include flexible screeners for stocks, ETFs, mutual funds, and fixed income, as well as a good selection of tools, calculators, and news sources. Its web-based and Active Trader Pro platforms both offer customizable charting with technical indicators, drawing tools, and up to 40 years of historical data.
Vanguard offers basic screeners for stocks, ETFs, and mutual funds. Fixed-income products are presented in a sortable list. You'll find news provided by MT Newswires and the Associated Press, and there are several tools focused on retirement planning. Charting is limited and no technical analysis is available—again, not surprising for a buy-and-hold-centric broker.
Fidelity and Vanguard both provide 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 financial picture. One thing that's missing is that neither broker allows you to calculate the tax impact of future trades. Both brokers indicate there are some updates in the works for portfolio analysis that will give clients a better view of their portfolio returns.
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. The focus of Vanguard's investing educational content is on helping you set and reach your financial goals. Most content is in the form of articles, and about 250 new pieces were added in 2019.
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. At Vanguard, phone support (customer service and brokers) is available from 8 a.m. to 8 p.m. (Eastern) Monday through Friday. Live chat isn't supported, but you can send a secure message via the website. Vanguard also maintains a presence on Twitter and answers queries within an hour or so.
Both Fidelity and Vanguard's security are up to industry standards. You can log into either broker's app with 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. Vanguard's excess SIPC insurance, also provided by London insurers, provides each client with $49.5 million for securities and a cash limit of $1.9 million per customer. There's an aggregate limit of $250 million for all clients.
Through Nov. 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.
Fidelity offers excellent value to investors of all experience levels, and it may be a good fit for some active traders, too (remember, it doesn't support futures trading). Buy-and-hold investors who value simplicity over bells and whistles, and who want access to professional advice and some of the best (and lowest cost) funds in the business, may prefer Vanguard.
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