Charles Schwab and Fidelity are two of the largest brokerage and financial services companies in the world. They’re both attractive for low fees, broad product offerings, and the ability to handle virtually all of your financial needs with a single provider—with only one username and password to remember.
If you’re deciding on Schwab vs. Fidelity, there is no perfect answer for everyone. Here’s a closer look at the pros and cons, account offerings, available investments, and potential fees at Schwab and Fidelity to help you make an educated decision on which company is best for your financial needs.
Charles Schwab Overview
The Charles Schwab Corporation traces its roots to 1963, when Charles Schwab, nicknamed “Chuck,” launched an investment newsletter service with a group of partners. More than 60 years and many mergers and acquisitions later, it’s the largest brokerage firm nationwide with $11.2 trillion in assets under management.
Today, it offers brokerage accounts, retirement accounts, robo advising, and its own family of low-fee mutual funds and ETFs, among other products and services. The company is based in Westlake, Texas, and it employs more than 32,000 workers globally. It’s publicly traded on the New York Stock Exchange (Ticker SCHW), so you can invest in Schwab itself or review its public financial statements if you’re interested in digging into the details and learning more.
Fidelity Overview
Fidelity Investments began as Fidelity Management & Research in 1946. It’s the fourth-largest brokerage in the United States with $6.4 trillion in assets under management. It remains a privately held company, with the founding Johnson family controlling about 40% of the business and employees holding the remaining 60%.
Fidelity is based in Boston, and it employs more than 78,000 people worldwide. It offers a broad mix of investment accounts, mutual funds, and ETFs, robo advising, and cryptocurrency among its low-fee offerings.
More information here:
Pros and Cons of Schwab
Schwab Pros
- Low fees: Schwab offers many low-fee and no-fee accounts and investment offerings. Highlights include Schwab Intelligent Portfolios, a full-featured robo-advising platform with a no-fee option.
- Strong reputation and track record: Schwab is a respected investment company with decades of experience and excellent user interfaces.
- Robust offerings for most investor needs: Schwab takes an approach of offering just about anything any investor would want, with only a few exceptions. You’ll find many types of retirement accounts, investment funds, and a top-notch active trading platform.
Schwab Cons
- Poor interest rates on cash: The biggest downside of Schwab is a terrible interest rate on uninvested cash. That’s basically how Schwab makes money from investors, rather than charging fees. But it’s an unfortunate, long-standing downside of keeping your investments with Schwab.
- No direct cryptocurrency investments: While you can get some crypto exposure through ETFs in a Schwab account, it doesn’t offer dedicated crypto accounts or access to buy or sell crypto assets directly.
Pros and Cons of Fidelity
Fidelity Pros
- Ultra-low-cost brokerage: Fidelity is perhaps the lowest-cost brokerage around, with many no-cost accounts and very low fees throughout its offerings. A standout example is the Fidelity Zero funds, four broad-market mutual funds with zero expense ratios.
- Long-term and retirement focus: The majority of Fidelity’s tools and dashboards are long-term focused. If you’re a regular reader here, you know that’s the mindset we like to take when investing. Fidelity is a top choice for retirement and long-term investing.
- Broad support for accounts and assets: Fidelity supports some accounts and assets you may not find elsewhere, including a no-fee Health Savings Account (HSA) and crypto trading for Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Solana (SOL).
Fidelity Cons
- Higher fees on some actively managed funds: While you can find ultra low-fee index funds, some of the actively managed funds can be more expensive.
- Fewer tools for active traders: While the retirement calculators and trackers are best-in-class, the active trading platform and tools lag behind most other brokerages.
How Is Schwab Different from Fidelity?
Schwab and Fidelity are both large discount brokerage firms that offer nearly everything the average investor would want and need. We can confidently recommend both. I’ve personally used Schwab and Fidelity for many years (as have members of my family), and I don’t have any big complaints about either.
For key differentiators, you may prefer Schwab if you’re interested in active investing, as the Thinkorswim platform, options trading tools, and mobile apps make the active investing and trading experience more robust compared to Fidelity. Schwab is also better if you want a robo advising account with no management fees.
On the other hand, if you only care about long-term investing and want the lowest possible costs, Fidelity is likely a better choice. The retirement calculators and dashboard tools are tough to beat. HSA accounts, cryptocurrencies, and no-fee mutual funds are also a draw.
More information here:
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Fidelity vs. Schwab Comparison
Costs and Fees
Fidelity and Schwab are both low-fee brokerages offering accounts with no recurring fees or minimums, no-commission stock and ETF trades, extensive lists of no-transaction-fee mutual funds, and competitive prices for most services that are at or below the typical fees you see across the industry.
Fidelity is the winner here due to better cash interest rates, its no-fee mutual fund offering, and slightly lower management fees and expenses across various services and investments. But if we were comparing Schwab to nearly any other brokerage firm aside from Fidelity, it would be the winner.
Investment Offerings
Both of these huge brokerage firms offer the most common types of investments and investment accounts. Those include taxable brokerage accounts, tax-advantaged retirement accounts, joint accounts, business accounts, trust accounts, custodial accounts, robo advising accounts, and wealth management services, ranging from basic advice to fully managed investments. With either, you can buy and sell nearly all stocks, mutual funds, and ETFs on American exchanges and many from abroad.
If you’re looking for active trading tools or want to get involved with options, Schwab offers a stronger feature set. Unique offerings at Fidelity that are missing at Schwab include HSA accounts and cryptocurrencies.
Performance
We’re calling a tie in this category. Both offer long lists of low-fee mutual funds and ETFs, and you’re likely to find very, very similar holdings when comparing similar funds in the same asset class. For example, both offer large cap stock funds with similar holdings and fees.
Ultimately, you should have similar results either way. If you can keep the fees a hair lower at Fidelity, that can offer compounding returns over time. But the difference is likely negligible.
Security
Both Schwab and Fidelity follow industry standards for security, including strong encryption, support for multi-factor authentication, and SIPC-insured accounts.
As with all financial accounts, it’s critical to use unique passwords, avoid logging in with public wifi or other public internet networks (like hotels, coffee shops, and libraries), and keep your devices and apps updated with the latest security fixes.
Customer Service and Digital Account Management/Technology
Having called and emailed both Schwab and Fidelity for a mix of small and large requests, I’m happy to report that both have among the best customer service I’ve ever experienced from any company. It’s the opposite of how it feels when calling an airline for help fixing a reservation during a major storm.
Schwab and Fidelity have both refunded fees, no questions asked. They helped me move assets from other brokerages with ease. I rarely wait on hold for long, and the person who answers the phone is almost always a US-based customer service representative who is licensed to offer financial and investment advice and can solve my issues efficiently and politely.
The online experience and apps are a bit better at Schwab. The layouts and navigation are easier to navigate, and it’s visually more appealing. But you won’t find many weaknesses at Fidelity, aside from the less-exciting active-trading apps on desktop and mobile.
529 Plan Fidelity vs. Schwab
Schwab offers its own Schwab 529 Education Savings Plan, sponsored by the state of Kansas but open to residents of any state. Like most 529 state sponsors, it allows you to invest regardless of where you live, and you can use the proceeds for any accredited college, university, or other qualified education expenses. It has no minimum starting balance and no recurring management fees, and it allows you to invest in several pre-built portfolios aligned with different investing goals and styles.
Fidelity is the official provider of 529 plans for Arizona, Connecticut, Delaware, Massachusetts, and New Hampshire. The New Hampshire UNIQUE College Investing Plan is an excellent pick for residents of any state. In fact, that’s where my kids' 529 accounts are held.
Fidelity vs. Schwab Index Funds
Schwab and Fidelity both offer industry-leading index funds, including low-fee mutual funds and ETFs. They’re in the same league as Vanguard, iShares, and other large fund managers. While Fidelity offers the four Fidelity Zero index mutual funds, we’re calling it a tie in this category.
Both are excellent picks for index funds. As an added benefit, you can buy most ETFs from either Schwab or Fidelity in accounts at any major brokerage firm. If you have a Schwab account and want a Fidelity ETF, it should be as easy as buying any other stock or ETF and vice versa.
Is It Better to Invest with Schwab or Fidelity?
In the Fidelity vs. Charles Schwab showdown, which is the best choice for your investments? The answer is . . . it depends. There is no perfect answer for everyone. Both are very good, and you likely won’t go wrong either way. The better brokerage comes down to your personal investment preferences and styles.
It may be worthwhile to browse their websites to get an idea of what it’s like to navigate and interact with them. You can also open a basic brokerage account at both with no minimum deposit or recurring fees, so you can test them out hands-on and go with your favorite.
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How to Choose Between Schwab and Fidelity?
If you’re still on the fence after trying out both, here are some tiebreaking factors when choosing between Schwab and Fidelity:
- If you’re an active trader, you should probably choose Schwab.
- If you’re focused on retirement, you should probably choose Fidelity
- If you care most about fees, you should probably choose Fidelity.
For households with a tie to either already, perhaps through a spouse or a parent, you may just want to stick with the same one rather than having to work with both. For example, if you’re managing investments for a parent, having access to their accounts with the same login as your own is convenient, but it's definitely not required.
Which Is a Better Choice for the WCI Investment Philosophy?
Given the WCI community's low-cost, long-term priorities, we’d lean slightly toward Fidelity over Schwab. But it’s truly neck-and-neck. Both are top choices, and the differences are slim. While we prefer Fidelity just a little more, both are safe and reliable places for your investments.
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