Fidelity vs. Charles Schwab

Looking to open a new brokerage account? You’ll have no shortage of options, but choosing a new broker isn’t as simple as picking out the best cuts of meat at the grocery store. You’ll need to consider how you’ll invest and what tools you’ll need to do it successfully. When it comes to providing tools and research to investors, few investment banks have more broad appeal than Fidelity Investments and Charles Schwab. Let’s break down which firm has the most to offer in terms of investment products and other services.

Comparing Fidelity vs. Charles Schwab

Fidelity and Charles Schwab are two heavyweights in the investment industry, each boasting decades of experience and trillions of dollars of assets under management. In addition to their history and offerings, Fidelity and Schwab have been at the forefront of fee reductions and were among the first major brokers to offer 100% commission-free trading on stocks and exchange-traded funds (ETFs).

Fidelity has long been a pioneer in the industry. It employed Peter Lynch, the successful fund manager behind the Magellan fund, which beat the market over and over until Lynch’s retirement. It created the first investment website in 1995 and developed a strong online footprint when most other brokers were still only dipping their toes in online waters. With services ranging from cash accounts to brokerage to sophisticated portfolio management, Fidelity is a one-stop shop for many investors.

Schwab has a similar array of offerings in the brokerage, cash and asset management departments. While also cultivating a strong online footprint, Schwab remains planted in the physical realm as well, with over 350 brick-and-mortar locations in the United States. Schwab clients can expect dedicated customer service, strong account security and detailed investment research.

Similarities Between Fidelity and Charles Schwab

When choosing between two investment banks as robust as Fidelity and Schwab, the decision will likely come down to minutiae. To attract more clients, both firms have slashed commissions, and they charge similar types of fees on account activity. Here are some features you’ll find at both firms.

Cheap Index ETFs 

Active trading might carry more of an exciting aura, but the bread and butter of most sound investing is efficient index funds. Affordably owning many companies can provide steady returns without taking on too much risk. Schwab and Fidelity both provide ETFs with some of the lowest expense ratios in the industry, as low as 0.03% on broad market index funds and 0.08% on sector or thematic ETFs.

Commission-Free Stock and ETF trading 

Schwab and Fidelity have both gotten rid of commissions on stock and ETF trades, starting a chain that led to basically all other brokers dropping their stock commissions to zero. Certain trading fees do still exist outside the equity area, but you won’t pay a penny in trade commissions to trade listed stocks and ETFs.

Wide Range of Asset and Wealth Management Services 

Both investment banks have broad appeal in their services. If you’re looking for sophisticated management of large accounts over $1 million, Schwab has its Wealth Advisory Services and Fidelity has Private Wealth Management. For smaller accounts, Schwab’s Intelligent Portfolios and Fidelity’s Personalized Planning and Advice provide a hybrid of robo and human advisor services. Investors across the income and asset spectrum can find valuable investment products and wealth management services at either firm.

Varied Account Types 

If you want to manage your own money and investments, you’ll find plenty of DIY investment options. Both companies have brokerage and trading accounts, retirement accounts like IRAs (including Roth IRAs), education savings accounts like 529 plans and cash management accounts for banking needs. Business owners can also manage their investments through business-specific accounts or open 401(k) retirement plans for their employees.

Powerful Active Trading Platform

If you’re looking to actively trade, both investment banks have impressive desktop trading applications that rival the best in the business. For Fidelity, it’s Active Trader Pro, with real-time news updates, charting tools and backtesting capability. StreetSmart Edge offers similarly powerful analytics and charting tools for Schwab clients, along with streaming data and financial TV.

Similar Price Structure for Options Trading

Stocks and ETFs might trade commission-free, but fees are still attached to derivatives like options. Schwab and Fidelity both charge 65 cents per options contract, which is higher than other brokerage firms geared toward active traders like Interactive Brokers, Robinhood or Webull.

Vast News and Research Libraries

One area that makes both firms stand out is the endless stream of investment news and research content. You’ll be able to learn trading and investment basics if you’re just starting out or learn about complex options strategies if you’re a trading veteran. Plus, both firms give clients access to financial research leaders like Morningstar, Zacks and MSCI.

Access to Multiple Asset Classes and Markets

If you want to invest across a wide range of asset classes, both Schwab and Fidelity have substantial offerings. You’ll get thousands of low-cost ETFs and mutual funds, domestic and international stocks, fixed-income products like government and corporate bonds, derivatives like options and annuity and insurance products.

Intuitive Mobile Apps

Schwab and Fidelity have simple mobile apps that lose very little optionality compared to their desktop platforms. You’ll be able to manage your investments, execute trades, research asset classes, contact customer service and open new brokerage accounts all from your smartphone.

Key Differences Between Fidelity and Charles Schwab

Schwab and Fidelity have similar offerings, but a few differences exist deep within the details. If you’re looking for something specific from your brokerage, consider the features on this list when deciding between these two investment banks.

Only Schwab Offers Futures Trading

If you want to access the futures trading market, you’ll need to use Schwab. Fidelity does not offer futures contract trading, but Schwab allows futures and futures options on equities, commodities and currencies for $2.25 per contract. It is important when trading in leverage to pay close attention to required account minimums, margin rates and transaction fees to prevent your account from going underwater.

Fidelity Has Fewer Account-Based Fees

Both companies have minimal trading fees, but Schwab does have a few account fees that Fidelity does not. Schwab charges $25 for bank wires, insufficient funds, late settlements and partial account transfers, plus $39 for reorganization fees and $50 for full account transfers. Fidelity doesn’t charge for these account actions.

Schwab Has More Affordable Robo-Advisor Services

If you’re looking for a robo advisor for a small account balance, Schwab has the cheaper option. For as little as $5,000, Schwab’s Intelligent Portfolios will provide robo-advisor services for no commission or advisory fee by using built-in research tools. Fidelity Go has no fees on the first $10,000 but then charges $3 per month for $10,000 to $50,000 accounts and 0.35% for accounts over $50,000. Schwab Intelligent Portfolios also perform tax-loss harvesting trades for no additional fee.

Fidelity Offers Access to Forex Markets

Forex markets are where currencies are traded against each other in pairs. Forex trading is an international market open 24 hours per day during the work week, but only Fidelity allows access to these markets. Schwab does not offer access to currency markets.

Schwab Allows Bitcoin Futures to Be Traded

Neither Fidelity nor Charles Schwab has its hands deep in the cryptocurrency cookie jar (likely since the regulatory status of digital assets remains murky), but Schwab does provide a Bitcoin futures trading contract so investors can gain exposure to crypto without actually owning Bitcoin tokens. Fidelity provides no direct exposure to cryptocurrency markets.

Fidelity Has Zero-Expense Mutual Funds

One of Fidelity’s biggest selling points is its zero-expense mutual funds. Already trading commission-free, these mutual funds are passively managed and track a variety of indices with a 0.00% expense ratio. Schwab’s cheapest mutual fund carries a 0.02% expense rate. It may not seem like much, but decades of compounding can make those two basis points matter.

Choose the Best Investment Bank for You

Choosing between Fidelity and Charles Schwab will likely come down to the specifics of your goals and investing plan. Both investment banks have such a wide array of similar products and services that clients with basic needs won’t be disappointed by either firm. If you want an IRA filled with index funds, both Schwab and Fidelity can meet your needs.

But the differences between the two firms and their brokerage platforms can make a big impact on the decisions of some investors. Charles Schwab has the best options if you want to open an account with a robo advisor and maybe dabble in futures trading. Fidelity is the better choice if you want zero-expense mutual funds and the ability to trade currencies on the forex market. Consider your individual needs when making your decision. And it wouldn’t hurt to try out the trading platforms and apps to see if you find one more usable than the other — although both are great.

Frequently Asked Questions