Menu burger Close thin Facebook Twitter Google plus Linked in Reddit Email
Loading
Tap on the profile icon to edit
your financial details.

Vanguard vs. Fidelity: Which Brokerage Is Best?

Vanguard and Fidelity are both major brokerage firms, with some of the largest client bases in the country. Each have broad financial offerings, from DIY brokerage accounts to financial advisors, robo-advisors and financial planning services. Vanguard is also widely known for its in-house selection of low-cost funds, as it runs a number of its own indexes. On the other hand, Fidelity offers in-depth investment tools that are great for veteran investors. Each firm has their own strengths and weaknesses, though, in relation to their fees, online experience and features. If you’d rather have someone who can help you invest and build a financial plan, consider working with a financial advisor.

Overview of Vanguard and Fidelity

There are few bigger names in the brokerage space than Vanguard and Fidelity. They consistently boast some of the largest client bases in the country, and for good reason. Both brokerages have extensive investing tools and platforms that make managing your investments and financial plans much easier.

Vanguard has long been known for its wide range of in-house index funds and exchange-traded funds (ETFs). If you’re looking to invest in funds, going directly to a main provider like Vanguard can significantly lower your costs. That’s because Vanguard can afford to offer lower expense ratios than other brokerages that allow you to invest in third-party funds.

While Vanguard stands out with its suite of funds, the brokerage is more limited when it comes to other offerings. However, it does allow investors to trade individual stocks and bonds. Conversely, Fidelity allows clients to invest in individual stocks, bonds, ETFs, options, mutual funds and more.

Vanguard vs. Fidelity: Fees

Vanguard and Fidelity Fees
Fee Type Vanguard Fidelity
Investment Fees
  • Stocks & ETFs: $0
  • Mutual funds: $0 ($20 for TF mutual funds)
  • Options: $0 commission and $1 contract fee
  • Secondary market bonds: $25 broker-assisted fee
  • CDs/U.S. Treasury securities: $0
  • Mortgage-backed securities: $35
  • Stocks & ETFs: $0
  • Mutual funds: $0 ($49.95 for TF mutual funds)
  • Options: $0 commission and $0.65 contract fee
  • New issue bonds: $0
  • Secondary market bonds: $1 and $19.95 broker-assisted fee
  • CDs/U.S. Treasury securities: $0
Account Fees
  • Account fee: $20 a year (waivable)
  • Wire transfer fee: $10
  • Foreign securities transactions: $50
  • Account fee: $0
  • Domestic wire transfer fee: $0
  • Foreign exchange wire transfer fee: Up to 3% of principal
  • Foreign securities transactions: $50

Fees are important to consider when picking a brokerage firm to open an account with. You’ll want to make sure that the fees are fair and within your budget, as an overbearing fee structure will have a large negative effect on your portfolio.

A commission-lowering wave has struck brokerage firms over the last couple years, and Fidelity and Vanguard have both followed suit. To trade stocks, ETFs, options and most mutual funds, clients of both firms will avoid commissions altogether. Options at Vanguard come with a minimal $1 contract fee, while Fidelity charges an even lower $0.65 contract fee. There are also some transaction fee mutual funds that can incur costs, with Fidelity and Vanguard charging $49.95 and $20 for them, respectively.

For bonds, Fidelity’s commission is cheaper at $1, as well as a $19.95 fee if you initiate a broker-assisted transaction. Vanguard unfortunately doesn’t offer new issue bonds. However, its secondary market bonds come with a higher $25 broker-assisted fee.

Vanguard’s funds lower the expenses that ETFs charge to around 0.10%, which equates to about $10 per $10,000 invested. But with actively traded funds, investors may see expense ratios as high as 0.19%. Fidelity mutual fund costs can vary, but they often have expense ratios that are higher, especially for active funds. It’s no surprise that Vanguard is cheaper here, as the firm offers many of its own funds to clients.

In regards to account fees, Vanguard charges a $20 annual fee for brokerage and IRA accounts. On the other hand, Fidelity doesn’t charge anything. Vanguard has a few ways to waive this fee, including holding at least $10,000 in Vanguard ETFs and mutual funds, holding at least $50,000 in qualifying Vanguard assets, electing e-Statements or having an organization or trust account with a registered EIN.

Vanguard vs. Fidelity: Services and Features

Vanguard vs. Fidelity: Which Brokerage Is Best?

Both Fidelity and Vanguard have a wide variety of low-cost mutual funds and ETFs. If you’re simply looking at the options offered by each firm, Fidelity has more options available. Vanguard has about 2,800 no-transaction-fee mutual funds and 1,800 commission-free ETFs, while Fidelity offers over 3,700 no-transaction-fee mutual funds.

However, when it comes to index funds, Vanguard offers the lowest expense ratio of any fund company on the market. Since Vanguard is essentially owned by its funds, which are then owned by the investors who hold the funds, expenses are minimized. However, many firms are trying to compete with Vanguard’s low-cost funds. Therefore, you may be able to find other firms that have lower expense ratios. In fact, depending on the funds you want to invest in, Fidelity may have funds with lower expense ratios.

Additionally, Fidelity has $0 account minimums and has several funds that have no minimums as well. While Vanguard also has a $0 account minimum the company often has fund minimums starting at $1,000 to $3,000 depending on the fund. Vanguard does not waive their minimums, even if you’re a repeat investor. But Vanguard may lower the minimums depending on the type of account that holds the funds, such as an educational savings account.

When it comes to investment options, both firms have offerings that may be suitable for your portfolio. If you’re unsure which firm has funds that meet your budget and investment objectives, you can compare funds by using each broker’s fund screener.

Fidelity and Vanguard both offer robo-advisor services, educational tools and mobile apps to help you better manage your money. However, for those who want to actively trade, Fidelity offers Active Trader Pro. This service helps investors stream data and customize charting. Vanguard doesn’t have a similar service.

For people who want investment advice, Vanguard has a hybrid robo-advisor service known as Vanguard Personal Advisor Services. This service has algorithms that help with portfolio construction and asset allocation. They also offer human advisors via phone or online who can help answer financial planning questions and concerns. Vanguard requires a $50,000 account minimum for this service and charges a 0.30% annual management fee.

Fidelity also offers a robo-advisor service known as Fidelity Go. This platform is best for self-directed investors, but also has brick-and-mortar locations where clients can find answers to some basic financial planning questions. If you don’t have a location in close proximity, you can also reach out to one of their call centers. There is no minimum for Fidelity Go, nor is there an annual fee if your account balance is less than $10,000. For accounts with a balance of $10,000 to $49,999, there’s a $3 monthly fee. Any accounts above $50,000 are charged a 0.35% annual fee.

Vanguard vs. Fidelity: Online and Mobile Experience

Both brokerages have robust online and mobile experiences. So while each firm has features and investments that favor specific types of clients, the quality of their tools and platforms are unquestionably strong.

Vanguard’s trading platform and apps are fairly basic, in keeping with the general aesthetic of the company. You can do everything you need to do as a low-level investor; make trades, buy mutual funds and check your performance. The platforms don’t have all the bells and whistles an experienced investor might want, but for someone who just wants to manage a few basic investments, it works.

Fidelity, on the other hand, has a more complicated and extensive online and mobile experience. While this may be a bit overwhelming for someone without a ton of investing experience, if you have been trading for awhile, Fidelity may help you take your investing game to the next level.

In April 2021, Vanguard’s mobile app has a major variance in its satisfaction level among users. For the Apple version, users rate it at 4.7 stars out of 5 across over 167,000 reviews. But on the Google Play store, Android users rate it at just 2.2 stars out of 5 across more than 5,350 reviews. The brokerage is releasing a new app called Vanguard Beacon, though, and it promises to have more features and tools for clients.

Fidelity’s mobile app has a much higher level of user approval than Vanguard’s does. In fact, more than 1.6 million iPhone users have rated the app to an average of 4.8 stars out of 5 in April 2021. And the app also holds a respectable 4.2-star out of 5 rating on the Google Play store across more than 87,000 reviews.

Who Should Use Vanguard?

Vanguard built a reputation as a platform that creates and offers low-fee mutual funds and exchange-traded funds. This makes it a good brokerage for clients who want to make basic investments and not think too much about them.

In addition, if you want low-cost funds, Vanguard has also grown to offer stocks and bonds. Though, trading these individual equities is much more limited.

Vanguard might also make sense for clients who want to open an IRA and manage it in a very hands-off manner.

At its core, the brokerage is designed for investors who want a simple and straightforward experience. Its accounts and tools are easy to use, and its website boasts a number of educational resources. This makes it extremely welcoming to beginners.

Who Should Use Fidelity?

Fidelity is a robust trading platform that is known for its individual trading products, which include stocks and bonds.

Most clients would be happy with Fidelity, but it is especially suited for those with ample investing experience. Its advanced investment tools and platforms can be overwhelming if you’re a newbie. Beyond that, if you’re going to be making frequent trades, Fidelity is one of the best choices out there.

While Fidelity does not charge much for its investment resources, it is also worth noting that other brokerages and broker-dealers are shifting to fee-free investment models.

Keeping this in mind, you’d be hard-pressed to find a better selection of high-level tools at an established brokerage. Many competitors have smaller pools of potential investments and less overall reliability than Fidelity.

Bottom Line

Vanguard vs. Fidelity: Which Brokerage Is Best?

If you want to actively trade within your accounts, Fidelity might be the better option. However, if you’re more focused on index investing, or you want to use a robo-advisor, Vanguard has a slight edge. While both institutions offer robo-advisors, Vanguard’s Personal Advisor Services, which is available to clients who can meet a $50,000 account minimum, offers a little more hands-on investment guidance and assistance with portfolio construction. Vanguard also has slightly lower expense ratios on their index funds.

If you want help with financial planning, mutual funds or retirement and brokerage accounts, both have great options. It’s best to compare costs and minimum account requirements of each firm and fund selection. By comparing your options you can discover the most suitable firm for your financial needs.

Tips for Investors

  • Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you decide to go with a brokerage, SmartAsset can recommend a few online options. Once you’ve considered the above factors and compared online brokerages, you’ll be in a position to find the best choice for you.

Photo credit: ©Vanguard/Fidelity, ©iStock.com/DNY59, ©Vanguard Beacon Apple Store Preview, ©Fidelity Investments Apple Store Preview, ©iStock.com/izusek

Ashley Kilroy Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
Was this content helpful?
Thanks for your input!