Fidelity Investments vs. Charles Schwab

Charles Schwab is a brokerage giant. The name is synonymous with full-service brokerage and comprehensive investment portfolios.

After the announcement that the broker is looking to merge with TD Ameritrade in November 2019, Charles Schwab came across some complications along the way in the form of law suits. But the closer of the acquisition still happened not a year later. 🎯

While Schwab may have been disorganized in the past, they have recently streamlined their apps, research, and robo-advisory services to offer a complete suite of tools for savvy traders. However, the brokerage still is not as cost-conscious as others, nor does it want to be.

Fidelity appeals to cost-conscious, beginner investors, but there is a whole other side of Fidelity for active, savvy investors through Active Trader Pro. The brokerage also provides intuitive mobile trading apps that are easier to use than the web platform.

With no commissions, low-cost robo-advisory services, and 24/7 customer support, most passive and active traders find a lot to love about this discount brokerage. 💸

So which brokerage is right for you?

Fidelity Investments has ramped up their mobile trading apps and research tools, but Charles Schwab looks to overtake the brokerage market by offering every investment option and service under the sun to traders of all levels.

Fees and Commissions 💰

Both brokers charge $0.65 per options contract. They even have thousands of no-transaction-fee mutual funds.

In fact, Fidelity and Schwab are quite similar in almost every way when it comes to fees, except for a few instances.

• ☑️ Fidelity offers $0 full account transfer fees and $0 partial account transfer fees
• ☑️ Charles Schwab requires $50 for full account transfers and $25 for partial account transfers
• ☑️ For no-load funds, Charles Schwab and Fidelity both charge $49.95 per trade
• ☑️ Broker-assisted trades cost $25 with Charles Schwab, but Fidelity charges more at $32.95 per trade

When it comes to trading on margin, there are some differences in costs to consider. As of January 2020, Fidelity is slightly better than Charles Schwab, but they mostly charge the same rates unless you have an account worth over $1 million, in which case your margin percentage goes down to 5 percent with Fidelity.

As for account fees and minimums, Charles Scwab charges more than Fidelity. While Fidelity charges nothing for IRA annual fees, closures, returned ACH, returned wires, or wire transfers, Charles Schwab has more fees in this area, as follows:

Charles Schwab Account Fees

•  ☑️ IRA closure fee: $50
•  ☑️ Returned ACH fee: $25
•  ☑️ Returned wire fee: $25
•  ☑️ Stock Certificate Processing Fee: $100
•  ☑️ Domestic Wire Fee: $25
•  ☑️ International Wire Fee: $25

The only fee Fidelity charges their customers in this area is a stock certificate delivery fee of $100.

Investment Selection 📃

Fidelity and Charles Schwab are both full-service brokerages that have dropped their fees in the past year. This move levels the playing field for fees and commissions, but what broker offers more investment opportunities?

In an apples to apples comparison, Fidelity and Charles Schwab are again pretty similar in their investment options for clients. They both offer the following:

• ☑️ Stocks
• ☑️ OTC/Penny stocks
• ☑️ ETF brokerage
• ☑️ Mutual funds
• ☑️ Bonds
• ☑️ Options
• ☑️ Forex trading

Basically, you can trade just about anything on both brokerages except for direct cryptocurrencies, and Fidelity does not allow you to trade futures. With Charles Schwab, cryptocurrency can technically be traded only as Bitcoin futures on the CBOE or CME. Neither Fidelity or Schwab currently offer this service to its retail brokerage clients though.

While Schwab does allow their customers to trade almost everything, some investment options require approval and broker assistance. For example, Charles Schwab offers futures only through their approved Schwab Trading Service. To trade on the forex, you also have to get approval from Fidelity, but the process is quick online.

Fidelity offers over 15,000 mutual funds through its own brokerage and other non-Fidelity brands. About 3,900 of these funds are no-load funds.

In contrast, Charles Schwab offers a bit more mutual funds with over 16,000 funds available. About 7,200 of these are no-load funds.

What Account Types are Available Through Fidelity and Schwab? 🤔

There are some differences in the account options for clients through each of these brokerages. Both try to include every account type, but ultimately Fidelity offered slightly more than Charles Schwab.

For example, you can’t open a Solo 401(k), annuities, money market, or CD account with Schwab. However, you can’t open a savings account with Fidelity.

Trade Experience and Security 🤝

For many traders, the brokerage may offer commission-free trades and lots of investment options, but is the brokerage’s platform easy-to-use? Is it safe? We analyzed both platforms to understand the client experience and what it’s like to actually use their trading tools.

With Charles Schwab, there are several platforms available that you can access once you sign up and log in to the main website. The StreetSmart Edge platform is the most advantageous for all traders, and you can run it from the browser or download it to your desktop.

StreetSmart Edge is run from the cloud, so it also syncs up to the corresponding mobile app. Advanced traders use StreetSmart Edge the most, but beginners can still use this platform and learn about the features through the intuitive helper tools and tips.

StreetSmart Edge delivers the best experience for traders because it combines real-time data with customizable charts, and you can place trades right from the stream. Charles Schwab also created the All-in-One Trade Ticket, which allows you to build orders using the asset classes you want. It’s intuitive, flexible, and fast. Everything updates in real-time.

Fidelity had a different interface just before 2019 that made it difficult to find the right price and quote due to an outdated platform. However, as of this writing, the company has updated all of its platforms to be more intuitive and responsive.

In addition, traders get more tools and tips to avoid making costly mistakes with Active Trader Pro, which is the new advanced platform. It also offers streaming data and customized charts like StreetSmart Edge for those who like technical analysis tools.

You can also see your order tickets on display, and a virtual assistant can provide you with tips to help you through the process if you don’t understand the market order, asset class, or trade strategy.

How Does Fidelity’s Trade Execution Compare to Schwab? ⚖

Charles Schwab has been known for its excellent execution. This is due to the company’s execution quality statistic report, which they monitor.

Every trade is scrutinized for a price improvement. Traders can check price improvement information after every trade.

On the other hand, Fidelity’s trade execution engine has improved immensely. The company published a trade execution report showing that they were leading brokerage, including statistics that the brokerage achieved five times the price improvement in comparison to other brokerages.

What is Account Security Like with Fidelity vs. Charles Schwab? 🛡

In today’s online trading atmosphere, it’s easy to get anxiety over who can access your accounts online. Charles Schwab launched SchwabSafe to protect its customer accounts. They use high privacy standards, encryption, identity verification, risk management applications, and optional security options to maintain the highest security for your account.

Fidelity also provides several security services, including two-factor authentication, money transfer lockdown, security account text alerts, and Fidelity MyVoice, which instantly matches your voice to verify your account. They also offer a customer protection guarantee.

Both Fidelity and Schwab are considered to be secured since both brokers are regulated by some of the best regulatory authorities like the Securities and Exchange Commission (SEC), and Financial Industry Regulatory Authority (FINRA).

On top of that Schwab is additionally regulated by the Commodity Futures Trading Commission (CFTC), Hong Kong Securities and Futures Commission (SFC), and the Monetary Authority of Singapore (MAS).

Both Fidelity and Charles Schwab protect your accounts in case of fraud through SIPC.

Online Advisors and Educational Offerings 👨‍🏫

Today’s trading climate is focused around robo-advisors and tools to help DIY traders. So how does each brokerage handle these features?

Fidelity Advisor Services and Educational Tools 📗

Fidelity has upgraded many of the research features on its website, desktop platform, and mobile app.

You can access the stock research center to show market movers, top-rated sections, and look at other orders by traders on Fidelity happening in real-time. You can easily stay on top of the action and get help with screeners, calculators, customizable charts, streaming quotes, and other real-time data.

In addition, portfolio advisory services are available through Fidelity Go. This is a robo-advisor platform that provides a one-to-one review of your accounts, and it provides a comprehensive breakdown of risk and forecasted revenue.

The goal is to also teach the trader about certain assets and improvements so that you can eventually move to a self-directed portfolio, which is awesome for beginner investors. Fidelity Go also utilizes rebalancing and target tracking.

There is a small catch with this service, as you will be charged an annual fee of 0.35 percent on your portfolio, and it’s automatically deducted each quarter.

You can also opt for a Fidelity professional to review your accounts and make suggestions, although there is a requirement that you have at least $50,000 to access this service.

The screening tools can help investors weed through investment choices across all asset classes. The charting is top-notch and uses Recognia’s technical data for patterns and events. You can also set up news feeds and streaming video, and traders can look at stock snapshot pages that pull in ratings from MSCI.

Charles Schwab Advisors and Educational Tools 📘

Schwab Intelligent Portfolios is the advisor program for its clients. While the platform charges no account management fee, there are premium options that offer more benefits and do have a $30 per month cost. This offers access to certified broker partners whose clients can talk to one-on-one.

There are two options for Schwab investors with this portfolio advisory service. However, you should first note that a $5,000 investment minimum is required to use this advisory service.

The SIP Premium service provides clients with unlimited access to certified financial planners, but you have to maintain a $25,000 minimum balance and pay a $30 monthly to access it. There is also a $300 one-time planning fee for the premium service.

Beginner investors, IRA investors, and those in need of financial planners get the most out of this service. The free option is worth it for those who want to use a robo-advisor.

Investors should note that you still pay the expense ratio on investments made in their portfolios, which typically default to Schwab funds. Schwab also takes a percentage of the interest earned on uninvested cash. Even with these points made, the robo-advisor is intuitive and provides comprehensive forecasts for investors.

You can customize your portfolio based on intelligent questions that link to your goals, time horizon, risk profile, and other tweaks that define your investment type. You can also remove anything that you don’t like about the portfolio. You can mix it up and swap in other ETFs as you like.

Charles Schwab also has extensive research tools for all equities, and you can access tools from a number of plugged-in resources. For example, Credit Suisse, MarketEdge, Morningstar, and CFRA all work with Schwab’s education platform.

The StreetSmart Idea Hub is the best place for traders to get options trading ideas. You can strategize with in-depth analysis and test different options using Schwab’s intuitive real-time data module.

Mobile and New Trade Tech 📱

Some traders want to use mobile for everything. Does Fidelity or Charles Schwab make it easy to trade on the go?

Charles Schwab offers custom client trade orders that sync up with the cloud, so if you make a trade order or set up a market order and save it, you can access that trade on StreetSmart Edge or the Schwab website platform. Streaming video and real-time quotes, as well as custom watchlists, are also available. There is a separate app for StreetSmart available on iOS and Android.

Fidelity’s apps are actually more fluid and responsive than the website, which has been under construction for some time. The startup home screen is completely customizable, so you can add watchlists, news, favorite stocks, trade tickets, and other screens to make it feel fast and agile for your tastes. The full range of investments and market orders are available to trade through the app, which is quite impressive.

Fidelity vs. Robinhood Final Verdict 🏁

Fidelity offers a ton of new tools and mobile services for the savvy, new school investor, and you can still access their Active Trader Pro platform on desktop.

While their website is not as savvy, it’s still better than most brokerages out there. Ultimately, we love that you can trade almost all asset classes, access a robo-advisor for next-to-no-cost, and use a mobile app to perform any trade order.

On the other hand, Charles Schwab offers more comprehensive research and a fully-developed cloud platform that syncs up web, desktop, and mobile.

Beginner to advanced investors can appreciate their education and research tools, but you may get tired of being pushed towards premium services and higher costs.