Fidelity Investments and Vanguard are two of the largest asset managers in the world, with each offering a variety of low-cost funds to meet investors’ needs. But they also operate online brokerages and rate well in Bankrate’s annual review of the best brokers.
Fidelity was named Bankrate’s best broker for beginner investors and for retirement investing in the 2022 Bankrate Awards. Fidelity stands out for its low costs, number of account types offered and great customer service, while Vanguard offers thousands of no-transaction-fee mutual funds and commission-free online trading of stocks and ETFs.
Which one is right for you? That will depend on your unique circumstances and what features you’re looking for in an online broker. Here’s how Fidelity and Vanguard compare on some of the most common features.
|Stock and ETF commissions||$0||$0 ($25 for phone orders)|
|Options commissions||$0.65 per contract||$1 per contract for accounts below $1 million|
|Tradable securities||Stocks, ETFs, bonds, mutual funds, options||Stocks, ETFs, bonds, mutual funds, options|
|Account fees||No annual, activity or transfer-out fee||$20 fee for certain accounts (can be waived with $10,000 in Vanguard assets or email delivery of statements)|
|No-transaction-fee mutual funds||3,400+||3,200+|
|Account types||Individual and joint taxable, IRAs, small business (SEP IRA, solo 401(k), etc.), custodial, 529, HSA, managed portfolio, charitable and trust, among others||Individual and joint taxable, IRAs, small business (SEP IRA, solo 401(k), etc.), custodial, 529, managed portfolio|
|Mobile app||Fidelity Mobile app on the Apple App Store and Google Play Store||Vanguard mobile app on the Apple App Store and Google Play Store|
|Fractional shares||For purchases and dividend reinvestment||Available on purchases of mutual funds, but dividend reinvestment only on stocks/ETFs|
|Customer support||Phone 24/7 availability, chat, email, 200+ branches||Phone M-F 8 a.m. – 8 p.m. ET, email|
Fidelity vs. Vanguard: Costs
Fidelity and Vanguard both do a good job keeping costs fairly low, but Fidelity has a slight edge overall. Both brokers charge zero commission for stock and ETF trades, but Fidelity charges $0.65 per contract on options trades, while Vanguard charges $1 per contract for customers with less than $1 million in assets.
When it comes to mutual funds, both Fidelity and Vanguard offer more than 3,000 funds with no transaction fees, making each broker an attractive spot for those saving for retirement or other long-term goals. Each one offers a number of low-cost index funds and Fidelity even has some with no fees.
Account fees are non-existent at Fidelity, while Vanguard does charge a $20 fee in certain accounts, which can be waived if you have at least $10,000 in qualifying Vanguard assets or sign up to have statements delivered electronically. If you’re just starting out and don’t have much in the way of savings to invest, Fidelity will likely be the better option.
Fidelity vs. Vanguard: Account minimum
Both Fidelity and Vanguard have no account minimum, allowing new investors to open accounts and then fund them with any amount when they’re ready. This feature makes both brokers a solid choice for new investors.
Fidelity vs. Vanguard: Tradable securities
Fidelity and Vanguard are also similar in terms of the number of tradable securities they offer. Both brokers offer the fairly standard choices of stocks, ETFs, mutual funds, bonds and options. This should meet the needs of most investors, but if you’re looking for some of the more exotic areas of the market such as cryptocurrency, futures or forex, you’ll need to use a different broker.
Fidelity vs. Vanguard: Account types
You shouldn’t have a hard time finding the type of account you’re looking for at either broker, but Fidelity does offer a few more options than Vanguard. Both brokers offer standard account types such as individual and joint taxable accounts, IRAs (Roth, traditional and rollovers), small business retirement accounts (SEP IRA, SIMPLE IRA and solo 401(k)) and 529 plans. You’ll also have robo-advisor options with Vanguard Digital Advisor and Fidelity Go.
Fidelity also offers health savings accounts (HSAs), which some people use to save for healthcare costs, as well as trusts and charitable accounts. Both Fidelity and Vanguard should be able to meet the account needs of most investors, though.
Fidelity vs. Vanguard: Fractional shares
Fidelity separates itself here by offering fractional shares on purchases of stocks and ETFs as well as on dividend reinvestments. Vanguard doesn’t offer fractional shares on new purchases of stocks and ETFs, only mutual funds. It does offer fractional shares on dividend reinvestments, however.
Fractional shares have become a key offering in recent years as stock prices for popular companies such as Alphabet, Amazon and Tesla have, at times, increased into the thousands of dollars for one share. Fractional shares allow investors an opportunity to invest in companies like these and make sure that their full amount gets invested, instead of sitting in cash while they wait to be able to afford a full share.
Fidelity vs. Vanguard: Customer support
Fidelity also has a slight edge in customer support, but both brokers should be able to answer any questions you may have in a timely manner. Fidelity is available to take calls over the phone 24 hours a day, 7 days a week, while also offering email and chat support. You can also get questions answered at one of the more than 200 branch locations they have throughout the country.
Vanguard is also available to answer questions over the phone, but the availability is more limited at just 12 hours each day, Monday through Friday. You can also get questions answered over email.
While each broker is a solid option for investors, the edge goes to Fidelity thanks to slight advantages in cost, the number of account types offered and their fractional shares offering. If these features matter to you, Fidelity is likely the best choice, but Vanguard isn’t too far behind.
If you already have significant assets with Vanguard, you may be able to wipe out some account fees, and the lack of fractional shares may not be a dealbreaker for you. Think about what matters most to you in an online broker and that should help you make your selection. You can always open accounts with both and benefit from the various features that each has to offer.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.