Fidelity vs. Charles Schwab: A Comprehensive 2024 Comparison

Choosing the right online broker is crucial for your investment success. Two of the most popular options are Fidelity and Charles Schwab, both offering a wide range of features and benefits. But which one comes out on top?

This comprehensive guide delves into the key differences between Fidelity and Charles Schwab, analyzing their strengths and weaknesses to help you make an informed decision.

Overall Appeal:

Both Fidelity and Schwab are excellent choices for investors of all levels, offering a vast selection of investment products, low fees, and user-friendly platforms. However, some subtle differences may make one more suitable for your specific needs.

Investment Options:

• Fidelity: Boasts a staggering selection of over 3,300 commission-free mutual funds, including several index funds with zero expense ratios, a rare find in the industry. Additionally, Fidelity offers a wide range of stocks, bonds, ETFs, options, and even fractional shares.
• Charles Schwab: While not as extensive as Fidelity’s, Schwab’s investment selection is still impressive, with over 8,000 commission-free mutual funds and access to stocks, bonds, ETFs, options, futures, and forex.

Trading Fees:

• Fidelity: Charges no commissions for stock and ETF trades, making it a top choice for active traders. Options contracts cost $0.65 per contract.
• Charles Schwab: Also offers commission-free stock and ETF trades, with options contracts priced at $0.65 per contract.

Account Fees:

• Fidelity: Charges no annual or inactivity fees, making it an attractive option for investors with smaller accounts. Transferring out of Fidelity incurs no fees.
• Charles Schwab: Similarly, Schwab charges no annual or inactivity fees. However, transferring out of Schwab incurs a $50 fee for full transfer of assets.

Margin Rates:

• Fidelity: Margin rates vary depending on the account balance, starting at 13.575% for balances under $25,000 and decreasing as the balance increases.
• Charles Schwab: Margin rates also vary based on account balance, starting at 13.575% for balances under $25,000 and decreasing as the balance increases.

Trading Platforms:

• Fidelity: Offers two platforms: Fidelity.com and Active Trader Pro. Both platforms are free for all customers and provide a comprehensive range of features, including charting tools, research, and order types.
• Charles Schwab: Provides four platforms with no trade minimums or fees: StreetSmart Edge, StreetSmart Central, thinkorswim, and Schwab Mobile. Each platform caters to different investor needs, from beginners to advanced traders.

Mobile Apps:

• Fidelity: Offers a robust mobile app available for iOS and Android devices. The app provides access to all major trading features, research, and account management tools.
• Charles Schwab: Also offers three mobile apps: Schwab Mobile, thinkorswim, and StreetSmart Mobile. Each app provides a different level of functionality, catering to various investor needs.

Research and Data:

• Fidelity: Provides extensive research and data, including free access to Morningstar, Reuters, and Zacks research reports. Fidelity also offers its own proprietary research and analysis tools.
• Charles Schwab: Offers research from leading providers like Morningstar, Argus, and S&P, along with in-house generated commentary and tools.

Customer Support:

• Fidelity: Provides 24/7 customer support via phone, email, and live chat. Additionally, Fidelity has over 200 local branches, offering in-person support.
• Charles Schwab: Also offers 24/7 customer support via phone, email, and chat. Schwab has a smaller network of branches, with in-person support available at select locations during business hours.

Who is Better Than Charles Schwab?

While both Fidelity and Charles Schwab are excellent brokers, Fidelity edges out Schwab in several key areas:

• Investment selection: Fidelity’s vast selection of commission-free mutual funds, including zero-expense-ratio index funds, makes it a more attractive option for long-term investors.
• Research and data: Fidelity’s extensive research offerings, including free access to leading providers and proprietary tools, provide investors with a deeper understanding of the market.
• Customer support: Fidelity’s 24/7 customer support via phone, email, live chat, and its network of local branches surpasses Schwab’s support options.

Who Should Choose Charles Schwab?

Charles Schwab remains a strong contender for investors who:

• Prefer a wider selection of no-transaction-fee mutual funds: Schwab’s 8,000+ commission-free mutual funds offer more choices than Fidelity.
• Trade futures: Schwab is one of the few online brokers that offer futures trading.
• Value in-person support: Schwab’s network of branches provides investors with the option for face-to-face assistance.

Ultimately, the best online broker for you depends on your individual needs and investment goals. Both Fidelity and Charles Schwab offer a compelling set of features, but Fidelity’s edge in investment selection, research, and customer support makes it the overall winner in this comparison. However, if you prioritize a wider selection of no-transaction-fee mutual funds, futures trading, or in-person support, Charles Schwab might be a better fit.

Additional Considerations:

• Account minimums: Both Fidelity and Charles Schwab require no minimum deposit to open an account.
• Interest rates on uninvested cash: Fidelity currently offers a 4.97% interest rate on uninvested cash, while Charles Schwab offers 0.45%.
• Educational resources: Both brokers provide extensive educational resources for investors of all levels.

Before making your final decision, it’s crucial to carefully consider your investment goals, trading style, and budget to determine which broker aligns best with your needs.