Fidelity vs. Schwab: Who’s Bigger and Better?

Choosing the right online broker is crucial for your investment journey Two of the biggest names in the industry are Fidelity and Schwab, both offering a comprehensive suite of services and competitive fees But which one is bigger, and which one is better for you?

Size Matters: Fidelity Takes the Lead

In terms of sheer size, Fidelity holds the crown. As of June 30, 2023, Fidelity boasts a whopping $11.5 trillion in assets under administration (AUA), while Schwab manages $8.2 trillion in client assets. This significant difference in size reflects Fidelity’s broader reach, encompassing not only retail investors but also institutional clients and retirement plans.

A Tale of Two Histories

Fidelity has a longer history, established in 1946 by Edward C Johnson II The company started as a mutual fund company and gradually expanded into other financial services, including brokerage. Charles Schwab, on the other hand, was founded in 1971 by Charles Schwab himself. The company initially focused on discount brokerage services and later diversified into wealth management and other offerings.

Similarities and Differences: A Head-to-Head Comparison

While both Fidelity and Schwab offer a wide range of investment products and services, there are some key differences to consider:

Trading Platforms: Both brokers provide user-friendly web and mobile platforms, along with advanced desktop platforms for active traders Fidelity’s Active Trader Pro and Schwab’s StreetSmart Edge offer similar functionalities, including charting tools, technical indicators, and order types

Investment Options: Both offer stocks, ETFs, mutual funds, options, and bonds. However, Fidelity has an edge with access to forex trading, while Schwab offers futures and cryptocurrency (indirectly through Bitcoin futures and a thematic ETF).

Commissions and Fees: Both brokers have eliminated commissions for online stock, ETF, and options trades. Other fees, such as margin rates and wire transfer charges, are generally comparable.

Customer Service: Both provide 24/7 phone support and access to live brokers. Schwab also offers a network of physical branches, while Fidelity relies primarily on online and phone support.

Research and Education: Both offer extensive research tools, including market reports, stock screeners, and educational resources. Schwab has a slight edge with its in-house research team and a broader selection of third-party reports.

Choosing the Right Broker for You

Ultimately, the “better” broker depends on your individual needs and preferences. Here’s a breakdown to help you decide:

Choose Fidelity if:

• You value a wider range of investment options, including forex and futures.
• You prefer a more comprehensive research offering, including in-house research reports.
• You are a more experienced trader and need a robust desktop platform with advanced features.

Choose Schwab if:

• You appreciate the convenience of physical branch locations.
• You value a broader selection of educational resources, including podcasts and life-stage-specific content.
• You are a more passive investor who primarily trades stocks, ETFs, and options.

Both Fidelity and Schwab are excellent choices for online brokers, offering competitive fees, user-friendly platforms, and a wide range of investment products and services. While Fidelity holds the edge in terms of size and asset management, Schwab offers a more comprehensive educational offering and physical branch access. Ultimately, the best choice depends on your individual needs and preferences.

Frequently Asked Questions

1. Who has more customers, Fidelity or Schwab?

As of June 30, 2023, Fidelity has over 42 million individual investors, while Schwab has over 34 million active brokerage accounts.

2. Which broker is better for beginners?

Both Fidelity and Schwab offer beginner-friendly platforms and educational resources. However, Schwab’s educational content is more extensive and tailored to different life stages, making it slightly more beginner-friendly.

3. Which broker is better for active traders?

Both Fidelity and Schwab offer advanced desktop platforms with extensive features for active traders. However, Fidelity’s Active Trader Pro is generally considered to have a slight edge in terms of charting tools and technical indicators.

4. Is Fidelity or Schwab safer?

Both brokers offer industry-standard security measures, including encryption, two-factor authentication, and excess Securities Investor Protection Corporation (SIPC) insurance.

5. Which broker has better customer service?

Both Fidelity and Schwab offer 24/7 phone support and access to live brokers. Schwab also has a network of physical branches, which may be more convenient for some investors.

6. Which broker is cheaper?

Both Fidelity and Schwab have eliminated commissions for online stock, ETF, and options trades. Other fees, such as margin rates and wire transfer charges, are generally comparable.

Additional Resources

• Fidelity vs. Schwab: https://www.nerdwallet.com/article/investing/fidelity-vs-schwab
• Charles Schwab vs. Fidelity: https://www.investopedia.com/charles-schwab-vs-fidelity-4587939
• Fidelity: https://www.fidelity.com/
• Charles Schwab: https://www.schwab.com/

Disclaimer

This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.