Vanguard and Fidelity are giant investment firms. If you own mutual funds or ETFs, chances are good you do business with one or both companies, whether you know it or not.
But Vanguard and Fidelity offer more than just low-cost investment funds for buy-and-hold types. They both provide a range of investment services and platforms for active and passive investors. If you’re looking for a new place to grow your savings, either is a fine choice.
Despite all they have in common, enough sets Vanguard and Fidelity apart to warrant a closer comparison. Read on to learn how their features and capabilities stack up — and how to choose which is right for you.
Key Features of Vanguard and Fidelity
Both Vanguard and Fidelity offer platforms and services for self-directed investors as well as passive investors who prefer to have others manage their money. Eligibility varies depending on how much you’re able to invest.
Self-Directed Investing Platforms
Vanguard and Fidelity both have brokerage accounts where you can buy stocks, exchange-traded funds (ETFs), mutual funds, and other securities, often without commissions. These accounts can be structured as general investing (taxable) accounts, traditional IRAs, Roth IRAs, other types of retirement accounts, and 529 college savings plans.
Vanguard Self-Directed Investing Platform
Vanguard’s online brokerage for DIY investors is Vanguard Brokerage Services. Use it to build a personalized portfolio with Vanguard mutual funds and exchange-traded funds as well as:
Vanguard mutual funds and ETFs generally trade commission-free through Vanguard Brokerage Services. Most stock trades are commission-free here as well. Options typically cost $1 per contract or less, while fixed-income securities typically cost no more than $1 per $1,000 of face value.
Vanguard is particularly friendly to less experienced DIYers. It offers semi-personalized recommendations for investors looking to build portfolios with Vanguard sector and index funds. And if you don’t have much capital to work with, Vanguard has a vast array of ETFs with no trading minimums — making it easy to build a diversified portfolio on a shoestring.
Fidelity Self-Directed Investing Platform
Fidelity’s in-house brokerage offers commission-free trading for stocks, ETFs, and hundreds of transaction-fee-free mutual funds. Options trades start at $0.65 per contract, while bond trades cost $1 apiece.
Fidelity offers access to alternative investment options with variable trade pricing, including precious metals. You can invest in fractional shares of more than 7,000 U.S. stocks and ETFs. And Fidelity has several mutual funds with no expense ratios, meaning no management fees charged by Fidelity.
Fidelity is friendly to intermediate and advanced investors thanks to very low margin rates and Active Trader Pro, a powerful active trading platform that’s appropriate for swing traders and day traders.
Vanguard and Fidelity both offer robo-advisor options for people who prefer not to actively manage their own investments. Both platforms automatically build and rebalance your portfolio in line with your stated investment objectives and risk tolerance. They use low-cost index funds and sector funds to increase diversification and manage risk.
Vanguard Robo-Advisor Platform (Vanguard Digital Advisor)
Vanguard Digital Advisor is a fully automated investing platform for hands-off investors able to bring at least $3,000 to the relationship.
Vanguard Digital Advisor uses low-cost Vanguard funds to build semi-personalized portfolios. Your exact cost varies by portfolio composition, but Vanguard claims you won’t pay more than $2 per $1,000 invested (0.20%) on an annual basis. Vanguard waives advisory fees for the first 90 days and periodically rebalances your portfolio at no additional cost to you.
Fidelity Robo-Advisor Platform (Fidelity Go)
Fidelity Go is Fidelity’s fully automated investment management platform. Unlike Vanguard Digital Advisor, it doesn’t have a minimum investment requirement, but you do need at least $10 in your account for Fidelity to allocate your funds.
Fidelity Go invests in a diversified array of Fidelity Flex mutual funds, none of which charge management fees (expense ratios). These index funds and sector funds offer exposure to U.S. and foreign assets without directly investing in stocks or bonds.
Fidelity Go has a three-tiered pricing scheme that depends on your account balance:
- Under $10,000: No advisory fee
- $10,000 to $49,999: $3 per month
- $50,000 and Up: 0.35% of assets under management (AUM) annualized
Wealth Management and Investment Advice Services
Fidelity and Vanguard both offer human-driven or -assisted wealth management services for clients with more money to invest. These services are more personalized and sophisticated than robo-advising but carry higher fees.
Vanguard Wealth Management Services
Vanguard has several wealth management options. Your eligibility and ideal fit depend on how much you’re able to invest with Vanguard and the degree of personalization and human assistance you prefer:
- Vanguard Personal Advisor Services. Vanguard Personal Advisor Services is a hybrid service that augments human-assisted financial planning and advice with Vanguard’s robo-advisor. It includes access to a human financial advisor, a personalized financial plan, ongoing investment coaching and advice, and real-time goal tracking. The minimum investment is $50,000 and the annual advisory fee is 0.30% AUM.
- Dedicated Financial Advisor. Bring at least $500,000 to the relationship to qualify for a dedicated financial advisor. Otherwise, service at this level is comparable to what you get with Vanguard Personal Advisor Services.
- Vanguard Flagship Services. To qualify for Vanguard Flagship Services, you must invest at least $1 million with Vanguard. In exchange, you get more personalized service, access to alternative investment opportunities, and the option to have Vanguard manage your family trust.
- Wealth Management Team (Flagship Select). Above $5 million in investable assets, you get access to a dedicated team of financial advisors — basically, a family investment office at your beck and call. Asset management fees step down for Flagship Select clients as well, down to just 0.05% AUM for assets above $25 million.
Fidelity Wealth Management Services
Fidelity has multiple wealth management options as well. As with Vanguard, eligibility and suitability depend primarily on your account balance and your preference for human interaction:
- Fidelity Personalized Planning and Advice. This is Fidelity’s answer to Vanguard Personal Advisor Services. It offers a comparable mix of financial planning and investment management services. The minimum to invest is $25,000 and the advisory fee is a flat 0.50% AUM.
- Fidelity Wealth Management (Fidelity Wealth Services). Bring at least $250,000 to the relationship to qualify for a dedicated Fidelity financial advisor who can assist you with long-range financial planning, custom asset management, and tax minimization. The advisory fee ranges from 0.50% to 1.50% AUM, depending on which services you use, your investment mix, and how much you have under management.
- Fidelity Private Wealth Management. When your Fidelity Wealth Services account balance hits $2 million and your total investable assets balance hits $10 million, you qualify for Fidelity Private Wealth Management. This service level comes with access to a dedicated wealth management team that helps manage all facets of your financial life. The gross advisory fee ranges from 0.20% to 1.04% AUM, depending on services used, your investment mix, and your assets under management.
Additional Features and Capabilities
Vanguard and Fidelity both have some additional features and capabilities worth noting.
Additional Features and Capabilities of Vanguard
Although its lineup of DIY investing tools isn’t as comprehensive as Fidelity’s, Vanguard does offer some useful capabilities for investors seeking to chart their own course.
- Margin Trading. You can apply for margin trading privileges in your Vanguard Brokerage Services account. You need to have at least $2,000 in your Vanguard account to receive and maintain privileges.
- News and Perspectives. Vanguard offers free news, analysis, and opinion content from a variety of reputable sources. Use this information to inform stock and fund picks, capitalize on market trends, and compare your performance against benchmark indexes and portfolios.
- Investing Tools and Calculators. Vanguard offers some useful free tools for active traders and long-term investors alike. These include retirement calculators, retirement income and expense worksheets, college cost calculators, college savings planners, and asset allocation guides.
Additional Features and Capabilities of Fidelity
Fidelity has an impressive menu of advanced trading and research tools. Unlike Vanguard, it also has a network of physical branches for investors who want the option to meet their advisors in person.
- Fidelity Retirement Score. This free scale uses simple inputs like your age, income, net worth, and expected retirement age to show you how well you’re faring on your retirement planning journey. Your score can range from 0 to 150. Anything above 100 means you should have enough to sustain your standard of living in retirement.
- Fidelity Estate Planner. This free tool helps set you up for success in estate planning. While it doesn’t actually write your will or establish a trust on your behalf, Fidelity Estate Planner shows you what you’ll need to make those things happen and can connect you with an estate planner in your area.
- Fidelity Trade Armor. Trade Armor is a value-added feature of Fidelity Active Trader Pro. It’s a sophisticated risk analysis tool that provides profit and loss projections and entry/exit scenarios for hypothetical trades.
- Physical Branch Network. Fidelity has dozens of physical branches scattered throughout the United States. If you live in or near a major city, there’s a good chance you’re within easy reach of at least one.
The Verdict: Should You Choose Vanguard or Fidelity?
Vanguard and Fidelity have a lot in common, but they’re not interchangeable. Vanguard has a slight edge for robo-advisor and hybrid wealth management clients, while Fidelity is a better fit for self-directed investors and those seeking to minimize fund expenses.
You Should Sign Up for Vanguard If…
Vanguard is a better fit if:
- You’re Seeking Low-Cost Robo-Advisor Services. Vanguard beats out Fidelity on robo-advisor pricing for most clients. If you can bring at least $10,000 to the relationship — Fidelity’s maximum balance for free automated investment management — then Vanguard Digital Advisor is likely to be more cost-effective.
- You Want Hands-on Wealth Management and Financial Planning Support at Very Low Management Fees. Vanguard also noses ahead of Fidelity when it comes to gross advisory fees for human-assisted wealth management and financial planning. As a Vanguard Personal Advisor Services client, your advisory fee never exceeds 0.30% AUM, although your gross asset management fee will be higher due to fund fees. Still, Fidelity charges up to 1.50% AUM, more than many independent human financial advisors.
- You’re a DIY Investing Novice Who Needs Help Getting Started. Vanguard is happy to hold novice investors’ hands and help them construct diversified portfolios that they then manage on their own. If you’d like to avoid working with a financial advisor or robo-advisor but need a gentle push, Vanguard is a good fit.
You Should Sign Up for Fidelity If…
Fidelity is a better fit if:
- You’re an Active Trader Who Likes to Do Your Research. Fidelity has a better lineup of research and analysis tools for active investors. If you plan to actively manage your portfolio and want an edge over the typical buy-and-hold long-term investor, Fidelity is a better fit than Vanguard.
- You Need a Powerful Trading Platform for Day or Swing Trading. Fidelity is also a better fit than Vanguard if you plan to make a living in the market as a swing trader or day trader. That’s due to Fidelity Active Trader Pro, a sophisticated, professional-grade trading platform that Vanguard has no answer for.
- You Want to Invest in Truly Fee-Free Mutual Funds. Although both companies are known for very low-cost mutual funds and ETFs, Fidelity is the only one with a lineup of truly fee-free mutual funds. If paying the absolute bare minimum in fund expenses is important to you, Fidelity is the way to go.
Both Are Great If…
Both Vanguard and Fidelity are excellent options if…
- You Want Access to Lots of Low-Cost Mutual Funds and ETFs. Vanguard and Fidelity both have hundreds of low-cost index funds, sector funds, and actively managed funds. Invest with either company and you won’t feel like you’re paying more than you should.
- You Don’t Want to Pay Commissions on Stock or ETF Trades. Vanguard and Fidelity both offer commission-free trading for stocks, ETFs, and some other types of securities. This is good news for active DIY investors who want to keep trading costs under control.
- You Want Full-Service Financial Advice at a Reasonable Cost. Although Fidelity is pricier, both companies offer full-service financial advice at a reasonable cost. Tailor your relationship appropriately and you’ll likely pay less in either place than you would at an independent investment shop.
Both Vanguard and Fidelity offer a lot to everyday market participants.
Both have low-cost, high-quality investment platforms for self-directed investors. Both have low-cost, high-quality robo-advisor services for people who prefer not to manage their own investments — and trust sophisticated algorithms to do so for them. And both have multiple levels of hybrid and hands-on wealth management for people with higher net worths.
Vanguard and Fidelity aren’t identical, however. Vanguard is a slightly better fit for passive investors, while Fidelity is a little stronger on the DIY side. And while both have legitimately low fees, Fidelity has a slight edge in that department too.
Either way, you won’t be disappointed by your choice. But that doesn’t mean it’s a toss-up.
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