Charles Schwab vs Fidelity vs Vanguard in 2024

Discount stock broker comparison: Vanguard vs Charles Schwab and Fidelity Investments. Brokerage, IRA account fees and commissions. Which broker to choose?

Overview of Schwab, Fidelity, and Vanguard

Three well-known brokerage firms in the U.S. are Fidelity, Schwab, and Vanguard. If you're an independent investor, you've likely heard of them. They hold vast amounts of customer assets and have millions of accounts. Here's an overview of these giants. Let's see if there's a clear winner.

Fees

Services

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Charles Schwab: Get $0 commissions + satisfaction guarantee at Charles Schwab.

Firstrade: Get up to $250 ACAT rebate and $0 commission trades.

Fidelity: Get $0 trades + 65₵ per options contract at Fidelity.

Vanguard: Open a Vanguard investment account.

Mutual Funds

All three brokerages are known for their mutual funds, so they perform well in this area. But there are key differences among them; let's explore these.

Vanguard offers over 16,000 funds available for new investments. Around 2,000 of these come with no transaction fee and no load. Vanguard also manages its own set of mutual funds, which includes about 100 out of the 7,200. All Vanguard funds are no-load, and if bought at Vanguard, they have no transaction fee. Funds sold too soon incur a $50 short-term redemption fee.

Schwab offers about 5,800 funds, slightly fewer than Vanguard. However, Schwab outperforms Vanguard with 3,400 no-load, no-transaction-fee products. Similar to Vanguard, Schwab also charges a $49.95 short-term trade fee.

Fidelity surpasses both its competitors with a list of 10,800 funds. It also provides 3,700 no-load, NTF funds, the largest in this review. Its short-term redemption charge is the same as Schwab's.

ETFs

These three firms offer trading in ETFs, as expected from top brokerage houses. However, their performance varies in some areas. For instance, Vanguard doesn't have the best ETF research tools, and both Fidelity and Schwab have ETFs with expense ratios that match or surpass Vanguard's.

All brokers in this review now offer commission-free trading for all ETFs.

This category is a tie.

Customer Service Channels

This category is often overlooked but is crucial. When you need help with your account at 3 am, you'll understand the importance of good customer service.

Speaking of 3 am, Vanguard doesn’t offer service at this time. Their hours are from 8:00 am to 10:00 pm, with no service on weekends. There’s no online chat tool on their site, and they don’t provide foreign language support or branch locations.

Moving to Fidelity, there’s a noticeable improvement. Fidelity is available around the clock, including weekends. Their website features an online chat tool during certain hours, and they have physical branches in many large cities. Although Fidelity has a few global offices, their foreign language support is limited.

Schwab offers support in languages other than English, including Chinese and Vietnamese. We also liked their extensive branch network, which is larger than Fidelity's, and their 24/7 phone support. Schwab also has online chat, but they failed to answer a test question during our chat session.

Overall, Schwab seems to offer the most in this category.


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Trading Software

Now we reach a crucial point if you plan to handle your own trades. All three brokers provide trading software, but here again, Vanguard falls short.

During our testing, we found Vanguard's website difficult to navigate at times, though the search box in the upper-right corner helps somewhat. There's no trade bar on the site, no browser platform, and no desktop program. All trading is done on simple web pages.

Schwab’s situation is much better. Their website is easier to navigate, thanks to an updated top menu, and there's plenty of useful information. There is a trade bar at the bottom of the browser, but it has limited functions. Schwab once had a great browser-based platform, but it hasn’t kept up with browser updates. The website’s trading capabilities may satisfy some investors, and if not, there’s thinkorswim.

thinkorswim is Schwab's flagship desktop program, offering many features, including Level II data and technical analysis. We especially liked the inclusion of direct-access routing, which will please many active traders.

Schwab faces strong competition from Fidelity here. Fidelity provides a pop-up trading ticket on its website, which is very user-friendly. We appreciated all the trading and educational resources it offers.

Although Fidelity doesn't have a browser platform, they do offer a very good desktop system called Active Trader Pro. Like Schwab’s platform, Active Trader Pro includes direct-access routing and offers excellent charting and advanced order types. We counted over 60 technical studies, and right-click trading makes it easy to buy and sell directly from charts.

Both platforms stream financial news. We found Fidelity’s software more customizable than Schwab’s.





Overall, it’s a close race between Fidelity and Schwab.

Cash Management

All three brokerages offer banking tools. As in some previous categories, we found Vanguard’s service to be the least appealing. VanguardAdvantage, the broker’s banking service, requires a minimum of $500,000 in assets. Additionally, the company charges a $30 annual fee and $9.95 for check reorders, which can be avoided by maintaining at least $1,000,000 with Vanguard. ATM fees are only reimbursed at PNC cash machines.

Schwab's offering is much better. They provide a free checking account with no minimums. It is FDIC-insured (unlike VanguardAdvantage) and offers unlimited ATM fee rebates worldwide.

Fidelity offers a Cash Management Account, which is technically a securities account. Free cash balances can be swept into multiple program banks that provide FDIC insurance. It includes free checks and a Visa debit card, and US-based ATM charges are reimbursed.

Schwab has an edge in global ATM fee rebates, while Fidelity offers up to five program banks for a maximum protection of $1,250,000. Schwab offers the standard $250,000.

Education and Research

All three brokers offer educational materials, but we found Vanguard’s website the hardest to navigate. Their resources are mainly in article format, though there are some videos available.

Fidelity has a much better-organized educational section, including infographics and self-guided courses. Schwab’s site also has a lot of financial information, though we thought Fidelity did a better job of organizing and presenting it in a user-friendly way.

Recommendation

Due to Vanguard’s weak performance in many important categories, we can only recommend the broker to investors primarily interested in Vanguard-family products.

For mutual fund investors, we recommend Charles Schwab. Besides its large selection of funds, the company’s website offers excellent fund resources, including fund profile pages, charts, graphics, and lots of useful information.

We also recommend Schwab for ETFs due to their large selection and the elimination of short-term redemption fees, which will benefit many traders.

For those seeking the best overall customer service experience, we suggest Schwab. With an extensive network of branches, most American investors (and some overseas) should find an office within driving distance.

For trading tools, we don’t recommend Vanguard due to its outdated software. For desktop and laptop traders, we suggest either Schwab or Fidelity, both of which offer excellent platforms. If you plan to trade on a mobile device, go with Fidelity. We preferred its mobile app over Schwab’s.

If you plan to travel abroad, take a Schwab debit card with you. No better option is available. If you’re staying in the U.S., choose Fidelity, which offers a higher level of FDIC protection.

Visit Websites

Charles Schwab: Get $0 commissions + satisfaction guarantee at Charles Schwab.

Firstrade: Get up to $250 ACAT rebate and $0 commission trades.

Fidelity: Get $0 trades + 65₵ per options contract at Fidelity.

Vanguard: Open a Vanguard investment account.

Schwab vs Fidelity vs Vanguard Judgment

Vanguard comes out as the least attractive broker of the three. Even in the fund category, where it has traditionally excelled, it lost to either Fidelity or Schwab. These latter two brokerage firms ended in a tie in this review. And with similar commission structures, you can’t go wrong with either one.