Table of Contents
Introduction
Investing is a process that begins with the right brokerage firm. This has eventually led many investors to compare and contrast the pros and cons between two of the most popular firms: Schwab and Fidelity. Both of the firms are well-known in the investment world and provide investors with a wide range of options. But, this is the first time I am facing such a problem and I am completely perplexed. In this article, I will attempt to compare between Schwab and Fidelity in order to assist you in selecting the right product for your investment needs.
Background on Schwab and Fidelity
Over the years, both Schwab and Fidelity have left their marks in the brokerage industry and have become major firms that investors turn to. The Charles Schwab Corporation, which is commonly known as Schwab, was established in 1971 and is one of the biggest brokerage companies in the United States as of today. On the other hand, Fidelity Investments, or simply Fidelity, has been in existence since 1946 and is one of the biggest mutual fund companies in the world.
Investment Products
The first factor to consider when selecting a brokerage is the number of investment products that are available. Both Schwab and Fidelity have many products that you can invest in, including stocks, bonds, mutual funds, ETFs, options and many more. However, there are some differences between these two brokerages that will be discussed.
Schwab
Schwab has a wide range of investment products to choose from, which include its mutual funds and ETFs. Also, Schwab provides the client with a chance to invest in third party mutual funds and ETFs in order to offer the client a vast array of investment products for different investment goals. Also, Schwab offers Schwab Intelligent Portfolios, a robo-advisory product to help manage your investments autonomously.
Fidelity
Right behind Fidelity is a series of its own mutual funds and ETFs and also presents third party products for investors to select from. Another great feature of Fidelity’s trading platform is the Active Trader Pro platform, which is designed for active traders who need sophisticated trading tools and a wealth of research to make informed trading decisions.
Fees and Spreads
A very important factor to consider for the majority of investors is the cost of trading. Trading costs and other expenses can make a huge difference in your investment income, so it is crucial to understand what Schwab and Fidelity charge for the services they offer.
Schwab
Schwab has a very simple pricing policy, for example, it charges $0 commission on online equity, ETF and options trades. Investors also have access to a wide range of no-load, transaction fee mutual funds that can be used to create a well-balanced portfolio without incurring other costs.
Fidelity
Online equity, ETF and options trading at Fidelity is also free like Schwab. Furthermore, Fidelity offers a fairly large number of no-transaction-fee mutual funds funds. However, it has a slightly higher charge for broker assisted trades than Schwab.
Research and Tools
Enhancing your investment experience is often a function of the quality of the research and tools that are available to you. You should also consider the research and tools that Schwab and Fidelity provide to their clients.
Schwab
Schwab provides its clients with a wide range of research and tools that are necessary for making wise investment decisions. The brokerage provides market research from other reputable firms like Morningstar and Credit Suisse. Furthermore, Schwab has several tools including stock screeners and portfolio analysis tools that assist investors when making decisions.
Fidelity
Similarly, Fidelity has gone the extra mile to provide its clients with a wide range of research and tools. The brokerage offers research from top corporations as well as from Thomson Reuters and Ned Davis Research. Fidelity provides its users with a convenient website and mobile application that includes real-time quotes, interactive charts, and watchlists that a user can create and customize.
