Table of Contents
Introduction
If you are just starting out in the world of investing, then selecting the right brokerage firm is important. Two of the biggest names out there are Vanguard and Fidelity. Both have made their presence felt in the investment world, providing customers with a vast product portfolio while ensuring that the charges are kept low and the customer relations are efficient. In this piece, we will compare and contrast Vanguard and Fidelity, with the aim of assisting the novice investor in identifying the brokerage firm that is most suitable for their needs.
Investment Options
The first thing that a novice investor is likely to consider when choosing a brokerage firm is the types of investments that the firm offers. Both Vanguard and Fidelity provide a vast range of products including mutual funds, exchange traded funds (ETFs), stocks and bonds. Vanguard is most popular for its mutual funds, being the largest provider of them in the world with over $6 trillion in assets under management. Their low cost index funds are particularly popular among those who want a passive approach to investing, being able to easily replicate the performance of a given market index. Fidelity however goes one step further by offering much more. In addition to mutual funds, Fidelity has a wide selection of individual stocks, ETFs and bonds. They are particularly famous for their active management approaches, having many actively managed mutual funds that are designed to outperform the market.
Fees and Expenses
Next, we need to talk about the fees and expenses associated with these firms. Vanguard has gained its reputation with low cost index funds and many of their expense ratios are below that of other companies. The expense ratio is the annual fee that mutual funds or ETFs charge and is expressed as a percentage of the total assets. Vanguard’s index funds typically have lower expense ratios than those of many other companies. Fidelity also has a number of low cost index funds, but the average expense ratios are a bit higher than those of Vanguard’s. However, over the last few years, Fidelity has been cutting its fees, and some of its index funds are now comparable to Vanguard’s in terms of cost. It is also important to note that both Vanguard and Fidelity offer commission free trading on their own mutual funds and ETFs which can lead to a lot of money for the people who trade frequently.
Customer Service and Support
Customer service is also very important for novice investors, especially for those who may need some direction. Both Vanguard and Fidelity are known for their high quality customer service but there is a difference between the two. Vanguard offers phone and email support, but there are no physical branch locations for in person meetings. Their customer service reps are knowledgeable and the company’s online presence is full of helpful educational resources. On the other hand, Fidelity has a more extensive physical presence and has branches in the United States. This is good for investors who like meeting their advisors in person or who need more hands on assistance. They also have phone and email assistance together with a good online platform which has a lot of educational material and tools.
Technology and Online Platform
Technology is now an integral part of people’s lives and in the world of business, it plays a key role in investing. Both Vanguard and Fidelity have developed good online platforms and mobile applications through which clients can manage their accounts and make trades. The platform of Vanguard is simple and easy to use. It enables investors to gain access to their account information, research and educational material. The Vanguard mobile application has also received positive reviews as it enables users to buy and sell, check their balances and get information about the market. On the other hand, Fidelity’s online platform is more complicated and offers more options than the rival’s platform. Besides account management and trading, it provides investors with real time market data, complex charting tools and access to research from third party providers. Their mobile app is also highly rated and offers a wide range of features.
Summary and Conclusion
It can be difficult for novice investors to determine between Vanguard and Fidelity. Both of the firms offer investors a good number of investment choices, low costs and excellent customer relations. Vanguard is especially good at low cost index funds and keeps things simple while Fidelity is strong with more investment choices and a more sophisticated online platform. In the end, the choice of the brokerage will depend on your individual preferences and requirements. If you like keeping things simple and cheap when it comes to investing then perhaps Vanguard could be considered to be better than the other. On the other hand, if you are looking for a wide range of investment products and tools then Fidelity might be more attractive to you. Please remember that investing is risky and it is important to research the market and seek the advice of professionals where necessary. Both Vanguard and Fidelity have many educational materials and resources that can help novice investors make the right decisions and achieve their financial goals.
