Fidelity and Vanguard are two of the biggest, most recognizable names in the investment brokerage business. As such, they boast a broad assortment of strengths—plus a few weaknesses.
As you might imagine with two investment giants, Fidelity and Vanguard have a lot in common. However, a number of differences also set them apart.
Fidelity vs. Vanguard: Similarities
Time in Business
Fidelity has been in business since 1946, while Vanguard was founded in 1975. In other words, neither company is a newcomer to the investment world.
Ownership
Fidelity and Vanguard are both privately owned companies.
Descendants of founder Edward Johnson own 49% of Fidelity, and Fidelity employees own the remaining 51%. Vanguard, on the other hand, is owned by the more than 30 million investors in its funds.
Assets
Both Fidelity and Vanguard are members of the trillion-dollar club.
As of March 31, 2023, Fidelity had more than $4.2 trillion in assets under management. By comparison, as of Dec. 31, 2022, Vanguard had $7.2 trillion in assets under management. Those figures put them among the world’s largest investment brokerages.
Commissions and Fees
Fidelity charges no commissions for online trading of U.S. stocks, options and exchange traded funds (ETFs).
It also does away with account fees and minimum balances for retail brokerage accounts, including individual retirement accounts (IRAs). And Fidelity skips minimum balances for its mutual funds, as well as transaction fees for Fidelity mutual funds and hundreds of other funds.
Similarly, Vanguard in many cases does not impose commissions for stock, option and ETF trades. However, some of its investment products do come with fees.
For example, Vanguard charges a $25 annual fee for brokerage accounts under $5 million and a $25 fee per Vanguard mutual fund (for customers with less than $5 million in qualifying Vanguard assets). These fees can be waived, though, simply by signing up for e-delivery of statements and other paperwork.
Additionally, minimum balance and deposit requirements are attached to some, but not all, investment options at Vanguard.
Investment Options
Each company offers an array of investment options, although Fidelity’s are a bit more extensive.
Fidelity’s investment options include:
- Stocks
- Bonds
- Mutual funds
- ETFs
- Fractional shares
- Certificates of deposit (CDs)
- Options
- Cryptocurrency
Vanguard’s investment options include:
- Stocks
- Bonds
- Mutual funds
- ETFs
- CDs
- Options
Mutual Funds
Fidelity and Vanguard are major players in the mutual fund business. Based on assets under management, they rank among the 10 largest mutual fund companies in the world.
Fidelity offers trading of more than 10,000 mutual funds from Fidelity and other companies. By comparison, Vanguard provides access to more than 160 Vanguard mutual funds and over 3,000 funds from other companies.
Robo-Advisor
Both Fidelity and Vanguard enable automated investing through robo-advisors.
The Fidelity Go robo-advisor scores a rating of 4.6 out of 5 stars from Forbes Advisor. “It’s among the few platforms that lack any annual advisory fees for account balances of less than $10,000, although fees kick in once your balance grows,” our review states.
With a rating of 4.6 out of 5 stars, the Vanguard Digital Advisor earns the title of Best Robo-Advisor for Beginners from Forbes Advisor. Meanwhile, the Vanguard Personal Advisor Services hybrid robo-advisor—with an identical 4.6-star rating from Forbes Advisor—snags the title of Best Robo-Advisor for High Balances.
Research and Education
Fidelity and Vanguard both make available a cornucopia of online research and educational tools and materials.
Fidelity vs. Vanguard: Differences
Robo-Advisor Drawbacks
The Fidelity Go robo-advisor requires no minimum balance. Whereas, Vanguard’s two robo-advisor offerings do.
In addition, Fidelity Go charges no advisory fee for balances under $25,000 and a fee of 0.35% if the balance is at least $25,000.
Meanwhile, Vanguard Digital Advisor waives advisory fees, but only for the first 90 days. Furthermore, it mandates a minimum initial balance of $3,000 for taxable brokerage accounts and a minimum initial balance of $5 for 401(k) accounts.
Vanguard Digital Advisor’s robo-advisor cousin, Vanguard Personal Advisor Services, requires a minimum initial balance of $50,000, and it charges an annual management fee equaling 0.30% of your balance.
Cryptocurrency Trading
Fidelity lets clients trade cryptocurrencies directly, whereas Vanguard does not.
However, in order to trade cryptocurrencies at Fidelity, you must have a Fidelity investment account and open a separate crypto account. Fidelity limits crypto trading to two coins: Bitcoin and Ethereum.
Fractional Shares
Fidelity customers can buy fractional shares of stocks and ETFs, but Vanguard customers cannot.
Fractional investing lets you buy stock based on a total dollar amount rather than on the price of a share of stock. Therefore, you might be able to invest, say, $50 to acquire a sliver of stock priced at $250 a share.
Branches
Fidelity provides in-person service at more than 200 branches, whereas Vanguard operates no branches.
Reputation Among Full-Service Investors
Fidelity and Vanguard both enjoy high marks from self-directed investors surveyed by market research company J.D. Power.
In the J.D. Power 2023 Self-Directed Investor Satisfaction Study, Fidelity garnered the highest score (704) among self-directed investors seeking guidance. While among DIY investors questioned in the same study, Vanguard rose to the top with a score of 734.
Self-directed investing gives you full control over how you invest your money and manage your portfolio.
Meanwhile, in the J.D. Power 2023 U.S. Full-Service Investor Satisfaction Study, Fidelity garnered a third-place score of 740. Vanguard picked up a below-average score of 725.
Online Broker Ranking
Forbes Advisor crowns Fidelity as the best online broker, with a rating of 4.4 out of 5 stars, saying, “Fidelity provides high-quality trade execution while keeping costs minimal.”
Vanguard, however, ekes out a rating of just 3.1 out of 5 stars in the online broker category.
Our review notes that Vanguard’s platform “has quirks that set it apart from many competitors—and if you plan to pursue an active trading strategy, you might consider other options.”
Who Should Choose Fidelity?
Fidelity may appeal to both DIY investors and those who want help from brokers. Fidelity stands out in this regard due to its robust investment offerings, network of more than 200 branches and well-regarded online presence.
Fidelity Pros
- Broader selection of investment options than Vanguard
- Availability of in-person customer service
- Higher ranking for online investing than Vanguard
Fidelity Cons
- Up to 1% markup on cryptocurrency trades
- Higher fee ($35) for each broker-assisted trade of stocks, options and ETFs than Vanguard (up to $25)
- Higher base rate (12.075%) for margin loans than Vanguard (11.000%)
Who Should Choose Vanguard?
Vanguard might be a good choice for investors who are comfortable with online trading and don’t want access to in-person customer service, as well as for folks seeking a praised robo-advisor. Perhaps most notably, it’s a worthy alternative to Fidelity in terms of highly rated mutual funds and ETFs.
Vanguard Pros
- Selection of highly rated mutual funds
- Collection of highly rated ETFs
- Solid showing in robo-advisor rankings
Vanguard Cons
- No in-person customer service availability
- Below-average ranking among full-service investors
- No opportunity to trade cryptocurrencies or fractional shares
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
