Compare Charles Schwab versus Fidelity - IRA, commissions, fees, trading tools, differences, pros and cons. Which online broker is better?

Overview of Schwab and Fidelity

Fidelity and Schwab are two giants of the online discount broking industry. They both have similar commission schedules and offer a similar range of products and services. But if you look closely, you can find differences. This article will help you do just that.

Comparison Table

Charles Schwab Review Fidelity Investments Review
Rating Charles Schwab rating Fidelity Investments rating
Stocks $0 $0
Options (per contract) $0.65 $0.65
Mutual Funds $49.95 ($0 to sell) $49.99 ($0 to sell)
Initial Funding Requirement $1,000 $2,500
Inactivity Fee $0 $0
IRA Annual Fee $0 $0
Account Closing Fee $0 $0
Trading Experience & Technology brokerage ratings brokerage ratings
Mobile brokerage ratings brokerage ratings
Research Amenities brokerage ratings brokerage ratings
Portfolio & Analysis Reports brokerage ratings brokerage ratings
Customer Service and Education brokerage ratings brokerage ratings

What Types of Software Do the Two Firms Have?

If you decide to bypass the portfolio management services that are available through the two brokers in our examination, you’ll need to familiarize yourself with the trading tools of whichever firm you choose. The better you understand the software, the less likely you are to make a (costly) mistake.

Schwab’s website is easy to use and has a lot of helpful tools, one of which is a trade bar that appears at the bottom of the screen. While we call it a trade bar, it can’t actually trade anything. A trade link generates a new web page with an order form. The tool does provide some helpful info, such as bid and ask numbers.

There’s also a browser platform called StreetSmart central. This is designed for accounts that have futures trading enabled. It offers complex orders such as contingents and triggers.

StreetSmart Edge

If you prefer to bypass website trading altogether, you can download and install the broker’s desktop software. Named StreetSmart Edge, it carries no account requirements. Perhaps the most important feature on the platform is a simulated trading login, which is great for new users.

Direct-access routing is available on the platform, although there are only two market makers. We also found Level II quotes and advanced option orders.

When we logged into our Fidelity test account, we found a somewhat different website. There aren’t as many menu choices, so it’s a little bit harder to navigate. There is a trade ticket, but it doesn’t sit at the bottom of the screen. Instead, it is a pop-up system that appears after you click on a trade button.

Active Trader Pro

Fidelity doesn’t have a browser platform like StreetSmart central, although its website is plenty good for most traders. It does have a desktop system that rivals Edge. Called Active Trader Pro, it has no account minimums and has a lot of the same features that Schwab’s platform has. For example, we found a demo mode, Level II information, and direct access to specific venues (we counted seven).

Both brokerage firms have also launched skills for Amazon’s Echo devices.

Who Has the Better Mobile App?

Fidelity and Schwab have one mobile app each (some brokers have more than one). With Schwab’s app, we found CNBC financial video news free of charge. The app has links to European and Asian versions, but during our testing we have almost never been able to access them while they are streaming.

For trading, Schwab’s app offers a few order types and time-in-force choices. Charting is very good with a horizontal display, technical studies, comparisons, events, and multiple graph styles. Other great features include a watchlist and the ability to trade mutual funds and options.

Fidelity vs Schwab

Instead of CNBC in standard definition, Fidelity’s app has Bloomberg in high definition. There’s also a greater emphasis on market news. We found lots of articles with links as images. As with Schwab’s app, Touch ID is integrated, which makes logging it quick and easy.

Charting on Fidelity’s app offers technical studies, horizontal viewing, multiple chart styles, comparisons, and extended hours prices. As with Schwab’s app, options and mutual funds can be bought and sold, and multi-leg strategies are available.

Schwab vs Fidelity

Both platforms offer mobile check deposit, bill pay, and funds transfer. Fidelity’s app has a tool to send money with PayPal.

What Cash Management Services Do They Offer?

Schwab and Fidelity are great places for banking services. Schwab actually operates an FDIC-insured bank, while Fidelity partners with several of them. Because Schwab owns its own bank, it offers checking and savings accounts that can be linked to an existing investment account. Its checking account comes with free checks and a Visa debit card (which can be turned on and off inside Schwab’s website).

Perhaps the best feature of Schwab’s checking account is that it comes with unlimited ATM fee refunds worldwide.

Although Fidelity doesn’t own its own bank, it does sweep uninvested cash into FDIC-insured program banks. This system actually results in a higher insurance level ($1,250,000 instead of the regular $250,000). The broker’s Cash Management Account offers checks and a debit card just like Schwab’s checking account, although only ATM withdrawal fees incurred inside the United States are reimbursed.

What Investment Vehicles Are Available?

Inside our Fidelity test account, we were able to find fixed-income securities, derivatives, equities, closed-end funds, ETF’s, and mutual funds. Annuities and life insurance products are also available. Besides taxable trading accounts, the brokerage firm also offers IRA’s, 529 savings plans, self-employed 401(k)’s, custodial accounts, and trusts and estate accounts.

Schwab offers the same investments that Fidelity does plus futures contracts. This is a major strength that Schwab has over its competitor. Schwab also emphasizes global trading more than Fidelity. As for accounts, Schwab offers IRA’s, a solo 401(k) plan, 529 accounts, custodial options, and trust, estate, and charitable accounts.

What Are the Customer Service Channels?

Schwab and Fidelity both offer phone support 24 hours a day, 7 days a week. Their websites have human chat services, while Fidelity also provides robo chat. During some testing we did, the AI was able to answer most of our questions. During a test with Schwab’s human chat service, we received a wrong answer, certainly not a good sign.

If you prefer in-person service, the two brokers offer branch locations. Schwab’s network is quite a bit larger than Fidelity’s: 345 versus 190.

Self-service sections are available on Fidelity’s and Schwab’s websites. We found Schwab’s easier to use.

Who Has the Better Fund Selection?

Using Schwab’s mutual fund screener, we found 5,900 products, with 3,400 having neither transaction fee nor load. At Fidelity, we found 10,600 with less than 2,000 offering no load and no transaction fee.

As for fund resources, there is good information on both websites. Both brokers also provide select lists of mutual funds (Schwab has one for ETF’s, too) that provide buy recommendations.

New Account Promotions

Charles Schwab: Open Schwab account and get $0 fee stock trades.

Fidelity Investments: Open Fidelity account and get $0 fee stock trades.

All Brokers: Top broker incentives.

Our Recommendations

If you plan to route orders to specific exchanges, then we recommend Fidelity. Its desktop platform offers more choices than Schwab’s.

For retirement savers, we propose Schwab over its competitor because Schwab doesn’t have an IRA close-out fee.

If you plan to travel internationally, we against recommend Schwab due to its ATM fee policy.

If in-person service is important to you, check to see if there’s a Fidelity location nearby. For many traders, Schwab will be the closest location.

If you plan to trade on a mobile app, we recommend Fidelity. Its app is better designed, and its financial news is in HD.

Beginners will do well at either firm as both websites have large selections of learning materials.

Bargain seekers should take a look at the $0-commission Firstrade.


Fidelity vs Charles Schwab Judgment

Schwab and Fidelity are titans in the online brokerage world. While they succeed in virtually all important areas, there are important differences between them. With this article, you can now pick the right firm for your investment needs.

Continue Reading