Vanguard vs Fidelity 2023 Analysis

Fidelity and Vanguard stand as two of the largest investment firms on a global scale. In this Vanguard vs Fidelity showdown, Fidelity takes the lead with a remarkable 40 million individual investors and $9.9 trillion in assets under management (AUM). 

Vanguard, in the opposing corner, boasts an impressive $8.5 trillion in AUM and more than 30 million investors. Both of these financial giants have earned solid industry reputations, and they provide an extensive range of low-cost mutual funds, exchange-traded funds (ETFs), expert advice, and related services.

Fidelity, established back in 1946, presents investors with a robust trading platform, exceptional research tools, and impressive trade execution capabilities. Meanwhile, Vanguard, which made its debut in 1975, offers an outstanding collection of low-cost mutual funds and ETFs specially designed for buy-and-hold investors. 

Though Vanguard and Fidelity share some similarities, we’ll delve into a Vanguard vs Fidelity comparison to help you decide which broker aligns better with your specific investment needs.

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Vanguard vs Fidelity: Pros and Cons

Fidelity’s Pros and Cons – A Vanguard vs Fidelity Analysis

Pros of Fidelity

• A well-rounded trading platform
• Outstanding research capabilities and asset screeners
• Exceptional trade execution

Cons of Fidelity

• Not supporting cryptocurrency trading, futures, and options on futures
• Quotes are delayed by 15 minutes

Vanguard’s Pros and Cons – A Vanguard vs Fidelity Examination

Pros of Vanguard

• Offering low-cost ETFs and mutual funds
• Demonstrating favorable net price improvement
• Presenting an updated, user-friendly website

Cons of Vanguard

• An outdated mobile app
• Lack of support for futures, options on futures, or cryptocurrency trading

Vanguard vs Fidelity: Usability

In the Vanguard vs Fidelity contest of usability, let’s explore the user experience and account setup:

Opening and funding a Vanguard account online is feasible, but there’s a delay of several days before you can start investing. On the other hand, Fidelity makes it easier and faster to kickstart your investment journey. Both brokers require additional documentation and a bit of waiting time for options trading or margin access.

Vanguard’s website has seen updates, rendering it more user-friendly and modern in appearance. However, there’s room for improvement in terms of ease of navigation, and you can’t explore far without logging into your account. 

Fidelity’s website, in comparison, stands out by offering a wealth of tools and resources to cater to a broader range of investor types.

In the grand showdown of Vanguard vs Fidelity, the verdict leans towards Vanguard being an excellent choice for long-term and retirement investors, especially those seeking professional advice and access to some of the industry’s lowest-cost funds. 

On the flip side, Fidelity excels in serving casual investors and traders who seek access to an abundance of tools, advanced charting, and technical analysis.

Vanguard vs Fidelity: Trade Experience

Desktop Trade Experience

Vanguard’s platform is carefully tailored for buy-and-hold investors rather than active traders. It efficiently allows order placement, but it lacks the bells and whistles you might find elsewhere. The order entry process is somewhat clunky and not particularly intuitive, and real-time data becomes available only upon initiating a trade ticket. 

While it serves passive investors adequately, it falls predictably short for those traders and investors who crave a more responsive and customizable experience. 

It’s essential to remember that Vanguard’s design isn’t meant to cater to frequent traders or short-term investors, so this isn’t considered a drawback for the company.

On the other hand, Fidelity steps into the ring with a superior trading experience suitable for every type of investor. Buy-and-hold investors will find Fidelity’s web-based platform more than sufficient. 

However, it’s important to note that quotes are delayed by 15 minutes unless you opt for real-time quotes. Active and technical traders will especially appreciate the features of Active Trader Pro, which include charts, technical indicators, screeners, advanced order types, and more.

Moreover, recent dashboard enhancements, new thematic baskets, custom indexing, and robust rebalancing features collectively make Fidelity a compelling choice for more sophisticated investors. When comparing Vanguard vs Fidelity, Fidelity emerges as the clear winner in terms of the trade experience.

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Mobile Experience

In the mobile experience category of Vanguard vs Fidelity, we have:

Vanguard’s mobile app, which is showing its age and lacks features. There is a noticeable absence of charting capabilities, and quotes remain delayed until you initiate an order ticket. 

However, it does allow you to monitor your positions, analyze your portfolio, read the news, and place basic orders, albeit for a limited set of asset classes. This is a suitable choice for buy-and-hold investors on the go.

Fidelity’s mobile app, on the other hand, offers an easy-to-navigate interface. Investors can efficiently manage orders, check pending transactions, and place trades with convenience. Where it falls short is in the realms of fundamental research and charting, as these features are quite limited. 

Nonetheless, mobile watchlists synchronize with desktop and web applications, and most of the same order types available on the web or desktop platforms are also accessible via the mobile app.

In terms of user ratings on the App Store, both apps earn favorable reviews. Vanguard’s app boasts a 4.7-star rating from around 170,000 reviews, while Fidelity’s app stands at an impressive 4.8-star rating with approximately 1.9 million reviews. 

Ultimately, our assessment reveals that Fidelity’s app offers a more extensive set of functionalities and is valuable to a broader range of investors.

Investment Philosophy

In the competition of Vanguard vs Fidelity, let’s take a look at the range of offerings:

When compared to some of the larger brokerage firms, both Vanguard and Fidelity present a somewhat limited range of offerings. These include equities, bonds, options, ETFs, and an extensive selection of no-load, no-fee mutual funds. 

However, neither of these brokers supports futures, options on futures, or cryptocurrency trading. Notably, only Fidelity extends its offerings to include Forex, precious metals, OTCBB, and fractional shares for purchase.

Vanguard vs Fidelity: Order Types

Predictably, Vanguard provides support for the order types typically favored by buy-and-hold investors, which includes market, limit, and stop-limit orders. While Vanguard doesn’t offer the ability to stage orders for later entry (a feature available with Fidelity), both brokers allow you to specify specific tax lots before placing orders.

Fidelity’s web platform and Active Trader Pro, in contrast, boast a broader variety of order types, encompassing conditional orders such as one-cancels-the-other (OCO) and one-triggers-the-other (OTO). 

In the realm of order types, Fidelity clearly has the upper hand in the Vanguard vs Fidelity face-off.

Vanguard vs Fidelity: Trading Technology

In the sphere of trading technology, Vanguard follows a different approach. Vanguard doesn’t employ smart order routing technology, and customers cannot route their own orders. 

However, the broker reports an average net price improvement of $2.31 per 100-share lot for eligible marketable orders. 

Notably, specific details regarding Vanguard’s execution speed are not readily available. This is unsurprising, considering Vanguard’s target clientele leans towards long-term investment strategies. While Vanguard’s routing approach may be basic compared to some other brokers, it earns points for not accepting payment for order flow.

On the other hand, Fidelity stands out with its smart order routing technology, which actively seeks the best available prices and has access to various market venues, including dark pools, exchanges, and market makers. 

Fidelity reports an impressive net price improvement of $19.24 per 1000-share equity order and boasts an average execution speed of just 0.05 seconds. Much like Vanguard, Fidelity refrains from accepting payment for order flow for stocks or ETFs.

The Vanguard vs Fidelity competition in the trading technology category leans strongly in Fidelity’s favor, thanks to its smart order routing technology, superior price improvement, and transparent execution speed statistics.

Vanguard vs Fidelity: Costs

Vanguard and Fidelity offer $0 commissions for online equity, options, and ETF trades for customers based in the United States. It’s worth noting that Fidelity imposes a $0.65 per contract option fee, while Vanguard sets this fee at $1.

For broker-assisted stock trades, Fidelity is on the costlier side, charging $32.95, as opposed to Vanguard’s $25. When it comes to mutual fund trades that fall outside the no-transaction-fee family, Fidelity charges $49.95. Vanguard, on the other hand, requires payments ranging from $0 to $20 per trade, depending on your account balance. 

Margin rates at both brokers remain close, with Vanguard charging 10.75% for $10,000 and Fidelity imposing a 10.575% rate for the same amount. 

In the grand Vanguard vs Fidelity cost comparison, it’s apparent that Fidelity might lead to savings for those engaged in options trading, whereas Vanguard stands as the more cost-effective option for investors with a focus on mutual funds.

Management Options

When it comes to account and research amenities in the Vanguard vs Fidelity face-off:

Vanguard provides fundamental screeners for stocks, ETFs, and mutual funds. News updates are sourced from MT Newswires and the Associated Press, while several tools are designed with a focus on retirement planning. 

However, the charting capabilities are limited, and technical analysis tools are notably absent. This aligns with Vanguard’s position as a broker catering to buy-and-hold investors.

On the other side of the ring, Fidelity takes the lead in this category. Its website offers versatile screeners for stocks, ETFs, mutual funds, and fixed income, along with a rich selection of tools, calculators, and news sources. 

The web-based platform and Active Trader Pro deliver customizable charting with technical indicators, drawing tools, and access to historical data. An additional advantage with Fidelity is its provision of portfolio margining.

In the Vanguard vs Fidelity contest for account and research resources, Fidelity emerges as the superior choice, providing a more comprehensive set of tools and resources to support investors in their decision-making process.

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