Vanguard vs. Fidelity: Which is Best for You?

Vanguard and Fidelity are two of the largest investment companies in the world. Both originated as fund companies, Vanguard with its revolutionary index-based funds, and Fidelity with its often world-famous mutual funds. Each now offers both types of funds, as well as diversified investment brokerage services.

Which should you choose between Vanguard vs. Fidelity? 

Table of Contents
  1. About Vanguard
  2. About Fidelity
  3. Vanguard Brokerage Services
    1. Vanguard Brokerage Services Summary:
  4. Fidelity Brokerage Services
    1. Fidelity Brokerage Services Summary:
  5. Professional Financial Advice
    1. Vanguard Digital Advisor
    2. Vanguard Personal Advisor Services
    3. Fidelity Go
    4. Fidelity Personalized Planning and Advice
    5. Fidelity Wealth Management
  6. Who is Vanguard Better For?
  7. Who is Fidelity Better For?
  8. Bottom Line

About Vanguard

Founded in 1975 by the legendary John Bogle, Vanguard was virtually the birthplace of index funds. Today, Vanguard has more than $7 trillion in assets under management. 

Not only do they offer direct investing by individuals and organizations, but they also make their exchange traded funds (ETFs) and mutual funds available to investment firms around the world. Vanguard funds are well-regarded because they have some of the lowest investment expenses of any fund family in the industry.

The company does offer direct brokerage services, but they are much better known for their funds. In fact, Vanguard is one of the largest providers of mutual funds in the world.

About Fidelity

Fidelity Investments, Inc., commonly known simply as “Fidelity”, traces its roots back to 1946. It’s now one of the largest investment institutions in the world, with nearly $5 trillion in assets under management.

Like Vanguard, Fidelity is well known for their funds. For example, the Fidelity Contrafund is the largest non-index fund in the US. But the company is perhaps better known for their brokerage services. They make both taxable investment accounts and retirement accounts available through their online platform and a network of brick-and-mortar offices around the country.

(Author disclosure: I have a brokerage account with Fidelity.)

Vanguard Brokerage Services

Though it’s well-known for its funds, Vanguard Brokerage Services also allows you to trade non-Vanguard funds. as well as the full selection of investment securities available on typical investment brokerages.

One investment type where Vanguard is particularly strong is with target date funds. Sometimes referred to as a “fund of funds”, they’re comprised of several funds, each representing a specific asset class.

They’re referred to as “target date funds” because they’re set up to match a specific year in the future, which is typically the year you intend to retire. For example, if you’re 35 years old now, and you plan to retire at age 65, you might be interested in a target date fund for the year 2050. The fund will invest more aggressively in the early years, but gradually shift to more conservative investments as you approach retirement.

Vanguard recently changed its fee structure, being one of the last brokers charging commissions on trades. But now they offer commission-free trades on many securities, and reduced fees on others.

Vanguard Brokerage Services Summary:

Minimum initial investment: $0, but if you’re going to invest in funds some require a minimum investment of $1,000, while others require $3,000 or even more.

Available investments: Individual stocks, ETFs, mutual funds (including target date funds), options, bonds, certificates of deposit and annuities.

Available accounts: Individual and joint taxable accounts; traditional, Roth, rollover, SEP and SIMPLE IRAs; solo 401(k), trusts and 529 college savings plans.

Annual fee: $20, but waived if you have at least $10,000 in Vanguard funds, at least $50,000 in qualifying Vanguard assets, or if you elect e-delivery of statements and other documents.

Trading fees: $0 on stocks, Vanguard and non-Vanguard ETFs, and options. There is a $1 per contract fee on options. $0 on Vanguard and non-Vanguard no-transaction-fee mutual funds (2,800 in all); $20 per trade on transaction fee mutual funds for most investors, and lower fees or even $0 on accounts over $1 million. $0 on most fixed -income securities, but there is a charge of $1 per $1,000 face amount ($250 maximum) on secondary issues.

Customer service: Phone contact available Monday through Friday, 8:00 AM to 8:00 PM, Eastern time.

Robo-advisor and wealth management: See descriptions below.

Fidelity Brokerage Services

Fidelity also offers brokerage services. Much like Vanguard, Fidelity started out as a fund company. It’s mutual funds, particularly the Fidelity Magellan Fund, once run by the legendary Peter Lynch, was considered to be the standard in the field. Fidelity continues to have a wide assortment of funds, but they’ve dramatically expanded their brokerage services over the years, and are now the second largest retail investment broker, after Charles Schwab.

For taxable investment accounts, the base account is Fidelity Cash Management. You can purchase investments out of the account, but also enjoy check writing, ATM access, online bill payment and mobile deposits. And though they don’t have an ATM network, they provide reimbursement for fees charged by ATMs.

With the notable exception of cryptocurrencies, virtually any and every investment security is available on the Fidelity platform. It’s also one of the most investor friendly services in the industry, providing securities and stock screeners, as well as a comprehensive stock research center. 

If you’re an active trader, you can take advantage of Fidelity’s Active Trader Pro trading platform. It’s fully customizable and provides real-time streaming information and analytics to help you improve your trading skills and results.

One area where Fidelity leads the industry is in its zero-expense ratio index mutual funds. Index funds typically carry very low expense ratios, but zero expense ratio funds are unique. And Fidelity offers four in all, including:

  1. Fidelity ZERO Total Market Index Fund
  2. Fidelity ZERO International Index Fund
  3. Fidelity ZERO Extended Market Index Fund
  4. Fidelity ZERO Large Cap Index Fund

And if zero expense ratios isn’t enough, there are no minimum investment requirements. In fact, there are no minimum investment requirements on any Fidelity mutual funds.

Fidelity Brokerage Services Summary:

Minimum initial investment: $0 to open an account, but you’ll naturally need to add funds to begin investing. And as is the case with Vanguard, you may need certain minimums to invest in specific non-Fidelity mutual funds.

Available investments: Individual stocks, ETFs, mutual funds, options, bonds, certificates of deposit and annuities.

Available accounts: Individual and joint taxable accounts; traditional, Roth, rollover, SEP and SIMPLE IRAs; solo 401(k), trusts and 529 college savings plans.

Annual fee: $0

Trading fees: $0 on stocks, Fidelity and non-Fidelity ETFs, and options. There is a $0.65 per contract fee on options. $0 on Fidelity and non-Fidelity no-transaction-fee mutual funds (3,700 in all); $49.95 per trade on transaction fee mutual funds. $0 on most fixed-income securities, but there is a charge of $1 per bond on secondary issues.

Customer service: Phone contact is available 24/7, as well as live chat, Monday through Friday, from 8:00 AM to 10:00 PM, and weekends, from 9:00 AM to 4:00 PM, all times Eastern. Fidelity also offers more than 200 brick-and-mortar branches located in and around large cities across the country.

Robo-advisor and wealth management: See descriptions below.

Professional Financial Advice

Vanguard Digital Advisor

Digital Advisor was only rolled out in 2020, though that hardly matters since Vanguard has been one of the major investment firms for nearly 50 years, and their funds are widely used by other robo-advisors. Similar to other robos, Digital Advisor provides automated investment management with automatic rebalancing at a low annual fee. Digital Advisor is also designed for those who want simple automated investing and those who want to pay off debt in mind.  

Portfolio risk profiles run from conservative to very aggressive, and each will be a mix of low-cost Vanguard exchange-traded funds. That’s important because Vanguard ETFs have some of the lowest expense ratios in the investment fund industry.

Before you enroll you can access the retirement planning tools to help you set retirement savings goals. After you enroll you will also have access to a debt payoff calculator to help you develop strategies to get out of debt.

Digital Advisor requires a minimum initial investment of $3,000 and has an net annual advisory fee of approximately 0.15%.

Learn more about Vanguard’s Digital Advisor Services here

Vanguard Personal Advisor Services

This plan is designed with larger investors in mind and provides a combination of advanced technology and expert methodology to help you achieve your long-term financial goals. It’s recommended especially for retirees and those who are nearing retirement.

The main features it adds over Digital Advisor are ongoing access to a financial advisor, more options for portfolio customization, and financial planning for retirement decisions like Social Security and health care. If your portfolio is under $500,000, you’ll have access to a team of financial planners. But if it’s more, you’ll have a dedicated certified financial planner to provide one-on-one advice.

With the Personal Advisor Service, you will also have more ability to customize your holdings and get a more detailed plan that can cover things like social security income, health care needs in retirement, and other circumstances that are unique to you.

Your portfolio will default to be invested in ETFs but can be customized to meet your needs with other funds, including actively managed mutual funds.

Vanguard Personal Advisor Services requires a minimum investment of $50,000, and has the following fee structure:

  • $50,000 to $5 million – 0.30%
  • $5 million to $10 million – 0.20%
  • $10 million to $25 million – 0.10%
  • $25 million and above – 0.05%

Learn more about Vanguard’s Personal Advisor Services here

Fidelity Go

Fidelity Go is Fidelity’s robo-advisor, and it has the advantage of having no required minimum balance. Your portfolio will be professionally designed and managed, including periodic rebalancing. It will also include a mix of mutual funds representing various asset classes.

Similar to Vanguard Digital Advisor, your portfolio orientation can range from very conservative to very aggressive.

Fees for Fidelity Go are as follows:

  • Under $10,000 – $0
  • $10,000 to $49,999 – $3 per month
  • $50,000 and above – 0.35% per year

Fidelity Personalized Planning and Advice

Fidelity personalized planning and advice comes with access to financial advisors. That will include unlimited one-on-one financial planning calls with a member of the team of Fidelity advisors. Because it also involves elements of automated investment management, it’s considered a hybrid robo-advisor since it also provides direct human assistance and planning.

A minimum of $25,000 is required to participate in this plan, with an annual advisory fee of 0.50% on all balances.

Fidelity Wealth Management

For those with at least $250,000 to invest, Fidelity offers their Wealth Services program. A dedicated Fidelity advisor will help you develop your goals and understand your options, along with comprehensive planning and personalized investment management. There are also tax smart strategies employed to minimize the tax bite of your investment activities.

For larger investors, those with at least $10 million in investable assets and at least $2 million invested with Fidelity, they also offer their Private Wealth Program. The personal advisor will not only provide investment management but also access to financial planning.

Gross advisory fees on the plan range from 0.20% to 1.04%.

Who is Vanguard Better For?

Vanguard does offer brokerage services, but its primary strength is in its funds. Not only is it one of the most successful fund families in the investment universe, but its funds are famous for their very low expense ratios. If you’re a fund investor yourself, and particularly if you lean toward Vanguard funds, Vanguard may be the right choice for you.

Vanguard may also be a better choice than Fidelity for managed investment options. Their robo-advisor, Digital Advisor, has an annual advisory fee of just 0.15%, compared to a high fee of 0.35% with Fidelity Go. 

(That said, Fidelity Go may be the better robo-advisor choice for new and small investors. They have no minimum initial investment – compared to $3,000 on Vanguard’s Digital Advisor – and no annual advisory fee on account balances under $10,000.)

And on the wealth management side, Vanguard Personal Advisor Services are especially welcoming to large investors. The low-end annual advisory fee of 0.05% might be the lowest wealth management fee in the entire industry.

Who is Fidelity Better For?

If Vanguard is the better choice for long-term investors and those who favor fund investing, Fidelity is the hands-down winner with brokerage services. Not only do they offer a superior trading platform, but they also provide 24/7 customer service – along with 200 local investment branches.

Fidelity will definitely be the better choice if you’re an options trader. While Vanguard charges no commission on options, they do have a $1 per contract charge, compared to just $0.65 per contract fee by Fidelity.

And even if you’re a fund investor, Fidelity’s four zero expense ratio index mutual funds may be too hard to pass up. If you’re planning to invest in the funds for 20 or more years, the absence of an annual expense ratio of even 0.10% or 0.20% can make a performance difference over many years.

Bottom Line

Between Vanguard and Fidelity, Vanguard seems to be the better choice for fund investors and very wealthy investors, with their unique combination of low expense ratio funds and very low wealth management fees for very large accounts.

But for most investors, particularly those who invest in individual securities or trade frequently, Fidelity is easily the better choice.


Disclosures: All investing is subject to risk, including the possible loss of the money you invest.

For more information about Vanguard funds and ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard Digital Advisor’s services are provided by Vanguard Advisers, Inc. (“VAI”), a federally registered investment advisor. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses.

The debt payoff calculator helps you project the impact of different fixed-rate debt payments over time. To analyze your debt payments, you’ll use a third-party aggregation service. There are limitations to the aggregated information, including inability to carve out any escrow payments. There also could be missing or inaccurate information, such as taxes and insurance, that you’ll need to closely review in using the calculator.

Vanguard Digital Advisor is an all-digital service that targets an annual net advisory fee of 0.15% across your enrolled accounts, although your actual fee will vary depending on the specific holdings in each enrolled account. To reach this target, Vanguard Digital Advisor starts with a 0.20% annual gross advisory fee to manage Vanguard Brokerage Accounts. However, we’ll credit you for the revenues that The Vanguard Group, Inc. (“VGI”), or its affiliates receive from the securities in your managed portfolio by Digital Advisor (i.e., at least that portion of the expense ratios of the Vanguard funds held in your portfolio that VGI or its affiliates receive). Your net advisory fee can also vary by enrolled account type. The combined annual cost of Vanguard Digital Advisor’s annual net advisory fee plus the expense ratios charged by the Vanguard funds in your managed portfolio will be 0.20% for Vanguard Brokerage Accounts. For more information, please review Form CRS and the Vanguard Digital Advisor brochure.

Vanguard Personal Advisor Services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited purpose trust company. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses.
 
The services provided to clients who elect to receive ongoing advice will vary based upon the amount of assets in a portfolio. Please review the Form CRS and Vanguard Personal Advisor Services Brochure for important details about the service, including its asset based service levels and fee breakpoints.
 
Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.

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About Kevin Mercadante

Since 2009, Kevin Mercadante has been sharing his journey from a washed-up mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed "slash worker" – accountant/blogger/freelance blog writer – on OutofYourRut.com. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides "Alt-retirement strategies" for the vast majority who won’t retire to the beach as millionaires.

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