Charles Schwab vs. Fidelity Investments

Charles Schwab and Fidelity are well-respected powerhouses in the brokerage industry. Both offer customizable trading platforms, mobile apps, and low costs to millions of clients. As of February 2022, Schwab had 33.4 million active brokerage accounts and $7.69 trillion in customer assets. Fidelity is larger still, with about 40 million individual investors and $11.8 trillion total customer assets (as of December 31, 2021). While these two brokers have a lot in common, we’ll look at some of their differences to help you determine which one is the right fit for your investment and trading needs.

Usability

Charles Schwab makes it easy to open and fund an account, and you can do so online, via mobile app, by phone, or at one of its 360+ branches. Fidelity also has a straightforward account opening process, but the paperwork to add account features like options trading or margin can be time-consuming.

Both brokers offer reasonably easy-to-navigate websites with screening tools, portfolio analysis, news, educational content, and basic order tickets, as well as customizable desktop platforms.

Schwab and Fidelity offer similar experiences regarding the trading experience, costs, research tools, customer service, and security standards. Most investors would do fine with either broker in this context. The choice may come down to your preferred trading instruments: only Schwab offers futures trading, and only Fidelity supports forex. It’s worth noting that Schwab also offers more international trading opportunities.

Trade Experience

Desktop Trade Experience

Schwab and Fidelity offer straightforward web-based trading platforms. While Fidelity’s web platform is easier to use, the quotes are delayed by 15 minutes unless you sign up for real-time quotes.

Each broker also offers a desktop trading platform: StreetSmart Edge from Schwab and Active Trader Pro from Fidelity. These platforms offer more functionality than their web-based counterparts, with more customization options, more order types, and better charting. StreetSmart Edge and Fidelity Active Trader Pro have dozens of technical studies available, however these amounts are relatively low by industry standards. Overall, traders will find similar tools on either platform, so the edge here purely from a trading experience is too close to call.

Mobile Trade Experience

Data streams in real-time on both brokers’ mobile apps, and you can stream quotes on multiple devices simultaneously. You can trade the same order types and asset classes as the brokers’ respective web/desktop platforms, except for individual bonds, which aren’t available on Fidelity’s app. Both brokers offer news and research on the app, but neither supports drawing tools for charting.

The apps have identical ratings on the App store, but Fidelity has far more reviews: Schwab has 4.8 stars from about 565,000 reviews, while Fidelity has a 4.8-star rating from some 1.9 million reviews. Overall, we found that either app should fit the needs of casual investors.

Range of Offerings

Schwab and Fidelity offer all the usual trading products, including stocks, ETFs, bonds, and mutual funds. However, only Schwab provides access to futures and crypto (albeit, only Bitcoin futures), and it has more opportunities for international trading. At the same time, you can trade forex only at Fidelity (the company doesn’t post any information about this asset class on its website, so you have to call for details). Ultimately, a preference for one broker over the other may come down to the brokers’ range of offerings.

Order Types

Both Schwab and Fidelity support the usual order types on their web and desktop platforms. Order types include market, limit, stop limit, and conditional orders like one-cancels-the-other (OCO) and one-triggers-the-other (OTO). However, only Schwab supports advanced order types on its app, which gives Schwab the edge here.

Trading Technology

Schwab uses a proprietary wheel-based router for order management purposes. Most stock orders and multiple exchange-listed options get routed to third-party wholesalers, which balances execution quality with the company’s cost savings. The company reports a net price improvement of $0.62 per equity order up to 99 shares. Its average execution speed is 0.07 seconds if you trade 1-99 shares and 0.05 for orders of 100 to 2,000 shares—above that, the speed drops back down to 0.07 seconds. The broker accepts an average of about $0.09 per hundred shares in payment for order flow.  

Meanwhile, Fidelity’s smart order routing technology seeks the best price available and can access all types of market venues, including dark pools, exchanges, and market makers. The company reports a net price improvement of $2.64 per 100-share equity trade—well above the $0.48 industry average. Fidelity has an average execution speed of 0.04 seconds, and it does not accept payment for order flow for stocks or ETFs (it does collect an average of $0.2514 per options contract).  

Overall, Fidelity wins in the trading technology department due to its price improvement, execution speed statistics, and lack of payment for order flow on equity trades.

Costs

You’ll find similar costs at Schwab and Fidelity. Both have $0 commissions for online equity, options (both have a per-contract fee of $0.65), ETF, and OTCBB trades. You’ll pay $49.95 at either broker to buy mutual funds outside the no-fee list. Broker-assisted transactions are $25 at Schwab and $32.95 at Fidelity. 

Margin rates are identical for both brokers at balance levels up to $499,999. Above that, Fidelity’s margin rates drop, but you have to call for pricing at Schwab (so we can’t compare). Some of the other typical account costs are cheaper at Fidelity. For example, Fidelity doesn’t charge paper check, domestic wire, or account transfer fees—but you’ll pay these at Schwab. Overall, these cost differences give Fidelity the slight edge here, but the brokers are essentially the same for actual trading costs.

Account and Research Amenities

Schwab and Fidelity offer comparable account and research amenities, including everything you would expect from a large broker. At either broker, you’ll find portfolio margining, stock loan programs, dividend reinvestment programs, and a suite of screeners—with the option to screen using ESG/SRI factors. Both brokers also offer numerous financial calculators and tools, trading idea generators, and streaming news from various sources. Overall, both brokers have similar offerings, but Schwab has a slight lead due to its large selection of in-house and third-party market reports.

Portfolio Analysis

Charles Schwab’s and Fidelity’s portfolio analysis offerings are similar. You can access real-time buying power and margin information with either broker, plus real-time unrealized and realized gains. You can link holdings from outside your account to get a complete picture of your finances. Both offer tax reports, but only Schwab lets you calculate the tax impact of future trades, which gave Schwab a slight edge in our ratings.

Education

Schwab and Fidelity offer a respectable range of educational content, including articles, videos, webinars, and live events. Schwab also hosts several educational podcasts, while Fidelity provides live coaching sessions with the “Trading Strategy Desk,” where you can discuss questions with a professional trading coach. Overall, we found that Schwab has better educational offerings if you want to learn about life stages (e.g., living in retirement). At the same time, Fidelity offers more investor and trading-specific content.

Customer Service

Schwab and Fidelity offer flexible customer service, with 24/7 phone line support and access to live brokers and brick-and-mortar branch offices for in-person support. You can count on reliable customer service from either broker.

Security

Schwab and Fidelity’s security are up to industry standards. You can log into the apps using biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity. 

Schwab carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers with an aggregate limit of $600 million, limited to a combined return to any customer of $150 million, including cash of up to $1.15 million. Fidelity’s excess SIPC insurance has a per-customer limit of $1.9 million on uninvested cash with a total aggregate limit of $1 billion. Overall, investors can be confident in the security standards of either broker.

Our Verdict

Schwab and Fidelity are both robust brokerages with strong trading platforms that can serve the needs of every level of investor. Because Schwab and Fidelity offer a similar experience, choosing one over the other isn’t easy. Most investors would do fine with either broker when it comes to the trading experience, costs, research tools, customer service, and security standards. The choice may come down to the asset classes each broker supports: Only Schwab offers futures trading, and only Fidelity supports forex (16 pairs). Additionally, Schwab offers more international trading opportunities. 

If the assets argument doesn’t apply to you, however, know that we picked Fidelity as our best overall broker for 2021, marking the third year it has won this category. Although they are small differences, Fidelity’s elimination of most account fees, rejection of payment for order flow, and the automated cash sweep into a money market fund just showed a deeper commitment to lowering costs for investors while also improving returns.