Schwab And Fidelity: Are They Affiliated?

Charles Schwab and Fidelity Investments are two of the largest and most well-respected investment firms in the industry. Both companies offer a wide range of investment options, including stocks, bonds, mutual funds, and ETFs, as well as robust trading platforms and tools. While there are some similarities between the two companies, there are also some key differences that investors should consider when deciding which platform to use.

Investment options and financial products

Charles Schwab and Fidelity Investments are not affiliated with each other. They are two separate entities offering investment and financial products to their clients. Here is an overview of the investment options and financial products provided by each company:

Charles Schwab Investment Options:

Charles Schwab offers a wide range of investment products and services to its clients. Here are some of the key investment options:

• Stocks and ETFs: Schwab provides easy-to-use tools for buying and selling stocks, ETFs, and other securities. They offer resources for building a portfolio, researching investments, and discovering new ideas.
• Mutual Funds: Schwab offers access to thousands of no-load, no-transaction-fee mutual funds. These funds provide diversification and professional management for investors.
• Bonds and Fixed Income: Schwab offers a comprehensive selection of bonds and fixed-income products, along with specialized help at a low price.
• Exchange-Traded Funds (ETFs): Schwab provides access to over 2,000 listed ETFs across various asset classes and fund companies, with $0 online commissions.
• International Investing: Schwab enables investors to trade stocks from over 30 countries and access more than 50 international stock exchanges.
• Options: Schwab offers sophisticated options tools, education, and specialized support at a competitive price.
• Futures and Forex: Schwab provides access to additional markets with futures and futures options, as well as forex trading.
• Cryptocurrency: While Schwab does not offer spot trading of cryptocurrency, they provide several choices for gaining exposure to the cryptocurrency markets.
• Robo-Advisor: Schwab offers a diversified portfolio of ETFs built by a robo-advisor, with daily monitoring and automatic rebalancing.
• Wealth Management: Schwab provides comprehensive wealth management services with dedicated advisors and experienced teams. They offer personalized approaches to meet specific needs.
• Retirement Plans: Schwab offers workplace retirement plans and IRA accounts, such as the Learning Quest® 529 plan, to help individuals save for the future.

Fidelity Investments Financial Products:

Fidelity Investments, on the other hand, is a large financial services corporation offering a broad range of financial products and services. Here are some of their key offerings:

• Brokerage Services: Fidelity operates a major brokerage firm, providing services to individual and institutional investors. They offer resources and tools to help investors manage their investments.
• Mutual Funds: Fidelity manages a large family of mutual funds, including the Fidelity Contrafund and Fidelity Magellan Fund. They also introduced zero-expense-ratio mutual funds with no management fees.
• Retirement Services: Fidelity assists individuals in saving for retirement through various products, such as 401(k) plans, Roth IRAs, and pension administration.
• Wealth Management: The company provides wealth management services, including investment advice, asset management, and financial planning.
• Index Funds: Fidelity offers a range of index funds, including the Fidelity Nasdaq Composite Index Tracking Stock Fund (ONEQ).
• Life Insurance: Fidelity provides life insurance products as part of their financial services offerings.
• Cryptocurrency: Fidelity has shown a strong interest in cryptocurrency, launching Fidelity Digital Asset Services for institutional investors and offering Bitcoin and Ethereum funds.
• Cash Management: Fidelity offers cash management products to help individuals save smarter and reach their financial goals.
• Financial Planning: Fidelity provides financial planning tools, such as the Financial Planning Tool and Full View, to help individuals manage their overall finances.
• Education and Coaching: They also offer educational resources and live coaching sessions with their Trading Strategy Desk to help investors make informed decisions.

Fees and commissions

Charles Schwab and Fidelity Investments are not affiliated with each other. They are competitors in the brokerage industry, offering similar products and services to millions of clients. When it comes to fees and commissions, here is a detailed comparison between the two:

Charles Schwab Fees and Commissions:

Charles Schwab offers commission-free online trading for stocks, ETFs, and options. There is no account or trade minimum required. Broker-assisted trades for listed stocks and ETFs are also free, but there is a $25 service charge. For options, the broker-assisted trade fee is $0.65 per contract, plus the $25 service charge.

For US Over-The-Counter (OTC) equities, the broker-assisted trade fee is $6.95, plus the $25 service charge. Mutual fund trades through Schwab's Mutual Fund OneSource® service are free, but there is a $25 service charge for broker-assisted trades. For all other mutual funds, the fee is up to $74.95 per purchase, plus the $25 service charge for broker-assisted trades.

Schwab offers thousands of no-load, no-transaction-fee mutual funds and over 2,000 commission-free ETFs. There is no minimum investment needed to open a brokerage account, and there are no fees to open and maintain a Schwab account.

Fidelity Investments Fees and Commissions:

Fidelity Investments also offers $0 commissions for online US stock, ETF, and option trades. There are no minimums to open an account. For options, there is a standard fee of $0.65 per contract. For non-Fidelity funds, there is no fee to purchase but a $49.95 fee for redemption if held for less than 60 days.

Fidelity offers a range of no-transaction-fee mutual funds and several index funds with no expense ratio. Trading fees for stocks and options are $0, plus $0.65 per contract for options. ETFs are $0 per trade, and bonds or CDs in secondary trading are $1 per trade, while US Treasuries traded online are free.

Fidelity also offers a highly competitive interest rate on uninvested cash, currently at 4.26% annually, compared to Schwab's 0.10% APY.

Both Charles Schwab and Fidelity Investments offer competitive fee structures, with $0 commissions on online trades for stocks, ETFs, and options. However, Fidelity has an edge due to its higher interest rate on uninvested cash and lower fees for mutual fund redemptions and bond trades. Schwab, on the other hand, provides a larger selection of no-transaction-fee mutual funds and commission-free ETFs.

Trading platforms and technology

Charles Schwab and Fidelity are both well-respected powerhouses in the brokerage industry, offering customizable trading platforms, mobile apps, and low costs to millions of clients. Both companies offer user-friendly web-based trading platforms, with quotes delayed by 15 minutes on Fidelity unless you opt for real-time updates. Both also offer more advanced desktop platforms with greater customisation, more order types, and enhanced charting capabilities.

Charles Schwab has two web-based platforms: Schwab.com and thinkorswim web. Thinkorswim web offers less customisation than its desktop counterpart but is still a solid choice. The thinkorswim desktop platform is highly customisable and offers a broad range of technical studies and support for similar asset types. It also supports futures trading, which is not available on the web-based platform.

Fidelity's Active Trader Pro platform offers greater functionality than its web-based platform, with more customisation, order types, and enhanced charting capabilities.

Charles Schwab offers two mobile apps: the regular Schwab mobile app and the thinkorswim mobile app. The thinkorswim mobile app mirrors the desktop platform in terms of charting and functionality. The regular Schwab app is used to trade mutual funds and fixed income, while futures and forex are only available on thinkorswim.

Fidelity's mobile app offers all assets within a single app, but the range of orders and charting tools is more limited when compared to Active Trader Pro.

Both Charles Schwab and Fidelity offer advanced trading tools and features, including margin, short selling, and options trading. Both also provide streaming quotes, directed trading, and more.

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 $18.97 on average for a 1,000-share equity order. Fidelity has an average execution speed of 0.04 seconds and does not accept payment for order flow for stocks or ETFs.

Charles Schwab uses a proprietary wheel-based router for order management purposes. The company reports average savings of $0.91 per equity order up to 99 shares, savings of $7.54 on orders of 100 to 499 shares, and savings of $22.84 on orders from 500 to 1,999 shares. Its average execution speed is 0.03 seconds for all types of orders, and 96% of orders are filled at prices better than the National Best Bid & Offer (NBBO). Schwab does accept a payment for order flow of around $0.00066 per share.

Overall, both Fidelity and Charles Schwab are top-tier brokers when it comes to trading technology, as evidenced by their execution quality. However, Fidelity wins in this category due to its lack of payment for order flow on equity trades.

Beginners and education

Both Fidelity and Charles Schwab offer a range of educational resources for beginners. These include webinars, videos, and quizzes, which allow users to track their learning progress. Both platforms also offer educational content in the form of articles, videos, and podcasts. Fidelity also provides live coaching sessions with its Trading Strategy Desk, where investors can discuss questions with a professional trading coach.

Fidelity's robo-advisor, Fidelity Go, does not require an account minimum or advisory fee for accounts under $25,000. This makes it a good option for beginners, as it allows for automated and customisable trading without a large initial investment. Charles Schwab's robo-advisor, on the other hand, has a $5,000 minimum investment. However, it does not charge an advisory fee, which may appeal to investors with larger balances.

Both platforms offer a range of tools for stock analysis, including screeners, streaming quotes, and charting tools. Fidelity offers 119 technical studies, while Schwab offers 373. Fidelity also offers mobile after-hours stock trading and after-hours charting capabilities, which are not available on the Schwab platform.

In terms of investment options, both platforms offer thousands of no-load, no-transaction-fee mutual funds and ETFs with low minimum investments. However, there are some differences in the specific investment opportunities offered by each platform. For example, Fidelity offers direct crypto trading, while Schwab only offers indirect crypto trading through ETFs and mutual funds. Schwab, on the other hand, offers futures trading, which is not available through Fidelity.

Day trading capabilities

Day trading is a high-risk, high-reward strategy that involves buying and selling investments within the same day. Day traders aim to profit from short-term price changes, which can be unpredictable. This strategy requires a significant time investment, extensive research, and the ability to withstand losses.

Charles Schwab Day Trading Capabilities

Charles Schwab offers day trading capabilities to its clients. However, day traders must be cautious not to trigger the Pattern Day Trader Rule, which can result in permanent restrictions on their accounts. This rule applies if a trader executes four or more day trades over five consecutive business days, and those trades account for more than 6% of their account activity. If flagged, the account will be required to maintain a minimum equity of $25,000.

Schwab provides a feature called Day Trade Buying Power (DTBP), which helps traders monitor their account activity and requirements. DTBP represents the amount of marginable stock that can be day-traded in a margin account without triggering a day trade margin call. It is important to note that day trading in a cash account will not trigger the Pattern Day Trader Rule, but it is still subject to the Good Faith Violation, which restricts the use of unsettled funds for day trading.

Fidelity Investments Day Trading Capabilities

Fidelity Investments also offers day trading on its platform. Similar to Charles Schwab, Fidelity requires pattern day traders to maintain a minimum equity of $25,000 in their margin accounts. This requirement is in accordance with the Pattern Day Trader Rule established by the Financial Industry Regulatory Authority (FINRA).

Fidelity provides educational resources and tools to assist day traders in their strategies. They offer a range of data providers, including Argus, Zacks, CFRA, and S&P Global. Additionally, they provide customer support 24/7 via phone, email, chat, social media, and physical branch locations.

Comparison

Both Charles Schwab and Fidelity Investments offer comprehensive day trading capabilities. However, it is important to note that day trading is a risky strategy that may not be suitable for all investors. When choosing between the two platforms, consider factors such as research and data offerings, investment selection, customer support, and mobile app capabilities.

Frequently asked questions