Fidelity Vs. Vanguard: Which Investment Advisor Is Right For You?

Fidelity and Vanguard are two of the largest investment companies in the world. Both brokers have solid industry reputations and offer a large selection of low-cost mutual funds, ETFs, advice, and related services. They are also similar in terms of the number of tradable securities they offer. However, there are some differences between the two companies that are worth noting. For example, Fidelity offers a more robust platform with excellent research and asset screeners, while Vanguard is geared towards buy-and-hold investors and offers low-cost mutual funds and ETFs.

Fidelity's cryptocurrency options

Fidelity also offers two crypto funds—one for Bitcoin, and one for Ether—allowing investors to add exposure to crypto in brokerage, trust, and IRA accounts. These funds provide indirect exposure to the performance of Bitcoin or Ether in a familiar investment structure that passively invests in the respective cryptocurrency.

Additionally, Fidelity offers the Fidelity® Crypto Industry and Digital Payments ETF (FDIG) and the Fidelity® Metaverse ETF (FMET), which invest in companies engaged in activities related to digital assets, digital payment processing, and the metaverse, rather than directly in cryptocurrencies.

Fidelity has been an innovator in crypto since 2014, when it began mining Bitcoin. In 2018, they launched their first crypto service, Fidelity Digital Assets®, an institutional custody and trading platform for digital assets.

It is important to note that crypto is considered a high-risk investment, and investors could lose their entire investment. Crypto is highly volatile, may become illiquid at any time, and is susceptible to market manipulation.

Vanguard's fees and charges

Vanguard charges an annual platform fee of 0.15% or 15p for every £100 you invest, capped at £375 per year, meaning investments over £250,000 are effectively free. This is much cheaper than its competitors like Hargreaves Lansdown (0.45%) and Fidelity (0.35%).

Vanguard's ongoing charges range from 0.06% on the Vanguard FTSE 100 Index Unit Trust to 0.8% a year for the Vanguard Global Emerging Markets Fund, and there are no transfer fees or dealing charges for funds.

Vanguard's fund charges range from 0.06% to 0.78%, with occasional fund entry charges of between 0.20% to 0.80%. There is an additional management fee for clients of their managed service.

Vanguard's management fee is 0.30% for those opting for a Vanguard Managed Stocks and Shares ISA or Managed SIPP, in addition to the 0.15% account fee and average fund charges of 0.15%. The management fee will be reduced to 0.20% from 31 January 2025.

Vanguard also charges a minimum fee of £4 per month from January 2025 for customers opting for a self-managed ISA, SIPP or General Investment Account.

Vanguard's robo-advisor service, Vanguard Digital Advisor, waives advisory fees for the first 90 days and has a minimum initial balance of $3,000 for taxable brokerage accounts and a minimum initial balance of $5 for 401(k) accounts.

Investment accounts for beginners

When you're just starting out as an investor, it's important to choose the right broker for your needs. Here are some things to consider when selecting an investment account as a beginner:

• Fees and commissions: Both Fidelity and Vanguard offer $0 commissions for online stock, option and ETF trades. However, Vanguard charges a $25 annual fee for brokerage accounts under $5 million, while Fidelity has no account fees and no minimum balances for retail brokerage accounts.
• Investment options: Fidelity offers a more extensive range of investment options, including certificates of deposit (CDs), stocks, mutual funds, ETFs, options, bonds, fixed income, precious metals and crypto. Vanguard's investment options include stocks, mutual funds, ETFs, options, bonds and CDs.
• Trading platform: Fidelity offers a robust trading platform with excellent research and asset screeners, while Vanguard's platform is geared towards buy-and-hold investors and does not offer a trading platform.
• Customer service: Fidelity offers 24/7 phone support, an online chat feature and a secure email portal. Vanguard offers phone support from 8 am to 8 pm (Eastern Time) Monday through Friday, as well as secure messaging via its website.
• Cryptocurrency trading: Fidelity allows clients to trade cryptocurrencies directly, while Vanguard does not offer cryptocurrency trading.
• Fractional shares: Fidelity customers can buy fractional shares of stocks and ETFs, but this feature is not available to Vanguard customers.

Based on these factors, Fidelity may be a better choice for beginners who want access to a wider range of investment options, a robust trading platform, and the ability to trade cryptocurrencies and fractional shares. However, Vanguard could be a good option for beginners who prefer a more simplified platform focused on long-term and retirement investing, and who don't need access to cryptocurrency trading or fractional shares.

• Start with a small amount: You don't need a lot of money to start investing. Most online brokerages allow you to open an account with no minimum deposit, so you can start with a small amount and gradually increase your contributions over time.
• Consider the fees: While commissions for stock and ETF trades have gone to zero across most brokers, there may be other fees to consider, such as account fees, transfer fees, and costs for trading options or other types of investments.
• Look for educational resources: As a beginner, it's important to choose a broker that offers educational resources and tools to help you learn about investing. Look for brokers that provide articles, webinars, and other content to help you improve your investing knowledge.
• Consider your investment goals: Different brokers may be better suited to different investment goals. For example, if you're primarily interested in retirement planning, a broker that offers a wide range of retirement account options and educational resources on retirement planning may be a better choice.

Customer service and support

Fidelity has a slight edge over Vanguard when it comes to customer service and support. Fidelity offers 24/7 phone support, along with email and chat support. They also have over 200 branch locations across the country where customers can get assistance. Vanguard, on the other hand, offers phone support from 8 am to 8 pm Eastern Time, Monday through Friday, and email support. They do not offer live chat as an option.

While both companies can provide timely answers to customer queries, the extended hours and additional support channels of Fidelity give it a slight advantage in this category.

Investment options and tradable securities

Both Vanguard and Fidelity offer a wide range of investment options and tradable securities. However, there are some differences between the two companies.

Fidelity's investment options include:

• Stocks
• Mutual funds
• Exchange-traded funds (ETFs)
• Options
• Bonds
• Fixed income
• Precious metals
• Crypto
• Certificates of deposit (CDs)

Vanguard's investment options include:

• Stocks
• Mutual funds
• ETFs
• Options
• Bonds
• CDs

In terms of tradable securities, both companies offer the standard choices of stocks, ETFs, mutual funds, bonds, and options. However, Fidelity also offers crypto trading in popular coins such as Bitcoin and Ethereum, as well as Forex, precious metals, and OTC trading. Vanguard, on the other hand, does not offer crypto trading or fractional shares on new purchases of stocks and ETFs (unless it's a Vanguard ETF).

When it comes to the number of investment options, Fidelity offers a more extensive range, with over 10,000 mutual funds from Fidelity and other companies, compared to Vanguard's access to more than 160 Vanguard mutual funds and over 3,000 funds from other companies.

Fidelity also has a broader selection of account types, including health savings accounts (HSAs), trusts, and charitable accounts. Both companies offer standard account types such as individual and joint taxable accounts, IRAs (Roth, traditional, and rollovers), small business retirement accounts, and 529 plans.

Overall, Fidelity has a slight edge when it comes to investment options and tradable securities, particularly for those looking for crypto investing options or a broader range of account types.

Frequently asked questions