Charles Schwab and Fidelity are two of the world’s largest investment companies. As of Dec. 31, 2019, Schwab had 12.3 million active brokerage accounts and $4.04 trillion in client assets. Fidelity is even more of a behemoth, with 30.8 million brokerage accounts and $7.3 trillion total customer assets (as of March 31, 2020).
- Account Minimum: $0
- Fees: Free stock, ETF trading, $0.65 per options contract
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
In 1975, Schwab revolutionized the brokerage industry when it became one of the first firms to offer discounted trading—making Wall Street more accessible to individual investors. Fidelity’s reputation was built on its mutual fund business, and today it provides nearly 3,500 no-fee funds.
In our 2020 Best Online Brokers reviews, Fidelity earned higher scores than Charles Schwab in our Best Overall, Best for Beginners, Best for Day Trading, Best for International Trading, Best for IRA Accounts, and Best for Low Cost categories. Meanwhile, Schwab outdid Fidelity in our Best Stock Trading App and Best for Options rankings. The two firms tied as our top pick among all brokers in our Best for ETFs category. In our 2020 Best Online Brokers Awards, Fidelity took top honors, and Charles Schwab came in a respectable fifth.
On November 25, 2019, Charles Schwab announced a buyout of TD Ameritrade’s online brokerage. The transaction itself is expected to close in the second half of 2020, and in the meantime, the two firms will operate autonomously. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.
Charles Schwab offers two web-based platforms, Schwab.com and StreetSmart Edge (its premier trading platform). The Schwab Mobile and StreetSmart Mobile apps round out the platform offerings. The company makes it easy to open and fund an account, and you can do so online, via mobile app, by phone, or in one of its 360+ branches.
We found Fidelity to be quite user-friendly overall. It has three platforms, including a web version, the downloadable Active Trader Pro, and Fidelity Mobile App. Opening an account is straightforward, and as with many brokers, you need to fill out additional paperwork to enable features like margin and options trading.
Schwab and Fidelity offer reasonably easy-to-navigate websites with screening tools, portfolio analysis, news, educational content, and basic order tickets. The mobile apps for both brokers are useful, but like most broker-supported apps, they have limited functionality compared to the standard platforms.
Much of Schwab’s trading experience is built around its All-In-One Trade Ticket, which works across platforms. There aren’t many customization options on the website, but you can set trading defaults by asset class using hotkeys in StreetSmart Edge. Streaming real-time quotes are standard across all platforms. You can stage orders and submit multiple orders on Schwab.com and StreetSmart Edge.
Fidelity’s web platform is reasonably easy to use. You can set a few defaults, such as to use a market or limit order, but you make most choices when you place a trade. Active Trader Pro is, not surprisingly, more powerful and customizable. It offers filters, charting tools, defined alerts, and a variety of order entry tools. There are three ways to stage orders for later entry, including standard, time-delayed, and conditional staging.
Schwab allows you to attach notes to trades through the Notes tool in StreetSmart Edge to save trading ideas and evaluate your trading activity.
Schwab’s mobile apps offer streaming real-time quotes, trade tickets, multiple order types (including conditional orders), in-app research, and charting with indicators, but no drawing tools. You can trade the same asset classes on any of the platforms, and your watchlists are the same on web and mobile (unless you download StreetSmart Edge and save the watchlist to your local device).
With Fidelity’s mobile app, it’s easy to manage your orders, check pending transactions, and place trades. Watchlists are shared with desktop and web applications. The order types offered on the web or desktop platforms are also available on the app, except for conditional orders. Like Schwab, you can trade the same asset classes on mobile as on the standard platform.
Range of Offerings
Both Schwab and Fidelity offer thousands of no-load, no-fee mutual funds, as well as a long list of commission-free ETFs. Schwab provides access to several asset classes that Fidelity doesn’t support, including futures, options on futures, and cryptocurrency (Bitcoin futures only). Both firms let you buy fractional shares of stock.
Schwab supports a wide variety of orders on its website, StreetSmart Edge, and mobile platforms, including conditional orders like one-cancels-the-other (OCO) and one-triggers-the-other (OTO). You can enter a wide variety of trade types on Fidelity’s web platform and Active Trader Pro, including OCOs and OTOs. Conditional orders are not currently available on the mobile app.
Schwab uses a proprietary wheel-based router for order management purposes, such as to handle exchange outages, perform real-time execution quality reviews, and handle volatile markets. Most orders in stocks and multiple-exchange listed options get routed to third-party wholesalers, which balances execution quality in terms of increased price improvement and improved execution quality statistics with the company’s cost savings. Schwab publishes quarterly information regarding execution quality on its website.
Fidelity has finely tuned its trade execution algorithms to emphasize price improvement and avoid payment for order flow. On average, more than 97% of orders are executed at a price better than the national best bid or offer. Fidelity indicates that clients who complete a 1,000-share marketable order can expect to save an average of $18.79 compared to the quote at order entry.
Fidelity’s backtesting takes place in Wealth-Lab Pro, a premium feature available to clients who have a minimum $25,000 account balance and who place at least 36 stock, bond, or options trades a year. If your balance is at least $1,000,000 and you place at least 500 trades, you can qualify for automated trading in Wealth-Lab Pro. Schwab also offers The Strategy Tester tool for backtesting on their StreetSmart platform.
Like a growing number of brokers, Charles Schwab and Fidelity have $0 commissions for online equity, options (both have a per-contract fee of $0.65), OTCBB, and ETF trades for U.S.-based customers. You’ll pay $49.95 with either broker to buy mutual funds outside the no-fee list. Broker-assisted orders are $25 at Schwab and $32.95 with Fidelity.
Both brokers generate interest income from the difference between what you’re paid on your idle cash and what they earn on customer balances. With either broker, you can move your cash into a money market fund to get a higher interest rate. The two brokers have stock loan programs in which you share the revenue generated by lending stocks held in your account to other traders or hedge funds (usually for short sales). Only Fidelity lets you choose which stocks to loan.
Schwab offers flexible screeners to help you research your next trade, including an ETF screener with over 150 criteria, such as asset class, fund performance, distribution yield, Morningstar category, regional exposure, and top ten holdings. You’ll also find calculators, idea generators, and a set of technical analysis charting tools. Schwab StreetSmart Edge software includes fundamental research with real-time news, company earnings, dividends, and ratings.
Fidelity’s research offerings on the website include screeners for stocks, ETFs, mutual funds, and fixed income, plus about 40 tools and calculators. One is a hypothetical trade tool that shows how a future trade will impact your portfolio. There are numerous news sources, and integrated third-party research from Standard & Poor’s, Hightower Report, Ned Davis Research, and Zacks. You can view up to 40 years of historical price data, and there are more than 60 customizable technical indicators.
Charles Schwab’s and Fidelity’s portfolio analysis offerings are similar. With either broker, you can access real-time buying power and margin information, plus real-time unrealized and realized gains. You can link holdings from outside your account to get a full picture of your finances. Both offer tax reports, but only Schwab lets you calculate the tax impact of future trades.
Schwab offers comprehensive investor education through its SchwabLive daily broadcasts, research from the Schwab Center for Financial Research, articles on the Insights & Ideas page, plus webinars and in-person events for investors and traders. In 2019, it offered more than 1,000 live events, including 155 that were trader-focused. Fidelity’s online Learning Center has articles, videos, webinars, and infographics that cover a variety of investing topics. There are regular webinars and online coaching sessions for more advanced topics, and learning programs aimed at beginning investors on the app.
Charles Schwab offers 24/7 phone line support with access to live brokers, plus 24/7 online chat with a live agent. You can also visit one of the company’s 360+ branches for in-person help. For retail clients calling customer support, Schwab says the average wait time on hold was 22 seconds in 2019 (Fidelity says it doesn’t track this data). Fidelity has a 24/7 phone line, an online chat feature (with limited hours), a secure email portal, and nearly 200 Investor Centers in the U.S. You can also use the Virtual Assistant, a chatbot designed to help you find answers to your questions.
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 also carries excess Securities Investor Protection Corporation (SIPC) insurance, with a per-customer limit of $1.9 million on cash awaiting investment. There’s no per-customer dollar limit on coverage of securities, but the total aggregate excess policy is $1 billion.
Through Nov. 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.
Charles Schwab and Fidelity are well-respected powerhouses in the brokerage industry. Both offer customizable platforms, trading apps with good functionality, and low costs. Due to its wide array of services and tools, we think Charles Schwab is a great choice for self-directed investors and traders who want access to professional advice and portfolio management. Fidelity offers excellent value to investors of all experience levels, and it may be a good fit for some active traders, depending on their preferred trading instruments.
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