If you’re on the hunt for a new brokerage account, the two biggest names in the field — Vanguard and Fidelity — might come to mind first.
- NerdWallet editor review
- Trade Commission $2 to $20 per trade, depending on Vanguard fund investment
- Account Minimum $0
- Promotion None
- NerdWallet editor review
- Trade commission $4.95 per trade
- Account minimum $0
- Promotion 300 commission-free trades with deposit of $50,000 or more
There’s one thing to get clear right upfront. Both Vanguard and Fidelity are retirement powerhouses — their brokers’ funds line many 401(k)s, and Fidelity is the leading 401(k) record-keeper. Both are also picks for our best brokers for IRAs. But Fidelity also caters to active traders, with low commissions and quality trading platforms.
Vanguard, not so much. The company doesn’t offer a trading platform, and in some cases investors who trade frequently are charged more, a rare pricing structure in the online broker business. So some people may be able to quit this comparison right here: Are you an active stock or options trader? Fidelity is your answer.
» MORE: See our roundup of best stock brokers
The tension between these two starts for those investors who are looking to compare mutual funds, fees, account minimums and investment offerings.
Vanguard vs. Fidelity at a glance
|Stock trading costs|
Vary by assets invested in Vanguard funds and ETFs:
• Less than $50,000: $7 per trade for first 25 trades each year, $20 thereafter.
• $50,000 to $499,999: $7.
• $500,000 to $999,999: $2.
• $1 million to $4,999,999: First 25 trades each year are free, $2 thereafter.
• $5 million and up: First 100 trades each year are free, $2 thereafter.
Vary by assets invested in Vanguard funds and ETFs:
• Less than $500,000: $7 + $1 per contract.
• $500,000 and up: $2 + $1 per contract.
$4.95 + 65 cents per contract
$0. However, fund minimums start at $1,000.
$0. However, many fund minimums start at $2,500.
|Account fees (annual, transfer, closing, inactivity)|
$20 annual account service fee for all brokerage accounts and IRAs. Waived by signing up for e-delivery and for clients with at least $10,000 in Vanguard funds.
|Trading platform||Not rated. Vanguard does not offer a trading platform outside of its website. ||
Online trading platform; Active Trader Pro for desktop and browser is available to customers who trade at least 36 times in a rolling 12-month period.
No trading app; standard mobile app to view accounts, investment returns and research funds
Advanced features mimic a desktop trading platform
2,800 no-transaction-fee mutual funds
More than 3,700 no-transaction-fee mutual funds
1,800 commission-free ETFs
91 commission-free ETFs
|Research and data|
Average quality but free
Extensive and free
|Customer support options||
Fund an account with $50,000 and get 300 commission-free trades, plus access to Active Trader Pro platform.
Fees and commissions
Fidelity’s commission is a flat-rate $4.95 per trade, which is one of the lowest among online brokers. Some brokers such as E-Trade offer volume discounts, but in this case that just brings its fee down to what Fidelity already offers as standard, $4.95. Ally Invest discounts its commission to $3.95.
Vanguard doesn’t really compete on commissions unless you also have a large amount of assets invested in Vanguard funds or ETFs. Those with at least $500,000 invested are charged just $2 per trade; those who cross the $1 million threshold get a number of trades free each year. Investors with Vanguard fund investments of between $50,000 and $500,000 pay $7 a trade, and those with investments of under $50,000 pay $7 for the first 25 trades per year, then $20 for each trade thereafter.
So if you plan to trade frequently alongside Vanguard fund or ETF investments of over $500,000 and don’t mind the lack of a trading platform, Vanguard could save you significantly on trade costs. If you don’t meet those criteria, Fidelity is likely to be of better value.
That’s also true when you look at fees. Fidelity doesn’t charge an annual account or inactivity fee, but Vanguard charges a $20 annual fee to brokerage accounts and IRAs. The broker waives that charge if you sign up for e-delivery of statements or hold at least $10,000 in Vanguard funds.
Winner: Fidelity for most investors, Vanguard for casual traders who also invest at least $500,000 in Vanguard funds or ETFs.
If we’re strictly playing a numbers game, Fidelity wins for no-transaction-fee mutual funds but Vanguard takes the crown for commission-free exchange-traded funds. Fidelity offers 91 commission-free ETFs and more than 3,700 no-transaction-fee mutual funds, while Vanguard has 1,800 commission-free ETFs and 2,800 no-transaction-fee mutual funds. Both brokers are among our top picks for mutual fund providers.
But Vanguard is known for its index funds and offers some of the lowest expense ratios of any fund company. The company has a unique structure; it’s actually owned by its funds, which are then owned by investors in those funds. That allows the company’s profits to reduce fund expenses.
There’s been a rush by other brokers to compete with Vanguard’s low costs lately, however, and that has brought costs down industrywide. That means it’s no longer a given that Vanguard’s funds will carry the lowest expense ratio; in many cases, Fidelity competes or comes in even lower. Both brokers also offer premium share classes with a $10,000 minimum investment that carry reduced costs.
It’s also worth noting that Fidelity has a $0 account minimum. Most Fidelity mutual funds carry a $2,500 minimum investment, though the broker waives that with automatic investments of at least $200 a month or $600 a quarter. Vanguard has a $0 account minimum, and fund minimums start at $1,000, though many hit $3,000. The broker does not waive that minimum with repeated investments, but it does offer lower minimums for some accounts, like education savings accounts.
Winner: We can’t break this tie. If you have a preference for one company’s funds, we’d suggest going straight to the source. Otherwise, we’d recommend using each broker’s fund screener to compare the expenses on the funds you plan to use to build your portfolio.
Online advisors and educational offerings
As is all the rage now, both Vanguard and Fidelity have robo-advisory offerings. We’ll give Vanguard points for being an early adopter; its Vanguard Personal Advisor Services is an industry leader, with over $50 billion in assets under management.
The online advisor builds portfolios on a client-by-client basis — though naturally, it uses mostly Vanguard funds — and gives investors access to a team of financial advisors. Vanguard Personal Advisor Services requires a $50,000 account minimum and charges 0.30% as an annual management fee on top of investment expenses. Clients with $500,000 or more are assigned a dedicated financial advisor.
Fidelity stepped up with Fidelity Go in 2016. That advisor uses portfolios managed by a team of investment advisors, though clients don’t have access to those advisors for guidance. Fidelity Go requires no account minimum and charges an all-in fee of 0.35%, including investment expense ratios. Portfolios primarily consist of Fidelity Flex funds.
Winner: We’d give Fidelity the edge for fees and minimum but Vanguard the edge for service, because its advisor really caters to individual client needs. Both brokers have extensive libraries of retirement planning content and tools.
»Looking for help managing your investments? Check out our top picks for best robo-advisors.
Which one is right for you?
We spoiled the surprise early on, but it’s worth repeating: Fidelity wins handily for active traders. For those seeking retirement accounts, mutual funds and financial planning assistance, it’s a closer race.
We suggest comparing expenses and minimum investment requirements on the specific funds you plan to use in your portfolio. If you’re after an online advisor relationship, Vanguard Personal Advisor services is worthy of your money, if you have enough to meet the $50,000 account minimum.
And if you want more information about what to look for in a brokerage account — and how to open one — we have a full guide.