Fidelity vs Charles Schwab: what’s the difference?

Uncover the key differences between Fidelity and Charles Schwab.

Understand their services to find strategies to optimise your investments.

What is the difference between Fidelity and Charles Schwab?

When comparing Fidelity and Charles Schwab, both are two well-established names in the investment industry, offering services that cater to a wide range of investor needs. 

Fidelity is known for its emphasis on mutual funds and retirement planning, while Charles Schwab focuses on low-cost investing and extensive online trading platforms. Both companies provide access to various financial products, including funds and ETFs, but their approaches differ significantly.

Fidelity’s philosophy centres on providing personalised guidance, resources, and financial advice. It also provides various financial services, including retirement accounts and wealth management.

Meanwhile, Charles Schwab positions itself as a leader in low-cost brokerage services, emphasising accessibility and DIY investing.

Geographically, both companies cater to global investors, though Charles Schwab has a stronger presence in the US. Fidelity has a broader focus, including Europe and the UK, and is particularly renowned for its financial services tailored to retirement planning. 

Fidelity offers over 3,700 mutual funds, including its 0% expense ratio funds, while Charles Schwab provides more than 4,000 mutual funds and ETFs, with an emphasis on its proprietary products.

Active investors may prefer Charles Schwab’s robust trading tools and lower fees for ETFs, while passive investors may gravitate towards Fidelity. Both firms deliver diverse investment options, making them adaptable to various investor styles.

Fidelity vs Charles Schwab: how do the fees compare?

Here’s how Fidelity’s fees compare to Charles Schwab’s fees:

Fidelity fees

Fidelity’s fees are designed to accommodate investors with various portfolio sizes. For portfolios of under £25,000, the service fee is 0.35% annually, provided you have a regular savings plan; otherwise, a flat fee of £7.50 a month (£90 per year) applies. 

Larger portfolios benefit from reduced rates, with portfolios between £250,000 and £1 million charged 0.20% annually. Portfolios exceeding £1 million incur 0.20% on the first £1 million, with no service fee on over £1 million. Fidelity does not require a minimum investment.

For trading, online transactions for shares, ETFs, and investment trusts, it costs £7.50 per trade, while regular savings plans and dividend reinvestments are charged at £1.50 per trade. Phone trades incur a £30 fee. Ongoing fund charges, set by fund managers, start from 0.05%.

If you invest £5,000 in a fund, the service fee of 0.35% would amount to £17.50 annually, with an additional £7.50 trading fee for an online purchase. Using a regular savings plan, each transaction would cost just £1.50.

Fidelity’s structure is well-suited for both small and large portfolios. The absence of a minimum investment makes it accessible to smaller investors, while the reduced fees for portfolios above £250,000 offer value for those with substantial investments.

Charles Schwab fees

Charles Schwab’s fees include a 0% commission for online trades of US-listed stocks and ETFs. Options trades incur a $0.65 per contract fee with no base commission. Broker-assisted trades are charged at $25 per trade.

For UK investors, Charles Schwab provides access to European-domiciled UCITS ETFs, allowing for diversified investment opportunities tailored to the needs of European residents.

Additional fees, such as exchange process fees, American depositary receipt (ADR), and stock borrow fees, may apply depending on the specific investments.

If you invest £5,000 in a European-domiciled UCITS ETF, there are no online trading commissions for the purchase. However, broker-assisted trades for UCITS ETFs incur a $25 service charge.

Charles Schwab’s $0 online commissions suit investors with large portfolios or those who frequently trade US-listed or European-domiciled ETFs. The flat fee for broker-assisted trades and competitive options trading costs cater well to active traders seeking professional assistance or diverse investment strategies.

Is Fidelity or Charles Schwab better?

It is hard to determine who is better between Charles Schwab and Fidelity, as the best option will be the one that suits your needs best. However, there are some considerations to bear in mind:

Range of investments

Fidelity offers a comprehensive range of over 5,000 investment options, including mutual funds, exchange-traded products, investment trusts, and company shares. This breadth of choice makes it a strong option for cost-conscious and retirement-focused investors.

Charles Schwab provides access to over 3,000 ETFs, along with a wide selection of mutual funds, US-listed stocks, and European-domiciled UCITS ETFs. It is particularly well-regarded for its low-cost proprietary options and flexibility in trading. 

Research and guidance

Fidelity excels in providing educational resources, including in-depth analysis, informative materials, and a fund screener tool to assist with investment decisions. Charles Schwab also delivers high-quality research, including a robust fee comparison tool and extensive market insights. 

Both platforms support informed decision-making, but Fidelity’s emphasis on guidance gives it an edge for newer investors.

Brand reputation

Both firms are highly respected in the financial industry. Charles Schwab’s financial services are synonymous with low-cost investing and innovation in online trading. 

Charles Schwab’s customer service offers accessible and knowledgeable support to assist investors at every stage. Fidelity is recognised for its innovation and its focus on retirement planning. 

Fidelity customer service consistently receives high ratings for its accessibility, responsiveness, and personalised guidance.

Can you open accounts with both Fidelity and Charles Schwab?

It is possible to have accounts with both Fidelity and Charles Schwab. This approach can benefit investors who wish to diversify their portfolios and access unique features from each platform. For example, Fidelity’s 0% ratio funds can complement Charles Schwab’s low-cost ETFs.

However, maintaining multiple accounts requires careful monitoring to avoid exceeding tax allowances. It can also complicate portfolio tracking, as fees and returns must be calculated across both platforms.

Which is better for passive, long-term investing?

Fidelity stands out for passive, long-term investing because it focuses on 0% expense ratio funds and strong support for retirement accounts. Its cost-effective fees and wealth management options make it a preferred choice for those with a long-term outlook.

Charles Schwab is also well-suited for passive investing, thanks to its low ETF expense ratios and no transaction fee mutual funds. Fidelity’s broader support for retirement planning gives it a slight edge in this category.

How do their investment philosophies differ?

Each firm has its own philosophy around investing.

Charles Schwab’s philosophy

Charles Schwab's financial services are built on the principles of affordability and accessibility. The company emphasises empowering investors with low costs and an intuitive platform.

Charles Schwab promotes self-directed investing, providing extensive tools to help clients take control of their financial goals.

Fidelity’s philosophy

Fidelity takes a more holistic approach, focusing on comprehensive financial services that include wealth management and retirement planning. Its philosophy centres on guiding clients towards long-term success through personalised advice and innovative tools.

Fidelity’s investor-centric approach is designed to support clients at every stage of their financial journey.

Get expert financial advice

When comparing Charles Schwab and Fidelity, both firms offer good services tailored to different investor needs. Fidelity excels in retirement planning, 0% expense ratio funds, and personalised support, making it a strong choice for long-term and retirement-focused investors. 

On the other hand, Charles Schwab stands out for its low-cost trading, extensive range of ETFs, and tools designed for active traders. 

Choosing between the two ultimately depends on your investment goals, portfolio size, and preferred level of guidance.

Let Unbiased match you with a professional financial adviser to optimise your investment strategy.