Fidelity Versus Schwab?

I cannot compare the two, but I've been satisfied with Fidelity for many years.

My first online brokerage was ETrade, and I had both ETrade and Fidelity for a number of years. I gave up ETrade when it became apparent that their policies on withdrawal of funds from IRA accounts was less flexible than was Fidelity, and that they were not going to change that policy.

I have no opinion or experience regarding Schwab.

--ron

If the OP is just starting out, IRA withdrawals are probably not an issue. Probably more important is whether the web site is user-friendly, the choice of investments available, and fees. If there are particular funds you're interested in, you might look for a brokerage that offers them NTF, or invest directly with the company running the fund.

I've heard Fidelity charges a $75 transaction fee to buy or sell funds outside their NTF network. It's only $20 at E-Trade, where I have my account. I have no experience with Schwab, either. The other "supermarkets" to look into are Scottrade and TD Ameritrade. Besides Fidelity, Vanguard and T. Rowe Price also offer brokerage services for funds outside their own company.

-Sandra the cynic

I have accounts with both. Frankly the difference is very minor. Fidelity has lots of it's own funds which you can buy for no cost.

As in so many things in life, it depends.

In this case, it depends on what services and features, exactly, you are looking for.

I've generally been very ery happy with Fidelity - with the exception of their $75 fee for non-NTF no-load funds transactions. For everything else, they seem competitive on prices, the returns on their core money-market funds (and muni-money-market funds) are quite decent and their website is, IMHO, mostly excellent (not perfect, but "mostly" is pretty great).

I haven't used Schwab so I can't comment on them, except that I looked into them a number of years ago and they were, at least at the time, quite a bit more expensive than Fidelity for my needs.

Could you be a bit more specific about this? I recently opened an E*Trade account mainly for the purpose of holding an IRA which I'd previously had directly with the fund in question (ie. rather than with a brokerage). So far, it seems okay, but, of course, I'm not planning on taking that money out any time soon.

Why are you looking to do business through a brokerage? Will you be buying a mutual funds or company stocks? If a novice, and just starting out, stocks are unlikely to give you the diversity you need and require at least a bit of knowledge. If funds, why not just open your account with the fund company?

Elizabeth Richardson

Somewhat less than that, $49.95 for online/phone transactions. Broker-assisted ones are an extra $25, so that's probably where the $75 comes from.

Brian

They may have changed their policies. This was about five years ago. At that time, ETrade required a written, signed form for each withdrawal, and the withdrawn funds would be *mailed* to me unless I wanted to transfer them to another ETrade account.

The only way to NOT have to mail in a form for each withdrawal at ETrade was if I set up to have regular withdrawals (e.g. monthly) of the same amount. But they still would not transfer the funds electronically to a non ETrade account. And regular monthly withdrawals was not something I wanted to do.

Fidelity required an initial written authorization, but once that was in place the funds could be authorized and withdrawn electronically into any account -- Fidelity or non-Fidelity. I did not have to submit anything in writing to Fidelity when I recently changed the account TO which I wanted funds transferred -- all handled over the Internet.

--ron

As a few others mentioned "neither" might be the answer -- what do you plan to invest in? Mutual funds, individual stocks, both? If mutual funds, which ones -- which fund companies?

-Tad

If you're going to do stock or ETF trades, TD Ameritrade has a special going, free trades for 45 days, also $100 if you put in $25K. Some people have expressed displeasure with their customer service in the past, so that's worth looking into before making any decision.

Brian

I've got accounts at both.

Schwab's one stop shopping for mutual funds is much better than Fidelity's with respect to fees, hold periods and back office. Some load funds show up as no-load on Schwab. Trades show up early that same evening.

For stocks they are the same.

Fidelity is a little better on the bond side as their minimums are lower and yields appear to be a bit better. What Schwab posts as the interest rate is available for only one offering, whereas Fidelity has many at that rate.

So my preference is Schwab for equities, and Fidelity for bonds and CDs.

Hope this helps

Correct (though depending on how you classify brokers, and quantify size, Merrill Lynch could be in that same group). "The nearly $2 trillion in accounts at Fidelity and Schwab comprises 80% of the cash in discount brokers."

Another factor which matters to some people is whether one can walk into an office. I believe Schwab is still pretty far ahead of Fidelity in number of branches, though Fidelity has a solid network of offices. E*Trade has fewer, though it appears to have been building up its branches since the last time I looked.

It is $0 (free) to sell any fund online. Also, even though the first purchase can cost $75, subsequent purchases of non-NTF funds, entered through their periodic investment system, cost only $5 (and one can turn off automatic investments at any time).

I prefer Fidelity to Schwab - Schwab keeps changing its fee structure (currently it is presenting a simplified fee schedule), it had dropped 24 hour phone support a few years back (since restored). On the plus side for Schwab, it occassionally offers a load fund NTF (load waived), e.g. Victory Funds.

Both provide fine service, and I don't believe you would go wrong with either one.

There are a lot more supermarkets than that. Check, for example, the SmartMoney link above.

Vanguard has a (IMHO well-earned) reputation for poor brokerage service. Start with its $30/year maintenance fee (for

Is this still true? I know it was a year or two ago when I last checked, but Schwab just changed its pricing (again), so that their mark-up is lower than Fidelity's - this should result in better yields.

Thanks for the new info on Schwab. The commissions may be different and changing and pricing may be different, but the bottom line net YTM is what I check. My statement is based on what I see and buy over the last few months for new offerings: CDs, Agency paper, corporate. I think that if you check both sites you can always find an example of what you say is correct. But in the end, I'm satisfied with my choice. We'll see how they are on July 1.

Maybe things have changed - It looks to me like a distribution form the IRA may be made using their standard "linked account" system - whether ETrade internal accounts or external ones (once they've been verified - I've got an outside checking accounts linked to my ETrade accounts and regularly make transfers between the outside account and both my regular ETrade brokerage account and my ETrade bank accounts, though I haven't tried to do anything - either contribute or distribute from the IRA account yet).

It looks like you need to submit a paper form for each withdrawal which is in the form of them mailing you a check, but electronic transfers to verified accounts may be done entirely online. Again, I haven't done it, so I'm only going by what I see by poking at the site just short of trying to initiate such a transfer.

I've been generally very very happy with Fidelity and recommend them without hesitation.

I'd be interested to hear what happens when you try to make withdrawals from the IRA accounts. As I recall, the policy was specific to IRA accounts.

I finally recalled my other beef with ETrade. They would not allow trades based on "uncleared" funds in cash accounts. What this meant in IRA's (which are all cash accounts), is that you would not be able to make purchases with funds from sales that had not yet cleared.

Other brokerages would allow purchases based on these funds.

The three days between executing a trade, and clearing the trade, was detrimental to my investment methods.

My reading of the SEC rules in this area led me to believe that this was a choice the brokerage could make, even on a case-by-case basis, and not a hard and fast policy mandated by the SEC. I was unable to convince ETrade of this, however.

--ron

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