Fidelity vs Vanguard (for about the gazillionth time)

[Nords]

We've had many many threads here over the years debating which one to choose, and we've probably had just as many different answers. A new version of the perpetual thread is just ramping up on MrMoneyMustache.com courtesy of jpluncford21:
Fidelity Vs. Vanguard: A New Investors Article

The article summarizes the pros & cons with bullet points and a short assessment. It's possible that they're only pretending to objective, and indeed their conclusion seems to be "Unless you're a fogey, neither." However I appreciate the format and the critical look.

Vanguard vs Fidelity Investments 2012 | Compare Fidelity versus Vanguard: Cons & Pros

Vanguard (Vanguard Review) and Fidelity (Fidelity Review) are known primarily for their own families of mutual funds rather than their brokerage services. As ETFs, due to their lower costs, are replacing mutual funds in investor portfolios, the importance of both firms is steadily diminishing.

Outside of mutual funds, Vanguard has little to offer: its commissions are higher than at many other online brokerage houses and it doesn't seem to be able to keep up with competition in services and trading technology.

Fidelity provides its customers with rich selection of investment products, access to great independent research, as well as many low cost Fidelity mutual funds.

There is a general consensus that Vanguard's mutual funds are lower cost and better performers than counterparts at Fidelity. Vanguard also offers dollar-cost-averaging transactions for mutual funds for those clients who choose to accumulate positions over time. Free dividend reinvestment is always a great plus too.

When comparing retirement accounts (ROTH IRA, Traditional, Simple), we can't recommend either one of the firms: they disappoint by charging a Low Balance Fee. Fidelity also has a Short Term Redemption fee which many other brokerages don't charge. Because of that, both companies were not included in our "Best IRA Accounts in 2012 list."

If you're starting your search from scratch, this is a great list of issues to consider.

 

[mathjak107]

i use both and i have to say fidelty offers so much more and does so much more. i have been with fidelity 25 years and a private access client the last 6 or 7 years.

vanguard is good for low cost funds. thats where it ends.

i use fidelity as my core for everything.

in fact i transfered a jumbo cd from my bank to fidelity.

my bank didnt follow instructions and liquidated it a few weeks early. fidelity called us and wanted to call our bank to make sure they didnt penalize us any interest..

turns out they did and fidelity kept calling them until we saw the interest credited .

5 years ago we bought a 2nd home and i pulled the cash out of our core.

fidelity called us within a day to see if everything was okay and to make sure we werent pulling it because we are unhappy.

i just call my vanguard account my passive account and my fidelity one my proactive account.


i just pulled 2 jumbo cd's , over 200k out of soverign bank and not one call to see why or are we unhappy with them.


not that i want to be bothered but humor me, pretend you care.

 

[jebmke]

VG works for me. I have mostly funds and individual TIPS which I can trade for free. A few legacy stocks that will be given to charitable gift account when my tax rate rises @70.5.

 

[FIREd]

I use both (and have been for almost 10 years). I see almost no difference between the two as I only use their most basic services - mutual funds and brokerage accounts to trade stocks and TIPS (very low turnover). I don't use their customer service, financial planning service, advanced brokerage service, or investment research service. My balances are high enough to keep fees reasonably low.

 

[frayne]

I use both and have not had to talk to anyone on the phone for over five years or more. Everything is taken care of on line. It's self evident from the main websites that FIDO offers more bells and whistles. When I originally set up my IRA with FIDO, a rep. contacted me and did a review and suggested certain funds, it was crap pushing about a dozen higher exp. ratio funds. Understanding the guy was just doing his job, I said no thanks and I'll manage my own portfolio.

I would recommend either kind of like Chevy and Buick.

 

[Midpack]

I've also had good first hand experience with Fidelity, Vanguard and Schwab. Vanguard's tools have always been at least one step behind, but like many here I don't rely on them anyway. If you want to actively trade individual equities substantially, there are clearly better options - not what Fido, VG and Chuck focus on as we all know. Interesting read nonetheless...

 

[steelyman]

I am also one of those who use both, and I think the article summary is reasonable. One thing not mentioned is the difference in the mobile apps currently provided by the two. Fidelity's is way better than Vanguard's, in my opinion.

Unless something really odd happens, I will eventually move everything over to Fidelity (right now, I leave Vanguard open as it has a Roth account that satisfies the 5-year rule, to which I no longer contribute). Not criticizing Vanguard, but simplicity is nice.

 

[pb4uski]

I have used VG for 20+ years. All mutual funds. Have a brokerage account but have never used it so far so if their commissions are higher it doesn't affect me. Quite satisfied but more of a DIY investor. Have heard good things about Fido but never moved since I'm happy where I am.

 

[Cheesehead]

I also use both but...I think there may be a difference now because Vanguard recently changed how it benchmarks its index funds (to save themselves money):

Vanguard to Switch Benchmarks for 22 Index Funds - Yahoo! Finance

I am still trying to figure out what this means. I do believe it means we can't compare Apples-to-Apples between index funds of Fidelity & VG correct? Can some knowledgeable person please explain this in layman's terms? It seems to me that there is now a true difference, correct?

So, how can we compare the two in terms of index funds?

 

[Animorph]

I have used both (may still have a $0 account at Vanguard), with the majority of my funds now at Fidelity. However, I do invest quite a bit directly with mutual fund companies and have Solo 401k accounts at E*Trade. E*Trade had a Solo Roth 401k, which Fidelity did not. They also had $1k minimums and a slightly different range of NTF funds. Direct investments with the fund companies allowed lower minimums, no redemption fees or shorter fee periods (and no NTF fee clawback), access to funds not available as NTF at Fidelity, and access to funds closed to investment through brokers.

 

[HFWR]

Have a personal account at VG, and both a 401k and 457b at Fidelity. Interact with neither on a regular basis. Fidelity does have a guy call me once or twice a year, and I tell him "thanks, but no thanks"...

 

[Texas Proud]

I also use both but...I think there may be a difference now because Vanguard recently changed how it benchmarks its index funds (to save themselves money):

Vanguard to Switch Benchmarks for 22 Index Funds - Yahoo! Finance

I am still trying to figure out what this means. I do believe it means we can't compare Apples-to-Apples between index funds of Fidelity & VG correct? Can some knowledgeable person please explain this in layman's terms? It seems to me that there is now a true difference, correct?

So, how can we compare the two in terms of index funds?

I saw a few minute video on the change.... IIRC, it is saving hundreds of millions of dollars... Unlike Fidelity who makes profits, this will go back to the investors... but probably is not that much to most people...

My guess is that if they use someone else's index, they have to pay a fee to them... IOW, if you say you have an S&P 500 index, then S&P wants their cut for using their index and their name...

 

[Texas Proud]

For me, Fidelity screwed up big time way back when.... (wish I could remember exactly when)...

I had my mother invested in an asset allocation fund... it dropped big time compared to others... came to find out they were investing in Mexican pesos.... not something that was conservative as the fund prospectus said... I also think a number of other funds had similar issues...

They said they fixed it, but we lost money we did not get back...


Just looked... it was 1996 or so...

Fidelity Manager to Join Goldman, Sachs - NYTimes.com


Edit to add....

Looks like it was 1994 reading other articles...

 

[foxfirev5]

I use both and see the value in a slightly higher ER for Fidelity. During an IRA rollover for DW I could tell the VG reps were guessing about the status of the rollover and gave conflicting reports of the status. It all worked out but gave me the impresssion if I had a real problem they wouldn't be much help.
On the other hand I had some questions about my retirement accts at Fidelity and the reps took the time to listen to my questions, research the issue and give me a concise correct answer to my questions. I believe in the case of VG and Fido you get what you pay for. With that said I have found that both are far and above what else is out there for mutual fund investors.

 

[FinancialDave]

I have both a Fidelity 401k account and a Vanguard account.
I don't really know why people would say the fees, brokerage or Mutual Funds are less at Fidelity because they are not. Of course you can buy many NTF funds and ETF's at both sites but when you stray from their products this is where Fidelity "hurts" your wallet.

Mutual Funds fees - $75 Fidelity (the highest I have found anywhere), Vanguard $35.

Stock trades $7.95 Fidelity, $7 Vanguard (or $2 for $500k and above accounts.)

While both sites have good funds, I just think Vanguard has the most diverse set of good funds and is where I am moving my Fidelity 401k, now that I am retired. This is where I plan to keep my retirement "Growth Bucket" My income bucket it sitting at my ETRADE account that I have had for many years, only because when I mentioned to my Etrade advisor that Vanguard offers $7 stock trades, she lowered my $9.99 fee to $6.99, so I don't really have anything to complain about.

 

[JoeWras]

Count us in as both. Most of our personal stuff is VG, with DW's IRA at Fid, and also her 401k. My 401k used to be there, but we were forced switched by MegaCorp2 to "Company X", which frankly is terrible.

I just rolled over a small old IRA I had at my bank to VG. It was painless and went well.

About to do the same with DW's at Fid, we'll see how that goes.

In both cases, low balance fees don't matter right now.

 

[RetireBy90]

When I got my current job, my 401K is with Fido. After a while, I moved IRA accounts from various places and am glad I did. Fired my financial advisor and now manage my pile my self. I really really like full view, where they pull all your accounts in one place, in my case from penfed and Wells Fargo, and TRowe.

I do get a call from time to time, but no pressure.

 

[Nords]

I am still trying to figure out what this means. I do believe it means we can't compare Apples-to-Apples between index funds of Fidelity & VG correct? Can some knowledgeable person please explain this in layman's terms? It seems to me that there is now a true difference, correct?
So, how can we compare the two in terms of index funds?

I don't think we could ever reassure ourselves that Vanguard was following the exact index composition any more than Fidelity was. Gus Sauter was supposed to be genius for the way he could duplicate the performance of an index without actually faithfully replicating it. Meanwhile, on the Fidelity side, I'm sure that index funds are being used as a manager training ground with lots of tinkering going on.

I think that one of the biggest remaining differences between two similar funds would be the expense ratio. A lower expense ratio is probably a bigger deal than a "slightly better" index.

 

[eytonxav]

Have $s with both, don't think you can go wrong with either one. While it may be convenient to use one company, I am just following the don't put all your eggs in one basket approach

 

[rescueme]

Have $s with both, don't think you can go wrong with either one. While it may be convenient to use one company, I am just following the don't put all your eggs in one basket approach

Same here.

DW/me invest with both companies, and being in retirement (pre-SS, pre-pension), we draw from both to satisfy our income needs (me? FIDO. DW? VG).

As has been said many times before, both have their positives/negatives, and in reality, why must it be a choice between either one?

And please don't tell me that it is easier to "manage" your assets with just one company (be it FIDO, VG, or any other company).

With today's tools and migration services (being able to see all your assets, regardless of provider - such as is provided by Yodlee), there is no reason to consider that as a prime reason to just give all your assets to just one company.

Just my simple POV ...

 

[Animorph]

Mutual Funds fees - $75 Fidelity (the highest I have found anywhere), Vanguard $35.

Fidelity was not that bad the last time I looked at everyone else, though I haven't checked Vanguard. The Fidelity $75 fee is only for buys, sells are free. Other companies charged less but had the same charge for buys and sells. I figured I'd be making large buys in setting up my AA and then small sells raising retirement cash. So Fidelity actually looks cheaper to me. I eventually went direct to fund companies for most of my non-NTF funds, so I don't think I'm all NTF at Fidelity now. I'd rather have multiple accounts than fees.

 

[nwsteve]

I also use both but...I think there may be a difference now because Vanguard recently changed how it benchmarks its index funds (to save themselves money):

Vanguard to Switch Benchmarks for 22 Index Funds - Yahoo! Finance

I am still trying to figure out what this means. I do believe it means we can't compare Apples-to-Apples between index funds of Fidelity & VG correct? Can some knowledgeable person please explain this in layman's terms? It seems to me that there is now a true difference, correct?

So, how can we compare the two in terms of index funds?

The WSJ today has an article on the index switch. Not sure if it is behind a paywall but here is the link:
The War Between the Indexes - WSJ.com

The article particularly comments on the differences in index content and uses VWO as an example,].
"Take the Vanguard MSCI Emerging Markets ETF, VWO -0.61% which has an expense ratio of 0.2% and tracks the MSCI Emerging Markets Index. In January, Vanguard will begin moving the ETF to the FTSE Emerging Index.
The change could cause Vanguard's licensing costs to dip below 0.02% per fund, says Vijay Sumon, director of quantitative research at HSBCHSBA.LN +0.18%—meaning that segment alone would cost an investor about $2 for every $10,000.
Yet the FTSE and MSCI indexes have a huge difference: While MSCI's index allocates almost 15% to Korean stocks, FTSE classifies South Korea as a developed country, and its emerging-markets index owns no Korean stocks. Conversely, FTSE includes the United Arab Emirates, Pakistan and Bermuda, while MSCI doesn't"
Nwsteve

 

[RonBoyd]

The WSJ today has an article on the index switch. Not sure if it is behind a paywall but here is the link:

It is blocked to non-subscribers using the link you provided.

Shhhh... Don't tell anyone. If you use a google search on The War Between the Indexes (I did it without quote marks), you get what they call an "Article Free Pass."

 

[Nords]

The WSJ today has an article on the index switch. Not sure if it is behind a paywall but here is the link:
The War Between the Indexes - WSJ.com

The WSJ has a little-publicized back-door deal with Google to make their content available through the search engine. Here's how to handle that paywall issue:
1. Click on the link. You'll get the first few paragraphs of the article.
2. Highlight the article title ("The War Between the Indexes") and paste the phrase (with quotes) into a Google search box.
3. Click on the link again, which is probably the first search result (next to the image).
4. Enjoy your new WSJ access to the full article.

Notice that the link was originally:
http://online.wsj.com/article/SB10001424052970204707104578090782337407620.html?mod=WSJ_hps_sections_personalfinance

but after running it through the search engine it became:
http://online.wsj.com/article/SB10001424052970204707104578090782337407620.html?mod=googlenews_wsj

 

[nwsteve]

Thanks to both RonBoyd and Nords for sharing the WSJ back door for content. I had not stumbled across that avenue before. Is it common for the Google backdoor work for other media sites?
Nwsteve