Author Topic: Fidelity vs Vanguard  (Read 19854 times)

meadow lark

  • Magnum Stache
  • ******
  • Posts: 4831
Fidelity vs Vanguard
« on: February 16, 2014, 10:41:41 PM »
My employer just changed our 403 b company to Fidelity (from Metlife).  I currently have my 403b money in a Vanguard index fund (serviced by Fidelity.). We are going to put money into a traditional IRA this year.  I can do it through through my account with Fidelity via my employer, or I could call Vanguard and start an account with them.  Is there any reason to do one versus the other, if I have access to the same index funds through them both?
Confused yet?

Frankies Girl

  • Magnum Stache
  • ******
  • Posts: 2907
  • Age: 81
  • Location: The laboratory
  • Typical Ghoul Next Door
Re: Fidelity vs Vanguard
« Reply #1 on: February 16, 2014, 11:24:17 PM »
Fidelity is not a bad company, but they are profit-driven, so you're going to run into them pushing a bit more towards the higher expense fee funds than others if you're coming into investing cold. If you know your basics, that's not an issue.

They have some great low cost funds - the Spartan series of index funds are really close (like within .01-.02%) in expenses to Vanguard's comparable funds. They have a line of ETFs with low or even no cost trades.

I debated for several months about moving most of my stuff over to Vanguard (can't move the 401k) once I started doing my research, and I ended up staying with Fidelity for two reasons - they have VERY good index funds available, and their customer service and website is kickass. 

I'm not knocking Vanguard in the least - they are going to be the best in so far as your investments themselves, and they are the leader of the pack. But I rate the customer service and usability highly myself, and for that, Fidelity has worked out for me quite well.


J

  • 5 O'Clock Shadow
  • *
  • Posts: 21
Re: Fidelity vs Vanguard
« Reply #2 on: February 17, 2014, 12:32:53 AM »
Unless there's some additional perk your employer offers for the Fidelity funds (for instance, if they offer matching, or they have access to institutional-class funds with even lower overhead), go with Vanguard.  They have the lowest overhead.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4841
Re: Fidelity vs Vanguard
« Reply #3 on: February 17, 2014, 06:04:07 AM »
There is a persistent and mistaken belief on this site that Vanguard has the lowest cost index funds and "everyone else" is much higher.  Because index funds are all the rage, fund companies have been dropping expenses to compete.  For example, the Fidelity Spartan Total Market Advantage Class fund has a base expense ratio of 0.07 percent, currently capped at 0.06 percent.  Vanguard Admiral Shares are 0.05 percent.  Same comparison on the S&P 500 index funds shows Fidelity at .07 percent base expense ratio, currently capped at 0.05 percent and Vanguard at 0.05 percent.  At Fidelity, you have access to a long list of quality ETF's with no commission trades.  Vanguard gives you their ETF's at no commission.  TD Ameritrade and Schwab have very cheap ways to invest as well.  "For profit" is not necessarily bad, especially when the market place is highly competitive.

The Fidelity advantage is a better website and better customer service.  If you live in a more urban area, Fidelity likely will have a bricks and mortar office where you can conduct business and visit your money.  Also, Fidelity has a much better selection of managed funds for those that choose to go that route.  Thanks, I will pay the 0.01 percent on the index fund to avoid Vanguard's clunky website and pleasant but not terribly helpful CSR's.

Meadow Lark - check what's available from Fidelity through the 403b plan administrator for your IRA.  Generally, I prefer to keep my IRA's separate from the workplace accounts.  You could change employers and have to do additional paperwork to get full control of your IRA's.  However, if you decide to open the IRA's separately, compare Fidelity and Vanguard before you decide which company is best for you.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4313
  • Location: CT
Re: Fidelity vs Vanguard
« Reply #4 on: February 17, 2014, 07:20:38 AM »
I use both. I see no downside to either, Another Reader has a great summary especially about the website interface. I'm of the opinion that Fidelity has better online tools, but there are better free online tools outside of either so...

markstache

  • Stubble
  • **
  • Posts: 167
Re: Fidelity vs Vanguard
« Reply #5 on: February 17, 2014, 11:05:30 AM »
Both are good. I like the simplicity of mutual funds rather than ETFs for the majority of my investing (I hold a few ETFs in areas where I want to slice and dice a little, but don't have enough invested to get the Admiral fund version). For me, this tips the balance in favor of Vanguard since I get access to all the mutual fund products at no cost (my impression and earlier research was the Fidelity was competitive in ETF offerings, but not with mutual funds -- I could be wrong here).

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4841
Re: Fidelity vs Vanguard
« Reply #6 on: February 17, 2014, 11:19:54 AM »
It's a good time to do the research and correct your "impression."  I used two Admiral shares index funds for the comparison, but the investor shares are similar.  Schwab offers very low cost funds tied to the same two indexes at the investor shares level under their label.  Fidelity and Vanguard both offer managed funds, which have higher expense ratios.  Vanguard's managed funds are generally weak performers.  If you see a value in management, T Rowe Price offers some excellent funds as does Fidelity.  My point is being investor owned does not make Vanguard a cheaper or better place to invest. 

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4841
Re: Fidelity vs Vanguard
« Reply #7 on: February 17, 2014, 11:25:12 AM »
For Meadow Lark - there is a Fidelity investor center in ABQ, off Louisiana Blvd north of I-40.  The address is on the Fidelity website.

markstache

  • Stubble
  • **
  • Posts: 167
Re: Fidelity vs Vanguard
« Reply #8 on: February 17, 2014, 12:23:05 PM »
It's a good time to do the research and correct your "impression."

Fair enough. The Spartan funds look good, and the investor class (low minimum) fund for total market is a little cheaper than the Vanguard equivalent. Endorsed.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4841
Re: Fidelity vs Vanguard
« Reply #9 on: February 17, 2014, 01:00:57 PM »
All these companies see the handwriting on the wall.  The competition for managing the assets of the retail investor is heavy.  The retail investors see how they are being screwed by their 401k provider.  They read all the articles about the superiority of index investing and the effects of costs on returns.  The investors demand low cost index funds and ETF's, and the financial services providers meet the demand. 

You get good customer service and a very broad choice of low cost funds and ETF's at Fidelity and a couple of their competitors.  In other words, you can pay Vanguard prices and get a better service provider. 

birdman2003

  • Bristles
  • ***
  • Posts: 314
  • Location: Iowa
Re: Fidelity vs Vanguard
« Reply #10 on: February 18, 2014, 03:26:29 PM »
My employer uses Fidelity for 401(k) and HSA.  Since my employer matches 401(k) contributions, I contribute enough to get the full match, and then I do a Roth IRA at Vanguard.  After that, I contribute to a taxable personal investing account with Vanguard.  I honestly wouldn't be with Fidelity unless my employer matched my 401(k) contributions.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27555
  • Age: -999
  • Location: Traveling the World
Re: Fidelity vs Vanguard
« Reply #11 on: February 18, 2014, 03:52:23 PM »
I use Fidelity, Vanguard, and Charles Schwab.

All for different reasons/uses.

Evaluate their offerings and see which is the best fit for your particular purpose.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4841
Re: Fidelity vs Vanguard
« Reply #12 on: February 18, 2014, 03:57:02 PM »
Funny, I use Fidelity, Schwab and Vanguard as well.  Along with T Rowe Price.  I have had good experiences with all four, but I still dislike the Vanguard web site.

pdxvandal

  • Bristles
  • ***
  • Posts: 281
  • Location: Earth
Re: Fidelity vs Vanguard
« Reply #13 on: February 18, 2014, 11:07:33 PM »
I've used Vanguard since 2008, however, I have a T. Rowe Price 401(k) at work, which ironically doesn't have any T. Rowe Price funds. So I have a Fidelity Spartan fund that tracks small and mid caps and two Vanguard funds that track S&P 500 and international.

I think Fidelity and Vanguard are pretty similar, but I prefer the latter. You can't go wrong with either one.

ShortInSeattle

  • Pencil Stache
  • ****
  • Posts: 576
Re: Fidelity vs Vanguard
« Reply #14 on: February 19, 2014, 08:42:49 AM »
I think they are both fine choices. We're with Fidelity and basically I'd suggest that you be very careful when speaking with their financial reps. They are nice people, but will probably try to steer you towards managed accounts, annuity accounts, and so on.

Their services are excellent. Lots of choices, great website, and so on.

fermata49

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Fidelity vs Vanguard
« Reply #15 on: December 24, 2014, 02:24:52 PM »
I have mixed feelings about Fido.  Their website has a lot of features but many times they don't work very well.  And now their new site has a lot of problems.  I like the design, but the implementation is lacking.  For example, every time I login, the site thinks I'm still using the old site and so makes me go through all the startup tutorials (or cancel out of them), which is a nuissance.  They tell me they've contacted their web development group and no one can figure it out.  Really?  That doesn't inspire confidence in me that they really know what they're doing with their mission critical functions, like buying and selling and calculations, etc. 

And then there's taxes.  Fido cost me 10K in 2011, long story, but suffice it to say they generated a bad account statement on my taxable account.  They never did get it right, nor did they apologize or do anything to make it right by me. 

And, as others have mentioned - be wary of their reps, especially at local branches.  They want you to: 1) buy their money management service (1+% of your AUM, 2) after they're managing your money, they want to put everything in actively managed funds (1.5+%), and 3) of course they want to sell you annuities.  Stay away from all these products. 

I'm seriously thinking of moving 50% to Schwab, just so I have a basis for comparison.

RyeWhiskey

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Fidelity vs Vanguard
« Reply #16 on: December 24, 2014, 06:26:18 PM »
There is a persistent and mistaken belief on this site that Vanguard has the lowest cost index funds and "everyone else" is much higher.  Because index funds are all the rage, fund companies have been dropping expenses to compete.  For example, the Fidelity Spartan Total Market Advantage Class fund has a base expense ratio of 0.07 percent, currently capped at 0.06 percent.  Vanguard Admiral Shares are 0.05 percent.  Same comparison on the S&P 500 index funds shows Fidelity at .07 percent base expense ratio, currently capped at 0.05 percent and Vanguard at 0.05 percent.  At Fidelity, you have access to a long list of quality ETF's with no commission trades.  Vanguard gives you their ETF's at no commission.  TD Ameritrade and Schwab have very cheap ways to invest as well.  "For profit" is not necessarily bad, especially when the market place is highly competitive.

The Fidelity advantage is a better website and better customer service.  If you live in a more urban area, Fidelity likely will have a bricks and mortar office where you can conduct business and visit your money.  Also, Fidelity has a much better selection of managed funds for those that choose to go that route.  Thanks, I will pay the 0.01 percent on the index fund to avoid Vanguard's clunky website and pleasant but not terribly helpful CSR's.

The truth is that Fidelity and Vanguard are differently structured companies. Fidelity exists to benefit the owners of the company while Vanguard exists to benefit the investors. So, with this simple fact in mind, it makes sense invest with Vanguard all other things equal. The fact that you had poor experiences with Vanguard reps is unfortunate, I have not had such experiences. I also disagree about Fido's website being better and they having better managed funds, but to each their own.

To the OP, go with whatever is lowest cost as well as the simplest.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Fidelity vs Vanguard
« Reply #17 on: December 24, 2014, 08:03:25 PM »
Plenty of good commentary above, so I'll just add that if you expect either brokerage to ever breach the SIPC limit in the future, it's likely a good idea to go ahead and have another account open at more than one brokerage.

I just hit 100k at Vanguard, and have many more years of investing remaining. Also initiated a small deposit account at Betterment and have my 401k through Fidelity in addition to another brokerage account at Schwab. Hopefully, I run into the problem of having too much money someday, but I'd like to be sure that I'm not taking on bankruptcy risk of a brokerage firm in order to save 1-30 bps in account fees. That is, in my opinion, far less important than ensuring the overall allocation is appropriate as well as focusing on earning more money and managing living expenses.

Otherwise, I'll just add that both Fidelity and Vanguard are great. Ignoring personal preferences, they both have cheap funds available. Fidelity has more options for actively managed funds, but you don't have to use them.

chasesfish

  • Magnum Stache
  • ******
  • Posts: 2948
  • Age: 37
  • Location: Texas
    • Years in the making, I created a journal!
Re: Fidelity vs Vanguard
« Reply #18 on: December 25, 2014, 05:16:54 PM »
Mark me up as another happy Fidelity user.  No complaints and I understand I'm paying slightly more for better quality and access to a decent call center.  I recently setup a fidelity "bank" account with checks, debit cards, and mobile deposit.  No complaints.

FarmerPete

  • Bristles
  • ***
  • Posts: 346
Re: Fidelity vs Vanguard
« Reply #19 on: December 26, 2014, 09:49:46 AM »
I've been using Fidelity for awhile now.  I had accounts with Scottrade, Schwab, and Fidelity not too long ago.  I consolidated everything to Fidelity mainly because I liked their fund choices and the online website best.  I also love their 2% cash back Amex card that requires a Fidelity account to use.  I use it as my go to card for every purchase that I don't have a "category" card for.  When I bought my last car, I put $4000 of the purchase price on the credit card for an instant cash back of $80.  Between when I got the CC and now, there are a few other competitors that come close to a 2% cash back on everything, but I like to reward the card that's been doing it the longest with my business.  Plus, having your CC in the same pane of glass as your brokerage/ira/roth is nice.

astvilla

  • Stubble
  • **
  • Posts: 234
Re: Fidelity vs Vanguard
« Reply #20 on: December 27, 2014, 05:41:50 AM »
I agree with some of the comments here. You can trust Vanguard with their principles and interest in you as an investor as opposed to Fidelity which can have conflicting interests. Vanguard will steer you to their products too, a recent call had 1 representative trying to get me into their target retirement funds with slight higher fees and more risk I thought.

I find Vanguard to be a bit slower in terms of service and outdated which seemed to be implied by the cust serv. My orders/transfers are in their computer waiting, tech talk etc, seemed to take quite a while, I don't think they have the money to reinvest and compete like others like Fidelity.

Fidelity has a nicer site and some news which I like. The site is more interactive, can't speak to their cust serv.

I use both and I'm happy with both. Fidelity to me seems a better site to navigate, have more resources and are quicker. Vanguard has cheaper funds and you can trust them more, both have good broad based index funds to choose from

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2198
  • Location: EastCoast
Re: Fidelity vs Vanguard
« Reply #21 on: December 29, 2014, 08:00:29 AM »
Plenty of good commentary above, so I'll just add that if you expect either brokerage to ever breach the SIPC limit in the future, it's likely a good idea to go ahead and have another account open at more than one brokerage.

I just hit 100k at Vanguard, and have many more years of investing remaining. Also initiated a small deposit account at Betterment and have my 401k through Fidelity in addition to another brokerage account at Schwab. Hopefully, I run into the problem of having too much money someday, but I'd like to be sure that I'm not taking on bankruptcy risk of a brokerage firm in order to save 1-30 bps in account fees. That is, in my opinion, far less important than ensuring the overall allocation is appropriate as well as focusing on earning more money and managing living expenses.

Otherwise, I'll just add that both Fidelity and Vanguard are great. Ignoring personal preferences, they both have cheap funds available. Fidelity has more options for actively managed funds, but you don't have to use them.

That's a good point I hadn't thought of. And if anyone else is curious the SIPC limit in case of brokerage bankruptcy is $500,000 for funds, or $250,000 for cash.

I use Schwab for my taxable account and my checking account. They have funds more or less as cheap as Vanguard, and I like that I can transfer extra cash from my bank account and buy a fund within minutes. I think either is fine. But if I change jobs I'm rolling my 401k into vanguard, to spread it out some

JoeO

  • 5 O'Clock Shadow
  • *
  • Posts: 14
Re: Fidelity vs Vanguard
« Reply #22 on: January 21, 2015, 09:27:14 AM »

do an internet search for FIDELITY JUNIOR DEBENTURES

that's one of the reasons i left fidelity - just don't care to be part of that type of scheme (the part that funds it)

cazaubon

  • 5 O'Clock Shadow
  • *
  • Posts: 25
  • Location: Montréal, Canada
Re: Fidelity vs Vanguard
« Reply #23 on: January 21, 2015, 10:58:54 AM »
My 401K is through Fidelity, no complaints.  They have good cheap spartan index funds.  My husband has all his accounts with Vanguard.  I figure keeping an account at each instititution hedges our bets against a disaster at either one.

3okirb

  • Stubble
  • **
  • Posts: 147
Re: Fidelity vs Vanguard
« Reply #24 on: January 21, 2015, 05:37:45 PM »
or they have access to institutional-class funds with even lower overhead

Great advice here.  I have funds that have such low fees you'd be shocked!

TreeTired

  • Bristles
  • ***
  • Posts: 449
  • Age: 134
  • Location: North Carolina
  • I think we can make it
Re: Fidelity vs Vanguard
« Reply #25 on: January 23, 2015, 09:42:19 AM »
Quote
if you expect either brokerage to ever breach the SIPC limit in the future, it's likely a good idea to go ahead and have another account open at more than one brokerage.


There are many reasons to diversify by having more than one broker,  beyond the SIPC limit.   I opened an account with Fidelity simply because I was uncomfortable having almost all of my financial assets with Schwab.   There are many things I can think of,  ie  website problems, power outage,  hacker attacks,  rogue employe,  and many more that I probably can't think of at the moment.