Charles Schwab vs TD Ameritrade vs Fidelity Investments

TD Ameritrade vs Charles Schwab vs Fidelity


Fidelity, TD Ameritrade and Charles Schwab comparison: which is better? Compare IRA accounts, trading fees, investment products, pros and cons.



Overview of Schwab, Fidelity, and TD Ameritrade


If you’re in the market to open a brokerage account, you’ll definitely want to consider the top three: TD Ameritrade, Fidelity, and Schwab. These three literally have trillions of dollars in client assets, oversee millions of accounts, and compete heavily for each others’ customers. Here they are in major categories:


TD Ameritrade, Fidelity and Schwab Pricing


Broker Fees Stock/ETF
Commission
Mutual Fund
Commission
Options
Commission
Maintenance
Fee
Annual IRA
Fee
TD Ameritrade $6.95 $49.95 $6.95 + $0.75 per contract $0 $0
Fidelity $4.95 $49.95 $4.95 + $0.65 per contract $0 $0
Charles Schwab $4.95 $76 ($0 to sell) $4.95 + $0.65 per contract $0 $0
Firstrade $0 $0 $0 $0 $0


Services


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
TD Ameritrade
Fidelity
Charles Schwab
Firstrade


Robo and Human Advisors


All three of these big players offer portfolio management services for customers who would rather let the professionals do the groundwork. We’ll start with Schwab. The broker’s robo-advisory service is called Intelligent Portfolios, and there is no charge for using it. How in the world does Schwab manage to offer it for free? According to our research, the brokerage firm makes money off of free cash balances. It also receives income from the ETF’s the software trades. Both of these issues are problematic, so it may be best to try its other account management services.

Traditional management at Schwab starts at 0.90% with a balance of $25,000. The percentage goes down with larger balances, reaching just 20 basis points at $1,000,000.





Now we come to TD Ameritrade. The broker-dealer also has a computer program that can trade low-cost ETF’s. The algorithm costs 30 basis points. It’s called Essential Portfolios (don’t get it confused with Intelligent Portfolios; and no, we don’t think Schwab’s is any smarter than TD Ameritrade’s) and requires a $5,000 deposit to begin.

TD Ameritrade’s human advisors cost between 60 and 90 basis points with either a $250,000 minimum or a $25,000 option. The higher minimum includes a one-on-one partnership with a financial advisor.

Finally it’s time to look at Fidelity. The broker’s robot is called Go and costs 0.35%, the most expensive program in our survey. Although it’s the most costly, Fidelity imposes no minimum balance requirement, a big plus obviously for small investors.

Fidelity’s old school advisory services start at 1.50% with a $50,000 deposit. The charge drops to 50 basis points with more assets. For a $200,000 deposit, you can get stocks in addition to ETF’s and mutual funds; and for higher balances, the broker’s fee is only 20 basis points.

Overall, the three brokers seem pretty even here.


Mutual Funds


Now we come to mutual funds, and here too, these three broker-dealers are hard to beat. TD Ameritrade provides over 11,400, with 3,900 that carry zero load and zero transaction fee. Selling an NTF fund in less than 6 months carries a $49.99 charge.

Schwab has far fewer funds (less than 5,800) but still manages to offer 3,400 no-load, no-transaction-fee funds. The broker’s short-term redemption charge is $49.95 for funds on the second list.

At Fidelity, we found nearly 10,800 funds using the broker’s screener. Roughly 3,700 of these come with no transaction fee, and about half of these products are also no-load funds. As with the other two firms, Fidelity charges a short-term redemption fee. It is $49.95.


ETF’s


All US-listed exchange-traded funds are of course available at all three brokerage firms. Fidelity provides 265 ETF’s that are free to trade. They are iShares and Fidelity funds.

TD Ameritrade clients have a slightly larger list. We counted over 300 ETF’s that can be bought and sold with zero commissions. While TD Ameritrade does not manage its own funds like Fidelity does, one advantage of TD Ameritrade’s list is the sheer number of fund families. We saw ETF’s from iShares, WisdomTree, First Trust, Invesco, JPMorgan, SPDR, and ProShares.

Schwab comes in at the exact same number that Fidelity offers: 265. Like TD Ameritrade, Schwab has a large selection of fund families. Examples include Aberdeen, Direxion, Global X, and John Hancock.


ameritrade vs schwab vs fidelity


Customer Service Channels


Coming to customer service, we see lots of strengths again. Every broker in our survey offers phone support all hours of the day and night. Schwab and Fidelity both offer online chat. TD Ameritrade fails here, and it will take it out of the competition in this category for top honors.

Both TD Ameritrade and Fidelity have chatbots on their sites. During our research, they did reasonably well in answering typed questions, but they don’t quite yet have the ability to replace competent human service.

All three brokerage firms have good self-service sections on their sites. At TD Ameritrade, you can apply for a margin account or open a credit card. Fidelity customers can add beneficiaries to their accounts or send an email to customer service. Schwab’s self-help section includes the ability to add a trusted contact person to an account and a section to adjust paperless settings.

Schwab and TD Ameritrade have a greater emphasis on foreign languages. All three have branch locations. TD Ameritrade and Schwab have more than 300 each, while Fidelity is close to 200.

Schwab seems like the outperformer here.


Trading Software


Up next is a topic we definitely don’t want to forget: trading technology. After all, these companies do have a lot of self-directed clients. If you’re going to be the one buying and selling in your account, you’ll want to be aware of the tools available to you.

TD Ameritrade offers a very well-designed website that is capable of research and trading all by itself. If you want something more than this, you can submit order for stocks, ETF’s, and options using SnapTicket, a convenient trade bar that appears at the bottom of the browser.





If you want more than SnapTicket, you can use Trade Architect, the broker-dealer’s simple browser-based trading platform. While we say simple, we don’t want to underestimate its trading ability. Charting comes with technical studies, comparisons, and multiple chart styles. CNBC also streams at no cost on Trade Architect.

If you need a sophisticated desktop platform, TD Ameritrade has you covered with its very robust software thinkorswim. It boasts advanced charting with 400 technical studies, options trading tools, security scanners, direct-access routing, and much more.

Moving from TD Ameritrade to Fidelity, we lose the browser-based platform. While Fidelity’s website is very useful and easy to navigate, it doesn’t quite measure up to TD Ameritrade’s. Fidelity’s trade bar, which is a pop-up window, doesn’t measure up to SnapTicket either.

We did like Active Trader Pro, the broker’s desktop program. It also offers direct-access routing and complex order types. Despite its sophistication, it seems to be a level below thinkorswim.

Schwab is third in our list, but not necessarily in last place. Its desktop platform StreetSmart Edge is very competitive with Active Trader Pro. StreetSmart Edge is customizable and user-friendly. It offers Market Depth, which is basically Level II quotes. We also liked the technical analysis tools on Schwab’s platform, which are from Recognia.

Besides computer trading platforms, all three brokers offer mobile apps, smartwatch platforms, and skills for Amazon Echo.

TD Ameritrade wins here.


Cash Management


As top firms, the three brokers in our investigation of course have remembered their customers’ banking needs. Checks and a debit card can be obtained free of charge from any of the three. There are some differences in this category, however.

Schwab offers an FDIC-insured checking account, whereas TD Ameritrade simply attaches checks and a Visa card to a pre-existing brokerage account. Fidelity offers something called the Cash Management Account. Technically, this is a securities account without margin. Cash balances can be swept to FDIC-insured program banks to receive government insurance. Alternatively, they can be kept in money market funds for SIPC protection.

Each broker reimburses ATM fees, although Schwab does so at any cash machine in the world. Fidelity and TD Ameritrade limit their policies to US-based machines. This difference seems to give Schwab the edge in this category.


Range of Investments


In our final category, we examine the range of assets that can be traded at the three companies. Of course, there are stocks, bonds, options, and funds at all three firms. Schwab used to offer forex through its affiliate optionsXpress; but it has been shut down. TD Ameritrade is the only brokerage house in this contest to offer futures and forex trading. The financial instruments can be traded on thinkorswim (both computer and mobile versions).


Promotions

TD Ameritrade: Trade free for 60 days + get up to $600.

Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.

Fidelity: Get 500 free trades with $100,000+ deposit.



Outcome and Recommendations


The three brokerage firms in this challenge are some of the biggest players in the industry. They are competitive with each other in all categories we looked at. TD Ameritrade seems to come out ahead overall due to its software, fund offerings, and futures and forex trading.

If you want the best professional-level trading platform on the market, an ability to practice trading without putting your money at risk, and the richest selection of third-party research, than TD Ameritrade is your broker. We recommend it to IRA account holders, beginners, and fund investors (3,900 no-commission mutual funds and 300 no-commission ETF's).

Fidelity is a good choice for investors who want to invest in Fidelity mutual funds and for buy-and-hold investors.

Charles Schwab is our pick for long-term investors and for anyone who needs some hand-holding.


Open TD Ameritrade Account




Open Schwab Account




Open Fidelity Account