Fidelity Versus Schwab?
cine...@gmail.com
I'm looking for some advice. I'm looking to start up an IRA and it
seems that the #1 and #2 for online brokers is Schwab and Fidelty,
respectively, although it seems those two could even be flipped. I
thought I would do some reasearch to make a choice between the two,
but as a novice, I'm finding it hard to find some definitive sites
that would compare both. I just want to figure out the layman's ins
and outs and the important differences that exist. Both houses seem
sort of neck in neck. Anyone here have a preference for one over the
other or know a well-regarded site/source that would at least offer
authoritative a review of both?
Thanks in advance for your assistance,
BL
Ron Rosenfeld
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
Sandra Loosemore
> On Mon, 25 Jun 2007 04:08:27 -0500, cine...@gmail.com wrote:
> >I'm looking for some advice. I'm looking to start up an IRA and it
> >seems that the #1 and #2 for online brokers is Schwab and Fidelty,
> >respectively, although it seems those two could even be flipped. I
> >thought I would do some reasearch to make a choice between the two,
> >but as a novice, I'm finding it hard to find some definitive sites
> >that would compare both. I just want to figure out the layman's ins
> >and outs and the important differences that exist. Both houses seem
> >sort of neck in neck. Anyone here have a preference for one over the
> >other or know a well-regarded site/source that would at least offer
> >authoritative a review of both?
>
> 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.
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
PeterL
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.
BreadW...@fractious.net
> I'm looking for some advice. I'm looking to start up an IRA and it
> seems that the #1 and #2 for online brokers is Schwab and Fidelty,
> respectively, although it seems those two could even be flipped. I
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.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
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BreadW...@fractious.net
> 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.
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.
Elizabeth Richardson
<cine...@gmail.com> wrote in message
news:1182744870.8...@z28g2000prd.googlegroups.com...
> Hi all,
> I'm looking for some advice. I'm looking to start up an IRA and it
> seems that the #1 and #2 for online brokers is Schwab and Fidelty,
> respectively, although it seems those two could even be flipped.
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
Default User
> I've heard Fidelity charges a $75 transaction fee to buy or sell funds
> outside their NTF network.
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.
<http://www.schwab.com/public/schwab/home/fees_commissions/commission_sc
hedule>
Brian
--
If televison's a babysitter, the Internet is a drunk librarian who
won't shut up.
-- Dorothy Gambrell (http://catandgirl.com)
Ron Rosenfeld
>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.
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
Tad Borek
> I'm looking for some advice. I'm looking to start up an IRA and it
> seems that the #1 and #2 for online brokers is Schwab and Fidelty,
> respectively, although it seems those two could even be flipped. I
> thought I would do some reasearch to make a choice between the two,
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
Richard
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
Default User
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.
Mark Freeland
news:m38xa88...@localhost.localdomain...
>> On Mon, 25 Jun 2007 04:08:27 -0500, cine...@gmail.com wrote:
>> >I'm looking for some advice. I'm looking to start up an IRA and it
>> >seems that the #1 and #2 for online brokers is Schwab and Fidelty,
>> >respectively, although it seems those two could even be flipped.
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."
http://www.smartmoney.com/brokers/index.cfm?story=august2006
(SmartMoney 2006 Broker Survey)
> [...] 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.
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.
> I've heard Fidelity charges a $75 transaction fee to buy or sell funds
> outside their NTF network.
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).
> It's only $20 at E-Trade, where I have my
> account. I have no experience with Schwab, either.
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.
> The other "supermarkets" to look into are Scottrade and TD Ameritrade.
> Besides Fidelity, Vanguard and T. Rowe Price also offer brokerage
> services forfunds outside their own company.
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 <$250,000 investors). Even
American Century has a brokerage. (IRA annual fee of $50 until you reach
$10,000).
Generally, the fund companies that offer brokerages do it as a convenience
for their fund investors, not as solid standalone operations. (Fidelity is
the exception.)
For a basic buy-and-hold IRA, pretty much any brokerage with a no-fee IRA
and the funds you want NTF will do. If you're interested in trading stocks
or ETFs, then you'll want to look at quality of execution (e.g. how good a
price they get for you - a penny price improvement here and there adds up)
as well as commissions.
Mark Freeland
BnetO...@sbcglobal.net
Mark Freeland
news:m9h083lv8dofp8jqq...@4ax.com...
> Fidelity is a little better on the bond side as their minimums are
> lower and yields appear to be a bit better.
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.
http://www.aboutschwab.com/press/releases/press-release.cgi?release_id=1014329
(Schwab - $1 mark-up as of July 1?)
http://personal.fidelity.com/products/trading/Commissions_Margin_Rates/Commissions_Margin_Rates_Bonds.shtml.cvsr
(Fidelity - $1.50 for munis, $2+ for corporates)
Mark Freeland
BnetO...@sbcglobal.net
Richard
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.
BreadW...@fractious.net
> On Mon, 25 Jun 2007 11:22:46 -0500, BreadW...@fractious.net wrote:
[disliked ETrade IRA withdrawal rules]
> >Could you be a bit more specific about this? I recently
> 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.
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).
> 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
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.
> Fidelity required an initial written authorization, but once that
> was in place the funds could be authorized and withdrawn
I've been generally very very happy with Fidelity and
recommend them without hesitation.
Ron Rosenfeld
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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