Fidelity vs Vanguard
April 20, 2005 2:12 PM   Subscribe

I need to roll over some 401K savings into an IRA account - any major differences and recommendations between Fidelity vs Vanguard?
posted by rookiewookie to Work & Money (14 answers total) 4 users marked this as a favorite
 
Vanguard is way cheaper in terms of fees and such. I would go with them or Schwab.
posted by Mid at 2:15 PM on April 20, 2005


Fidelity's customer service rocks my world. Every time I've called them I've been so impressed. They really do a fantastic job on that aspect of it.
posted by Coffeemate at 2:28 PM on April 20, 2005


They're not really equal things to compare, are they? Fidelity can invest in a Vanguard fund for you, but they will charge you an additional fee for the privilege. If it's a Vanguard fund you want, I say just go directly to Vanguard and cut out the middle man. If you're thinking of buying many funds from several different providers, you might want to open a Fidelity account to make managing them easier.

(I used to have a Fidelity account but got tired of paying them all those fees. When I finally closed my account, they charged me for closing it, too!)
posted by bcwinters at 2:29 PM on April 20, 2005


don't forget that Vanguard's cheaper fees are a result of their philosophy that advertising costs shouldn't be passed onto the consumer. They do almost no advertising, and that alone is enough for me to favor them.
posted by frufry at 2:49 PM on April 20, 2005


Fidelity can invest in a Vanguard fund for you, but they will charge you an additional fee for the privilege.

Are you sure? I went with Fidelity over Vanguard (rollover IRA for old 401k) for exactly the opposite reason: Fidelity had recently abolished their 99$ annual fee AND I could freely buy into any NTFs for no fee whatsoever, whereas Vanguard would charge me a like $35 commission for mutual funds outside of the Vanguard family.

I've really been happy with Fidelity, too. Great customer service, and the web site's very smartly put together.

My fiancee has used Vanguard for a long time and has no qualms with them.
posted by xmutex at 2:52 PM on April 20, 2005


I am also very happy with Fidelity...
My company 401(k) provides Fidelity account. Due to home and future invest concerns I have recently contacted them several times. Every time the answer was fast and people were very very helpful. I probably talk to 5 different people in last few month. I was so impressed with help and service, I actually wanted to tip them (not possible) I don't know if this is related it to question, but I was actually able to invest in Vanguard Index through my Fidelity account.
posted by curiousleo at 3:13 PM on April 20, 2005


Here's a list of some brokerage firms and their respective policies and fees. Maybe it will be of help:

http://www.fundx.com/broker.cfm
posted by xmutex at 3:26 PM on April 20, 2005


xmutex: I think bcwinters was trying to say that Vanguard is best if you want to buy a Vanguard fund, not if you want to buy some other kind of fund.
posted by grouse at 3:35 PM on April 20, 2005


Though I am not currently employed by either, I, erm, know a bit about these two firms. I can tell you that, unequivocally, Fidelity is a better choice.

1. Fidelity has more maintenance-type fees, but damn near every one of them can be waved if you play by their (unrestrictive) rules or sign up for electronic statement delivery.

2. Fidelity has many, many more branches, and pays its reps better.

3. Fidelity never closes its phones. At midnight on 01/01/00, the firm paid thousands of reps double-time (with additional bonuses, too) to sit for 8-12 hours "just in case something went wrong."

4. Fidelity's reps are far and away more competent than Vanguard's. CFP certification is becoming nothing short of a requirement for intermediate customer-contact personnel.

5. Fidelity has a comparable fund to nearly every Vanguard fund and the expense ratios for index funds are .01-.02% higher. The difference is insignificant.

6. Fidelity's technology, back-end and front-end, is state of the art. The CapEx at the firm would truly blow you away.

7. Fidelity owns a prime brokerage, and can get you damn near any product you want, including some commodities.

8. Fidelity's Bond desk is far better than Vanguard's, and the firm participates in more fixed income IPOs. (FI IPOs, unlike equity IPOs, save the investor money)

Write me for more, if you wish.
posted by trharlan at 3:36 PM on April 20, 2005


Most financial advisors will tell you that the most important factor in investment performance is fees and expenses. The lowest expenses are in index mutual funds and the lowest expenses among index funds are Vanguard, bar none. Vanguard also has the largest selection of index funds -- 37. Fidelity has only eight. You can buy Vanguard funds from a Fidelity account but it will cost you $75 a pop.

You can construct a complete, well diversified portfolio using only Vanguard index funds and never pay a commission or fee while enjoying the lowest expenses in the industry.
posted by JackFlash at 6:57 PM on April 20, 2005 [1 favorite]


As someone who is a current Vanguard customer, I haven't had the greatest experience with them. While they have some of the lowest expense ratios in the industry, it took me a half dozen phone calls to get a simple change made and I spent 2 hours on the phone with them in the last week trying to get a simple transaction completed.

While my experience may not be yours, I've had a particularly difficult time finding reps who will own a issue from start to finish.
posted by jazzkat11 at 8:08 PM on April 20, 2005


Some people are confusing mutual fund companies with brokerage firms. Fidelity is both.

I rolled my 401K over to Fidelity about 9 years ago. I've been very pleased with the results. As others have pointed out, they have top notch customer service, and very good online tools. They also offer a wide range of mutual funds that you can buy. (Pretty much everything.)

But of course, you are not restricted to mutual funds. I do a little bit of stock trading, and I do all of it in my Roth IRA. The huge advantage of that is that you can buy and sell without paying any capital gains tax. To me, that's sort of the whole point of going with a company like Fidelity for your IRA. You can lots of different things with your money while it's in there. The same is true of Schwab, of course, but I have no experience with them. As for Vanguard, I think they're a fine mutual fund company, but I don't know anything about their brokerage services (or whether they even provide brokerage services).
posted by alms at 8:15 PM on April 20, 2005


Yes, Vanguard has a brokerage service.

I've been a customer of both Vanguard and Fidelity for about 20 years. I don't have any customer service complaints about either. (Fidelity Magellan has turned into a closet index fund with much higher fees, but that's a different issue.) Money magazine had an article last year that seemed to suggest Vanguard was a victim of its own success; they experienced significant growth, and are still trying to hold down costs.

Personally, I prefer Vanguard's emphasis on lower costs. Fidelity is a latecomer to the low-cost index fund concept; they just slashed their index fund fees last year because they had to in order to be competitive. I think Fidelity doesn't really like index funds (they get lower fees), but customers demand them.

Trithfully, I don't think you'd go wrong with either. If you'd like to read more, go to Morningstar.
posted by pmurray63 at 8:57 PM on April 20, 2005


Thanks everyone for their advic - it's been very helpful.

I am leaning towards going with Fidelity in the short run because I have heard from various other sources that their customer service is more accessible, and the extra handholding will be helpful for me to get started.

Once I feel more comfortable with various products and developing more sophisticated investment strategies, I may switch over to save on fees, etc.
posted by rookiewookie at 9:28 AM on April 21, 2005


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