Vanguard vs. Fidelity

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arcticpineapplecorp.
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Re: Vanguard vs. Fidelity

Post by arcticpineapplecorp. »

since the total stock market makes up the S&P 500 index fund (around 80% of the total market) and the extended market index fund (completion index 20% of the total market) they are 80% similar you could say. The difference is due to small and mid caps. Since the S&P500 is mostly large cap, it will do better than total stock market when small and mid caps do worse than large cap and the S&P500 will do worse than total market when small and mid cap do better than large cap.

So as people have said recently small and mid haven't been doing as great as large and therefore the S&P500 has been doing better than total market (because the small has dragged down the return of the total market):

Image

see how S&P500 is only down -0.28% but the total stock market is down -0.57%?

That's because the extended market index (the other 20% of the total market is down -2.66%, so it dragged down the total market.

Some times small and mid helps, and some times it hurts. Diversification is always working though. And diversification means always having to say you're sorry.

Though look at how the total bond market did so far this year...up 5.09% (better than both the S&P500 and the total stock market!)

over a long enough time these changes have tended to even out, so the returns of both S&P500 and total stock market have been very similar. Going back to the inception of the total stock market index fund (Vanguard) 4/27/1992 (the S&P500 is older than that, but you can't compare them if the total stock market index fund only started in 1992) you find the returns very similar over time, but the total stock market did do better overall than S&p500 having earned $1094.19 more (on an original $10,000 investment) since 1992 (total market in blue below and S&P500 in orange below):

Image

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
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ruralavalon
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

mike_in_ny wrote: Fri Jun 05, 2020 9:37 pm Does anyone else have any input on difference between the "big 3" companies (Schwab,
Vanguard, Fidelity) in terms of their distribution of capital gains?

I NEVER get capital gains distributions on my Vanguard funds (all core index). In contrast,
I get ~0.5% distribution on my Schwab S&P500 fund each year. I do not know about Fidelity.
This starts to add up and contributes to AGI and current year tax bill.

My understanding is Vanguard is different because of this:
https://www.bloomberg.com/graphics/2019 ... tax-dodge/
Vanguard mutual funds are more tax-efficient than any other, because of their unique structure.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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tvubpwcisla
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Re: Vanguard vs. Fidelity

Post by tvubpwcisla »

Investor1319 wrote: Thu Jun 04, 2020 4:21 pm I have about $30K invested in my IRA (total stock market) in Vanguard. My husband has about $33K invested in his IRA (S&P) with Fidelity. I'm struggling with whether I should stay with Vanguard or switch to Fidelity since I am a smaller investor (at least right now) and read that Fidelity is better for smaller, beginner investors. I know the total stock market fund and s&p are supposed to run pretty closely, but my husband always seems to do better with his. Any advice? Thanks!!
Certainly nothing wrong with having both.

:beer
Stay invested my friends.
CardioMD
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Re: Vanguard vs. Fidelity

Post by CardioMD »

ruralavalon wrote: Sat Jun 06, 2020 11:30 am
mike_in_ny wrote: Fri Jun 05, 2020 9:37 pm Does anyone else have any input on difference between the "big 3" companies (Schwab,
Vanguard, Fidelity) in terms of their distribution of capital gains?

I NEVER get capital gains distributions on my Vanguard funds (all core index). In contrast,
I get ~0.5% distribution on my Schwab S&P500 fund each year. I do not know about Fidelity.
This starts to add up and contributes to AGI and current year tax bill.

My understanding is Vanguard is different because of this:
https://www.bloomberg.com/graphics/2019 ... tax-dodge/
Vanguard mutual funds are more tax-efficient than any other, because of their unique structure.
I use Fidelity so I guess I don’t understand how Vanguard’s structure attributes to this. Could you explain for a layman?
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
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retired@50
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Re: Vanguard vs. Fidelity

Post by retired@50 »

CardioMD wrote: Sat Jun 06, 2020 11:36 am
ruralavalon wrote: Sat Jun 06, 2020 11:30 am
mike_in_ny wrote: Fri Jun 05, 2020 9:37 pm Does anyone else have any input on difference between the "big 3" companies (Schwab,
Vanguard, Fidelity) in terms of their distribution of capital gains?

I NEVER get capital gains distributions on my Vanguard funds (all core index). In contrast,
I get ~0.5% distribution on my Schwab S&P500 fund each year. I do not know about Fidelity.
This starts to add up and contributes to AGI and current year tax bill.

My understanding is Vanguard is different because of this:
https://www.bloomberg.com/graphics/2019 ... tax-dodge/
Vanguard mutual funds are more tax-efficient than any other, because of their unique structure.
I use Fidelity so I guess I don’t understand how Vanguard’s structure attributes to this. Could you explain for a layman?
See link. An article at Bloomberg explains the situation.
https://www.bloomberg.com/graphics/2019 ... tax-dodge/

Regards,
This is one person's opinion. Nothing more.
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ruralavalon
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

CardioMD wrote: Sat Jun 06, 2020 11:36 am
ruralavalon wrote: Sat Jun 06, 2020 11:30 am
mike_in_ny wrote: Fri Jun 05, 2020 9:37 pm Does anyone else have any input on difference between the "big 3" companies (Schwab,
Vanguard, Fidelity) in terms of their distribution of capital gains?

I NEVER get capital gains distributions on my Vanguard funds (all core index). In contrast,
I get ~0.5% distribution on my Schwab S&P500 fund each year. I do not know about Fidelity.
This starts to add up and contributes to AGI and current year tax bill.

My understanding is Vanguard is different because of this:
https://www.bloomberg.com/graphics/2019 ... tax-dodge/
Vanguard mutual funds are more tax-efficient than any other, because of their unique structure.
I use Fidelity so I guess I don’t understand how Vanguard’s structure attributes to this. Could you explain for a layman?
It is the structure of Vanguard mutual funds which reduces capital gains distributions, at Vanguard an ETF is just another share class of the mutual fund.

Please see the wiki article ETF, "Taxes".
Bogleheads' wiki wrote:The ETF structure is likely to make stock ETFs more tax-efficient than stock mutual funds.

When a mutual fund or ETF sells a stock, it has a taxable capital gain (or loss) equal to the difference between what it received and what it paid. When an institutional investor converts shares of an ETF to stock, the ETF provider can give away the shares of stock with the lowest purchase price; these are the shares which would have the highest gain if sold. Thus ETFs can often reduce the capital gains they must distribute.
. . . . .
Most Vanguard ETFs have no tax advantage over the corresponding Vanguard index funds, because in most cases the ETF is a share class of the index fund and thus the mutual fund shares the tax benefits of the ETF.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
CardioMD
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Re: Vanguard vs. Fidelity

Post by CardioMD »

retired@50 wrote: Sat Jun 06, 2020 11:47 am
CardioMD wrote: Sat Jun 06, 2020 11:36 am
ruralavalon wrote: Sat Jun 06, 2020 11:30 am
mike_in_ny wrote: Fri Jun 05, 2020 9:37 pm Does anyone else have any input on difference between the "big 3" companies (Schwab,
Vanguard, Fidelity) in terms of their distribution of capital gains?

I NEVER get capital gains distributions on my Vanguard funds (all core index). In contrast,
I get ~0.5% distribution on my Schwab S&P500 fund each year. I do not know about Fidelity.
This starts to add up and contributes to AGI and current year tax bill.

My understanding is Vanguard is different because of this:
https://www.bloomberg.com/graphics/2019 ... tax-dodge/
Vanguard mutual funds are more tax-efficient than any other, because of their unique structure.
I use Fidelity so I guess I don’t understand how Vanguard’s structure attributes to this. Could you explain for a layman?
See link. An article at Bloomberg explains the situation.
https://www.bloomberg.com/graphics/2019 ... tax-dodge/

Regards,
So when the parent expires the field will most likely be leveled.

The explanation I usually get is about how the owners of the funds own Vanguard but that didn’t make sense to me. Thanks
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
Northern Flicker
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Re: Vanguard vs. Fidelity

Post by Northern Flicker »

It is a legitimate question but I suspect the reason the OP’s husband’s IRA has done better recently is nothing more than it has been a period where large caps over-performed so that the S&P500 beat the total market in the period. The same would have happened if the total market were held at Fidelity or the S&P500 held at Vanguard.

As far as switching, it would be a reasonable decision for an IRA because Fidelity index funds have very low expense ratios (but not recommended for a taxable account because Vanguard index funds are more tax-efficient).

(I personally will avoid the Fidelity Zero funds because I prefer the transparency of an index fund tracking an index managed by a 3rd party).

At Fidelity you get very low cost index funds and a very broad selection of actively managed products, and no minimum investment amount or requirement to use an ETF for the lowest cost version of a product.

At Vanguard you get more tax-efficient index mutual funds, significantly lower cost offerings for money-market funds and actively managed funds, and a broader selection of types of bond funds available at low cost.
Last edited by Northern Flicker on Sat Jun 06, 2020 7:53 pm, edited 1 time in total.
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ruralavalon
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

CardioMD wrote: Sat Jun 06, 2020 12:04 pmSo when the parent expires the field will most likely be leveled.
I am not so sure about that, nobody so far has bothered to use that ETF/fund structure under license.
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JBTX
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Re: Vanguard vs. Fidelity

Post by JBTX »

I have both fidelity and vanguard.

Vanguard pros: better selection of index mutual funds and low fee active funds and I generally prefer their target date funds and life strategy funds

Fidelity pros: better customer service and lower minimums to set up accounts. I set my kid's (now adult) Roth ira up with fidelity. Also better online security protocol (better 2FA)
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Re: Vanguard vs. Fidelity

Post by retired@50 »

CardioMD wrote: Sat Jun 06, 2020 12:04 pm
So when the parent expires the field will most likely be leveled.

The explanation I usually get is about how the owners of the funds own Vanguard but that didn’t make sense to me. Thanks
The "owners of the funds own Vanguard" is a separate and distinct issue from the tax efficiency of the Vanguard ETF and Admiral share classes.

Vanguard is unique in the mutual fund industry in that it doesn't have stock that trades on the open market. Other mutual fund houses have stock that trades on the open market, which creates stockholders who expect a return on their investment through share price appreciation or dividends.

Vanguard has no such thing. It's a mutually owned company, owned by the people who invest in Vanguard funds. See wiki link that discusses the John Bogle Era of Vanguard's founding and initial structure.

https://www.bogleheads.org/wiki/The_Van ... .931996.29

Regards,
This is one person's opinion. Nothing more.
bck63
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Re: Vanguard vs. Fidelity

Post by bck63 »

.....
Last edited by bck63 on Sat Jun 06, 2020 1:45 pm, edited 1 time in total.
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Re: Vanguard vs. Fidelity

Post by bck63 »

petulant wrote: Thu Jun 04, 2020 4:29 pm There are some circumstances where Vanguard vs. Fidelity really matters. But if these are the only relevant details, OP's decision is akin to deciding between Coke and Pepsi.
I would gently argue that the differences between the aforementioned soft drinks are huge. Coke all the way baby! And I've got Warren and Charlie on my side. :-)
bck63
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Re: Vanguard vs. Fidelity

Post by bck63 »

I use both Vanguard and Fidelity. I like them both. I do find Fidelity's cash management account very useful. I stick with Fidelity's index funds only, and I would suggest the same.
CrossOverGuy
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Re: Vanguard vs. Fidelity

Post by CrossOverGuy »

Well, on a day like yesterday, when I couldn't get into my Vanguard account because of some computer glitch (until I switched browsers and was able to), it was comforting to be able to get into Fidelity right away. So not a bad idea to have money in a couple of places at least.
CardioMD
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Re: Vanguard vs. Fidelity

Post by CardioMD »

retired@50 wrote: Sat Jun 06, 2020 1:30 pm
CardioMD wrote: Sat Jun 06, 2020 12:04 pm
So when the parent expires the field will most likely be leveled.

The explanation I usually get is about how the owners of the funds own Vanguard but that didn’t make sense to me. Thanks
The "owners of the funds own Vanguard" is a separate and distinct issue from the tax efficiency of the Vanguard ETF and Admiral share classes.

Vanguard is unique in the mutual fund industry in that it doesn't have stock that trades on the open market. Other mutual fund houses have stock that trades on the open market, which creates stockholders who expect a return on their investment through share price appreciation or dividends.

Vanguard has no such thing. It's a mutually owned company, owned by the people who invest in Vanguard funds. See wiki link that discusses the John Bogle Era of Vanguard's founding and initial structure.

https://www.bogleheads.org/wiki/The_Van ... .931996.29

Regards,
Thank you. I really enjoy finding new sections on the wiki. Seems limitless.

Fidelity does not have stock that trades on the open market and their index funds perform just as well or better with lower ERs. How does Vanguard’s structure create an advantage over Fidelity? Maybe I’m too simple to understand it. I like the structure and actually wanted to go with Vanguard but the process was a pain and Fidelity made it easy.
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
protagonist
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Re: Vanguard vs. Fidelity

Post by protagonist »

Investor1319 wrote: Thu Jun 04, 2020 4:21 pm I have about $30K invested in my IRA (total stock market) in Vanguard. My husband has about $33K invested in his IRA (S&P) with Fidelity. I'm struggling with whether I should stay with Vanguard or switch to Fidelity since I am a smaller investor (at least right now) and read that Fidelity is better for smaller, beginner investors. I know the total stock market fund and s&p are supposed to run pretty closely, but my husband always seems to do better with his. Any advice? Thanks!!
IMHO, like Android (Google) or Microsoft and Apple, they both make a great product, and fortunately they are fierce competitors.
If you are a beginner, IMHO you might get more hand holding at Fidelity. I have used Fido since the 90s and have always been impressed with their customer service and willingness to help.
That said, they offer similar products and have their own minor advantages and disadvantages, so pick the one you think would serve you best and go with it. I would have no qualms investing with Vanguard....it's just that Fidelity got to me first and I have no reason to leave.
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Re: Vanguard vs. Fidelity

Post by retired@50 »

CardioMD wrote: Sat Jun 06, 2020 1:48 pm
Thank you. I really enjoy finding new sections on the wiki. Seems limitless.

Fidelity does not have stock that trades on the open market and their index funds perform just as well or better with lower ERs. How does Vanguard’s structure create an advantage over Fidelity? Maybe I’m too simple to understand it. I like the structure and actually wanted to go with Vanguard but the process was a pain and Fidelity made it easy.
As I understand it, Fidelity is a privately held corporation, so the profits still flow to shareholders, it's just that the shareholders are a small group of people - descendants of Edward "Ned" Johnson.

With regard to the Vanguard / Fidelity divide and any potential advantages Vanguard has I'll say this. The mutual fund industry has changed quite a bit in the last 10 or 15 years. The pressure to bring down expense ratios was largely driven by the fact that it was always cheaper to invest with Vanguard. I suspect Fidelity got sick of hearing this, so they, and Schwab, started to create low-expense ratio index funds.

Now that the industry has a choice of low-expense ratio funds, some people wonder what is so great about Vanguard. Well, in the 1990s when I started to use Vanguard, they were the low cost leader by a country mile. I've already saved tens of thousands of dollars in fees. All I can say is "Thanks" to John Bogle.

My rub with Fidelity is showcased below. With such a wide variety of funds, it still appears that they'd prefer you invested in an actively managed fund, in spite of the mountains of evidence that this is usually a less effective strategy.

In this thread: viewtopic.php?f=1&t=312284
I did a bit of research on the Fidelity site.
I looked at the Fidelity webpage that shows 310 funds, which I sorted by net expense ratio, and of the 16 pages of results, it was on page 13 that the expense ratios dropped below .20%.
Regards,
This is one person's opinion. Nothing more.
Elysium
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Re: Vanguard vs. Fidelity

Post by Elysium »

jay4u wrote: Fri Jun 05, 2020 9:57 pm I would stay as far away from Vanguard as I could if I were you. They messed up a trade I was trying to do thru their web site, which ended up costing me a lot of money ($40k). After calling and emailing their basic answer to me was that I should not rely on their web site, I should call in transactions! [OT comment removed by admin LadyGeek] I moved all my money to Schwab and have been very happy with their services and web site.,
[OT comment removed by admin LadyGeek] We don't know exact nature of your trade and what all happened. I have been with Vanguard over 20 years, and have done multiple rollovers, transactions, conversions, within accounts and between accounts, as well as from external sources into Vg. Never had anything messed up, hopefully it will remain so.
CardioMD
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Re: Vanguard vs. Fidelity

Post by CardioMD »

retired@50 wrote: Sat Jun 06, 2020 2:19 pm
CardioMD wrote: Sat Jun 06, 2020 1:48 pm
Thank you. I really enjoy finding new sections on the wiki. Seems limitless.

Fidelity does not have stock that trades on the open market and their index funds perform just as well or better with lower ERs. How does Vanguard’s structure create an advantage over Fidelity? Maybe I’m too simple to understand it. I like the structure and actually wanted to go with Vanguard but the process was a pain and Fidelity made it easy.
As I understand it, Fidelity is a privately held corporation, so the profits still flow to shareholders, it's just that the shareholders are a small group of people - descendants of Edward "Ned" Johnson.

With regard to the Vanguard / Fidelity divide and any potential advantages Vanguard has I'll say this. The mutual fund industry has changed quite a bit in the last 10 or 15 years. The pressure to bring down expense ratios was largely driven by the fact that it was always cheaper to invest with Vanguard. I suspect Fidelity got sick of hearing this, so they, and Schwab, started to create low-expense ratio index funds.

Now that the industry has a choice of low-expense ratio funds, some people wonder what is so great about Vanguard. Well, in the 1990s when I started to use Vanguard, they were the low cost leader by a country mile. I've already saved tens of thousands of dollars in fees. All I can say is "Thanks" to John Bogle.

My rub with Fidelity is showcased below. With such a wide variety of funds, it still appears that they'd prefer you invested in an actively managed fund, in spite of the mountains of evidence that this is usually a less effective strategy.

In this thread: viewtopic.php?f=1&t=312284
I did a bit of research on the Fidelity site.
I looked at the Fidelity webpage that shows 310 funds, which I sorted by net expense ratio, and of the 16 pages of results, it was on page 13 that the expense ratios dropped below .20%.
Regards,
I would absolutely agree with this for anyone that started in the 90s or before (even early 2000s). You’ve likely saved a boatload in fees. However, at this point I don’t see the Vanguard advantage. I’d imagine BHs at Fidelity has done as good or better if you count the cash management and customer service. Just my two cents. Thanks for entertaining my questions.
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
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Re: Vanguard vs. Fidelity

Post by Ferdinand2014 »

CardioMD wrote: Sat Jun 06, 2020 1:48 pm
retired@50 wrote: Sat Jun 06, 2020 1:30 pm
CardioMD wrote: Sat Jun 06, 2020 12:04 pm
So when the parent expires the field will most likely be leveled.

The explanation I usually get is about how the owners of the funds own Vanguard but that didn’t make sense to me. Thanks
The "owners of the funds own Vanguard" is a separate and distinct issue from the tax efficiency of the Vanguard ETF and Admiral share classes.

Vanguard is unique in the mutual fund industry in that it doesn't have stock that trades on the open market. Other mutual fund houses have stock that trades on the open market, which creates stockholders who expect a return on their investment through share price appreciation or dividends.

Vanguard has no such thing. It's a mutually owned company, owned by the people who invest in Vanguard funds. See wiki link that discusses the John Bogle Era of Vanguard's founding and initial structure.

https://www.bogleheads.org/wiki/The_Van ... .931996.29

Regards,
Thank you. I really enjoy finding new sections on the wiki. Seems limitless.

Fidelity does not have stock that trades on the open market and their index funds perform just as well or better with lower ERs. How does Vanguard’s structure create an advantage over Fidelity? Maybe I’m too simple to understand it. I like the structure and actually wanted to go with Vanguard but the process was a pain and Fidelity made it easy.
They don’t distribute capital gains. So in taxable accounts you save the long term capital gains tax. However, the lower expense ratio of Fidelity and frankly slightly better tracking of the index means that the difference is de minimus.

Example: $1,000,000 in FXAIX (Fidelity 500 index) vs VFIAX (Vanguard 500 index fund): In 2019 FXAIX distributed a long term capital gain of .119 per share at 110.48 share price. (It did not distribute a capital gain in 2020 and has distributed higher capital gains in the past so this is a reasonable average). So, $1,000,000/100.48=9,952 shares x .119 = $1,184 in long term capital gains taxes at 15% = $177. Advantage VFIAX over FXAIX. Now, the expense ratio is 0.015 for FXAIX and .04 for VFIAX. Or $150 on $1,000,000 for FXAIX and $400 for VFIAX. So $150+$177 = $327 for FXAIX and $400 for VFIAX. Advantage Fidelity if they both distribute the same dividends and track the S&P 500 equally well. Fidelity is Cheaper than Vanguard. Even with the capital gains advantage. Again, the difference is way overplayed.

Proof is in the pudding:

FXAIX 10 year return ending 3/31 AFTER taxes on distributions: 9.97%
VFIAX 10 year return ending 3/31 AFTER taxes on distributions: 9.91%

*Morningstar source

Again, essentially no difference. For me, 24/7 and excellent customer service (very important to me as a physician working lots of odd hours), all in one investing convenience for my business, retirement, etc, are most important for me.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
bck63
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Re: Vanguard vs. Fidelity

Post by bck63 »

Ferdinand2014 wrote: Sat Jun 06, 2020 3:19 pm Example: $1,000,000 in FXAIX (Fidelity 500 index) vs VFIAX (Vanguard 500 index fund): In 2019 FXAIX distributed a long term capital gain of .119 per share at 110.48 share price. (It did not distribute a capital gain in 2020 and has distributed higher capital gains in the past so this is a reasonable average). So, $1,000,000/100.48=9,952 shares x .119 = $1,184 in long term capital gains taxes at 15% = $177. Advantage VFIAX over FXAIX. Now, the expense ratio is 0.015 for FXAIX and .04 for VFIAX. Or $150 on $1,000,000 for FXAIX and $400 for VFIAX. So $150+$177 = $327 for FXAIX and $400 for VFIAX. Advantage Fidelity if they both distribute the same dividends and track the S&P 500 equally well. Fidelity is Cheaper than Vanguard. Even with the capital gains advantage. Again, the difference is way overplayed.
This is really great and really helpful. I have the S&P 500 funds at both Vanguard and Fidelity and of course knew I was paying capital gains at Fido but never took the time to actually do the comparative math. Thank you.

Brian
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ruralavalon
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

Here is a different look at the math.

Alan Roth, financial-planning.com (8/14/2018), "Vanguard vs Fidelity's ZERO funds . . .".
Alan Roth wrote:In my view, the winner is Vanguard. Expense ratios are very important, but Vanguard more than easily offsets its higher fees with much greater tax efficiency, though this wouldn’t be relevant in a tax-deferred or tax-free Roth account. In addition, the portfolio construction is better because it encompasses more of the market.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
matt27
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Re: Vanguard vs. Fidelity

Post by matt27 »

I keep my accounts at Fidelity to take advantage of their nicer website and better customer support. I also enjoy the following advantages:
  • I can do more of my business with Fidelity compared to Vanguard. For example, they offer HSA and Cash Management accounts as well as a 2% Cash Back Credit Card that automatically deposits my cash back into my brokerage account.
  • No minimums to invest in any of the Fidelity index funds or need to distinguish between share classes such as Investor Shares and Admiral Shares
  • Slightly lower expense ratios on Fidelity index funds compared with Vanguard. It's easy to find them and avoid the higher cost funds. I use Fidelity Index funds in my tax advantaged accounts.
  • With no-cost trades, I can buy Vanguard ETFs in my Fidelity Taxable account. This allows me to take advantage of Vanguard's superior tax efficiency and gives me great portability should I ever decide to switch to a different brokerage house. I can even buy fractional shares so I'm always 100% invested.
In the end, all of these advantages are minor. Both are great places to be!
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Re: Vanguard vs. Fidelity

Post by Bama12 »

Elysium wrote: Sat Jun 06, 2020 2:36 pm
jay4u wrote: Fri Jun 05, 2020 9:57 pm I would stay as far away from Vanguard as I could if I were you. They messed up a trade I was trying to do thru their web site, which ended up costing me a lot of money ($40k). After calling and emailing their basic answer to me was that I should not rely on their web site, I should call in transactions! Isn't that a bunch of BS! I moved all my money to Schwab and have been very happy with their services and web site.,
I call BS on this. We don't know exact nature of your trade and what all happened. I have been with Vanguard over 20 years, and have done multiple rollovers, transactions, conversions, within accounts and between accounts, as well as from external sources into Vg. Never had anything messed up, hopefully it will remain so.
I have been with Vanguard for years and trade about five times a week. I have never had an issue.
sycotik
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Re: Vanguard vs. Fidelity

Post by sycotik »

Elysium wrote: Sat Jun 06, 2020 2:36 pm
jay4u wrote: Fri Jun 05, 2020 9:57 pm I would stay as far away from Vanguard as I could if I were you. They messed up a trade I was trying to do thru their web site, which ended up costing me a lot of money ($40k). After calling and emailing their basic answer to me was that I should not rely on their web site, I should call in transactions! Isn't that a bunch of BS! I moved all my money to Schwab and have been very happy with their services and web site.,
I call BS on this.
This... you lost 40k because of a website glitch? I dont believe that. Not to be rude, but come on...
mindboggling
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Re: Vanguard vs. Fidelity

Post by mindboggling »

If one is an inexperienced investor, I might recommend Vanguard. Outfits such as Schwab and Fidelity offer a bewildering array of products and strategies, many of which are of little benefit to the investor. If one hasn't been schooled in Bogle-style investing, it can be confusing.

I've had my life savings at Vanguard for over 30 years, but I'm now in the process of moving everything to Schwab. However, I'll always be a Bogle-style investor. I know how to walk through Schwab's minefield.
In broken mathematics, We estimate our prize, --Emily Dickinson
ronin
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Re: Vanguard vs. Fidelity

Post by ronin »

mindboggling wrote: Sun Jun 07, 2020 5:59 pm If one is an inexperienced investor, I might recommend Vanguard. Outfits such as Schwab and Fidelity offer a bewildering array of products and strategies, many of which are of little benefit to the investor. If one hasn't been schooled in Bogle-style investing, it can be confusing.

I've had my life savings at Vanguard for over 30 years, but I'm now in the process of moving everything to Schwab. However, I'll always be a Bogle-style investor. I know how to walk through Schwab's minefield.
Care to share why you are making the move and why Schwab compared to Fidelity?
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Re: Vanguard vs. Fidelity

Post by lazynovice »

I have had accounts at Schwab, Fidelity and Vanguard. I eventually consolidated to one place to make it easier for my husband if I were to pass away suddenly. While I like Vanguard’s funds and ETFs, I hold them at Fidelity. I work and when I need to talk to a customer service rep (which is rare), I typically need to do that on a weekend.
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Re: Vanguard vs. Fidelity

Post by mindboggling »

ronin wrote: Sun Jun 07, 2020 6:20 pm
mindboggling wrote: Sun Jun 07, 2020 5:59 pm If one is an inexperienced investor, I might recommend Vanguard. Outfits such as Schwab and Fidelity offer a bewildering array of products and strategies, many of which are of little benefit to the investor. If one hasn't been schooled in Bogle-style investing, it can be confusing.

I've had my life savings at Vanguard for over 30 years, but I'm now in the process of moving everything to Schwab. However, I'll always be a Bogle-style investor. I know how to walk through Schwab's minefield.
Care to share why you are making the move and why Schwab compared to Fidelity?
There is nothing wrong with Fidelity. When I was working, they administered our 401k. Never had a problem. Either Fidelity or Schwab is OK. They are similar. Vanguard just hasn't kept up technically and operationally with other players. Jack Bogle disrupted the financial services industry for the benefit of small investors, but Vanguard has lost its advantage.
In broken mathematics, We estimate our prize, --Emily Dickinson
wolf359
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Re: Vanguard vs. Fidelity

Post by wolf359 »

tvubpwcisla wrote: Sat Jun 06, 2020 11:31 am
Investor1319 wrote: Thu Jun 04, 2020 4:21 pm I have about $30K invested in my IRA (total stock market) in Vanguard. My husband has about $33K invested in his IRA (S&P) with Fidelity. I'm struggling with whether I should stay with Vanguard or switch to Fidelity since I am a smaller investor (at least right now) and read that Fidelity is better for smaller, beginner investors. I know the total stock market fund and s&p are supposed to run pretty closely, but my husband always seems to do better with his. Any advice? Thanks!!
Certainly nothing wrong with having both.

:beer
+1

We have both. It is possible for an unforeseen glitch to make your account at least temporarily inaccessible. Should this happen, having funds in a second location allows you to stay funded while the issue is worked out.
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Re: Vanguard vs. Fidelity

Post by A_Bond »

I have accounts at both. I have found Vanguard's website to be better than expected, but I still do prefer Fidelity's web system. Some of the funds I wanted to get into when I opened my accounts were ever so slightly cheaper at Fidelity as well. If push came to shove and I had to pick one, I would probably go Fidelity. However, as others have said, there really is no wrong answer.
buy. hold. repeat.
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Re: Vanguard vs. Fidelity

Post by moneywise3 »

Ice-9 wrote: Thu Jun 04, 2020 4:26 pmThese Zero funds are not recommended in taxable accounts, because they aren't portable if you ever switch to another company and would require incurring a taxable event.
Good point, I'd have missed that. Does it mean if I transfer my taxable "in kind" to another custodian, it's not taxable?
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Re: Vanguard vs. Fidelity

Post by Northern Flicker »

bck63 wrote: Sat Jun 06, 2020 4:23 pm
Ferdinand2014 wrote: Sat Jun 06, 2020 3:19 pm Example: $1,000,000 in FXAIX (Fidelity 500 index) vs VFIAX (Vanguard 500 index fund): In 2019 FXAIX distributed a long term capital gain of .119 per share at 110.48 share price. (It did not distribute a capital gain in 2020 and has distributed higher capital gains in the past so this is a reasonable average). So, $1,000,000/100.48=9,952 shares x .119 = $1,184 in long term capital gains taxes at 15% = $177. Advantage VFIAX over FXAIX. Now, the expense ratio is 0.015 for FXAIX and .04 for VFIAX. Or $150 on $1,000,000 for FXAIX and $400 for VFIAX. So $150+$177 = $327 for FXAIX and $400 for VFIAX. Advantage Fidelity if they both distribute the same dividends and track the S&P 500 equally well. Fidelity is Cheaper than Vanguard. Even with the capital gains advantage. Again, the difference is way overplayed.
This is really great and really helpful. I have the S&P 500 funds at both Vanguard and Fidelity and of course knew I was paying capital gains at Fido but never took the time to actually do the comparative math. Thank you.

Brian
That is 2019 only. In 2018 the Fidelity fund distributed 63bp of capital gains. In a 15% tax bracket $1M of holding cost $945 in taxes.
Risk is not a guarantor of return.
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Re: Vanguard vs. Fidelity

Post by ronin »

I would be curious to learn more about what the reasons were for people leaving Vanguard for Fido other than for CMA features. In other words, for someone focusing on simple three fund/ETF approach, what about your experience was deemed better at Fido compared to Vanguard?

I would think this need wouldn’t require much in the way of customer service which is what I keep hearing Fido is better at. I also wouldn’t think the web site would matter that much so long as one could execute the trades fairly easily. What is so much better about Fido’s web site that materially matters for this type of investor?
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Re: Vanguard vs. Fidelity

Post by BroIceCream »

ronin wrote: Sun Jun 07, 2020 10:56 pm I would be curious to learn more about what the reasons were for people leaving Vanguard for Fido other than for CMA features. ...What is so much better about Fido’s web site that materially matters for this type of investor?
I don't know if it is better. In my case, it is the old adage: Location, location, location (meaning consolidation)
My employer uses Fidelity to administer my 401k. Fidelity is also one option for my health insurance providers HSA. Add to that the CMA and 2% Visa, and my pre-existing IRA, it is a one-stop shop to login and see the landscape of my finances.
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Re: Vanguard vs. Fidelity

Post by PatrickA5 »

ronin wrote: Sun Jun 07, 2020 10:56 pm I would be curious to learn more about what the reasons were for people leaving Vanguard for Fido other than for CMA features. In other words, for someone focusing on simple three fund/ETF approach, what about your experience was deemed better at Fido compared to Vanguard?

I would think this need wouldn’t require much in the way of customer service which is what I keep hearing Fido is better at. I also wouldn’t think the web site would matter that much so long as one could execute the trades fairly easily. What is so much better about Fido’s web site that materially matters for this type of investor?
We used to have everything at VG and moved it all to Fidelity last year. Main reason was the fact that VG got rid of the CMA account, but I've found the customer service to be MUCH better at Fidelity and I also like having a local office to go to, if needed.
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Re: Vanguard vs. Fidelity

Post by SmileyFace »

ruralavalon wrote: Sun Jun 07, 2020 11:17 am Here is a different look at the math.

Alan Roth, financial-planning.com (8/14/2018), "Vanguard vs Fidelity's ZERO funds . . .".
Alan Roth wrote:In my view, the winner is Vanguard. Expense ratios are very important, but Vanguard more than easily offsets its higher fees with much greater tax efficiency, though this wouldn’t be relevant in a tax-deferred or tax-free Roth account. In addition, the portfolio construction is better because it encompasses more of the market.
OP stated their accounts were IRAs so not sure why all the talk about tax efficiencies in this thread. Am I missing something?

I have accounts at both Vanguard and Fidelity either is fine but if I were to pick one it would probably be Fidelity (they now have the lowest ERs, have better customer service, have offices, etc.)
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

DaftInvestor wrote: Mon Jun 08, 2020 12:50 pm
ruralavalon wrote: Sun Jun 07, 2020 11:17 am Here is a different look at the math.

Alan Roth, financial-planning.com (8/14/2018), "Vanguard vs Fidelity's ZERO funds . . .".
Alan Roth wrote:In my view, the winner is Vanguard. Expense ratios are very important, but Vanguard more than easily offsets its higher fees with much greater tax efficiency, though this wouldn’t be relevant in a tax-deferred or tax-free Roth account. In addition, the portfolio construction is better because it encompasses more of the market.
OP stated their accounts were IRAs so not sure why all the talk about tax efficiencies in this thread. Am I missing something?

I have accounts at both Vanguard and Fidelity either is fine but if I were to pick one it would probably be Fidelity (they now have the lowest ERs, have better customer service, have offices, etc.)
You are not missing anything, the discussion drifted to a general discussion about Vanguard vs Fidelity and other posters started talking about expense ratio differences and tax efficiency.

I agree that makes no difference in OP's tax-advantaged accounts.

I agree that either Fidelity or Vanguard would be fine for OP, it's primarily a matter of personal preference.

My personal preference is Vanguard (much larger selection of low expense mutual funds, not impressed with miniscule differences in expense ratios, do have a taxable brokerage account so do care about tax-efficiency, and don't care about local customer service offices or banking-type services).
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Re: Vanguard vs. Fidelity

Post by Ice-9 »

moneywise3 wrote: Sun Jun 07, 2020 10:20 pm
Ice-9 wrote: Thu Jun 04, 2020 4:26 pmThese Zero funds are not recommended in taxable accounts, because they aren't portable if you ever switch to another company and would require incurring a taxable event.
Good point, I'd have missed that. Does it mean if I transfer my taxable "in kind" to another custodian, it's not taxable?
Exactly. See https://www.nerdwallet.com/blog/investi ... vestments/
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Re: Vanguard vs. Fidelity

Post by Gui0507 »

Question. I have vanguard funds VTSAX (Roth) and VFIAX (broker) right now. Being that they both have their 3,000 buy ins I’m well over that. If I were to transfer these account over to fidelity, would I incur a charge every time I bought more of these shares? I know when you first purchase them over on fidelity you have the 3K buy in but also a $75 charge. I know the ETF’s don’t.

My reasoning is lately I’ve had to email or call Vanguard for everything, however, the fidelity customer service has just been better. They also have a chat functionality which is great for when I can’t get in the phone often at work. The interface is also a lot better in my opinion.
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

Gui0507 wrote: Fri Jun 12, 2020 11:08 am Question. I have vanguard funds VTSAX (Roth) and VFIAX (broker) right now. Being that they both have their 3,000 buy ins I’m well over that. If I were to transfer these account over to fidelity, would I incur a charge every time I bought more of these shares? I know when you first purchase them over on fidelity you have the 3K buy in but also a $75 charge. I know the ETF’s don’t.

My reasoning is lately I’ve had to email or call Vanguard for everything, however, the fidelity customer service has just been better. They also have a chat functionality which is great for when I can’t get in the phone often at work. The interface is also a lot better in my opinion.
Why not stay at Vanguard, and do fund transactions online with their website and or app? Why do you need or want customer service for that?

I use the app, and can't even remember last time I had to call to do any transaction.
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Re: Vanguard vs. Fidelity

Post by SxSW »

retired@50 wrote: Sat Jun 06, 2020 1:30 pm Vanguard is unique in the mutual fund industry in that it doesn't have stock that trades on the open market. Other mutual fund houses have stock that trades on the open market, which creates stockholders who expect a return on their investment through share price appreciation or dividends.

Vanguard has no such thing. It's a mutually owned company, owned by the people who invest in Vanguard funds. See wiki link that discusses the John Bogle Era of Vanguard's founding and initial structure.

As was pointed out in The House That Bogle Built, the fund structure doesn't actually force Vanguard to minimize expenses, though. They could triple everyone's salary and still claim they were providing 'at cost'. Cost is whatever Vanguard says it is, and upper management salaries are still kept secret.
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Re: Vanguard vs. Fidelity

Post by retired@50 »

Duplicate.

Regards,
Last edited by retired@50 on Sat Jun 13, 2020 3:15 pm, edited 1 time in total.
This is one person's opinion. Nothing more.
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Re: Vanguard vs. Fidelity

Post by backpacker61 »

I've had a Fidelity account since 1985, and a Vanguard account since 1989.

You will be fine at either/both. They do each have different strengths.

+Fidelity
  • HSA (Health Savings Account) available
  • Cash Management account available
  • 2% cash back Visa credit card with no annual fee
  • lower fund minimums

+Vanguard
  • much better selection of low cost tax exempt bond funds
  • lower cost/higher return on money market funds
  • no higher cost products for their reps to "push"
  • the actively managed funds they do have are consistently lower in cost
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Re: Vanguard vs. Fidelity

Post by ronin »

backpacker61 wrote: Sat Jun 13, 2020 9:38 am I've had a Fidelity account since 1985, and a Vanguard account since 1989.

You will be fine at either/both. They do each have different strengths.

+Fidelity
  • HSA (Health Savings Account) available
  • Cash Management account available
  • 2% cash back Visa credit card with no annual fee
  • lower fund minimums

+Vanguard
  • much better selection of low cost tax exempt bond funds
  • lower cost/higher return on money market funds
  • no higher cost products for their reps to "push"
  • the actively managed funds they do have are consistently lower in cost
This is a great recap on your many years of perspective, thank you. Half of the Fidelity list pertains to topics more related to classic banking functions rather than traditional investing ones, while the Vanguard list seems more aligned with investing. I guess this shouldn't be a surprise given the outward strategies of each organization, however for someone that is less concerned with a one-stop shop approach, Vanguard might be preferred for core investment needs, recognizing banking/CMA needs would need to be met elsewhere (Fidelity, banks/CUs, etc.).

Personally, while I appreciate simplicity, I also recognize some benefits to more of a best-of-breed approach. Its a balance that each person must assess for themselves and the stakeholders in their decisions.
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Re: Vanguard vs. Fidelity

Post by ChrisBenn »

ronin wrote: Sat Jun 13, 2020 9:55 am
backpacker61 wrote: Sat Jun 13, 2020 9:38 am I've had a Fidelity account since 1985, and a Vanguard account since 1989.

You will be fine at either/both. They do each have different strengths.

+Fidelity
  • HSA (Health Savings Account) available
  • Cash Management account available
  • 2% cash back Visa credit card with no annual fee
  • lower fund minimums

+Vanguard
  • much better selection of low cost tax exempt bond funds
  • lower cost/higher return on money market funds
  • no higher cost products for their reps to "push"
  • the actively managed funds they do have are consistently lower in cost
This is a great recap on your many years of perspective, thank you. Half of the Fidelity list pertains to topics more related to classic banking functions rather than traditional investing ones, while the Vanguard list seems more aligned with investing. I guess this shouldn't be a surprise given the outward strategies of each organization, however for someone that is less concerned with a one-stop shop approach, Vanguard might be preferred for core investment needs, recognizing banking/CMA needs would need to be met elsewhere (Fidelity, banks/CUs, etc.).

Personally, while I appreciate simplicity, I also recognize some benefits to more of a best-of-breed approach. Its a balance that each person must assess for themselves and the stakeholders in their decisions.
IMO best in breed would be holding vanguard funds at fidelity. With vanguards push to ETF share classes/fund structures this seems very viable.
Don't forget the customer service difference which was excluded in the original query.
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Re: Vanguard vs. Fidelity

Post by bondsr4me »

SxSW wrote: Sat Jun 13, 2020 9:01 am
retired@50 wrote: Sat Jun 06, 2020 1:30 pm Vanguard is unique in the mutual fund industry in that it doesn't have stock that trades on the open market. Other mutual fund houses have stock that trades on the open market, which creates stockholders who expect a return on their investment through share price appreciation or dividends.

Vanguard has no such thing. It's a mutually owned company, owned by the people who invest in Vanguard funds. See wiki link that discusses the John Bogle Era of Vanguard's founding and initial structure.

As was pointed out in The House That Bogle Built, the fund structure doesn't actually force Vanguard to minimize expenses, though. They could triple everyone's salary and still claim they were providing 'at cost'. Cost is whatever Vanguard says it is, and upper management salaries are still kept secret.
Agree...not what I would call full and transparent disclosure to us "owners".
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Re: Vanguard vs. Fidelity

Post by ruralavalon »

backpacker61 wrote: Sat Jun 13, 2020 9:38 am I've had a Fidelity account since 1985, and a Vanguard account since 1989.

You will be fine at either/both. They do each have different strengths.

+Fidelity
  • HSA (Health Savings Account) available
  • Cash Management account available
  • 2% cash back Visa credit card with no annual fee
  • lower fund minimums

+Vanguard
  • much better selection of low cost tax exempt bond funds
  • lower cost/higher return on money market funds
  • no higher cost products for their reps to "push"
  • the actively managed funds they do have are consistently lower in cost
Both Vanguard and Fidelity are good choices. In my opinion it's largely a matter of personal preference.

That's a nice summary of some of the strengths of each.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
ronin
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Re: Vanguard vs. Fidelity

Post by ronin »

ChrisBenn wrote: Sat Jun 13, 2020 10:07 am
ronin wrote: Sat Jun 13, 2020 9:55 am
backpacker61 wrote: Sat Jun 13, 2020 9:38 am I've had a Fidelity account since 1985, and a Vanguard account since 1989.

You will be fine at either/both. They do each have different strengths.

+Fidelity
  • HSA (Health Savings Account) available
  • Cash Management account available
  • 2% cash back Visa credit card with no annual fee
  • lower fund minimums

+Vanguard
  • much better selection of low cost tax exempt bond funds
  • lower cost/higher return on money market funds
  • no higher cost products for their reps to "push"
  • the actively managed funds they do have are consistently lower in cost
This is a great recap on your many years of perspective, thank you. Half of the Fidelity list pertains to topics more related to classic banking functions rather than traditional investing ones, while the Vanguard list seems more aligned with investing. I guess this shouldn't be a surprise given the outward strategies of each organization, however for someone that is less concerned with a one-stop shop approach, Vanguard might be preferred for core investment needs, recognizing banking/CMA needs would need to be met elsewhere (Fidelity, banks/CUs, etc.).

Personally, while I appreciate simplicity, I also recognize some benefits to more of a best-of-breed approach. Its a balance that each person must assess for themselves and the stakeholders in their decisions.
IMO best in breed would be holding vanguard funds at fidelity. With vanguards push to ETF share classes/fund structures this seems very viable.
Don't forget the customer service difference which was excluded in the original query.
I could see that as a possibility except for the difference in MM fund rates between Fido and Vanguard, where Vanguard has a clear edge.
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