Published in: Buying Stocks | Dec. 3, 2018

Fidelity vs. TD Ameritrade: Comparing Top Online Brokerages

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Fidelity and TD Ameritrade are compelling choices for investors who want low commissions and a wide selection of investments. See how the two compare on fees, commissions, and trading platforms below.

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No discussion of the top online brokerages would be complete without talking about Fidelity and TD Ameritrade, two of the industry’s giants. With millions of accountholders, these discount brokers can afford to invest heavily in feature-rich trading platforms, large fund selection, and customer service, making them top picks for investors who want all the bells and whistles at low prices.

Below, we’ll take you through a head-to-head comparison of Fidelity vs. TD Ameritrade on prices, platforms, free perks, and more, to help you decide between two of the largest brokers on the block.

Commission prices

Fidelity and TD Ameritrade are highly competitive on the cost to place a trade, as prices for the most common types of trades differ by just $2.00. Here’s a quick comparison of their basic commission schedules.

Broker Stocks and ETFs Stock options Mutual funds
Fidelity $4.95 per trade $4.95 plus $0.65 per contract $49.95 (thousands for free)
TD Ameritrade $6.95 per trade $6.95 plus $0.75 per contract $49.99 (thousands for free)

It’s worth pointing out that not all trades are subject to a commission. Fidelity and TD Ameritrade offer many different mutual funds and exchange-traded funds (ETFs) you can trade without paying a commission. In addition, new customers may qualify for perks (cash bonuses and free trades) when opening or transferring an account, which can help you reduce your total trading costs over time.

Mutual funds and ETFs you can trade for free

One thing that separates many of the top online brokerages from the pack is an assortment of mutual funds and ETFs you can trade without paying a commission or transaction fee. Given a typical commission of $5-$7 to trade ETFs, and $20-$50 to trade mutual funds, commission-free ETFs and no-transaction-fee mutual funds can be a boon for cost-conscious investors.

Fund type Fidelity TD Ameritrade
Total mutual funds More than 12,200 More than 12,500
No-transaction-fee mutual funds More than 3,800 More than 1,900
Commission-free ETFs More than 260 More than 300

Fidelity’s core business of fund management and retirement-plan administration spills over into its online discount brokerage business. It offers one of the largest lists of no-transaction-fee mutual funds, and boasts a competitive assortment of commission-free ETFs. The bulk of Fidelity’s free ETFs are low-cost iShares ETFs, which are index ETFs that can serve as the basic building blocks of a retirement portfolio. Noteworthy ETFs include iShares’ Core S&P 500 ETF (large cap stocks) and Core S&P Small-Cap ETF (small cap stocks), which carry annual expense ratios of just 0.04% and 0.07%, respectively.

In addition, Fidelity has a highly-competitive fund lineup that is getting better (and less costly) over time. In particular, its new ZERO line of mutual funds has taken the brokerage industry by storm. Its ZERO index funds are truly no-cost -- its clients pay nothing to buy them, and nothing in management fees, making them a truly free index fund offering.

TD Ameritrade notches a win in its commission-free assortment, offering many ultra-low-cost ETFs from sponsors including SPDR and iShares. Its commission-free ETFs from SPDR are particularly attractive from a cost perspective, given many carry expense ratios of 0.05% or less. Thus, not only can you dodge a commission on the trade, but you won’t pay an arm and a leg in ongoing management fees, either.

Minimum deposit requirements

As a general rule, discount brokers won’t turn you away just because you want to start small. Fidelity and TD Ameritrade are no-minimum discount brokers, so you can open an account without having to empty your bank account to do it.

New investors can start small, adding money to their accounts over time to purchase commission-free ETFs or no-transaction-fee mutual funds until they have enough cash to invest to justify paying a commission to buy individual stocks, for example.

Trading platforms

TD Ameritrade is a clear leader in trading platforms. Its customers enjoy highly-rated mobile apps on Android, iOS, and Windows devices, in addition to a web-browser platform and a full desktop platform. The desktop platform, thinkorswim, is the crown jewel, available to any TD Ameritrade customer regardless of how often they trade, or how much they keep in their account. (You’ll see why this is important in just a second.)

Fully customizable, thinkorswim’s layout can be adjusted to show exactly what you want to see -- stock charts, historical earnings results for a favorite ticker, real-time streaming quotes, or a video feed of recent CNBC interviews. The layout is limited only by your imagination. The thinkorswim platform is also available on mobile devices, and it includes almost all of the functionality you’d find on the desktop platform.

Fidelity matches TD Ameritrade with a web-based browser trading tool and mobile apps, but its premier trading platform isn’t open to everyone. Its advanced desktop platform (Fidelity Active Trader Pro) is free, but you’ll need to make at least 36 qualifying trades in a rolling 12-month period for access. (Some customers may also qualify for the advanced platform by calling in for access.) Thus, if you want a platform to do more watching than trading, Fidelity might not be the right choice for you.

That said, as far as free platforms go, Fidelity Active Trader Pro is tough to beat. Like thinkorswim, the homepage is completely customizable, with features that include hundreds of charting tools, real-time news, and optional columns to show the information that’s most important to you (a stock’s daily volume, high or low price, price-to-earnings multiple, and so on).

Admittedly, assessing the quality of a trading platform is more of a subjective art than an objective science. Given that both brokers are no-minimum brokers, those who view a trading platform as particularly important in choosing a broker can easily “try before they buy,” so to speak.

International stocks and ADRs

The short story here is that Fidelity offers far more than TD Ameritrade when it comes to trading foreign stocks. While both brokers will allow you to buy American depositary receipts (ADRs), which are basically foreign stocks with domestic tickers, only Fidelity offers the ability to place trades on overseas markets through an online account.

Fidelity customers can trade in 25 different countries and exchange between 16 different currencies. So, if you want to buy a small cap stock listed on the Australian Securities Exchange, Fidelity can get you there with a few clicks; TD Ameritrade cannot.

Research reports and news

Discount brokers of today are nothing like those of the past. While the industry historically focused on eliminating extras like free research to reduce trading costs, electronic trading allows brokers to offer both low costs and excellent research.

Fidelity’s value proposition is particularly strong in stock and fund research. With 12 independent third-party research providers for individual stocks, in addition to proprietary research reports on certain investment themes and top-down analysis of the U.S. stock market. Proprietary research is relatively rare with online discount brokers, as few have the scale to justify the cost of in-house analysis and commentary.

TD Ameritrade’s size allows it to offer an assortment of proprietary research and commentary, as well as research reports from several third-party providers including CFRA, Ford, and Market Edge. The brokerage is especially competitive in daily market reports, offering nearly 50 different pieces from content providers that include S&P Capital IQ and First Call.

If research is particularly important to you, Fidelity is a likely winner. The sheer volume and depth of its research offering (it has reports on more than 6,000 stocks) means that you’ll be hard-pressed to find a ticker that isn’t covered by one or many of its independent research providers.

Top online brokerage: Fidelity vs. TD Ameritrade

Deciding between Fidelity and TD Ameritrade largely comes down to the features or functionality that are most important to you. TD Ameritrade offers a best-in-class trading platform that is completely free, a lengthier list of commission-free funds, and a compelling research suite, but at $6.95 per trade, it is priced about $2 more than Fidelity and other leading discount brokers. For frequent traders, a $2 commission difference adds up fast, particularly for people who want to build a custom portfolio of individual stocks.

Fidelity’s standard commission price of $4.95 ranks among the best, and it’s particularly attractive for investors who have a preference for iShares ETFs, given its commission-free ETF list includes more than 240 iShares ETFs. And as far as research goes, Fidelity is arguably the best of any discount broker, since it simply offers research from all the third-parties that supply other brokers… and then some on top!

The downside, though, is that Fidelity’s most powerful platform isn’t necessarily open to everyone, given it requires at least 36 trades in a rolling 12-month period to qualify. That said, unless you need to be glued to your computer screen, its web browser and mobile apps make trading a snap, even if they aren’t as feature dense as a full desktop platform.

Using the wrong broker could cost you serious money

Over the long term, there's been no better way to grow your wealth than investing in the stock market. But using the wrong broker could make a big dent in your investing returns. Our experts have ranked and reviewed the top online stock brokers - simply click here to see the results and learn how to take advantage of the free trades and cash bonuses that our top-rated brokers are offering.

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