E*TRADE vs. Betterment vs. Fidelity… Is it a fair fight? Maybe between E*TRADE and Fidelity, which offer similar investment services. Betterment is a much more limited platform, but it’s perhaps the best in the industry at what it does.

If you’re either searching for a first-time investment platform or looking to switch from where you are to something new, this is a good three-way comparison. Each of the three platforms has its own unique specializations, and depending on what type of investing you want to do, you may find investment nirvana at one of the three.

About E*TRADE

E*TRADE launched in 1982 as a platform designed specifically for online trading. At the time, that was a new concept. But today, virtually every investment firm in the market offers online trading. Still, E*TRADE is one of the best in the business in that regard. The more than $65 billion in assets it has under management testify to that fact.

E*TRADE is a full-service discount investment broker with one of the best trading platforms in the business. Not only does E*TRADE give you the ability to be a successful self-directed investor, offering stocks, bonds, mutual funds, exchange traded funds (ETFs), options, futures and FOREX trading, but it also offers four different managed investment options. Three are aimed at larger investment accounts and are actively managed by financial advisors. But the Core Portfolios robo advisor goes head-to-head with Betterment and gives E*TRADE virtually every investment option an investor could want.

The service charges trading commissions of $6.95 per trade, but that drops to $4.95 per trade if you’re a frequent trader (defined as making at least 30 trades per quarter).


About Betterment

Betterment

Betterment was the first robo advisor, having started in 2008, and it continues to set the pace for that industry sector. Even though there are now scores of robo advisors — including those offered by major investment brokerages — Betterment is still the leader in robo-advisor innovation. It’s constantly adding new features, even some that are not typical of robo advisors.

Despite the growing competition, Betterment remains the largest independent robo advisor, with more than $16 billion in assets under management. And where once it offered a one-size-fits-all portfolio for all investors, it now makes several available, particularly for investors with larger portfolios.

Betterment doesn’t offer self-directed investing, such as trading in individual securities and funds. It’s strictly an automated online investment platform, perfectly suited to new investors and those who lack either the knowledge or the time to invest. All you need to do is invest your money and Betterment handles all the management details for you.

There are plenty of other robo advisors available today, but Betterment just does it better than the rest.


About Fidelity

fidelity

Founded in 1946 and based in Boston, Fidelity is one of the largest investment brokerage firms in the world. In fact, with $2.46 trillion in assets under management, it’s the second largest in the world, trailing only Charles Schwab.

One of the advantages of that kind of size is that Fidelity can offer 24/7 customer service as well as access to more than 140 local branches throughout the country. Once known primarily for its proprietary mutual funds, it operates as a full-service discount brokerage. It offers trading in every asset type: stocks, bonds, mutual funds and ETFs (both Fidelity Funds and funds from other providers), and options.

Like all other large investment brokers, Fidelity has its own robo advisor, Fidelity Go. You can open an account with no money at all and begin investing with just $10. Much like Betterment, it invests in U.S. and international stock and bond ETFs. The annual advisory fee is 0.35%.

In addition to the Fidelity Go robo advisor, Fidelity also offers several other investment management options, including Fidelity Portfolio Advisory, Fidelity Personalized Portfolios, Fidelity Separately Managed Accounts, and Fidelity Wealth Management Advisory. Each is designed for investors with larger portfolios, requiring larger minimum initial investments and charging higher fees.


What’s in This Comparison?

How Are They the Same?

Similarities between E*TRADE and Fidelity are common, since both are diversified investment brokers.

  • Betterment is a robo advisor, whereas E*TRADE and Fidelity are diversified investment brokers that also offer several robo advisor options.
  • E*TRADE and Fidelity are both investment brokers, while Betterment is strictly a robo advisor.
  • Betterment and Fidelity have no required minimum investment, while E*TRADE requires a minimum of $500 to open a brokerage account.
  • E*TRADE and Fidelity have local branches, while Betterment is purely an online platform.
  • All three platforms provide investor access online and by iOS and Android mobile apps.

How Are They Different?

Once again, there’s much in common between E*TRADE and Fidelity, but there are major differences with Betterment:

Platform Purpose Betterment is a robo advisor, while E*TRADE and Fidelity are full-service discount investment brokers.
Investor Profile E*TRADE and Fidelity are primarily for self-directed investors, while Betterment is for passive investors.
Investments Offered Betterment offers predesigned portfolios. E*TRADE and Fidelity also offer managed investment options but allow you to invest in individual stocks, bonds, funds, options and other investments too.
Fees Betterment charges an annual advisory fee. E*TRADE and Fidelity charge trading commissions, although each also charges an annual advisory fee on its robo advisor.
Customer Service E*TRADE offers 24/7 customer service by live chat. Fidelity offers 24/7 phone contact, and Betterment offers limited daily customer contact.
Local Branches E*TRADE has 30 local branch offices, Fidelity has 140, and Betterment has none.

Unique Features

E*TRADE

Like many investment brokerages, E*TRADE is expanding into broader financial services. Open an account with E*TRADE and you can also bank with E*TRADE, through E*TRADE Savings Bank. It comes with free checking and high interest savings, as well as a line of credit secured by your investment account. You can borrow up to 50% of the value of your account for any reason other than buying securities on margin. In this way, E*TRADE gives you the ability to bank where you invest.

Betterment

Both E*TRADE and Fidelity have robo advisor services available. But that’s only one item on their very long menus of options. What makes Betterment unique is that it’s a pure robo advisor. In fact, Betterment is independent, which is to say it’s not owned by — or affiliated with — any other investment brokers or financial services providers. And based on many expert opinions, it’s widely considered the very best robo advisor.

Fidelity

Fidelity is an investment brokerage that’s good at virtually everything. But its customer service is so good as to be unique. It’s available by phone 24 hours a day, seven days per week. Even in an era of online trading, investors often prefer to speak directly with a live human being. In a world where that’s harder to come by, especially when investing, Fidelity is a breath of fresh air. And if you like face-to-face contact, there are also 140 local branches around the country.

Minimum Investments

  • E*TRADE requires a minimum of $500 to open a brokerage account. But the brokerage requires relatively high minimums for its managed options. The E*TRADE Core Portfolios robo advisor requires a minimum investment of $5,000. The Blend ($25,000), Dedicated ($150,000) and Fixed Income ($250,000) portfolios have much higher minimums.
  • Betterment requires no upfront investment. You can open your account with no money whatsoever, then fund your account going forward.
  • Fidelity also has no minimum initial investment requirement, either for a brokerage account or for the Fidelity Go robo advisor.
Winner — Fidelity wins due to having no minimum initial investment required for either a brokerage account or the robo advisor.

Annual Fees

  • E*TRADE charges no annual fees for brokerage accounts. But its managed accounts have an annual advisory fee of 0.30% for the Core Portfolios robo advisor and fees ranging from 0.35% to as high as 1.125% on the other managed portfolio accounts.
  • Betterment charges an annual advisory fee of 0.25% on its basic Digital Plan and 0.40% on its Premium Plan.
  • Like E*TRADE, Fidelity has no annual fee for its brokerage accounts. But the Fidelity Go robo advisor does have an annual advisory fee of 0.35%, while its four other managed account options range from 0.40% up to 1.70%.

Standout Features

E*TRADE

E*TRADE has two standout features. The first is options. The trading platform is particularly well-suited to options trading. It’s widely recognized as one of the best in the industry. The other feature is free fund trading. E*TRADE offers more than 250 commission-free ETFs and at least 4,400 no-fee mutual funds.

E*TRADE also likes to promote its frequent trader discount, lowering its basic trading fee from $6.95 to $4.95 for those who make more than 30 trades per quarter. But that discount just brings E*TRADE’s fees down to where Fidelity is all the time.

Betterment

Betterment is specifically designed for those who want to invest but either know little about investing or lack the time or inclination to do it for themselves. As an investor, you turn your money over to Betterment and it handles all the investment management for you. What’s more, Betterment is one of the lowest-cost providers in the space. With an advisory fee at just 0.25%, it’s at the low end of the robo advisor fee range. This gives you the benefit of both professional management and low cost.

Beyond the basic portfolio, Betterment also offers socially responsible investing, as well as smart beta and income portfolio options as it broadens its robo-advisor menu.

Fidelity

Given its history as a mutual fund company, it’s not surprising that Fidelity has one of the largest selections of mutual funds in the industry. Including Fidelity’s own propriety funds, the platform offers investors access to more than 10,000 mutual funds. In fact, Fidelity’s Contra Fund is the largest mutual fund in the world, with well over $100 billion in assets under management. In addition, Fidelity offers its standard trading commission of $4.95 per trade on stocks, options and ETFs. You don’t need to be a frequent trader to qualify for that pricing.

Winner — E*TRADE wins as the best options trading platform. Betterment wins as the best managed-investment option. Fidelity wins for having the largest number of funds, as well as the same low trading fee regardless of trading frequency.

Customer Service

  • E*TRADE phone contact is available Monday through Friday, from 8:30 P.M. to 8:30 P.M. Eastern Time. However, customer support is available 24 hours a day, seven days per week, by live chat.
  • Betterment’s phone customer service is available only on weekdays, from 9:00 A.M. to 6:00 P.M. Eastern Time. It has more limited hours on weekends, from 11:00 A.M. to 6:00 P.M., but that contact is by email only.
  • Fidelity offers customer support by phone, 24 hours a day, seven days per week. It also has the advantage of having 140 local branches around the country.

Security

All three accounts come with SIPC coverage, which protects investor’s funds from broker failure up to $500,000 in securities in cash, including up to $250,000 in cash.

For direct account security, E*TRADE offers $0 liability against unauthorized use of your account, as well as complete payment protection, information privacy, optional digital security ID, and smart alerts by text or email.

For direct account security, Betterment offers two-factor authentication to prevent hackers from taking control of your account by stealing your password.

Fidelity offers two-factor authentication, security text alerts and a money transfer lockdown option, which lets you block electronic money movements out of your account. The broker also offers the Fidelity Customer Protection Guarantee. Fidelity will reimburse you for any financial losses that result from unauthorized activities on your accounts.

Winner — E*TRADE and Fidelity are tied here. Both offer to reimburse you for unauthorized losses, as well as offering other security measures.

Who Are They Best For?

  • E*TRADE will work best for options traders. Options are the platform’s biggest specialization, and its Power E*TRADE trading platform is one of the best in the industry.
  • No surprise here, Betterment is best for anyone who doesn’t want to handle the actual job of investing but still wants to invest. All you need to do is provide the funds and Betterment will provide full investment management at a very low annual fee. That also makes Betterment the best of the three platforms for new investors. If you lack the experience to be successful as a self-directed investor, a managed option is the best choice. And even if you are an experienced investor, you may still want to have at least a portion of your portfolio professionally managed. Betterment stands out in that area because it’s likely the best, most cost-effective managed option available.
  • Due to the everyday low trading fee of $4.95, as well as the large number of investment options, Fidelity is the best overall platform for self-directed investors. The lone exception is with options, where E*TRADE has a slight edge. Fidelity is also the preferred platform to use if you’re a fund investor. It simply offers more funds, including many of its own Fidelity mutual funds, which come with no transaction fees.

Which Is the Best?

At just about any experience or portfolio level, Fidelity comes out as the overall winner. That helps to explain why its assets under management are in the trillions, while the other two platforms are in the tens of billions. Fidelity simply offers more for the largest number of investors. Overall, it’s the best platform for both self-directed investors and fund investors.

But that doesn’t mean Fidelity’s the best in all categories:

  • E*TRADE takes the crown for options trading due to its platform being heavily slanted in that direction.
  • Even though both Fidelity and E*TRADE offer managed investment options, including robo advisors, Betterment is the winner in this category, with its combination of low fees and no minimum initial investment.

Depending on your investment preference, you really can’t go wrong with any of these three platforms.

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