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Fidelity vs Vanguard: IRA Conversion, 529s, Interface

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  • Fidelity vs Vanguard: IRA Conversion, 529s, Interface

    I need to change financial institutions, and I want:

    1. Quick and easy Trad -> Roth IRA conversion for my annual backdoor

    2. Good 529 options (preferably ones I can manage myself with low cost)

    3. Simple UI, esp a good Android app

    The funds I want - p much just the basic low-cost index funds - are almost identical (FSTVX/VFIAX, etc) as to performance, composition, and fees.  Vanguard's REIT is a bit better, but I prob won't put that in for a little while.

    I've tooled around with Fidelity and Vanguard without creating accounts (************************ credit fraud means I have to mail my stuff in or go in person...paper or brick-and-mortar?  These still exist?) and the UIs are both not bad, I might favor Fidelity since they've got brick-and-mortar places nearby if I ever actually need that...I haven't really done anything actually involving account management with their interfaces, though, tooling around just looking at stuff.

    Vanguard's 529 was rated Gold by Morningstar, but looking at Fidelity's options, their AZ plan has slightly fewer options, but lower costs (0.11-0.18% vs Vanguard's 0.24% or so), but they were only rated Bronze.  What's the deal with that?  I know their ratings aren't everything, just wondering what they know that I don't.

    I know that Vanguard's backdoor Roth process is very easy.  I've heard Fidelity's is too, but haven't really had it explained to me other than "it's easy."

    My wife has an employer account with Fidelity, which would be nice to keep in the same institution, but wouldn't really make that big of a difference...

    Has anyone used both and can compare them head-to-head, or at least give their thoughts as to the 3 points mentioned?

  • #2
    I use both.

    If you prefer mutual funds to ETFs, I'd stick with Vanguard for your main brokerage and/or IRA account. Fidelity has lowered ERs to match Vanguard on many major index funds, but still trails behind VG on overall selection and investment costs in many categories such as REITs, municipal bonds, small cap value, I just trust VG more to continue to lead the way on costs, with Fido following suit.

    No difference in ease if backdoor Roth. Eventually you'll want to have several Roths at different custodians to perform Roth "horserace" conversions later in life, in early retirement years.

    529 choice should be made separately. Assuming home state tax deduction is not a major factor, I think your top three choices are MA Fidelity (overall lowest costs, Fidelity index funds, total plan ER 0.12% for us), NY Vanguard (your lowest ER Vanguard provider, ER 0.16% last I checked), or UT (Vanguard and DFA funds, more customizable, slightly higher cost, ER in 0.2-0.3% range, for us was ER 0.23 last I checked.)

    Good luck.