Fidelity Investments Review – Our Trading Experience Rating

Item: Fidelity Investments Review
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Key Takeaways

Fidelity was founded in 1946 and has its headquarters in Boston, Massachusetts.
Fidelity has more than 40 million customers.
The financial services firm is regulated by the United States Financial Industry Regulatory Authority (FINRA).
Fidelity is also registered with the US Securities and Exchange Commission (SEC).
The company is a member of the Securities Investor Protection Corporation (SIPC), which offers protection of members up to $500,000 (including $250,000 for claims for cash).
As well, Fidelity provides its brokerage customers with additional “excess of SIPC” coverage that provides an aggregate of $100 million of coverage – up to $1.5 million for cash and $10 million for securities per customer.
Fidelity customers can trade US and international stocks, Exchange Traded Funds (ETF), bonds and mutual funds.
The company holds $9.6 trillion in assets under administration and $3.6 trillion in discretionary assets.
The broker does not offer trading in futures or conventional retail FOREX trading.
New traders are drawn to Fidelity for its low fees, zero balance new account requirement, its simple and user-friendly platforms, as well as its wide range of research amenities.
Fidelity has strong customer service coverage, allowing traders to seek help via a human agent, chatbot, email, phone or through a physical branch visit.
The broker provides clients with Web and mobile access to its Fidelity.com platform as well as the Active Trader Pro platform.
The broker has a powerful US presence and a long history of operations in that country. It has overseas operations to serve its international clientele.
With over 57,000 associates, its global presence spans nine countries from North America, Europe, Asia and Australia.

Overall Summary

Fidelity Investments is a diversified financial services firm in the US. It has a strong full-service stockbroker offering and is considered by many industry experts to be the largest US stock brokerage firm. The firm was founded in 1946 in Boston and has spent several decades offering financial services products and solutions to individuals and companies.

The firm has over 40 million clients. Its stated aim is to “help people feel more confident in their most important financial goals.” The company has a significant business-to-business operating division, through which it manages employee benefit programs for upwards of 22,000 companies. It also offers its services to over 3,600 advisory firms. The company’s offerings are backed by innovative and progressive technology solutions that help companies and individuals optimize their trading.

Fidelity is a major player in the world of diversified investments, holding $9.6 trillion in assets under administration, $3.6 trillion in discretionary assets, and seeing daily trading traffic of over 3.1 million trades. The company also has over 57,000 associates, pushing its global presence across nine markets from North America, Europe, Asia and Australia.

Fidelity prides itself on its independence. It claims to have a unique view of the entire market. It is big enough to have the stability required to have long-term planning that benefits its own clientele and itself, too. The company prides itself on its continual investment in trading platforms and systems. It recently added an improved investor dashboard, and all its indexes are customizable.

The Web-trading platform is easy to use and offers advanced order types. You can also trade on international indices, not just US stocks. It is a good option for beginner investors while maintaining a high level of functionality for elite traders. The company strives to provide competitive pricing, but some of its mutual funds have high fees. We will explain more in further detail later in the review.

The company has been awarded many prizes. In 2022, Investor's Business Daily recognized the company as the #1 Most Trusted Wealth Management Company. Similarly, Kiplinger’s magazine, in August 2021, voted Fidelity as its # 1 Overall Broker. Although Fidelity operates in a wide range of financial service areas, this review will concentrate on Fidelity’s activities as an online stockbroker.

Who Is Fidelity Good For?

Fidelity has been in the market for a long time and has been able to craft its offering to be able to serve all ends of the trader experience spectrum. As such, it can adequately serve both experienced and new traders alike. In keeping with this ethos, the broker ensures that its trading platform, be it on the Web or app, is straightforward and easy to navigate while retaining a high level of advanced tools.

Fidelity is a recognizable brand name for good reason. Having been a key player in the market for many years, it has developed competitive products and services for every segment of the investment and wealth management world. It has excellent platforms, zero trade commissions, and an admirable slate of research tools. Fidelity is known for its powerful mutual fund selection. It also performs very well with stock traders due to its wide range of US and international stock access.

The company offers excellent screeners, and portfolio analysis tools and its peerless platform Active Trader Pro has the tools stock and options traders need. A wide range of managed portfolios, with accompanying coaching and financial advisor guidance, is perfect for investors looking for a combination of self-managed tools and expert guidance. Here are some key facts to consider before engaging with this broker:

Pros

Commission-free US stocks and ETFs.
Powerful trading platforms.
Excellent research tools.
Educational resources for all levels of investors.
Strong customer service desk.
Large selection of no-transaction-fee funds.
Offers expense ratio free index funds.
Wide selection of mutual funds.
Highly rated mobile app.

Cons

High mutual fund fees.
Account verification can be slow.
Relatively high broker-assisted trade fee.
Lack of futures, cryptocurrency trading and conventional FOREX trading.
Platform design can appear outdated.
Portfolio analysis feature does not have an in-depth view.
This broker does not provide negative balance protection.

Pros Explained

Low costs: Fidelity is a highly competitive broker with low costs. One of its key features is that it provides free stock and ETF trading. The broker has worked hard to eradicate the bulk of its common account fees, including pesky fees like intra-account transfers, account maintenance, and even check fees.

Excellent trade executions: Fidelity offers a highly competitive trade execution package that is powered by its in-house trade execution algorithms. It optimizes order routing via dozens of key market players, like stock exchanges and intermediary market makers.

Powerful research and asset screeners: Stock screeners allow traders to cut through many thousands of individual stock characteristics to hone in on those that best fit their strategic aims. Fidelity has developed exceptional screeners for financial instruments like stocks, ETFs, options and fixed-income assets. Traders can create customized watch lists of screeners based on criteria of their choosing. Fidelity recently included screeners for environmental, social and socially responsible investing.

Intensive educational content: Fidelity has a well-stocked educational section that contains a powerful list of recorded Webinars covering a variety of subjects. The video analysis section is an in-house selection of videos that make it easier to make sense of trading ideas. There is also a detailed graphic section containing helpful infographics.

Excellent portfolio analysis tools and calculators: The broker has curated a selection of tools and calculators to help craft a trading strategy. It can also help traders calculate the probability of success, which is helpful for options. It also has calculators for determining investment objectives and measuring portfolio results.

Cons Explained

Limited assets: In today’s world of endless access to financial assets, it is a major drawback that Fidelity does not provide traders access to futures, commodities, FOREX or crypto trading. While Fidelity can rest easy in the knowledge that it is a major stockbroker, it will know that many modern traders are keen to try their hand at a wide range of financial assets, something they cannot do with this broker.

High broker-assisted trading fees: The broker-assisted trading fees are some of the least competitive in the brokerage world. Traders can find cheaper broker-assisted trading at a host of other brokers.

Options fees higher than competitors: Fidelity charges high options fees when you open and close a trade. Also, there are no caps on the size of the transaction fee. Some brokers don’t charge anything for options, while others cap commissions that are necessary for high-volume and active traders.

Is Fidelity Safe?

One of the most effective ways to check the safety of any broker is to check by whom it is regulated. Fidelity is a FINRA (high trust) regulated broker-dealer. It is also registered with the SEC. Fidelity is a member of the SIPC, which offers protection to members up to $500,000 (including $250,000 for claims for cash).

SIPC covers notes, stocks, bonds, mutual funds and investment company shares, as well as registered securities. It does not cover such instruments as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver or other commodity futures contracts or commodity options. Beyond SIPC, Fidelity has also instituted a Customer Protection Guarantee that covers traders from losses in the event of unauthorized activity on their accounts.

Fidelity goes to great lengths to make sure its Website and platform security meets stringent industry standards. For a start, there is two-factor authentication before you can access its platforms. There is also the option of biometric access on some of its tools, like its mobile app.

The broker also goes to great lengths to trumpet its transparency. Traders can view the broker’s detailed rate card to establish all the relevant commissions, fees and margin rates. Fidelity offers commission-free ETFs and commission-free stocks, which is a break from many other brokers. The broker ensures that all its stipulations are widely broadcast on its website.

Offering of Investments

Fidelity offers a solid range of assets, but those engaging with the broker with the expectation that it will have all bases covered are in line for a surprise. Fidelity provides ready access to stocks, which is its strongest area. The broker also provides access to bonds, mutual funds, ETFs, options and fixed income. Fidelity supports currency exchange and purchases, but not FOREX trading in the conventional sense. Fidelity does not offer futures, futures options, FOREX trading and cryptocurrency. This is a significant number of useful assets not to offer.

Fidelity allows traders to buy fractional shares, which is a useful option for traders who wish to venture into buying premium stocks that cost more. This way, they can buy a smaller portion of the share but still have an investment in the company of their choice.

As far as cryptocurrencies go, Fidelity recently launched Fidelity Digital Asset Services aimed at institutional traders who may wish to create a portfolio that contains cryptos in the future. This feature is in development and is seen as Fidelity playing the long game in digital assets as opposed to offering the service now.

Although the crypto world is currently experiencing deep problems with loss of value, Fidelity opened the option of allowing retirement savers to use Bitcoin as a method of savings. The company does not offer crypto trading in the conventional sense via its platform and through a crypto exchange, but it shows it is cognizant of the growing importance of crypto as an option for the modern investor. It has rolled out an ETF it calls Fidelity Crypto Industry and Digital Payments (FDIG), which will allow companies exposure to cryptos as a payment vehicle, but not the opportunity to trade in actual cryptos. Fidelity's financial asset portfolio includes:

Stocks (Over 9,000 instruments).
Over-the-counter Bulletin Board (OTCBB) or penny stocks.
ETFs.
Mutual funds (Over 3,500 funds).
Options.
Bonds.
Single and up to four leg options strategies.
Service agent advisory services.
Robo-advisory services.
International markets (25 countries).
Foreign currencies (16 pairs to buy and sell).
Fractional shares.
Securities, including Treasury Inflation-Protected Securities (TIPS), municipal reset bonds, high-yield corporate bonds, precious metals, principal-protected notes and others.
· Cash management services

Account Types

Fidelity has a wide range of account types. The list can be intimidating. This is because it caters to such different types of entities as individuals, families, businesses and managed accounts. In truth, the company has used its 75 years in operation to create a formidable list of accounts to answer any requirement an individual or business could need. Here is the list of accounts:

Taxable investing.
Individual retirement accounts (IRA).
Traditional IRAs.
Roth IRAs.
Inherited IRAs.
Business accounts.
Saving and investing for a child.
Saving for medical expenses.
Estate planning.
Self-employed 401(k)s.
Trust accounts.
Custodial accounts.
529 accounts.
Health savings account (HSA).
Youth accounts.
Wholly managed accounts.
Annuities and life insurance.

The sheer range of accounts can be scary, but the company does an excellent job of grouping the accounts according to the trader’s objective and focus and gives a clear explanation of how the account type is used. Naturally, stock traders will only require a standard trading account for stocks, or the asset in which they are trading.

Account Opening

Fidelity has a zero-dollar account minimum, which has become increasingly common among diversified brokers. Traders are not required to have funds in their account to open it or to maintain it. Selected funds, like mutual funds, however, do need some form of investment.

To open a Fidelity account, you need to lodge an application for a new account in the Fidelity app or Website. It takes a few minutes to confirm your identity and employment information for your application to be lodged.

Demo Account

In the world of stocks, paper trading allows new traders to buy stocks without risking any money. The Fidelity Website does not provide the option of paper trading, unlike its closest rivals. However, you can sign up for a test account on Active Trader Pro. Here you can trade stocks with delayed market data until you can pivot to a regular trading account where you can use actual money.

Bonuses and Promotions

The broker has bonuses and promotions that change from time to time. At the time of writing, the broker was offering Fidelity Bloom, featuring an incentive to download the free financial app and deposit $25 or more and receive $50. The Fidelity Starter Pack offered to give you $100 if you deposited at least $50 into your new account. Finally, for opening a Fidelity Youth Account, investors could receive a $50 reward.

Deposits and Withdrawals

If you want to transfer regularly to and from your Fidelity account, you can usually do so without paying any fees. The only caveat Fidelity makes is that “The financial institution you are transferring from may charge fees.”

For example, automatic transfers to accounts like a mutual fund, IRA or 529 accounts from your bank or brokerage account are free. If you are performing a direct deposit, for example, by check, it is free. Similarly, automatic withdrawals from your account to a bank account are free.

Depositing by credit and ATM cards gives you instantaneous access to the cash in your Fidelity account, and yet fees may apply from your financial institution. However, it should be noted that these fee schedules apply to US traders. It was unclear from the Fidelity Website how international investors are affected in overseas markets.

Customer Service

Fidelity provides many options for reaching customer service. It also has a physical branch network numbering over 200 scattered across the US. The Fidelity Website has a useful table that illustrates when peak call volumes occur. You can reach the broker in the following ways:

24/7 dedicated phone line.
Online chat with a human agent.
Online chat with a live broker (you must pay a fee to make trades this way).
Fidelity assistant bot.
Customer support email.
Physical branches.

International traders will welcome the UK-based phone contact service that is open six days a week. Fidelity has developed an online chat service that is accessible for those who have an online account and are logged in. Fidelity’s Online Learning Center has been developed over time to include a more detailed experience, using machine learning to recommend educational topics that match the customer’s investing behavior.

Commissions and Fees

Fidelity ranks well as a price-competitive diversified broker. According to the company, its pricing is the most transparent among competitors, further claiming that Fidelity clients save $18.64 on average for a 1,000-share equity order, as opposed to the industry average of $4.70. Here are some of the key price points offered by the broker:

Account fees:

Traders will be happy to find that Fidelity has worked very hard to erase almost all account fees. While many brokers look to score revenue from low-hanging fruit, such as fund transfer fees and account management and closure fees, with Fidelity these are free.

Stock trading:

Fidelity had long set the tone in its segment with low-cost commissions, before doing away with commissions fully in 2019. Today, investors can trade US stocks, including penny stocks, ETFs and pay zero commissions.

Options trading:

Options trading with Fidelity is also free of commission. However, traders will still need to pay a contract fee of $0.65. One drawback of Fidelity’s service is that it does not offer volume discounts on options.

Mutual funds:

All Fidelity mutual funds can be traded with no fees if the trader owns them for at least 60 days. The company has also hand-picked four premium index funds that can be traded at a zero-expense ratio and with no minimum investment. In total, the broker offers 3,300 mutual funds that carry no transaction fee and over 950 funds with expense ratios of 0.50% or less. Traders should be aware that many non-Fidelity mutual funds come with commissions.

Bonds:

Investors in bonds do not pay a fee for new bond issue purchases. Secondary issues come at a reasonable cost of one dollar. Fidelity offers broker-assisted trades at a cost of $19.95 per transaction, which is considered high in some circles.

Margin interest:

Margin interest is the interest due to your broker on funds you have borrowed from them to trade on margin. Fidelity’s margin interest rates are below average among brokers of its class. That said, it is not the lowest in the market as some brokers try to differentiate themselves on low-margin interest. With Fidelity, you must pay an interest rate of 12.075% for accounts with less than $25,000 and 11.575% for accounts with a balance under $50,000. Accounts with $1 million or more must pay 7.75%. These rates are a few percentage points lower than rivals.

Payment for order flow (PFOF):

Certain brokers accept payments from market makers for sending equity and options orders their way. This is known as PFOF. Detractors say the practice compromises a broker’s execution speeds as they are sometimes not contracted to market makers who can offer more liquidity and higher execution speeds.

Regardless, it is a common practice among brokers. Fidelity does not accept PFOF for equity trades. However, it accepts an average of $0.11 per options contract in PFOF, markedly lower than other brokers that favor PFOF as a major part of their operating methods.

Services with no fees:

Traders should know that the following services do not attract any fees: use of Fidelity’s software, account inactivity, account closure or transfer, outgoing domestic wires, checks or paper statements, trade confirmations and full transfers out.

Platforms and Tools

Fidelity clients can work through two main trading platforms: Fidelity.com and Active Trader Pro. Traders can register for both, free of charge, and they can interchange between these accounts seamlessly. The Active Trader Pro platform comes as a desktop interface that can be downloaded and installed. Traders can also use the Web version at ActiveTraderPro.com.

Both platforms feature highly advanced research-based screeners based on a decade of historical information. Traders can customize both platforms and create shortcuts of their choosing. They can also apply technical filters based on high-quality market information.

Fidelity’s trade execution speed and effectiveness are excellent. It uses an in-house order routing package that includes Fidelity Dynamic Liquidity Management (FDLM), a system that hunts for the optimal location and price for customer orders. The firm also makes use of CrossStream, an alternative trading system that pairs buy and sell-side orders with Fidelity’s own order flow.

With an average execution speed of 0.08 seconds, Fidelity consistently performs at the highest levels in this regard. Some 90.46% of trade prices are improved, and some 98.30% of trades feature in the national best bid and offer (NBBO). Elite and high-volume traders will also be pleased to know that Fidelity’s average price improvement for a 1,000-share equity trade is $17.46, as much as four times better than most competitors.

Options traders receive the benefit of their orders being channeled through any of eight available exchanges. Fidelity offers fractional trading on stocks and ETFs, which is a valuable benefit for under-capitalized traders. Fidelity also offers its Wealth-Lab Pro tool that allows traders to back-test their strategies.

Mobile Trading

Fidelity offers a powerful mobile app on which traders can access all the same assets as Fidelity.com and Active Trader Pro. Fidelity mobile is a combination of the best features from the Web versions of its platform and the desktop platform, as opposed to an exact replica. User feedback indicates that traders find the mobile app a good part-time replacement in times of need, although it does not have enough tools to allow traders to trade on it exclusively.

The mobile app features real-time quotes, options trading, and a selected version of the company’s research offerings. It even has a handy notebook tool that allows you to store notes and article links directly from your mobile browser.

Fidelity’s mobile app is intuitive enough for users to verify detailed information about an asset, before placing an order. Users should note that the mobile app does not support conditional orders. Traders must access their accounts on Active Trader Pro or Fidelity.com to action these kinds of orders. In response to some negative user feedback over the usability of its interface, Fidelity has updated its apps to become more streamlined and user-friendly. Now, managing your portfolio and performing other tasks, like keeping track of the newsfeed, is a breeze.

Research and Development

Fidelity offers a slate of many excellent features and tools on its accounts. Its research assets are just one such feature. The depth and quality of its research differentiate Fidelity from some of its competitors. The broker has spared no effort in making sure its clients are some of the best-informed traders on the market. Fidelity has commissioned stock research from over 24 external providers, including Moody's Investment Service, Zacks Investment Research, Morningstar, and LiveVol. The sheer volume of research may be daunting at first, but traders can take a questionnaire to identify the best information stream for their investment needs. Some of the research material it makes available is as follows:

Stock screeners featuring more than 140 criteria with customizable values.
ETF and mutual fund evaluator with 88 criteria from which to choose and is customizable by theme.
Options screeners powered by LiveVol.
Fixed Income Screeners helping users identify a secondary market offering of over 120,000 options.
Tools and calculators for any financial subject, filtered by product and topic.
Charting using more than 70 indicators to create trend lines and channels.
Trading idea generators to help identify potential options trades using real-time data.

Education

Fidelity prioritizes access to breaking economic news on all its platforms. Active Trader Pro even presents streaming, real-time news. The broker partners with external news content providers, such as Briefing.com, Reuters, PR Newswire, Business Wire, Market Wire and more.

In keeping with its strong research ethos, Fidelity provides third-party research from such authoritative companies as Refinitiv, Integrity Research Associates, Investars, ISS-EVA, Jefferson Research, McClean Capital Management, MSCI, Recognia, Social Market Analytics, The Hightower Report, Trading Central, BlackRock and PIMCO.

Final Thoughts

Fidelity is a long-established broker that is well-regulated in the US and its major operating regions. The firm is a strong all-around broker and is rightly the top pick in multiple categories in many broker reviews. Its platforms are attractive and easy to use. Its well-crafted technology platforms fit the needs of newbie investors who are likely to use the Website or mobile app, as well as elite traders who can benefit from the Active Trader Pro platform.

Fidelity is perfect for new investors who are not well-capitalized, as it makes good on its promise to continually make trading more affordable. Diversified traders looking for access to commodities, futures, and cryptocurrency markets will have to search elsewhere as this broker does not offer access to those markets. Traders focusing on options trading may consider other platforms that offer lower costs for options trading and better options analysis tools. For most investors and traders, however, Fidelity is an ideal investment platform.

The broker has instituted some inviting bonuses and promotions that will motivate users to trade more. Fidelity has taken the time to create a strong research product that, among other things, gives you the latest trading news from key markets. It provides articles and videos that discuss important matters related to choosing the right stocks. Its research tools include market summary information and a detailed economic calendar.

Conclusion

Fidelity is a long-established premium broker with an eye on young and mature traders alike. The company does a good job of serving entry-level traders, elite traders and institutions while staying true to its plan to include everybody, regardless of the size of their pocket or their trading experience.

The company is well-regulated. The broker’s customer service desk offers comprehensive help options run by trained staff. Fidelity has gone to great lengths to commission and develop a highly informative and authoritative research and educational section. Overall, this broker is a good option for traders who are beginning their trading journey, just as institutional partners and high-volume traders alike will feel equally at home.

Fidelity in Brief

Fidelity has had a rich history of success in its 75-year existence. It is a mainstay in the US private investing sector, and it has managed to stay relevant over the decades by re-inventing itself and staying close to investment trends. Traders are advised to analyze its value proposition with a kind eye.

Review Methodology

The team at Arincen collected more than 120 pieces of data covering in excess of 100 licensed FOREX companies. Data collection was done in three ways:

Companies’ Websites.
Other Websites that have ranked FOREX companies.
A survey questionnaire (referred to here as Survey “1”) we had sent to the companies invited to participate in the exercise.

We have identified 12 criteria for our assessment, each containing several aspects and carrying its own relative weight. These include licensing, deposits and withdrawals, number of assets etc.

Afterward we validated the data by:

Registering with FOREX companies as a secret shopper and/or as Arincen.
Survey number “2,” in which we asked these companies’ customers for important feedback and past experience.

The next step saw us evaluate and rank each company, relying on the hard work of 15 Arincen employees. We were very careful in ensuring the most accurate assessment possible, including taking into account different languages, as well as the various mobile-app operating systems,e.g., Apple, Samsung etc.

To add credibility to our research project, we sent a final and third survey (referred to here as Survey “3”) to enable participating FOREX companies evaluate our own research and whether it accurately reflects the realities on the ground. We were fortunate enough to receive a mark of 9.9 out of 10! We have kept to a minimum the margin of error, which stood at a measly 1%. To learn more on how we came up with the evaluation, please click here.

FAQ

Where is Fidelity Investments regulated?

Fidelity is regulated by one tier-1 (high trust) regulator, the FINRA in the US. It is also registered with the SEC in the US.

In what other ways does Fidelity Investments protect me?

Fidelity is a member of the SIPC, which offers protection to members up to $500,000 (including $250,000 for claims for cash). The company also provides “excess of SIPC” coverage through certain underwriters at Lloyd’s of London. Through this method, the broker can offer coverage amounting to as much as $1.5 million for cash and $10 million for securities per customer.

Which countries does Fidelity Investments serve?

The broker’s main division was created exclusively for US clients. As it grew, however, it began to pay more attention to its international division, which now ably manages clients from several countries.

Does Fidelity Investments offer cryptocurrency trading?

No. Fidelity does not offer cryptocurrency trading.

Does Fidelity Investments provide any extra offerings?

Fidelity runs promotions that change periodically. At the time of writing, the broker was offering Fidelity Bloom, featuring an incentive to download the free financial app and deposit $25 or more, and receiving $50. The Fidelity Starter Pack offered to give you $100 if you deposited at least $50 into your new account. And, for opening a Fidelity Youth Account, investors could receive a $50 reward.

How do I fund my account?

Deposits and withdrawals can be initiated using bank transfers and bank cards. The broker’s US operation does not accept electronic wallet options like Neteller and Skrill. This is not uncommon for US brokers.

Which trading platforms does Fidelity Investments offer?

The broker offers clients the use of Active Trader Pro and Fidelity.com. It also has a mobile application.

How can I access customer service?

The broker offers an email option, a callback option, a chatbot service, and a range of physical branches to visit in the US.