Fidelity Investments Review
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Broker: Fidelity
Regulator: FCA, FINRA, SEC
Year: 2008
Platforms: iPad®, iPhone®, Android™, or Windows Phone 8 device,website,Trader Pro®
Account minimum: $0
Fees - $0 for stock/ETF trading, $0 plus $0.65/contract to trade options
Our Take
Fidelity was our overall top choice for the best online broker and our favourite low-cost broker. Fidelity also displaced Charles Schwab from the Best Broker for ETFs category this year. Fidelity offers excellent market platforms that customers can access from their mobile and desktop devices. Fidelity leverages its market position to enhance an already excellent product offering, while keeping very low administrative and fees. Fidelity charges no commission or fees for ETF or stock trades. Fidelity offers customers access to options, currencies and mutual funds. Fixed income products include CDs, OTCBB (penny stock), fixed income products such as treasury and corporate bonds.
Fidelity provides excellent support for its customers with excellent tools and resources for traders and investors, including strong educational materials and portfolio analysis tools, reports and calculators. It also offers excellent screening tools to identify individual securities within an asset class. Fidelity doesn't offer options on futures or commodities and some traders might want to consider other options.
Overview
Fidelity, the largest U.S. brokerage company, continues to be our top choice for the best online broker as well as low-cost broker. Fidelity was founded in 1943 in Boston. It has 40 million investors, $11.3 trillion of assets under administration, $4.3 trillion discretionary assets and handles 3.1 million daily trades. Since its inception, Fidelity's guiding principle has been "Take intelligent risks instead of following the crowd." It continues to have an impact on Fidelity, as Abby Johnson, the current Chairman and CEO, stated that "the reason we exist hasn’t changed since our foundation...to strengthen our clients’ financial well-being."
The company continues to invest in their systems and innovate within its online trade platforms. For example, it has added an enhanced investor dashboard that keeps track of where you are when you close the program. This allows you to start from that page whenever you login again. The company has also added customizable indexes and thematic baskets that can be rebalanced individually.
Pros
Low prices
Trade executions of the highest order
Great research and asset screening
Educational content extensive
Portfolio analysis tools and calculators of the highest quality
Cons
Access to futures, commodities or crypto trading is not possible
Accounts can only be opened by residents of the U.S.A. and main islands
Broker-assisted trading fees are high
Option fees are higher than those charged by competitors
Rating of the company overall
Reliability ⭐⭐⭐⭐⭐
Platform ⭐⭐⭐⭐
Commissions ⭐⭐⭐
Support ⭐⭐⭐⭐
Financial instruments ⭐⭐⭐⭐⭐
RATING: 4.3
Pros Explained
Low cost: Fidelity is very affordable. It provides free stock and ETF trading, and has eliminated most account fees such as wire, check, and transfer fees. Optional fees are $0.65 per contract traded.
Excellent trade executions: Fidelity achieves outstanding trade execution using its proprietary trade execution algorithms. These algorithms route orders to up 50 market centers such as exchanges and market makers. Fidelity can capture the National Best Offer and Quote (NBBO), and often achieves even better price execution. Fidelity achieves an average net price improvement of $0.0121 for stocks and ETFs and $0.0525 in options. Fidelity, with the exception of options and payment for order flow (PFOF), does not accept payments for stock or ETF trades. This is unlike other online brokers. It will always strive for the best price execution, without any conflicts, and this includes stocks and ETF trades. Traders can route their orders if they wish.
Fidelity offers excellent research and asset screening: Fidelity's search offerings and asset screens are outstanding. Users can access screeners for stocks and ETFs as well as options and fixed income. The screeners can choose from a variety of criteria, including themes such as cloud computing, drones and environmental, social and governance (ESG) and watch lists that can also be generated from search results. Fidelity's new screeners allow you to view all ETFs that include a particular stock. Access to Fidelity research as well as third-party research is available from over 25 sources, including Standard & Poors, Moody's Investor Service, Inc. and Zacks Investment Research. They are also available for stocks, ETFs, mutual fund, fixed income, and environmental, social, governance, and socially responsible investment (ESG/SRI).
A wide range of educational content is available: Fidelity offers a variety of educational options to customers, in multiple formats. These include articles, videos and live or recorded webinars. To discuss trading ideas with experts, customers can speak to professionals who have trading experience.
High-quality portfolio analysis tools and calculations: Fidelity offers many tools and calculators that can be used against a portfolio, or to trade specific securities. It also has options calculators that can show you the probability of options trades ending in money. Fidelity has also developed calculators to help you determine your investment goals and track your portfolio results.
The Cons
No access or futures or commodities: Fidelity doesn't support trading in futures or options on futures or commodities. You can also exchange currencies on the platform. Fidelity customers might not be interested in these products. However, active traders may wish to trade these markets. They may prefer one platform to access all of their trading products.
Accounts can only be opened by residents of the US or the main islands: Fidelity accounts cannot be opened by residents of the U.S.A. or any of its main islands.
Broker-assisted trade fees are high: The broker-assisted fees for trading, which cost $32.95, is one of the most expensive in the brokerage industry. Broker-assisted trading is a better option for traders and investors who are looking to find brokers that charge less.
Options fees are higher than other competitors:Fidelity charges $0.65 per option contract, on both the open- and close-sides of the trade. There is no cap. You will be charged commissions for both the open side and the closing of multi-leg option trades. High volume options traders might consider trading elsewhere, such as Webull or tastyworks, which don't charge any options fees.
Table of Contents
Useability
Fidelity makes it easy to open an account. The process is the same for all brokers: mailing address, Social Security Number, employment information and account creation. Existing customers can also open new accounts faster. You can have multiple Fidelity account types for different purposes. As with other brokerage accounts, anyone who wants to trade options or to borrow money will need to complete additional forms.
Fidelity offers three platforms that can all be used simultaneously. The web platform doesn't stream real-time stock quotes or news. However, all platforms offer stock quotes and news. Although the basic web-based platform is easier to use and suits the needs of passive investors more, it is less likely to be appealing to active traders and investors. Fidelity's downloadable trading platform Active Trader Pro will appeal to traders and active investors. Active Trader Pro is customizable and offers many more features and tools than the web platform. Active Trader Pro offers advanced functions such as conditional orders and tools for traders who are more experienced.
The Android, iOS and Amazon mobile apps are available for Android, iOS and Amazon devices with Google Assistant enabled. However, the mobile app is not compatible with Active Trader Pro. It does not support fixed income trading nor conditional orders.
Fidelity's websites have a fairly intuitive navigation system. However, it can be difficult for new users to navigate through the many sub-menus. Fidelity has a watch application that allows users to view their quote history and receive real-time, detailed quotes for stocks, options and ETFs. You can also receive notifications about orders and price triggers through the watch app.
Trade Experience
Fidelity's website makes trading easy and is intuitive. Although streaming quotes can be viewed on the website, it is not possible to view live news. Although you can set default trading settings on the website, most trade details will need to be entered again. The website platform allows you to place buy, sell and stop orders. This includes trailing stops as well as market-on-open and close.
The web platform does not offer options trading, but it is more robust than other platforms. There are four-leg options strategies supported by the platform. The drop-down allows users to choose the type of trade they want, including condors spreads, condors spreads, condors spreads, condors spreads, condors strangles, straddles and spread trades. There were however no diagrams for the most commonly used payout graph. After selecting the type of options trade you want, the blank input lines for each leg are displayed based on that trade type. The trader would have to manually enter all information, while other brokers can change maturity dates and strike strikes.
The Active Trader Pro platform offers more functionality than both the mobile and web versions. You can personalize the trading platform with the customizable layout. Trade defaults can be set up, shortcuts created, and hotkeys assigned for navigation and trade entry. Although the Active Trader Pro platform is better than the website for options trades, it's not as user-friendly as other brokers' interfaces. Active Trader Pro is Fidelity's only platform that allows conditional orders. You can only cancel an open trade. There was no way to change the price or modify the trade from the open order window.
Mobile Trade Experience
The mobile app is intuitive and powerful. The mobile app allows users to view news and basic information about security and place orders while they are on the move. Although the mobile app is not as user-friendly as the website's order form, it has many of the same problems as the website. Conditional orders cannot be supported by the mobile app, just like they aren't available on the website. Drop-down menus left no option for changing ticket details, so traders had to manually enter specifics such as maturity or strike. It is more difficult to use than other online brokers, where the legs are shown and can be modified by moving the strike on a profitability graph. The mobile app does not include all elements of Active Trader Pro workflow.
Fidelity Mobile is somewhere between the desktop platform and the web platform. It's not an attempt to replicate the robust desktop platform. While it will be able to serve the needs less active investors, it is not fully featured enough to enable active traders to use Active Trader Pro on their own.
A wide range of offerings
Fidelity has a wide range of assets including stocks, ETFs and options. Fidelity does not support forex trading, but currency exchange. Fidelity's mobile app supports all asset classes, except fixed income. Futures, futures options and currency trading are all missing from Fidelity’s portfolio.
Fidelity Digital Asset Services was launched by Fidelity to institutional investors. It anticipates that crypto trading will grow over time. If the plan sponsor allows it, Fidelity will offer Bitcoin as an option to invest in retirement accounts. Fidelity doesn't support cryptocurrency trading in retail accounts. However, Fidelity developed an ETF called Fidelity Crypto Industry and Digital Payments. FDIG exposes companies that provide technology and services to the cryptocurrency industry; it doesn't involve trading in actual cryptocurrencies.
Fidelity offers the following products:
Stocks both long and short (2.800 on the easy-to borrow list and 6.500 securities available to shorten)
OTCBB (penny stock)
Mutual funds (approximately 3,500, with no transaction fee and no load)
Bonds: Corporate, municipal, Treasury, CDs
Strategies for single and up to four legs
Robo-advisory integrated in the website and mobile application
International (access to 25 different countries in 16 currencies)
Forex (16 pairs), however it isn't clear if this is currency trading or a currency swap program to fund foreign purchases
Fractional shares
ETPs, IPOs and foreign ORDs are just a few of the other securities
Types of Order
Fidelity offers many order types. However, availability depends on the platform. Only market, limit and stop loss orders are supported by the web platform. The mobile app supports all of the orders on the web but does not support conditional orders like one-cancels-the-other (OCO) and one-triggers-the-other (OTO) plus orders that are supported on the Active Trader Pro desktop platforms.
Fidelity allows traders to trade stocks either by dollar amount or share amount. You can also close a position and roll an option order right from the positions page. Fidelity's basket-trading services let users select up to 50 stocks that they can trade, monitor, manage and rebalance in one unit.
Account owners can also choose which tax lot preference they prefer for their accounts. This could include first in, last out, last out, average cost, or first in. When closing a position, they can also choose the tax lot.
Trade Technology
Fidelity's trade execution is strong thanks to its proprietary smart order routing system and Fidelity Dynamic Liquidity Management, which seeks the best price and location for customers orders. Fidelity also uses CrossStream, an alternative trading system which anonymously matches the buy-and-sell-side orders of brokerage clients against Fidelity's massive order flow.
Fidelity's average execution speed is 0.05 seconds. 87.99% trades are price-improved, 98.20% trades fall within the national Best Bid and Offer (NBBO), and an average price improvement of $19.24 for a 1,000-share equity trading is more than four times that of the industry average.
Order routing can also be done through representatives. Fidelity also supports fractional trading in stocks and ETFs. Traders can trade after the market closes.
Fidelity also offers Wealth-Lab Pro, which allows you to back-test trading strategies. This premium service is available to households that have more than $25,000. These thresholds were previously set at 500 trades per annum and accounts assets greater than $100,000.
Prices
Every year, Fidelity ranks highly in our Best For Low Cost category. Fidelity offers online trading without commissions in U.S stocks and ETFs and there is no minimum or account fee to open a retail brokerage account. Fidelity charges the following fees:
Fidelity does not charge commissions for online ETF, options and OTCBB trades.
The fee per contract option is $0.65
A 50-option contract order costs $32.50. However, to open and close 50 options options contracts would cost $65 - both parties pay.
Covered call trades of 500 shares and five contracts would run $3.25
For mutual funds that are not in the no transaction fees program, the commissions on mutual fund commissions are $49.95 for the buy and $0 on the sell.
Margin interest is 10.575% on accounts under $25,000; breakpoints are 10.075% on accounts under $50,000; 9.125% on balances below $100,000; 9.075% on balances less than $250,000; 9.075% if balances less than $250,000; 8.825% if balances lower $500,000; 6.50% if balances less than $1 million; and 6.255% for accounts over $1 million.
Software, inactivity or account closure, transfer, exercise/assignment or domestic wires, checks or paper statements, as well as trade confirmations, are all free.
Fidelity charges exchange fees on most orders, usually fractions of one penny per share or contract.
75 dollars are required for certain mutual fund families such as Vanguard, CGM and Dodge & Cox.
Live broker fees are $32.95 per trade.
International trades are subject to different fees. Before placing an order, be sure to carefully review these commissions.
How this broker makes money for you and from you
It's becoming less common for brokerages to charge commissions in order to stay in business. These are the hidden ways Fidelity makes its money, both for you and for them.
Cash sweep program: Fidelity clients automatically enroll in cash sweep programs paying nominal interest rates. Fidelity earns money by the difference in what it pays for idle cash and what is earned on customer cash balances. Customers have an advantage with automatic enrollment, but many brokers do not earn any interest on idle cash.
Margin Interest: Fidelity has margin interest rates that are lower than the industry average, but not as low compared to brokers who use margin as a key feature. Accounts with less than $25,000 are charged 10.575%, while accounts with $99,999 to $250,000.
Payment for Order Flow (PFOF: Some market makers pay brokers to direct equity and option orders. This is called payment for order flow or PFOF. Fidelity doesn't accept PFOF to trade equity, but it does receive an average $0.11 per option contract in PFOF. This is a lot lower than the PFOF-based brokers.
Stock loan programs: Fidelity makes revenue by lending stocks to your account for short-term sales. It shares this income with you. Fidelity told us that 38% of accounts earned $100 or less after lending hard-to-borrow securities. 37% earned between $100 and $1,000, while 25% earned more than $1,000.
Price Improvement: Equity orders average $0.0121 per share for net price improvement, while options orders average $0.0525 per contract.
Portfolio Margining: Fidelity clients can apply for portfolio margining. This calculates real-time margins for stock and option trades based upon risk, instead of fixed percentages.
Account and Research Amenities
Fidelity provides many high-quality accounts and amenities that you would expect from a large broker. Fidelity is distinguished by its quality and breadth of features. Flexible screeners, trade ideas generators, charting and access to research and basic data are just a few of the amenities offered by Fidelity.
Stocks Screeners
Fidelity's stock screening tool has more than 140 criteria. These include volume, implied volatility, order flow, and order flow. Fidelity also offers a variety of themes, including drones and data services. You can further customize the various thematic screens by going to the menu. A recent enhancement allows you to distinguish what happened overnight from regular trading hours. You can also use the screener results to create a watchlist.
ETF and Mutual Fund Evaluator
There are 88 criteria available for mutual fund and ETF screeners. The screener offers themes that can be selected and refined. This screener can be used to identify themes such as market cap, fixed-income, and SRI. Fidelity also has the ability to identify mutual funds and ETFs that contain a particular security. The results of Fidelity's screeners can be used to create watchlists that match the criteria set by the screener.
Option Screeners
Fidelity's option screening tool is powered by LiveVol. Fidelity's option screener can be used in the same way as other screens. Users can either choose from pre-defined scans or create their own criteria such as volume, implied volatilty, spreads and order flow. Active Trader Pro has more than 25 filters and nearly 200 criteria that can be incorporated in a search.
Fixed Income Screeners
Screener for fixed income can help users find secondary markets from more than 120,000 options. The yield table will be updated every 15 minutes. Clicking a yield value will return all CDs or bonds that meet the criteria, including product type, rating, maturity date, and other details. A tool is available to build a bond ladder that can be used to stagger fixed income securities.
Calculators and Tools
Fidelity offers a wide range of calculators and tools. Calculators can be used to help with almost any financial topic. These calculators can be filter by product such as annuities, bonds and 529 plans. These calculators can also be filtered by topic, including estate planning, college planning and retirement. Fidelity offers 38 calculators, all of which can be grouped on the tools and calculators website.
Charting
The website allows you to chart easily. You can change the type of price indicator or bar, add one or several of over 70 indicators, draw trendlines or channels, and even draw trendlines. However, there is no way to trade directly from the charts.
The small screen makes charting difficult on the mobile app. This is similar to other brokers' offerings. The mobile app is not able to draw on or trade directly from a price graph, but the overall experience is superior to that offered by many brokers.
Active Trader Pro is the most powerful platform. It allows for drawing, indicators and the addition a comparison chart. Trader can open a trade ticket from the chart even though the orders are not visible on the chart. Clicking on an option will automatically create order tickets. Fidelity charts do not show open orders. Key tools to capture price inefficiencies such as the ability place statistical bands on volume-weighted average prices (VWAP), will be appreciated by active day traders.
Trade Idea Generators
Fidelity provides idea generators that help to identify potential options trades. Option generators can help you identify trade ideas and provide real-time data about specific trading ideas. It is based on the following criteria:
Bullish, neutral, or bearish sentiments
Profit potential is limited, significant, and unlimitable
There are limited, significant, and unlimited risks
Alternativly, users can choose a trading strategy. The idea generator will give information about the trade and its characteristics. Fidelity offers third-party content. This includes Bulls/Bears of the Day from Zacks Investment Research as well as technical events from Recognia.
News
Fidelity offers news on all of its platforms. However, only Active Trader Pro shows streaming, real time news. Fidelity offers news sources from Reuters, PR Newswire and Briefing.com. You can also see news for specific stocks and market segments.
Research by a Third Party
Fidelity provides a lot of third-party research at no cost. This includes I/B/E/S, ISS, EVA, Jefferson Research and McClean Capital Management. Also, Recognia, Social Market Analytics. The Hightower Report. Trading Central. Zacks Investment Research. BlackRock. There is also MSCI data, including standing against peers, and other qualitative and quantitative research. Fidelity has a lot of research content.
Cash Management
Fidelity clients are automatically enrolled in a cash sweep program. This allows the customer to choose from a variety of money market mutual funds. Fidelity pays a minimal interest rate on this cash, which is 1.19%, as of August 17, 2022. However, this compares favorably to many of its peers since they don't often pay interest on cash balances. Fidelity's cash sweep program may be able to benefit from the higher U.S. interest rate.
Fractional Dividend Reinvestment Plan - DRIP
Fidelity gives customers the opportunity to sign up for a dividend reinvestment program that will automatically reinvest dividends in the company. A fractional share of the dividend will be added to your account, rather than being put into cash. You can sell all of your shares by paying the full amount and then any fractional shares are canceled.
SRI/ESG Research Amenities
SRI (socially responsible investing) and ESG (environment, social, governance) criteria can be found in mutual fund screeners, stock, ETF and mutual fund screens. Fidelity has several SRI/ESG funds and produces a Stewardship Report that outlines Fidelity’s values, processes, and commitments to SRI/ESG investment.
Portfolio Analysis
Fidelity's portfolio analytics tools give information about a portfolio. They provide graphical views of account assets and show industry weightings and asset allocation. You can also compare industry sector weightings within your portfolio. Fidelity offers the Fidelity Portfolio Check to customers. This will help you optimize your investment strategy and analyze your portfolio. This tool is designed to help advisors increase their success and save time.
Education
Fidelity provides excellent educational material to its customers through videos, webinars and articles. They also offer live events and seminars. Fidelity offers life stage planning tools to help you plan for your marriage, divorce, buying a home, and college costs. There is also third-party educational content that customers can access, as well as courses they can take. You can search for education topics using a few keywords.
Fidelity hosts sessions that allow you to speak with an expert on trading strategies. Fidelity has a Reddit community with 36,000 members.
Fidelity offers a glossary of investment terms and frequently asked questions.
Customer Service
Fidelity offers several ways to get in touch with customer support, as well as physical Investor Centers located throughout the United States:
Phone line available 24/7
Chat online with a live agent.
A live broker can be contacted (trades made via broker incur a surcharge).
Chatbot (Fidelity Virtual Assistant).
Customer support email.
Branch locations that are open for walk-ins.
Security and reliability
Fidelity's security meets industry standards:
All platforms offer two-factor authentication.
Two-factor authentication is required for higher-risk transactions such as wire transfers.
Users can log in to mobile apps using biometric (face, fingerprint) recognition.
Clients who log in using an unfamiliar browser are asked security questions.
Fidelity has excess Securities Investor Protection Corporation insurance. This insurance includes a $1.9million limit on uninvested money. Fidelity claims that this is the highest excess SIPC protection available in the brokerage sector.
Fidelity's Customer Safety Guarantee protects against any losses resulting from unauthorised activity in covered accounts.
Fidelity reported that there were no serious or widespread platform outages in 2022.
Transparency
Fidelity is very transparent. Fidelity does not accept payments for order flow for stocks or ETFs, but it will accept payment for options order flow. Fidelity's margin rates, commissions, and fees are clearly explained. Fidelity does not charge commissions or fees for stocks and ETFs. Fidelity also has no fees for wire transfers, minimum balances and account closings.
There are many account types available
Fidelity offers the complete range of accounts that are most commonly used, plus many more. There are many accounts that you can open, including:
Account for tax-deductible brokerage
Individual retirement accounts (IRAs) can be rolled over
Traditional IRAs
Roth IRAs
Inherited IRAs
Simplified employee pension (SEP) IRA
Self-employed 401(k)s
SIMPLE IRAs
Custodial accounts
529 accounts
HSA (Health Savings Account)
Youth account (these accounts are not custodial, as young investors make investment decisions)
Accounts for trust and estate
Fully managed accounts
Fidelity also has a Digital Asset Account that allows participants to direct some of their contributions to a digital asset account. This account will contain bitcoin.
Fidelity makes it easy to navigate the vast array of accounts available. Clicking on "Saving & Investing for a Child" will take you to the Roth IRA for children, custodial and youth accounts, as well as the 529 account section. You can quickly identify the best account for you by reading the description.
Final Verdict
Fidelity remains a strong broker that can do it all. It has been our top choice in many categories for the past few years. These platforms are suited for passive investors, who will use the website and mobile app. Active traders can also benefit from the Active Trader Pro platform. Fidelity offers a wide range of tools and content that can be used to analyze individual trades as well as a broad platform. It also has low prices, excellent execution, multiple educational offerings and portfolio analysis tools. They also have robust screeners that help you identify potential opportunities. Fidelity offers its customers both proprietary research and top-quality third-party content.
However, high-volume traders who are looking to trade commodities, futures and cryptocurrency markets will probably look elsewhere to avoid having to trade on multiple platforms. Option traders who are primarily interested in options trading might consider other platforms with lower options trading costs and better options analysis tools. Fidelity is a great investment platform for traders and investors.