Fidelity Review

In our Fidelity review below, we’ll tell you everything you need to know about the online broker, from how to score free trades every month to outlining what kind of investor Fidelity is really the right fit for. 

Fidelity

Fidelity

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Our Bottom Line

Fidelity combines low commissions, top-notch research, and an excellent mobile app, all in a simple platform. With $0 account minimums and zero-expense-ratio index and mutual funds, this is one of the most affordable brokers.

Fees:

$4.95 per trade

Account Minimum:

$0

Fidelity was one of the first brokerages to go online, launching a primitive stock trading service in 1984. Since then, using a Fidelity brokerage account has only become more convenient while also becoming a lot less expensive.

As one of the largest mutual fund managers, and the largest 401(K) recordkeeper, Fidelity is also a dominant force in online discount brokerage. The company is a true price leader, charging just $4.95 to make an online stock trade, while offering thousands of mutual funds and ETFs that its customers can trade for free. Those are just some of the reasons it landed a spot on our best online stock brokers for 2018 list. 

In the Fidelity review below, we’ll take a look at how the online broker compares on costs, fees, and depth of research, and why you might want to choose Fidelity as your next brokerage firm.

Why you can trust us

Here at The Ascent, our passion is providing expert reviews that highlight the things that actually matter when making decisions that affect your personal finances. We've talked personal finance on major TV networks like CNBC and Fox, and have published thousands of articles that have appeared on sites like CNN, MSN, and Yahoo Finance. But don't worry: you'll find that our reviews are all jargon-free and written in plain english. As investors who manage our own portfolios through online brokerage firms, we have personal experience with many of the most popular online brokers which informs our view on brokers, how they compare, and pitfalls to look out for. 

Fidelity’s commission prices

While what you pay to make a trade isn’t everything, trading costs are one of the most important reasons why investors turn to discount brokers in the first place. The table below shows how much Fidelity charges per trade or transaction, based on the type of investment.  

Stocks and ETFs Options Mutual funds
$4.95 $4.95 + $0.65 per contract $49.95 per purchase

Bear in mind that this table reflects Fidelity’s base commissions. In many cases, investors pay less than the stated rate, on average, thanks to free trades on certain ETFs and mutual funds, as well as promotions that can significantly reduce the cost of trading.

Buying mutual funds and ETFs with a Fidelity account

One of Fidelity’s major advantages is that it has one of the widest selections of funds, including its own line of Fidelity funds. Combined, Fidelity accountholders can purchase nearly 4,000 mutual funds and exchange-traded funds without paying a transaction fee or commission.

Total mutual funds More than 12,200
No-load mutual funds More than 8,100
No-transaction-fee mutual funds More than 3,800
Commission-free ETFs 93

When it comes to mutual funds, many of its own funds (including Fidelity index funds) are available in no-transaction-fee and no-load form.

Fidelity’s list of commission-free ETFs includes some of the most popular ETFs on the market, as it has a partnership with iShares, making many of the leading ETFs free to trade for long-term investors. In all, it offers:

  • 70 different iShares ETFs

  • 11 Fidelity sector ETFs

  • 3 Fidelity active fixed income ETFs

  • 8 Fidelity factor ETFs

With Fidelity, free ETF trades are as simple as shopping off its list of freebies, as the list includes Fidelity ETFs and some of the most popular (and low cost) iShares ETFs on the market today.

Fidelity fees you should know about

Commissions aren’t the only cost of having a brokerage account. We read through Fidelity’s fee list, finding a few fees that are worthy of some additional discussion.

  • $49.95 fee for no-transaction-fee funds -- Investors who invest in no-transaction-fee mutual funds should be careful about actively trading them. For any non-Fidelity NTF mutual fund, the company charges a $49.95 fee if you redeem shares held for less than 60 days. Many brokers have such fees to discourage investors from actively trading in and out of mutual funds, but it’s something to be aware of.

  • ATM fees -- Getting a Fidelity debit card linked to your account is free, as are the first 5 ATM withdrawals each month. However, after the first 5 withdrawals, each additional withdraw will cost $1 each. Note, though, that checks are free.

  • $4.95 short-term trading fee for commission-free ETFs -- Though many iShares ETFs are commission-free on its platform, Fidelity charges a $4.95 fee to sell iShares ETFs that are sold within 30 days of purchase. This fee is more than fair, given it’s in line with Fidelity’s commissions for trading ETFs. (Many brokers charge a fee in excess of their standard commission for trading a commission-free ETF quickly.)

  • Fidelity IRA fees -- There aren’t any fees for a traditional, Roth, SEP, or Rollover IRA. However it does charge a $25 fee for SIMPLE IRAs. (SIMPLE IRAs are a relatively uncommon type of IRA because they are employer-sponsored, so it’s unlikely your IRA is a SIMPLE IRA.)

Fidelity’s platform

Fidelity offers a web-based trading platform, in addition to a platform for active traders. The advanced platform (Fidelity Active Trader Pro) is made available to clients who make at least 36 qualifying trading in a rolling 12-month period and does not have any fees or additional costs associated with it. Some customers may also qualify for the advanced platform by calling in for access.

Even the basic web-based solution is quite powerful, though, offering real-time streaming quotes through the watch list feature. Its mobile apps (available on iOS, Android, and Windows) offer the functionality you’d expect, with charting tools, and the ability to trade stocks, ETFs, mutual funds, and options right from your tablet or smartphone.

Admittedly, as long-term buy-and-hold investors, we don’t demand much more from a platform other than the ability to check prices and place a trade with a few clicks. At a certain point, personal preference is ultimately the deciding factor between which platforms are “better” or “worse.”

Fidelity’s margin rates

Fidelity ranks near the middle for rates on margin loans, with deep discounts for investors who have large balances. Margin loans are most cost-effective above $500,000, where there is a large step down in the interest rate charged.

Margin balance Interest rate
Less than $25,000 9.33%
$25,000 to $49,999 8.83%
$50,000 to $99,999 7.88%
$100,000 to $249,999 7.83%
$250,000 to $499,999 7.58%
$500,000 to $999,999 5.25%
$1,000,000 and up 5.00%

Admittedly, few long-term investors use margin, and even fewer use it for long periods of time, since using borrowed money to invest can be both risky and costly. That said, if margin is central to your investing strategy, Fidelity is best for investors who use hefty, six-figure amounts of margin at a time.

Fidelity customer service and support

Discount brokers may forego the cost of sending you a holiday card every year, but that doesn’t mean they skimp on customer support. Fidelity has 24/7 phone support for brokerage accounts. Online chat service is open Monday through Friday from 8 a.m. Eastern to 10 p.m. Eastern. (We used its live chat feature to ask about its support hours, and received a response within 30 seconds.)

If you’d like to speak to someone face-to-face, that’s as easy as visiting one of Fidelity’s 196 branch offices located all around the United States. One of the benefits of working with a large financial firm is that they have the scale to offer phone support around the clock and branch offices in virtually every metropolitan area.

Fidelity’s research offerings

One area where Fidelity really shines is in research. The company proudly boasts that it offers more research than other similarly-sized discount brokerage firms. A few of its research capabilities are detailed below.

  • 12 independent research firms -- Fidelity offers access to in-depth research reports from 12 independent research firms. Simply look up a ticker and you’ll see a list of reports ready for reading for free.  

  • StarMine -- Thomson Reuters StarMine is a unique tool that gathers analyst ratings and weights them by their historical accuracy. This can also be helpful for determining which research firms have been right about their past price targets for a particular stock, or whether the buy ratings on a company have historically been deserved.

  • Upgrades and downgrades -- Fidelity makes it easy to view the movers and shakers on the market any given day, showing upgrade and downgrade activity from more than 125 research firms.

Fidelity also offers a number of stock, fund, and ETF screeners so you can quickly search for companies with rapidly-growing earnings, funds with low expense ratios with long-tenured managers, or ETFs that are highly correlated to another fund you own, so as to compare your funds to alternatives.

Fidelity’s top features

No brokerage is perfect for everyone, but every brokerage designs their service line-up in such a way as to attract a certain type of customer. We think Fidelity stands out from the pack with these three main features:

  1. International trading -- Fidelity is one of a handful of brokerages that offer access to international markets. It allows customers to trade on 25 different markets, though higher commissions may apply depending on the exchange.

  2. Commission-free ETFs -- Long-term investors who want to use ETFs as the building blocks of their portfolio won’t be disappointed by Fidelity’s list of commission-free ETFs. Its list includes many of iShares’ “Core” ETFs, which track indexes including the S&P 500, aggregate bond index, and MSCI’s emerging markets indexes, for example.

  3. Branch offices -- Not everything goes to plan all the time. Being able to drop into one of Fidelity’s offices to speak to a representative can offer a lot of peace of mind.

  4. Low cost trades -- At $4.95 for stock and ETF trades, Fidelity ranks as one of the least expensive place to make a trade.

Fidelity zero expense ratio funds and $0 fees

In August, 2018 Fidelity announced zero expense ratio index mutual funds (FZROX and FZILX), took the minimum to invest in Fidelity mutual funds to $0, and announced $0 transaction fees for Fidelity funds and hundreds of other funds they support. On top of an already industry leading $4.95 fee for stock and ETF trades, Fidelity has continued to cement their position as one of the most affordable brokers for investors to use. With a wide range of investing vehicles and support, that affordability doesn't come at the expense of features. 

You should open a Fidelity account if...

Every broker has some killer feature or function that makes it a better choice for a subset of investors than another. In thinking about Fidelity’s value proposition, we think it would be a good choice if most or all of the statements below apply to you.

  • You want to invest in Fidelity or iShares funds. It’s fair to say that you could easily create a diversified portfolio of funds just from the commission-free ETFs and no-transaction-fee mutual funds Fidelity has to offer. If Fidelity or iShares funds are important to you, Fidelity may very well be a no-brainer decision.

  • You care about low costs. Priced at $4.95 per stock and ETF trade, Fidelity is one of the least expensive brokers despite ranking toward the top for research, screening tools, and commission-free fund choices.

  • You like to have ample access to research. Fidelity offers more independent research reports than virtually any other discount broker, particularly for individual stocks. It also offers thematic research, daily market updates, and does a great job of showing investors which analysts are worth listening to, thanks to StarMine.

  • You value face-to-face customer support. With nearly 200 branches in the United States, getting personalized attention and help is only a short drive away. But if you’d rather get help over the phone or online, Fidelity offers that, too.

  • You want to trade stocks on international markets. U.S.-based investors who want to trade overseas may value Fidelity for offering access to international markets, not just foreign stocks that trade in the United States. Not only can you trade overseas, but you can watch them, too, thanks to real-time streaming quotes for international markets. Some research is also available for stocks on international markets, though not to the extent of U.S. markets.