Fidelity Review: Top Broker With Extensive Research Tools

Fidelity combines $0 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. This Fidelity review will dive into the pros and cons of Fidelity's brokerage platform and whether it's right for you.

This stock broker is a good fit for: Investors wanting a one-stop-shop solution that allows them to cut costs for routine stock, ETF, options, and mutual fund trades.

LEARN MORE: How to Open a Fidelity Account

Top Perks

$0 stock and ETF commissions

Like all the best stock brokers, Fidelity charges no commission for U.S. stock and ETF trades.

Fidelity mutual fund access and $0 fees

Fidelity's sought-after mutual funds are highly regarded for their lengthy track records, along with competitive costs. Fidelity also charges no online commission fee to buy its own highly-rated funds.

Fewer account fees than rivals

In addition to trading commissions, there are some fees commonly charged by brokers for things like outgoing account transfers, bank wires, insufficient funds, and more. Unlike some of its peers, Fidelity charges $0 for any of these.

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 and exchange their money in 16 different currencies, though higher commissions may apply depending on the exchange.

Branch offices

Being able to drop into one of Fidelity's offices to speak to a representative can offer a lot of peace of mind, especially when you have issues that can't easily be solved over the phone. Fidelity has investment branch locations throughout the U.S., so there's likely to be one within driving distance of you.

Fractional share investing

Fidelity is one of the few mainstream brokers that allows investors to buy and sell fractional shares of stock. Investors can place orders for a certain dollar amount, or for a specific fractional share quantity, all the way down to three decimal points in many cases, with a minimum of just $1 per stock or ETF. In other words, if you want to buy 0.01 shares of Amazon.com, Fidelity will let you do just that.

LEARN MORE: Best brokers for fractional shares

Highly-rated mobile app

Fidelity's iOS and Android apps both receive high marks from users, mainly for the versatility that allows investors to manage an array of account needs on the go. Here are the current app store ratings.

• iOS rating: 4.8/5 stars
• Android rating: 4.4/5 stars

What could be improved

Options contract fees

While Fidelity offers $0 options commissions trades, its fee of $0.65 per contract is higher than many of the best options brokers.

Margin rates

Fidelity is better suited to investors who aren't actively trading on margin, especially those with relatively low balances. Its higher-than-average margin rates for most investors are one reason why.

What you pay to make a trade isn't everything, but 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.

Bear in mind that this table reflects Fidelity's base commissions. In many cases, investors pay less than these rates, on average, thanks to free trades on certain mutual funds, including Fidelity's own proprietary mutual fund products. And its low options commissions make it competitive with the best stock brokers for options.

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 account holders can purchase over 3,300 mutual funds and exchange-traded funds without paying a transaction fee or commission.

Fidelity's own mutual funds (including Fidelity index funds) are available in no-transaction-fee and no-load forms. Not only that, but some of Fidelity's own index funds have no expense ratios whatsoever.

Commissions aren't the only cost of having a brokerage account. We read through Fidelity's fee list and found 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.
• ATM fees: Getting a Fidelity debit card linked to your account is free, as are all ATM withdrawals each month -- including withdrawals from international ATMs. The only cost associated with the debit card is an international currency exchange cost.

Fidelity offers a web-based trading platform in addition to a platform for active traders. The advanced platform (Fidelity Active Trader Pro®) does not have any fees or additional costs associated with it and has no eligibility requirements.

Both its trading dashboard on the web and its mobile apps (available on iOS, Android, and Windows) offer the functionality you'd expect, with live streaming quotes, charting tools, and the ability to trade stocks, ETFs, mutual funds, and options right from your browser, tablet, or smartphone.

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 margin rates rank toward the middle, 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.

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.

Discount brokers may forgo 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. ET to 10 p.m. ET. (We used its live chat feature to ask about its support hours and received a response within 30 seconds.)

Fidelity also offers a 24/7 virtual assistant. The chatbot can guide you through finding tax forms, recovering a password, or setting up a transfer, among other things.

If you'd like to speak to someone face to face, that's as easy as visiting one of Fidelity's 197 branch offices located all around the United States. One of the benefits of working with a large financial firm is that it has the scale to offer phone support around the clock and branch offices in virtually every metropolitan area.

One area where Fidelity really shines is in research. The company boasts that it offers more research than other similarly sized discount brokerage firms. Here are a few of its research capabilities:

• More than 20 independent research firms: Fidelity offers access to in-depth research reports from more than 20 independent research firms. Simply look up a ticker and you'll see a list of reports ready to read 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 in the market on any given day, showing upgrade and downgrade activity from more than 89 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, ETFs that are highly correlated to another fund you own, and more.

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 no-transaction-fee mutual funds Fidelity has to offer. If Fidelity or iShares funds are important to you, opening an account with Fidelity may very well be an easy decision.
• You care about low costs. Priced at $0 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.
• You want the ability to buy fractional shares. This can be a big perk for newer investors and those without a ton of capital to get started.

Compare Fidelity to other brokerages

Wondering how Fidelity stacks up to the competition? Check out our reviews:

At The Motley Fool Ascent, brokerages are rated on a scale of one to five stars. We primarily focus on fees, available assets, and account types; however, we also take into account features like research, education, tax-loss harvesting, and highly rated mobile apps. Our highest-rated brokerages generally include low fees, a diverse range of assets and account types, and useful platform features.

See our full methodology here: Ratings Methodology