Fidelity Review

By Jason Van Steenwyk  | September 16, 2017

Fidelity is notable for abundant fund choices, reasonable commissions, and unmatched research materials for everyone from novices to advanced traders.

Overall Rating

4.5/
5.0
Products & Fees
3.7
Trust
5.0
Special Features
5.0
Desktop Experience
4.0
Mobile Experience
4.6
Customer Support
5.0
Research & Insights
4.7
Education
4.1
Banking
4.0

Fidelity Fast Facts

With over $2,346.2 Billion in global assets under management, Fidelity Investments is already a household name in mutual funds. Less known is its extensive brokerage operation. But Fidelity offers a competitive commission schedule centered on $4.95 trades for most securities, combined with an impressive array of research tools and products. For the cost-sensitive, there are plenty of no-transaction-fee, no-load funds and inexpensive index funds. Dedicated stock traders can take advantage of souped-up charting and research with the Active Trader Pro software or, after meeting certain account minimums, they can qualify for Wealth-Lab Pro, an even more sophisticated and specialized trading software program.

pros

  • Outstanding Research
    In-house and third-party research on thousands of stocks, funds, ETFs, closed-end funds, sectors, and income products – all free to traders
  • Low Cost
    A basic $4.95 commission on most trades – quite reasonable, given the research and analysis tools
  • Excellent Customer Support and Education
    24/7 live customer support, plus chat and messaging support; an extensive video library; in-person education; and workshops at Fidelity offices
  • Comprehensive Research & Education
    Make informed investment decisions with the Fidelity Research and Education portals
  • Vast Array of Securities
    Open-end and closed-end mutual funds, low-cost index funds, and ETFs, as well as stocks, bonds, options, and annuities

cons

  • Basic Version Excludes Active Trader Pro
    At $6.95, the standard commission is above the industry average
  • Mobile Apps
    Does not offer a practice trading account before depositing real money
  • Limited Asset Classes
    Trading in forex, futures, and more exotic asset classes like spread betting, popular in Europe, aren’t supported

Products & Fees

3.7

The centerpiece of Fidelity’s offerings is a low $4.95 commission for all U.S. stock trades, regardless of dollar amount or number of shares. Option trades are also reasonably priced. Fans of mutual funds also will find thousands available with no transaction fees.

  • Stocks & ETFs
    $4.95
  • Broker Assisted Equity Trades
    $32.95
  • Options
    $4.95 + $0.65 per contract
  • iShare ETFs
    Free
  • Bonds (new issues)
    Free
  • Bond (secondary issues)
    $1 per bond
  • U.S. Treasuries*
    Free
  • Mutual Funds (Fidelity Funds)
    Free
  • Forex
    Not Available
  • Futures
    Not Available

Trust

5.0

Fidelity is a member of SIPC, and certain cash accounts are also eligible for FDIC coverage. But the brokerage also provides guarantees above the SIPC and FDIC protections.

What you need to know

Fidelity is a member of the Securities Investor Protection Corporation (SIPC). This coverage is designed to protect investors in the event a brokerage firm goes bankrupt and assets are missing. SIPC provides up to $500,000 in protection – $250,000 for missing securities such as stocks and bonds, and $250,000 for cash held in a brokerage account. Precious metals, commodity futures, and investment contracts (e.g., limited partnerships), certain annuities and insurance products are not protected.

Special Features

5.0
Fidelity special features

Active Trader Pro and Wealth-Lab Pro both feature advanced interactive charting features and exportable data. Active Trader Pro also lets you stream Bloomberg News. There’s a full library of technical indicators that you can easily apply to your charting strategy, and an extensive array of educational materials. Tax-sensitive traders will appreciate the ability to view tax lot information in real time on the advanced trading platforms.

What you need to know

To access Fidelity’s more advanced trading platforms, you must meet certain criteria: 1) Active Trader Pro: trade 36 times or more in a rolling 12-month period. 2) Wealth-Lab Pro: 36 trades in past 12 months, plus $25,000 invested across eligible Fidelity brokerage accounts.

Desktop Experience

4.0
Desktop Platform Experience

Fidelity packs a lot of features even into its most basic web-based set-up, including extensive screening capabilities and a research and an online Learning Center that is second to none. The more advanced Active Trader Pro system also works seamlessly with both Macs and PCs, though you can download a specialized software version if you prefer.

Pros

Designers have packed a ton of information into the basic web version, but the overall experience is still intuitive and easy to learn. The web search engine is easy to use and effective.

Cons

For full web functionality, you must meet a 36 trade minimum in a rolling 12 month period.Fidelity’s focus is narrower than that of some other online brokers – it doesn’t support futures or forex trading. Also, other than the demo mode for its software (not available on Macs), Fidelity doesn’t directly offer a “paper trading” solution for users looking for a dry run before committing to a strategy. And some research companies, such as Recognia, are available only to very active traders. Recognia, for example, is available only to those who have logged at least 120 trades over the past year on a rolling basis.

Mobile Experience

4.6
Mobile Platform Experience

Fidelity’s easy-to-use mobile application lets you check your portfolio and execute trades from wherever you have wireless Internet access. The app itself is elegant, attractive and easy to navigate, and offers alerts and push notifications. For cash management, the app makes it easy to transfer funds and pay bills, deposit a check into any Fidelity account by taking a photograph of it and uploading it via your mobile device.

Pros

Security is a critical consideration for any financial services mobile platform. Fidelity’s mobile app has advanced encryption functionality and two-factor verification to help ensure trader security. Other security measures include timed automatic log-offs and a voice-recognition feature called Fidelity MyVoice. Fidelity also provides active monitoring to help prevent unauthorized access to your accounts.

Cons

A full-service brokerage is complicated, and something has to give when you design a desktop system to function on a smartphone. In this case, mobile users lose some of the advanced interactive charting functionalities, which may affect active traders the most.

Customer Support

5.0

Fidelity has multiple options for customer support. Traders can contact Fidelity via phone, live chat, or email, and they can visit a broker in any of dozens of branch locations across the United States.

What you need to know

Any Fidelity customer can use any of these methods to contact customer service. However, support for Wealth-Lab Pro and Active Trader Pro, as well as certain other functions, is limited to those who have logged 36 trades or more over the past year. Active Trader services are available to those logging 120 trades plus stock, bond, or option trades in a 12 month period. Maintain a minimum balance of $25,000 in assets across Fidelity accounts. Active Trader VIP service, the highest level of service, is available to those logging 500 trades or more per year plus stock, bond, or option trades in a 12 month period. Maintain $1,000,000 in assets across Fidelity accounts..

Research & Insights

4.7

Perhaps Fidelity’s greatest selling point is the vast amount of research and analytic information it makes available, including performance figures, key metrics, options information, and analysis, even to basic-level users.

Price Improvement
Savings you may receive on a stock or option trade compared to the quoted price at the time the order is submitted.
Price Triggers
Investors receive an alert if the market price of a chosen security rises or falls by a certain amount
Portfolio Builder
Easily compare the sector allocation and weighting of your investment portfolio against benchmarks like the S&P 500
Tax Loss Harvesting
Find opportunities to offset capital gains by selling other positions at a loss, thereby realizing tax savings (not available with basic accounts).
Bond Ladder
Create a “ladder” of bonds or CDs to reach maturity at specific intervals, matching the customer’s income needs over time.
Margin Calculator
View any security’s current margin requirements, calculate the impact of hypothetical trades, and see how price changes can affect margin requirements and balances.

Pros

Traders have a wealth of fundamental and technical information at their fingertips using any of Fidelity’s trading platforms. Typically, a dozen or more reports are available for larger stocks and many sectors and indexes. The advanced solutions, especially Wealth-Lab Pro, also provide years of market data so traders can backtest strategies before committing real money.

Cons

Fidelity’s research is limited to the products and asset classes that it sells, so you won’t find much research specifically on forex or futures contracts, which it doesn’t support. Also, although Fidelity offers third-party research from over 20 different firms, in addition to research from its own deep bench of analysts, some of that research, such as Recognia, is not available unless the customer meets certain activity criteria.

Education

4.1

Fidelity is friendly to the novice trader, with hundreds of free educational articles, tutorials, and videos on dozens of different topics. Topics include stock and option trading, retirement funds, college saving, tax planning, debt and budgeting, charitable giving, estate tax planning, life insurance needs analysis, and much more. Additionally, Fidelity advisors routinely conduct financial education seminars at 180 local office locations across the country. The centerpiece of the Fidelity investor education effort is the online Learning Center, where investors can access a wide variety of materials ranging from basic personal finance tips to advanced trading techniques.

What you need to know

Fidelity breaks out its educational offerings by level of complexity (basic, intermediate or advanced), platform, and subject matter. A large number of its online instructional and educational materials are videos. However, as extensive as the Fidelity Learning Center is, it is no substitute for rigorous independent study of the markets from a variety of independent sources.

Banking

4.0

Fidelity offers a variety of banking-type services via Fidelity Cash Management Solutions. If you hold a Fidelity account, you can keep up to $1,250,000 in cash with FDIC protection. Fidelity also offers modern banking conveniences like mobile check deposit, free bill paying, and a free debit card that allows you to access your cash management account from any ATM in the country where you see Visa, Plus or Star logos. Fidelity also reimburses bank fees from third-party ATMs.

What you need to know

To use the full suite of banking service features and benefits, you have to sign up for a Fidelity Cash Management Account. It doesn’t come automatically with a Fidelity brokerage account. The Fidelity Cash Management Account is a good, flexible place to store “safe money” while you are awaiting an opportunity to invest it. Fidelity doesn’t offer direct personal, mortgage, or business loans (except to buy securities via margin loans), so it does not entirely replace a relationship with a traditional bank or credit union, though it offers a similar mix of cash management and savings products. If you don’t expect to be taking out a loan any time soon, the combination of convenient bill-paying solutions, direct transfers in and out of other Fidelity accounts, no-fee ATM cards, and free checking may be something to consider.

Bottom Line

With a reasonable pricing structure, easy-to-use software, copious research, and a wealth of educational materials, Fidelity is a great starting point for novice traders and traders who like to use lots of third-party research materials when making their own trading decisions. Fidelity is also a great place for mutual fund fans, thanks to the extensive selection of no-transaction-fee Fidelity funds and other funds and ETFs. While Fidelity is primarily an active management shop, its index funds and ETFs are competitively priced, and its solid trade execution makes investor costs effectively even lower. That should appeal to cost-sensitive investors and indexing fans. Fidelity ties it all together with a solid cash management program that qualifies for FDIC insurance, and sweetens the deal by providing limited banking services such as ATM access and credit and debit cards. Those who want to trade forex or futures contracts, however, must look elsewhere. Fidelity does not support these activities. While Fidelity does have some good functionality for chart watchers – especially on its advanced platforms Wealth-Lab Pro and Active Trader Pro – hardcore technical analysis traders and those who want hot key capabilities may want to consider other alternatives as well. Fidelity also tends to discourage high-frequency trading on its platform. So if you’re the type to set up a black box to execute hundreds of trades a day, Fidelity isn’t the home for you.

Jason Van Steenwyk
Reviewed by Jason Van Steenwyk

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