Fidelity continues to evolve as a major force in the online brokerage space. Fidelity's brokerage service took our top spot overall in both our 2019 and 2020 Best Online Brokers Awards, as the firm has continued to enhance key pieces of its platform while also committing to lowering the cost of investing for investors. E*TRADE, an online brokerage pioneer, offers two computer-based platforms and two full-featured mobile apps that will appeal to a range of investing styles and interests. E*TRADE’s long history as an online broker has paid off in terms of very intuitive and easy-to-navigate platforms.
- Account Minimum: $0
- Fees: No commission for stock/ETF trades. Options are $0.50-$0.65 per contract, depending on trading volume.
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Fidelity's brokerage service took our top spot overall in both our 2019 and 2020 online broker awards, rated our best overall online broker and best low cost day trading platform. E*TRADE is firmly entrenched in the top 5, and is rated our best broker for ease of trading and best broker for beginning options traders. Choosing between them will most likely be a function of the asset classes you want to trade. We'll look at how these two match up against each other overall.
Fidelity is quite friendly to use overall. The firm has addressed the challenge of having the tools for active traders while still having an easy experience for basic investors by essentially splitting its offering into two platforms. Initial account opening with Fidelity is simple, especially if you're adding an account to an existing household. However, adding on account features such as options trading or margin involves filling out an additional application, and none of that data (such as your occupation) is copied from your profile, so you have to enter it again. Less active investors mainly looking to buy and hold will find Fidelity's web-based platform more than sufficient for their needs, with quotes, charts, watchlists, and more packed into an interface that manages to avoid being overwhelming. Active Trader Pro, Fidelity's downloadable trading interface, gives traders and more active investors a deeper feature set than is available through the website. Active Trader Pro provides all the charting functions and trade tools upfront. It is customizable, so you can set up your workspace to suit your needs.
A new E*TRADE customer can open and fund an account easily whether using a mobile device or a computer. There are two main web-based platforms that each have dedicated mobile apps mirroring the functionality of the respective web platform. The Power E*TRADE app, for example, allows you to do almost everything you can through the Power E*TRADE web platform. The standard E*TRADE website and app, aimed at investors who are just getting started, have two-level menus with access to numerous screening tools, portfolio analysis, and education offerings. For active investors and traders looking for charting tools, price alerts and more, the Power E*TRADE site and app provides a wider set of trading focused features. Power E*TRADE can be set up to put the functions you use most often front and center so you don’t have to dig around for them. Power E*TRADE is the place for derivatives analysis and trading as it has all the features inherited from the firm’s acquisition of the OptionsHouse technology. An update in April 2020 allows clients with multiple E*TRADE accounts to select and save a default account so it will automatically display when you log into Power E*TRADE.
Fidelity’s workflow for analyzing or trading existing positions on the website is relatively easy—you'll find links to news and research for tickers in your portfolio or on a watchlist. It's when you're searching for a new trading idea that it gets clumsy to sort through the various tabs and drop-down choices. Most investors will find what they are looking for in the News & Research tab where you can find stocks by market cap, dividend yield, top rating in sector, and so on. You can set a few defaults for trading on the web, such as whether you want a market or limit order, but most choices must be made at the time of the trade.
Placing an order with E*TRADE is straightforward with a Trade Ticket that you can save for later. Your portfolio positions are easy to monitor and E*TRADE provides analysis tools where you can measure your asset allocation against three model portfolios. The standard E*TRADE website can be clumsy to navigate with its two-level menus. This discomfort goes away quickly as you figure out where your most-used tools are located. Compiling your watchlist is centered around the symbol lookup and your watchlists have a trade button inline with each stock if you decide you like what you see. New investors without a particular list can see stocks organized by common strategies and styles, including fundamental strategies like low price-to-earnings and Dogs of the Dow, and technical strategies like a long-term RSI.
Power E*TRADE's workflow is designed to let you access all your favorite tools in a single layout that you can tweak to your preferences. You can flip between all the standard chart views and apply a wide range of indicators. The trade ticket for Power E*TRADE is more detailed than the standard one and provides snapshot analysis that projects max profit and loss, events to look out for, and more. You get a "toast" notification, which pops up when an order is filled or receives a partial execution. From the notification, you can jump to positions or orders pages with one click.
On all platforms, you’ll find a ubiquitous trade ticket with streaming real-time data. You can place orders from a chart and track it visually. You can also stage orders and send a batch simultaneously.
You can trade stocks, ETFs, options and mutual funds on Fidelity’s mobile app but not fixed income. Fidelity has enabled fractional share trading on its mobile apps; customers specify dollars rather than shares when entering an order. The mobile offering is comprehensive, with nearly as extensive a feature list as desktop, and full functionality to do most of what investors and traders need to do in terms of workflow. You can choose your own login page and buttons at the bottom of the device for your most frequently-used features, and define how you want your news presented. Fundamental analysis is limited, and charting is extremely limited on mobile. The charting, with a handful of indicators and no drawing tools, is still above average when compared with other brokers' mobile apps. Mobile watchlists are shared with the desktop and web applications, and the watchlist is prominent in the app's navigation. Most order types one can use on the web or desktop are also on the mobile app, with the exception of conditional orders.
Watchlists are integrated across all of E*TRADE's platforms, and the full range of tradable assets is accessible on the mobile apps. The workflow is smoother on the mobile apps than on the etrade.com website, though the website has been updated a bit over the last year. Using Power E*TRADE on a tablet, for example, is quite pleasant.
Range of Offerings
Fidelity clients can trade a wide swath of assets on the website and on Active Trader Pro. Equities (including fractional shares), options and mutual funds can be traded on the mobile apps. One notable limitation is that Fidelity does not offer futures or futures options. E*TRADE has a more robust derivatives offering, with access to futures and futures options. Neither broker enables cryptocurrency trading.
|Fidelity vs. E*TRADE Range of Offerings|
|Mutual Funds||Yes, (over 10,000 total, ~3,400 no-load no transaction fee)||Yes (over 9,000 total, ~4,700 no-load, no transaction fee)|
|Complex Options||Yes, max 4 legs||Yes, max 4 legs|
|International exchanges||25 exchanges online, additional countries through International Trading Gate||None|
|Forex||16 currencies online, 4 via live broker. 190 trading pairs||No|
|Fractional Shares||Yes, on mobile app||No|
|OTCBB and Penny Stocks||Yes||Yes|
Fidelity allows you to enter a wide variety of orders on the website and Active Trader Pro, including conditional orders such as one-cancels-other and one-triggers-other. Conditional orders are not currently available on the mobile apps. Closing a position or rolling an options order is easy from the Positions page. With Fidelity's basket trading services, you can select a group of up to 50 stocks, called a basket, that can be monitored, traded and managed as one entity. You can automatically allocate investments across multiple securities with an equal dollar amount or number of shares. This capability is not found at many online brokers.
E*TRADE clients can enter a wide variety of orders on the websites and E*TRADE Pro, including conditional orders. Mobile users can enter a limited number of conditional orders. The most powerful order entry setup is on E*TRADE Pro, which allows trailing stop limit orders and several other advanced order types. Clients can stage orders for later entry on all platforms.
Fidelity's trade execution engine, Fidelity Dynamic Liquidity Management (FDLM), seeks the best available price and gives clients a high rate of price improvement. Fidelity says that its clients who execute a 1,000 share marketable order can expect to save on average, $18.79 on that transaction compared to the quote at order entry. That is $13.86 better than the industry average of $2.80, according to Fidelity's internal statistics (data from January through Sept. 2019). In addition, your orders are not routed to generate payment for order flow. Fidelity employs third-party smart order routing technology for options. Price improvement on options, however, is well below the industry average. Backtesting of trading strategies can be done in Fidelity’s Wealth-Lab Pro, a premium feature available to investors in households that place 36+ stock, bond, or options trades in a rolling 12-month period, and have at least $25,000 in assets across their eligible Fidelity brokerage account. Customers can execute their strategy trading in Wealth-Lab Pro by qualifying for automated trading, which requires $100,000 in equity and 500 trades per year.
E*TRADE's order routing technology utilizes both spray and sequential routing, and most orders are sent to market makers. Approximately 95% of orders for stocks on the S&P 500 receive price improvement. The router looks for a combination of execution speed and quality, and the firm states that it has a team dedicated to monitoring its advanced order routing technology to seek the best execution available in the market. E*TRADE publishes its order routing report on its website and updates it quarterly.
Fidelity's fees are in line with most industry participants, having joined in the race to zero fees in Oct. 2019. Fidelity charges no commissions for online equity, ETF or OTCBB trades. There is no per-leg commission on options trades. Per-contract commissions are $0.65. Margin interest rates are average compared to the rest of the industry. Fidelity charges $75 on the initial purchase of certain mutual fund families, including industry giant Vanguard Funds. International trades incur a wide range of fees, depending on the market, so take a careful look at those commissions before entering an order.
E*TRADE charges no commissions for online equity, or ETF trades. Penny stock and options trade pricing is tiered. OTCBB trades incur a commission of $6.95/transaction for clients placing fewer than 30 trades per quarter, or $4.95 with 30+ trades/quarter. There is no per-leg commission on options trades. Per-contract commissions are $0.65 for most clients; $0.50 for those who place more than 30 trades per quarter. Fees are waived for contracts priced at $0.10 or less. Mutual fund commission for funds outside the No Transaction Fee program is $19.99. Fixed income is $1 per bond with a minimum of $10 and a maximum of $250. Margin interest rates are higher than average. Futures transaction fees are $1.50 per contract per side plus exchange fees. Bitcoin futures fees are $2.50 per contract per side plus exchange fees. Live broker fee is $25 per trade across asset classes. This fee is waived for Extended Hours overnight session trades placed via broker between 4 a.m. and 7 a.m. ET.
Fidelity clients are automatically enrolled in cash sweep programs that pay a much higher interest rate than most other brokers make available. Fidelity does make money from the difference between what you are paid on your idle cash and what they can earn on customer cash balances, but it is hard to begrudge them the money when they are already paying you an above average rate. E*TRADE clients can earn a small amount of interest on their uninvested cash if they take no action. If you move cash into a money market fund or an E*TRADE high-interest bank account, you could earn more, but you must take action yourself.
Fidelity doesn’t engage in payment for order flow (PFOF). This is the practice where a broker accepts payment from a market maker for letting that market maker execute the order. Rather than focus on these payments, Fidelity looks for quality trade executions and ensures that your orders are achieving price improvement on almost every trade. This is a very important point of differentiation for Fidelity as many of its competitors have seen PFOF revenue grow - likely at the price of better execution for their customers. E*TRADE accepts payment for order flow but its order execution practices generated significantly more price improvement than they received in payment for order flow.
Fidelity clients enjoy a healthy rate of price improvement on their equity orders, but below average for options. On average, equity orders receive $0.0091 per share in price improvement and options orders receive $0.0342 per contract. E*TRADE clients receive, on average, $0.0045 per share in price improvement on equity orders and options orders receive $1.81 per contract. E*TRADE’s options price improvement is well above average.
Both firms offer stock loan programs to their clients, and both have enabled portfolio margining as well.
Fidelity and E*TRADE have wide-ranging research amenities. You’ll find more support for options trading at E*TRADE, especially in the Power E*TRADE platform.
Fidelity's research offerings on the website include flexible screeners for stocks, ETFs, mutual funds and fixed income, plus a variety of tools and calculators. Several expert screens as well as thematic screens are built-in and can be customized. The ETF screener has a similar look and feel as the stock screener, but includes analyst ratings. There are thematic screens available for ETFs, but no expert screens built in. When researching ETFs, you can type in a ticker (or group of tickers) to find ETFs that contain that stock. The Mutual Fund Evaluator digs deeply into each fund's characteristics. Though it tends to drive the user to Fidelity funds, that's not unexpected given the platform. For options, there are scanners powered by LiveVol with some built-in scans, plus the ability to create a custom scan. Fixed-income investors can use the bond screener to winnow down the nearly 120,000 secondary market offerings available by a variety of criteria, and can build a bond ladder. Those looking for an options trading idea on the website can dive into the Strategy Pairing Tool, which lets clients who know what underlying and option strategy interests them to scan for trading ideas. The Strategy Evaluator evaluates and compares different strategies; results can automatically populate a trade ticket.
The website features numerous news sources, which can be sorted by holdings and watchlists and updates in real-time. The news sources include global markets as well as the U.S. On Active Trader Pro, you can set up streaming news feeds and video from Bloomberg TV. Fidelity clients have access to integrated third-party research from sources such as Standard & Poors, Hightower Report, Ned Davis Research and Zacks. Fidelity's web-based charting has integrated technical patterns and events provided by Recognia, and social sentiment score provided by Social Market Analytics. Charting is more flexible and customizable on Active Trader Pro. Though charting on the mobile app is relatively limited, it’s still better than that offered by most other brokers.
E*TRADE's research offerings on the website include flexible screeners for stocks, ETFs, mutual funds and fixed income, plus a variety of tools and calculators. Power E*TRADE features options-specific research and a great charting package. The standard E*TRADE stock screener is customizable using 45 different criteria, across six categories. On Power E*TRADE, the Live Action scanner has over 100 pre-defined screens that scan the market in real-time on live prices and live analytical metrics based on unusual activity, volatility metrics, the Greeks, fundamentals, price movement or any option or stock activity. LiveAction provides numerous screens on technical, fundamental, earnings, sentiment and news events. Many of these built-in screens are unique to the Power E*TRADE platform. The Recognia scanner enables you to scan stocks based on technical events or patterns, and set alerts when new criteria are met.
E*TRADE added 17 thematic investing screeners in 2020, with themes that include Playing Defense, Hedging with Gold, Undervalued Large Firms, Up and Comers, Emerging Economies, and Technology Pacesetters. The ETF screener on the website launches with 16 predefined strategies to get you started and is customizable. On the web, the All-Star Funds are a list of mutual funds selected by E*TRADE Capital Management to get clients started. The list is selected from the universe of no-load mutual funds offered through E*TRADE Securities. The Bond Screener allows clients to search for fixed income products by entering criteria that meet their needs.
To help come up with trading ideas, Power E*TRADE has the Live Action tool that includes technical pattern recognition. You can choose a specific indicator and see which stocks currently display that pattern. LiveAction updates every 15 minutes. Options traders can use Strategy Seek, which is a rehash of an OptionsHouse feature that is intended as education as well as an illustration of how options work. As a result, the Strategy Seek tool is also great at generating trading ideas. Power E*TRADE features free Bloomberg TV plus real-time streaming news, Dow Jones, MarketWatch, PR Newswire, BusinessWire, GlobeNewswire and Briefing.com. E*TRADE gives clients access to research and ratings from Moody's, Thomson Reuters, Morningstar, MarketEdge, Trefis, Research Team, TipRanks, and New Constructs free of charge. TipRanks offers aggregated opinions from more than 4,000 sell-side analysts and 4,500 financial bloggers. Clients with over $100,000 in assets can check out Credit Suisse research; new account holders are given a 30-day trial. On Power E*TRADE, charting enthusiasts have access to a wide array of technical indicators as well as Recognia's ability to recognize technical events.
Fidelity’s portfolio analysis program, FullView, lets you bring in external accounts to give you a picture of all of your assets, which also lets you give limited access to your investments to an advisor. FullView can be slow to load and a little difficult to customize once you’ve added several non-Fidelity accounts. The reports give you a good picture of your asset allocation and where the changes in asset value come from. The portfolio performance reports built into the website can be customized and compared to a variety of benchmarks. Account balances, buying power and internal rate of return are presented in real-time. Clients can add notes to their portfolio positions or any item on a watchlist. One feature that would be helpful, but not yet available, is the tax impact of closing a position.
On Power E*TRADE, you can look at your overall portfolio risk as well as your asset allocation. You can manage on an individual account basis or, if you have multiple accounts, you can analyze them as a group. The risk slide feature looks at risk across various ranges in price and volatility to show you where you are most vulnerable to market changes. You can't consolidate assets held at other financial institutions to get a picture of your overall assets, though. Traders can also add notes to trades or watchlists on the Power E*TRADE platform. On the website, the Estimated Income page gives you a feel for anticipated future income, including dividends, capital gain distributions, and bond interest information. Buying power and margin requirements are updated in real-time.
Fidelity's online Learning Center contains more than 600 pieces of content in areas including options, fixed income, fundamental and technical analysis, and retirement. The educational content is made up of articles, videos, webinars, infographics, and recorded webinars. The content is a mixture of Fidelity and third-party created content, which includes courses intended to guide the learner forward. Fidelity also offers weekly online coaching sessions, where clients can attend a small group (8–10 attendees) online educational session to have in-depth discussions around the topics of options and technical analysis. The mobile apps feature what Fidelity calls Learning Programs that help beginning investors better understand market and investing concepts. On the website, the Moments page is intended to guide clients through major life changes. Topics include home purchases, getting married or divorced, losing a parent or spouse, having or adopting a child, sending a child to college, transitioning into retirement, and others. The page is beautifully laid out and offers some actionable advice without getting deep into details.
E*TRADE’s website offers a Learning Center that contains investing-related articles, help using the technology, and trading-related content. Beginners to trading can check out the Getting Started section and move on from there as they get more comfortable with investing concepts. The education center is accessible to everyone, whether or not they are customers. It offers investor education in a variety of formats and covers topics spanning investing, retirement, and trading. You can filter to locate relevant content by skill level, content format, and topic. E*TRADE offers a daily product webinar to help its traders and investors become proficient in the web, mobile and Power E*TRADE platforms. There are three to four virtual learning environment events (VLEs) each year, which are webinar-based all-day events with a structured, sequential learning format, which the firm plans to continue in 2020. The Options Forum event provided three tracks—Beginner, Intermediate, and Advanced—for a total of 12 education sessions directed toward options competency.
Fidelity offers a 24/7 phone line, online chat with a human agent on the website and in mobile apps. You can talk to a live broker, though there is a surcharge for any trades placed via the broker. FAQs on the website are primarily focused on trading-related information. Customer service appears to respond very quickly on Twitter to complaints sent to their account (@fidelity). The response to those in deep distress on Twitter typically reads, "I'm sorry for the frustration. This isn't how we want you to feel, and we want to make sure your comments are forwarded to the right team. Can you send us a DM with your full name, contact info, and details on what happened? Thank you."
E*TRADE also has a 24/7 phone line with access to brokers as well as to retirement specialists, financial consultants, active trader consultants, and product specialists. Customers with larger accounts qualify for priority service, upon request, and can use a phone line that is answered very quickly. Financial consultants in E*TRADE's physical branches for face-to-face assistance. There is online chat with human representatives. E*TRADE's mobile users can access customer service via chat. Currently there is limited chatbot capability, but E*TRADE plans to expand this feature during 2020. Feedback can be submitted to E*TRADE at any time by clicking the "Suggestions" link found in the customer service menu in the top navigation on each page of the website.
Fidelity's security is up to industry standards. Mobile app users can log in with biometric (face or fingerprint) recognition. Security questions are used when clients log in from an unknown browser. Higher risk transactions, such as wire transfers, require two-factor authentication. Fidelity carries excess Securities Investor Protection Corporation (SIPC) insurance which includes a $1.9 million limit on uninvested cash. According to Fidelity, this is the maximum excess SIPC protection currently available in the brokerage industry.
E*TRADE's security is also up to industry standards, and includes biometric (face or fingerprint) recognition for mobile login. E*TRADE's Complete Protection Guarantee covers any fraudulent use of a customer's account, and offers additional security software on demand. E*TRADE carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London Insurers with an aggregate limit of $600 million to pay amounts in addition to those returned in a SIPC liquidation. The maximum for any single customer is $150 million with a cash limit of $900,000 per customer.
Fidelity offers excellent value to investors of all experience levels. Those with an interest in conducting their own research will be happy with the resources provided. Buy-and-hold investors and frequent equity traders are especially well served, which speaks to how large and well-rounded Fidelity is as an online broker. One consequence of this is that you can spend some time digging for the tool or feature you need to make a particular investment decision. It exists, but you may have to search for it. That is the trade-off for having such a deep feature set, however, and the separation of Active Trader Pro and the main platform helps to remove some potential clutter. Once you are set up and trading, Fidelity's execution quality is terrific at most trade sizes and their focus on generating interest on your idle cash is admirable. The firm is privately owned, and is unlikely to be a takeover candidate.
E*TRADE is positioning itself as a nimble, yet full-functioned, player in the online brokerage space. The integration of the OptionsHouse technology provided E*TRADE with a major upgrade to its options analysis and trading capabilities in the Power E*TRADE platform, maintaining E*TRADE's edge as one of the top trading platforms. Derivatives traders will find more research capabilities on E*TRADE when compared to Fidelity. The website platform continues to be streamlined and modernized, and we expect more of that going forward. E*TRADE is great for options analysis and trading and for mobile app users who want analytical power. Less active clients who prefer a more passive approach to investing might be happier elsewhere, or using E*TRADE's Core Portfolios robo-advisory service. Morgan Stanley announced its intention to acquire E*TRADE in February 2020. We hope that the excellent options trading tools found on the Power E*TRADE platform are maintained, and that features for less sophisticated investors continue to be developed.
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