Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.
Fidelity is a top online broker across multiple metrics – its size, number of customers, accounts offered, and trading tools available. However, Fidelity is known for its low costs and zero commissions.
Most consider Fidelity as the Walmart for brokerage accounts – they have everything for a low price.
Apart from catering to active traders, Fidelity also has two different robo-advisors that assist their customers with retirement planning and long-term investing.
Fidelity is one best online stock brokers for a good reason – they’ve shown consistent dedication to low fees. Last year, they even slashed the expense ratio to zero for most index funds.
Read on to see if Fidelity is the right place for you to open a brokerage account in 2022.
Fidelity Overview
| Features: | Details |
|---|---|
| Account Minimum: | $0 |
| Commissions: | $0 |
| Management Fee(s): | Varies Per Robo-Advisor ( 0.0% - 0.50%) |
| Account Types | Individual and Joint Taxable Accounts, Traditional and Roth IRA, Custodial IRAs, Rollover IRAs, SEP IRAs, Family Trusts, Charitable Giving Trusts, UGMA/UTMA Custodial Accounts |
| Automatic Rebalancing: | Yes, but only for those enrolled in one of their robo-advisor offerings or wealth management plans. |
| Customer Support: | Email, Office Hours, Phone |
| Human Advisor(s): | Yes |
| Mobile App: | iOS & Android |
| Tax Strategy: | No |
| Tradeable Securities: | Stocks, ETFs, Options, Forex, CDs, IPOs, & Bonds |
| SIPC Insured: | Yes |
| SRI: | Yes, they offer numerous socially responsible funds for investors to choose from. |
About Fidelity
Fidelity is one of the largest asset managers in the world, with over $3.5 trillion in assets managed.
Based out of Boston, Massachusetts, Fidelity Investments operates one of the largest online brokerages, but that’s not all. They also offer a large family of mutual funds, ETFs, and financial advisory services. Recently, they rolled out select insurance products like fixed and variable annuities.
All types of accounts can be opened here – taxable and non-taxable (retirement), margin trading, custodial accounts, trusts, 401k, and even HSA accounts.
Best of all, these accounts have no annual account fees and no transfer fees. This is nearly unheard of in the brokerage world.
Most accounts have no minimum balance, and Fidelity has a strong suite of online tools to help you start investing.
Pros:
- No account maintenance or transfer fees – even for closing an account.
- Broad-spectrum of securities available to trade.
- Responsive, 24/7 customer service.
- Low expense ratios on funds and four zero expense ratio index funds.
Cons:
- Some users feel that the website and platform can seem cluttered and intimidating to a beginner investor.
- While margin rates and options contract rates are low, they’re not the lowest around. Super active traders will seek to minimize these costs, and they can do that elsewhere.
Fidelity Investments Detailed Overview
Account Minimum Balance:
$0 minimum balance for all individual and joint accounts, and all individual retirement accounts (Traditional, Roth, SEP, SIMPLE, or Rollover).
Commissions:
$0 commissions on all stock trades, Fidelity mutual funds, options trades, and exchange-traded funds (ETFs) made online or on the mobile app; $12.95 or $32.95 service fee for any broker-assisted transactions. Options contracts trade for $0.65 per contract, and non-fidelity mutual funds incur a transaction fee up to $50.
Management Fee(s):
Two robo-advisors have the following management fee structure (excluding the underlying operating expense ratios of the ETFs & funds held in a portfolio):
- Fidelity Go – no management fee for balances under $10,000; $3/month for balances up to $50,000, 0.35% per year for balances over $50,000
- Fidelity Personalized Planning & Advice – 0.50% per year management fee
Account Types:
- Individual and Joint taxable Brokerage Accounts
- Margin Accounts
- Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs Custodial IRAs, and Rollover IRAs
- UGMA/UTMA custodial accounts, 529 plans
- Family Trusts
- Charitable Giving Trusts
Automatic Rebalancing:
Not offered in standard brokerage accounts unless enrolled in a robo-advisor like Fidelity Go or Fidelity Personalized Planning & Advice.
Expense Ratios:
Fidelity has four index funds with zero expense ratios, a first in the industry.
They offer 25+ other ETFs with operating expense ratios (OERs) ranging from 0.04% per year up to 0.60% per year, and hundreds of mutual funds with OERs ranging from 0.25%-1.10% per year.
Customer Support:
Support for customers is available by phone 24/7, as well as live chat with specialists in both the mobile app and desktop trading platform.
Human Advisor(s):
Yes, human advisors available for broker-assisted trades and for professional services like 1-on-1 coaching (though its hybrid robo-advisor program), and free seminars at Fidelity branch offices.
Tax Strategy:
Unfortunately, there is no automated tax harvesting strategy for standard brokerage accounts. Fidelity’s website has resources available to help with your overall tax strategy.
Their articles and guides are written by experienced fiduciary managers and are updated with current tax information each season. If you want a robo-advisor that offers tax harvesting, then check out our Betterment Review.
Tradeable Securities:
All U.S.-exchange listed stocks, fractional shares, mutual funds, options, over-the-counter stocks, and ETFs are available to trade. While Fidelity Investments does not offer Forex trading, they do allow customers to convert cash to local currencies across Europe, Hong Kong, Japan, Australia, Canada, and other select countries.
Fixed income investments can also be traded, including treasuries, municipal & corporate bonds, secondary market issues, and CDs.
Customers at Fidelity can gain access to Initial Public Offering (IPO) shares and also secondary offerings. However, these transactions will come with extra fees of up to 8% of the purchase price due to limited supply.
Socially Responsible Investing:
Fidelity has several funds in their family that focus on the thematic of environmental, social, and (corporate) governance, or ESG.
There are six funds in total that are ESG focused, including a broad global stock fund that targets companies with the highest ESG ratings and funds for water sustainability, women’s leadership, and alternative energy.
Margin Trading:
Margin trading is available on taxable Fidelity accounts. However, this feature is only available to customers who fill out a separate application form that includes additional disclosures. There are risks involved with trading securities on margin.
The interest rate paid on margin fluctuates based on market conditions. Margin interest starts at 8.325% for balances under $25,000, but rates can go as low as 4.0% for accounts over $1 million.
Traders looking to sell stocks or options contracts short must have a margin account opened at Fidelity, which includes extra levels of risk evaluation and a lengthier approval process than just opening a brokerage account online.
Fidelity Review
Fidelity is known for being a low-cost leader. They were one of the first major brokerages to cut trading commissions to zero back in 2019, and they’ve added to their reputation as a customer-first platform by offering select zero-expense index funds.
The trading platforms at Fidelity – both the base package and the active trader pro layover software – are robust, include detailed stock charts, and are highly customizable.
And if you are looking for financial guidance, Fidelity provides you with options. You can get one-time seminars, tailored coaching and retirement planning, or sign up for a robo-advisor. Additionally, Fidelity offers standard wealth management, where a team of advisors will look after your portfolio every day.
Fidelity is Best For:
- Active-Investors (Day Traders)
- Young Adults
- Retirement Investors
- Low-Fees
- Commission-Free Trading
Fidelity is our recommendation for active traders, and for young investors looking to gain access to educational articles, videos, seminars, and coaching.
Active traders will appreciate the advanced charting features, order creating, and maintenance screens on the Active Trader Pro platform. And young investors will gravitate towards the Fidelity Go base robo-advisor platform.
Related: How to Invest $1,000
What is Fidelity?
Fidelity’s Brokerage business comprises two main subsidiaries, Fidelity Brokerage Services LLC and National Financial Services LLC.
Both are members of FINRA for oversight and offer SIPC protection plus extra syndicate insurance.
Fidelity provides a plethora of accounts to service all types of investors, from the passively oriented retirement investors to active traders.
Fidelity is one of the largest asset managers in the world, managing hundreds of mutual funds and providing custody and trading services to thousands of institutional investors. But its largest customer base is the retail, do-it-yourself investor.
How Does Fidelity Work?
Fidelity Investments allows account holders to buy and sell multiple types of securities in taxable or retirement-based accounts with $0 commissions.
Furthermore, Fidelity also charges no base annual account service fees, and they have several zero expense ratio ETFs that can be traded for no cost.
This is an extraordinary value for both beginner and experienced investors, to be able to get invested so cheaply and with no minimums.
Fidelity has numerous features and tools that cater to active traders, such as foreign stock trading, IPO allocations, and advanced options trading software.
Fidelity earns profits from:
- Scale – since their fees and expense ratios are so low, they count on having an enormous base of assets to earn those small fees on an annual basis.
- Interest on cash balances – Fidelity earns interest income on un-invested cash balances held at their brokerage and pays only part of that interest income back to customers via cash yields (though Fidelity’s default cash accounts pay an attractive high yield compared to peers).
- Interest on margin – customers who take out loans to buy stocks or other investments pays interest on those loans, earning fees for Fidelity.
What We Like:
The sheer breadth of what Fidelity has to offer – from what accounts you can open to what securities you can trade to the tools available – is the biggest selling point.
And with zero commission trades, no account fees, no minimums, and some zero expense ratio funds to choose from, we can’t find a better value online broker anywhere (and we’ve checked!).
Unlike other brokers, Fidelity does not earn fees from market makers that work for securities exchanges by selling order flow. This aligns their goals with their customers. Furthermore, this ensures the best possible price is received for every customer on every trade.
How Fidelity Invests Your Money:
All cash deposits, or proceeds from sales made in your account, go into a “core position” money market account that pays a slightly higher interest rate.
For most brokerage accounts at Fidelity, this is the Fidelity Government Money Market fund or the Fidelity Treasury Fund. However, your funds are not locked. As soon as you purchase a stock or security, your funds will be allocated to that asset.
Does Fidelity Offer Wealth Management?
Fidelity has extensive wealth management offerings, mostly through its separate account’s programs. Investing styles in its separate accounts include tax-managed U.S. and global stocks and bonds.
Account minimums range from $100,000-$350,000 in its separate accounts, and management fees range from 0.35%-1.5% per year.
In addition, Fidelity has two levels of robo-advisor services, starting with a base package called Fidelity Go that starts at $0 management fees and caps at 0.35% per year.
Fidelity Go will create a basic portfolio of ETFs with low expense ratio but doesn’t offer any tax management strategies.
Higher up the ladder is the Fidelity Personalized Planning & Advice “hybrid” robo-advisor that offers more access to human experts for coaching and education has an account minimum of $25,000 and charges 0.50% per year.
Fidelity Fees and Pricing:
- $0 commissions on all U.S. stock, ETF, and options trades. There is a $0.65/contract service fee for options trades.
- $0 account closing, transfer, opening, or maintenance fees.
- Fidelity family mutual funds trade for $0 commission; non-Fidelity mutual fund trades will cost up to $50 per transaction.
- Service fees apply to purchases of IPOs, foreign-listed stocks, Unit Investment Trusts, and secondary stock offerings.
Is Fidelity Investments SIPC Insured?
Yes, all assets (securities + cash) held at Fidelity are Securities Investor Protection Corporation (SIPC) insured up to $500,000 in the event of a broker-dealer failure.
This $500,000 in protection applies to each account capacity (such as Individual, Joint, or Trust account). The limit for SIPC claims on uninvested balances is $250,000 cash.
Additionally, Fidelity has obtained syndicate insurance from Lloyds’ of London that can amount to up to $1.9 million (per account) in additional coverage, the highest excess SIPC protection in the industry.
Research and Tools for Investors
Fidelity has strong research partnerships with over 20 providers of data covering stocks, industries, macroeconomic data, and much more.
It’s all incorporated into their core trading platform and on the mobile app. It’s easy to do deep dives into specific small cap or large cap stocks or funds, and there is a powerful screener for funds based on style, expense ratio, multi-year returns, and top holdings.
Individual investors can research and trade right on the platform without having to hop out to visit some other site. Fidelity also has a content hub that is littered with in-depth articles, tutorials, and trading resources.
Related: Motley Fool Review
Bottom Line: Fidelity Review
Fidelity is a one-stop-shop for investors. Whether you are a long-term retirement investor or an active day trader, Fidelity has the resources you need to succeed. Their low-fees, $0 account minimums, and platforms make this one of the best brokers in America.
More Broker Reviews:
