Fidelity boasts low costs, abundant investment opportunities, and useful tools. Is there a catch? Keep reading to find out.
Fidelity Investments is one of the most well-rounded online discount brokerages on the market today. Best known for their mutual funds, their abundant investment opportunities mean that it's no slouch as a brokerage either.
In fact, there are many reasons for us to genuinely consider Fidelity one of the best platforms available.
There are abundant investment opportunities, low trade commissions, and a swatch of useful research offerings. Add to that the incredibly easy-to-use trading platform with high customization capabilities that advanced traders will appreciate, and we're sure you can understand our enthusiasm.
Fidelity has made itself stand out among its competitors for other, more recent reasons as well. In 2018, the company made itself even more investor-friendly by removing their account fees and minimum balances.
With everything the firm has going for them, it may seem hard to imagine choosing a different brokerage.
But as with everything in life, Fidelity has a few downsides too.
We take everything into consideration when writing our reviews to ensure that our readers can make a properly informed decision.
- Trading fees: $4.95 per trade (plus $0.65 per options contract)
- Account minimum: $0 (no minimum)
- Promotion: 300 to 500 commission-free trades with a qualifying deposit
Fidelity is Best For
Fidelity is clearly one of the best online brokerages and robo-advisors available. We'll be taking a look at why we think so in the next section.
For now, here's a quick list of the type of investors who will get the most out of a Fidelity account:
- Retirement investors
- Traders who are fairly active
- Those who appreciate premium research capabilities
- Investors looking for low trading fees
- Traders wanting a wider selection of funds
There's most certainly a lot to love about Fidelity. Here's why we and other reviewers consider it one of the top brokerages:
Considering the high service standard Fidelity Investments offers and maintains, their trading fee of $4.95 is considered cheap. Major competitors like TD Ameritrade, which offers a somewhat lower standard of service quality, charge as much as $6.95 per trade.
That's already a savings of $2 – which means you'll have an extra $2 per trade to invest in your next one.
Fidelity charges an additional $0.65 per contract for options trading on top of the usual trading fee. However, this is a standard practice common to all online brokerages. While you may find other competitors like Ally Invest match Fidelity in this regard, there aren't any who beat the company here.
Over and above this, Fidelity also removed almost all the fees commonly associated with holding a brokerage account.
For example, they no longer charge transfer or account closure fees. This can be compared to E*Trade, who charges $60 for transfers, or TD Ameritrade, who charges $75. As mentioned earlier, Fidelity Zero index funds are 100% commission-free exchange-traded funds (ETFs) – and there are over 260 of them.
Plus, if you make a qualifying deposit, you can get between 300 and 500 free trades for two years.
+No Expense Ratio Mutual Funds
As mentioned in our introduction, Fidelity Invest has built a strong reputation for itself on the basis of its mutual funds.
But Fidelity Invest fired a deciding blow that financial experts have been expecting – by becoming the first brokerage company to offer no-fee index funds that carry no expense ratio. These are comprised of the Fidelity Zero Total Market Index Fund, Fidelity Zero Extended Market Index Fund, Fidelity Zero International Index Fund, and the Fidelity Zero Large Cap Index Fund.
This makes it possible for Fidelity Invest clients to potentially build a balanced, well-diversified retirement portfolio at virtually no cost. Even if you do include those Fidelity index funds that carry an expense ratio charge, your portfolio's cost will be vastly lower than with any of the company's competition.
That is value that's incredibly hard to beat. So far, none of the competition has been able to realistically meet the challenge.
+No Account/Fund Minimum
Fidelity Invest hasn't had an account minimum for a long time, putting them at an equal footing with competitors like TD Ameritrade, Ally Invest, and robo-advisory pioneer Betterment.
But once again, the company has undercut its rivals. This time, it's in the form of their minimum opening investment for proprietary mutual funds.
While other online discount brokerages continue to require this minimum, Fidelity Invest no longer does. Investors with a Fidelity account are now able to get started trading with mutual funds right away, without having to build up capital.
E*Trade is often lauded for having one of the most expansive research sections among online discount brokers. The catch? It makes their site unnecessarily difficult to navigate.1
That's certainly not the case with Fidelity. In fact, not only is Fidelity's site much more user-friendly (a pro in itself), but their research resources are unrivaled.
There's stock research from nineteen providers, such as McLean Capital Management, MorningStar, Ned Davis Research Inc., Recognia, and Thomson Reuters. Six of those providers also offer ETF-specific research. And the options analysis software LiveVol adds comprehensive options strategy ideas to the mix.
When looking at the stock quote pages, you'll be able to see the Equity Summary Score. This is Fidelity's way of summarizing the ratings from all the research providers by consolidating them into a single score.
According to their website, the Equity Summary Score provides an “accuracy-weighted sentiment,” which means you can absolutely trust it. Fidelity hasn't altered the scores in any way to benefit from commissions or kickbacks, which is sometimes an issue with competitors.
Granted, this can seem a little overwhelming to new investors – after all, there's a lot of information to parse.
But rather than let it become a contention point, Fidelity gives new clients the ability to fill out a short quiz. Your answers will help the company identify specific providers that best match your investment style and features them more prominently for you.
And to make sure that there's minimized risk of confirmation bias, Fidelity will also display a research firm scorecard. This evaluates and provides the accuracy rating of research provider recommendations.
+Educational Support & Customer Service
Fidelity scores top marks for their high level of customer service quality – something they've been consistent in for years.
You can opt to receive money management advice through Fidelity Go, their robo-advisor, or to schedule an online or phone call investment account review free of charge. This includes evaluations for investment portfolios not held with Fidelity. Alternatively, they have more than 190 physical branch locations, where you can meet with an advisor in person.
Fidelity also hosts regular webinars, covering a range of investment topics – including Tax Season Insights, The Intricacies of Trading Options, and A Beginner's Guide to ETFs. Don't worry if you miss one of them: you can still access them in the archive section.
On top of all that, the company also has a very comprehensive online Learning Center. Whether you're a beginner or an advanced trader, you'll be able to find all the educational resources you need.
As mentioned earlier, it's also incredibly easy to find all the key information. When testing the website for usability, we were able to quickly locate their account minimums, investment options and trading costs, and how to close an account.
+Trading Platforms & Tools
The website platform is as easily navigable as the rest of their site. You'll also have access to some fairly comprehensive tools, such as advanced screeners (which use the research and strategy testing resources we mentioned earlier) based on historical data dating back ten years.
Fidelity's mobile app is just as impressive – something that can't be said for all of their rival investing apps. You'll find a consolidated version of their research offerings, real-time trade quotes, a notebook for saving ideas and articles, and multi-leg options trading capabilities.
Active Trader Pro, one of the desktop apps, has recently become available for free to all clients. You can also access it online using your login details and move between the two versions seamlessly. Active Trader Pro is a highly customizable platform and includes a host of features:
- Intuitive shortcuts
- Pre-built market, options, and technical filters
- Advanced options tools
- A multi-trade ticket
The multi-trade ticket is especially impressive, capable of storing dozens of store orders to complete at a later time. You can even place up to 50 trade orders simultaneously.
Finally, Fidelity also offers a second desktop platform: Wealth-Lab Pro.
Unlike Active Trader Pro, Wealth-Lab Pro is a premium desktop-strategy-testing software. You'll need to trade a minimum of 36 times over a rolling 12-month period, as well as maintain a minimum of $25,000 in eligible brokerage accounts held with Fidelity.
If you do meet this requirement, you'll have access to all the same features as Active Trader Pro, with the additional capability of customizing your strategies. You'll also be able to access 20 years worth of daily historical data, seven years of intraday historical data, and six years of fundamental data. This can be invaluable to active traders.
Don't despair if you don't yet meet the minimums, though. Fidelity allows you to enjoy a 30-day free trial.
Fidelity Invest is very nearly perfect – one of the very few companies of which we can honestly say so.
There isn't much that we would consider a contention point. In fact, the online discount brokerage has a long history of overwhelmingly positive reviews – and since late-2018, they've been breaking the proverbial charts.
However, in the spirit of transparency, there are a few minor quibbles that are worth mentioning.
-Promotion is Tough-to-Earn
In our Quick Facts section, we mentioned that Fidelity offers between 300 and 500 commission-free trades for two years with a qualifying opening deposit.
On top of their (as mentioned before) already low-cost, no expense ratio funds, this would mean active traders can potentially build a small fortune for themselves at virtually no cost.
The catch lies within those three words: “qualifying opening deposit.”
In order to benefit from the 300 commission-free trades promotion, you need a minimum deposit of $50,000. For the 500 commission-free trades version, that minimum jumps up to $100,000.
That means if you want to build a virtually free small fortune in those two years without limiting yourself to the Fidelity Zero funds, you'll need to start with a small fortune.
-Broker-Assisted Trade Fee
Fidelity offers broker-assisted trading, which carries a slightly higher fee than you might expect from the company: $32.95.
This won't be much of an issue for most traders, however, as their wealth of tools and resources could negate the need for assistance.
Is Fidelity Right For You?
We usually avoid giving any kind of definite answer to this question. That's because what makes a brokerage right for one person could make it totally wrong for another.
However, with so few contention points, we're sure you'll agree that Fidelity is sure to be the right online discount brokerage and robo-advisor for you. This is especially true if you're an active trader saving up for retirement.
If you're not an active trader (and most experts do advise trading long-term), Fidelity will still be an attractive platform.
With their high reputation for mutual funds, wide variety of commission-free, no expense ratio index funds, and stellar research capabilities, Fidelity Invest sets a standard that's hard to beat.
Ideal for beginners without sacrificing on the resources advanced traders appreciate, Fidelity is a truly all-inclusive investment platform.
Link to E*Trades review ↩