Fidelity Review: One of the First Discount Brokers Is Still One of the Best

Fidelity is one of the top dogs when it comes to online brokers.

In many ways, Fidelity offers investors the best of both worlds. In addition to outstanding self-directed trading capability — both web-based and mobile — Fidelity also stands ready with broker assistance just a phone call away. While not the absolute cheapest broker out there, the diversity of offerings and the quality of research and support at Fidelity may outweigh the minimal fees that most investors will encounter. Take a look at the pluses and minuses of Fidelity compared to other brokers to see if the firm is a match for your financial needs.

Quick Take

Fidelity’s reasonable commissions, breadth and depth of services, access to physical locations and roster of fee-free investment choices is enough to win most customers over.

Equity Trades$0
Account Minimum$0
PromotionNone currently

You can find information on other top online brokerages, the best retirement accounts and other information on investing in these articles:

When considering Fidelity for your investment needs, the more data you have, the better. Here’s a quick look at what this review offers:

About Fidelity

Fidelity gained popularity in the 1980s on the strength of its mutual fund lineup, which included star managers such as Peter Lynch and his Magellan fund. Since then, the company has evolved into a one-stop shop for self-directed investors, with a broad product line, low fees and a host of features and benefits. Fidelity offers something for all levels of investors and traders on both its website and mobile app, which is why it makes GOBankingRates’ best brokers list for 2019.

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Pros and Cons

Fidelity has the whole package, from access to investments and low overall costs, with hardly any notable drawbacks.

Pros

  • Trading fees from $0
  • No trade or account minimums
  • Good sign-up promotion
  • No fees for most account services, including transfers out
  • Numerous physical branches across America
  • Access to zero-fee exchange-traded funds

Cons

  • Hard for many investors to earn the free trades promotion
  • User interface can be a bit overwhelming

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Fidelity at a Glance

Here’s a quick look at some of the features and details of Fidelity:

Fidelity at a Glance
Account Minimum$0
Stock Commission$0
Option Commission$0 + $0.65 per contract
Commission-Free ETFsYes
Zero Transaction-Fee Mutual FundsYes, also zero expense ratio index funds
Investment SelectionMutual funds, IRAs, stocks, fixed income investments, bonds, CDs, ETFs, options, sector investing, cash management and credit cards, managed account, 529 college savings, annuities, life insurance and long-term care, charitable giving, managed portfolios, international trading in 25 countries and 16 foreign currencies
Customer ServiceLive chat, Fidelity branches, 24/7 phone support
Mobile AppYes, with real-time quotes and extensive features
News and ResearchExtensive research, including the Fidelity Learning Center
Miscellaneous FeesFees for nearly all account services are $0
Current PromotionUp to 500 free trades for two years

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Individual Services Reviews

The strength of any broker lies in the range and quality of its services. Here’s a look at how Fidelity fares across various important service categories. When comparing Fidelity to other brokers, you can use these groupings to make an apples-to-apples comparison as to which platform provides the best overall package for your investing needs.

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Trading Experience

Fidelity offers three levels of trading for investors with different experience levels. The standard interface is easy-to-use and comes with many standard features, from mobile and online trading to complimentary webinars and events, virtual group coaching sessions and discounts on advanced tax software.

The next level up is Fidelity’s Active Trader Services, for traders with at least $25,000 invested who make 120-plus stock, bond or option trades in 12 months. This platform provides access to ActiveTrade Pro and WealthLab Pro, which provide additional technology, including real-time alerts and analytics, for more active traders. Customers also receive free Turbo Tax Premier online software.

Traders, who have at least a $1 million portfolio and make 500 or more trades in 12 months have access to Active Trader VIP. Active Trader VIP provides direct access to Fidelity traders and a host of added technology benefits, in addition to all the features of Active Trader.

A Beginner’s Guide: How To Invest In Stocks

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Account and Investment Minimums

Fidelity has no account minimums and no minimum initial investment requirement.

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Commissions and Fund Expenses

For the most part, Fidelity offers competitive commissions and fund expenses. Online equity trades cost $0, and options contract tack on 65 cents per contract. These prices are on par with some other brokers that charge $0 for online trades but below many large firms that charge $6.95 per trade or more.

For phone trades, you can use Fidelity’s Automated Service Telephone, aka FAST. Equity trades cost $12.95, while options trades tack on the additional 65 cents per contract. For broker-assisted trades, the rate goes up to $32.95 and $32.95 plus 65 cents per contract, respectively.

In the ETF and mutual fund segments, Fidelity has commission-free offerings. You can buy all ETFs at the firm for no commission, including iShares ETFs, Fidelity sector ETFs, Fidelity active fixed-income ETFs, Fidelity factor ETFs and more.

All Fidelity funds can be bought free of charge, and a number of no-transaction-fee funds are available. Note that these funds do come with a $49.95 fee if you sell them within 60 days of purchase. Other funds can be bought for a $49.95 commission, with no redemption fees at any time.

Learn: How To Decide Between Mutual Funds and Stocks

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Trading Technology

Fidelity takes pride in its price improvement technology. For every 1,000-share equity order, Fidelity saves investors $17 on average and provides the amount that trades were improved upon confirmation. A full 94.74% of shares are improved at Fidelity, and the average execution speed is 0.05 seconds. In 2018 alone, Fidelity saved investors $635 million thanks to its price improvement capabilities.

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Usability

The Fidelity interface, to some degree, is a victim of its success. On the plus side, there’s a seemingly endless amount of information available, from research and market insights to investment options, advice and services.

All of this data can be potentially overwhelming for some customers, however. For example, drop-down menus fill the screen when you hover over the numerous options, which can sometimes make finding exactly what you want a bit of a chore. However, those who take the time to familiarize themselves with the way the website works can find plenty of helpful information.

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Mobile and Emerging Tech

In some ways, the apps that Fidelity has for both Android and iOS are more functional than the website. For starters, you can customize your landing page and your news feed. Plus, the screen isn’t cluttered with all the information that’s available on the website. But don’t worry about missing out — all of your important information is synced between your app and your website account.

The app also allows you to get real-time quotes and view balances and watch lists without having to log in. Additionally, you can record ideas about your current or potential holdings on the app’s handy Notebook feature.

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Range of Offerings and Investment Selection

Fidelity offers a broad range of investment options, enough to satisfy both beginning and expert traders. Available investment options and products include the following:

  • Mutual funds
  • IRAs
  • Trading
  • Stocks
  • Fixed income investments, bonds and CDs
  • ETFs
  • Options
  • Sector investing
  • Cash management and credit cards
  • Managed accounts
  • 529 college savings
  • Annuities
  • Life insurance and long-term care
  • Charitable giving
  • Managed portfolios
  • International trading in 25 countries and 16 foreign currencies

Fidelity offers over 10,000 mutual funds for customers, but it does not yet have cryptocurrency or futures trading available.

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News and Research

Fidelity has extensive news and research capabilities. You can track watch lists, get quotes and alerts or read research reports about any segment of the market — from stocks and bonds to fixed income, options, IPOs and more. Research for each market segment includes screeners, filters, news and insights, plus other features. Beyond all this education, you can head straight to the Fidelity Learning Center, which hosts articles, courses, webinars and events.

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Customer Service

Fidelity customer service can be reached at any time via 24/7 phone assistance. Live chat isn’t available 24/7 but has fairly generous hours, from 8 a.m to 10 p.m. EST during the week and 9 a.m. to 4 p.m. EST on weekends. Although Fidelity has all the best characteristics of an online brokerage, you can also visit one of the company’s Investor Centers, located across America, if you need to speak with a financial representative in person.

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Security

Fidelity uses encryption, firewalls, secure email and proactive 24/7 account surveillance to help keep customer information safe. The firm also uses two-factor authentication and security text alerts to protect client identities. The Fidelity Customer Protection Guarantee guarantees reimbursement of any financial losses resulting from unauthorized activity in customer accounts.

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Costs

As of October, Fidelity offers trading at the rock-bottom rate of $0 like some of its competitors. ETFs and mutual funds can be purchased free of charge, and Fidelity offers a laundry list of free services that usually cost money at other firms. For example, there are no fees for bill payment, stop payment, ATMs, bank wires, insufficient funds or outbound account transfers at Fidelity.

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Best For

Fidelity is best for the following features:

  • News and research
  • Trading experience
  • Range of offerings and investment selection
  • Customer service
  • Account and investment minimums

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Falls Short

Here are the disadvantages of working with this broker:

  • Some fund expenses

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Current Promotions

Fidelity currently offers a promotion where investors can earn up to 500 free trades over two years. Although this promotion is outstanding, it may not be attainable for many investors. To qualify for even 300 free trades, investors must deposit at least $50,000 into their account. For the 500-trade offer, the deposit minimum climbs to $100,000.

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Comparison: Fidelity vs. Other Brokers

On a per-trade commission basis, Fidelity comes up short when compared with a few brokers. However, Fidelity’s commission structure is still low, and it is the only firm on the list that offers its own line of zero-fee ETFs.

Broker Comparison
BrokerStock CommissionAccount MinimumPromotion
Fidelity$0$0500 commission-free trades with a $100,000 deposit
TD Ameritrade$0$060 days of commission-free trading, plus up to $600 in cash with new account deposit
Charles Schwab$0$0500 commission-free online equity and options trades for two years with a $100,000 deposit
Merrill Edge$2.95$0Up to $600 cash with new account deposit
Firstrade$0$0Up to $200 in transfer fee rebates
Robinhood$0$0One share of free stock when your brokerage application is approved
E-Trade$0$500Up to 500 commission-free trades plus up to $2,500 in cash with qualifying deposit

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Should You Invest With Fidelity?

Fidelity is one of the most respected names in the brokerage industry — and with good reason. For a wide range of investors, from beginners to expert traders, Fidelity provides a high level of service and is an excellent choice.

Previously, the most prominent drawback to investing at Fidelity was the $4.95 commission on most equity and options trades. Now that that fee has been cut, the remaining drawback is for investors looking to buy mutual funds — they may face a $49.95 transaction fee if the fund is not part of Fidelity’s no-transaction fund program.

Looking at the overall picture, however, this drawback shouldn’t be an impediment for most investors to consider Fidelity. Investors with at least $25,000 can take advantage of the commission-free promotion currently offered by Fidelity. Plus, there are literally thousands of mutual fund and ETF options that investors can purchase for no fee whatsoever.

Advanced investors might find the lack of cryptocurrency or futures trading problematic, but the majority of investors won’t have an issue with this. For those that do, there are rumors that Fidelity will be adding crypto trading in the near future. Beyond this drawback, advanced traders will find lots to love with Fidelity’s advanced trading platforms.

Overall, Fidelity has a broad range of products, service, features and benefits that will appeal to a wide swath of investors. Trading isn’t the absolute cheapest, but it’s lower than at many firms. Plus, dedicated investors can find plenty of ways to avoid paying investment commissions and fees. Coupled with the firm’s investor education resources and brick-and-mortar locations, Fidelity has an attractive total package for an online broker.

More From GOBankingRates

Online fees for the broker are accurate as of October 2019. All other information is accurate as of Sep. 23, 2019.

Disclaimer: This content is not provided by Fidelity. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by Fidelity.

About the Author

John Csiszar is a freelance writer and article curator. He served as a registered investment advisor for 18 years before becoming a writing and editing contractor for private clients. In addition to writing thousands of articles for various online publications, he has published two educational books for young adults.