Fidelity is a leading investment management firm that consistently ranks among the best online brokers. Headquartered in Boston, it serves more than 26 million customers in the United States and surrounding islands.
Whether you’re a beginner who’s just trying to get your feet wet in the market, an expert trader who’s made a career out of capitalizing on volatility, or a long-term investor who’s building a solid retirement, Fidelity’s services will likely appeal to you.
Fidelity Investments has a solid reputation, but is the broker right for you?
Key Features of Fidelity Investments
Fidelity has the tools you need to be successful in the market whether you’re a beginner or an expert, and whether you’re a trader or an investor. Not to mention, the broker lives in the low-cost category, meaning you’ll get to keep more of your gains.
There are no account fees or account minimums on Fidelity brokerage accounts, and domestic stocks, options, and exchange-traded fund (ETF) trades are all commission-free, although you pay a small, $0.65 options contract fee if you take part in options trading.
The only rub on the fees is that you’ll pay $32.95 for broker-assisted trades, which is on the high end of the spectrum. You only pay broker-assisted trade fees when you work with a licensed Fidelity broker to make your trade.
Nonetheless, for all intents and purposes, Fidelity is one of the lowest-cost brokerages online today. Not to mention, you won’t have to give up functionality in exchange for the low cost. Here are the features you have access to as a Fidelity member:
Available Asset Classes
Owning a fidelity account gives you access to a wide range of assets, including:
- Domestic Stocks. There are more than 7,000 U.S. stocks and ETFs to choose from on the platform.
- Options. Single-leg and multi-leg trades are available. There are no options trading commissions, but you will pay a $0.65 contract fee.
- Forex. The Fidelity website doesn’t offer much insight into its forex-related services, but there are 16 currency pairs available to trade.
- Mutual Funds. There are about 3,500 mutual funds to choose from, most of which are no-load funds with no transaction fees. The majority of mutual funds on the platform are index funds, but there are plenty of actively managed funds to consider as well.
- Fixed-Income Securities. Access a wide range of bonds including corporate, municipal, and Treasury bonds. Certificates of deposit (CDs) are also available.
- International Stocks. You can find stocks and ETFs from 25 countries and 16 currencies on the platform, although international stocks don’t qualify for commission-free trading.
Aside from the commonly-used asset classes mentioned above, you also have access to exchange-traded products (ETPs), initial public offerings (IPOs), foreign American depository receipts (ADRs), preferred shares, rights, warrants, Treasury inflation-protected securities (TIPS), municipal reset bonds, high-yield corporate bonds, precious metals, and principal-protected notes.
Moreover, although you can’t trade cryptocurrencies on the platform, Fidelity is the first retirement plan provider to allow cryptocurrencies in 401(k) accounts. Fidelity allows 401(k) plans it administers to offer bitcoin as an investment choice, but not all plans that use Fidelity will make the choice available to their participants. There are no other cryptocurrencies available on the platform.
Fidelity Go
Fidelity Go is the company’s robo-advisor service, and it’s one of the most effective and least expensive on the market today. Fidelity Go might be the solution you’ve been looking for if you’d rather take a hands-off approach to investing.
There’s no minimum investment to get involved, and you’ll only pay a 0.35% all-in annual advisory fee.
The Fidelity Go robo-advisor is one of the easiest ways to invest today. Simply answer a few questions about your investment goals, set up a one-time contribution or automatic contributions, and let the robots do the rest.
Fidelity Go automatically chooses the best investment vehicles to use in order to reach your goals as efficiently as possible while keeping your risk tolerance in mind. The platform also automatically rebalances your portfolio when necessary to ensure your portfolio has the most exposure to gains possible while limiting risk exposure.
Active Trader Pro
If you’re an active trader, Fidelity’s Active Trader Pro trading platform was made just for you. The platform is available as a desktop application or a mobile app for iOS and Android devices, and it has all you’ll need to be successful in the market.
The platform is easy to use, but you won’t give up any functionality. It has all the interactive charts, technical indicators, and real-time data you need to make educated trading decisions. Moreover, the mobile app is just as intuitive as its desktop counterpart, so you’ll have everything you need whether you trade at home or on the go.
Fractional Shares
Some stocks are so expensive that beginner investors can’t access them while maintaining proper diversification in their portfolios. For example, a single share of Berkshire Hathaway (BRK.A) will set you back more than $469,000. OK, that’s an extreme example, but even a share of Amazon.com (AMZN) costs over $2,000, which is cost-prohibitive for beginners.
Fractional shares are the solution.
When you invest in fractional shares, you can buy any stock you want with as little as $1. Simply tell Fidelity the amount of money you’d like to invest in the stock and the broker will issue you a fraction of a share based on the amount you invest in relation to the price of the stock.
For example, if you invest $1 in a $10 stock, Fidelity lets you buy one-tenth of a share.
Available Account Types
Some online brokers only offer access to basic taxable investment accounts. Fidelity isn’t one of those brokers. The company also offers access to custodial accounts and a wide range of retirement accounts including:
Fidelity Learning Center
Education provides the building blocks required to build a financially free life, and Fidelity’s learning center offers a wealth of educational resources. The company gives you free access to videos, articles, and webinars focused on all aspects of personal finance, investing, trading, and wealth management.
You can even take part in regular interactive coaching sessions. In most cases, the sessions have less than 100 guests, so you won’t be competing with thousands of people to get your questions answered. The best part is that even the interactive coaching sessions are absolutely free!
Screeners
One of the toughest parts of investing is finding the right kinds of opportunities to dive into. However, Fidelity Investments has you covered with intuitive financial market screeners and research tools.
All you need to do is adjust the parameters of the screener to meet your needs and you’ll be provided with a list of stocks to dive into.
The ETF research tools are just as impressive. You can view analyst ratings, search for funds that invest in specific stocks you’re interested in, and find themed funds that fit into your investment strategy with the click of a button.
Backtesting
Backtesting is only available with Fidelity’s Wealth Lab Pro, a premium service offered to customers who make more than 500 trades per year with account balances over $100,000.
Nonetheless, if you qualify for the service, it’s one to strongly consider.
Backtesting gives you the opportunity to see how new strategies would have performed in the real world using historical data. Any time you consider adjusting your strategy, you should consider running it through Wealth Lab Pro to see if the adjustment will yield better returns.
Zero Expense Ratio ETFs
The vast majority of exchange-traded funds come with expense ratios that represent the annual cost of owning the fund. The expenses cover the costs associated with paying fund managers, traders, and analysts, along with fees associated with trading.
Zero expense ratio funds are relatively new, but there are plenty of them available on Fidelity Investments. Investing in these funds means fund expenses won’t cut into your earnings.
Finance Calculators
There are several reasons you may need a financial calculator. Maybe you want to know how a change to your investment strategy affects your profitability, how much money you might need for health savings down the road, or how big your monthly contributions should be in order to meet your retirement goals.
No matter what you need, there’s a strong chance you’ll find what you’re looking for in Fidelity’s library of financial calculators.
Fund Evaluator
The Fidelity Fund Evaluator gives you more insight into the investment-grade funds you’re considering investing in.
The Evaluator gauges multiple funds at once, making it easy to compare your options. The results of the evaluator seem to lean toward heavy self promotion of Fidelity funds though, so if Fidelity keeps popping up as the top dog, dive in a little deeper and do your own research. In many cases, however, funds from Fidelity really will be your best choice.
Advantages of Fidelity Investments
As you can see from the features above, there are several reasons to consider signing up for a brokerage account with Fidelity Investments. Some of the most exciting benefits include:
- Educational Resources. We’ve reviewed several different investing education resources throughout the years, and few have come close to being as intuitive as those in the Fidelity Learning Center. Even fewer offer interactive coaching sessions for free!
- Retirement Resources. Access whatever type of retirement account you’re looking for and take advantage of second-to-none tools for retirement planning. Fidelity is also the first broker in history to allow cryptocurrency holdings in the 401(k) accounts it services.
- Cash Management Account. Unused balances in your investing account are automatically swept into money market accounts to make the most of your unused cash.
- Fidelity Mobile. Fidelity’s mobile app is just as intuitive as its desktop platform. Whether you’re interested in long-term investing or active trading, all the tools you need are right at your fingertips.
- SIPC Insured. All Fidelity Investments are SIPC insured, meaning you have coverage in the off chance that something horrible happens to Fidelity.
- Low Cost. There are plenty of online brokers offering commission-free trades these days, but Fidelity takes low-cost investing a step further by offering a wide range of zero expense ratio ETFs.
Disadvantages of Fidelity Investments
Fidelity is a great broker that offers its users several perks, but there are some disadvantages to brokerage accounts with the company as well. Some of the biggest include:
- Serves the U.S. and Outlying Islands Only. Fidelity only serves residents of the United States and U.S. territories. International customers will have to look elsewhere for investment management services.
- Broker-Assisted Trades Are Expensive. You pay $32.95 for broker-assisted trades. To put that into perspective, broker-assisted trades are only $25 at TD Ameritrade and Schwab.
- No Futures or Commodities. Fidelity offers a wide range of asset classes, but you’ll need to look elsewhere if you want access to futures or commodities. Also, the company does allow cryptocurrencies in the 401(k) accounts it services but doesn’t offer cryptocurrency trading.
How Fidelity Investments Stacks Up
One of the most popular alternatives to Fidelity Investments is Robinhood. Here’s how the two compare:
| Fidelity Investments | Robinhood | |
| Trading Fees | No commissions on domestic stock, ETF, and options trades. $0.65 options contract fee. | No commission on stock, ETF, and options trades. No options contract fee. |
| Zero Expense Ratio ETFs | Yes | No |
| Educational Resources | Extensive | None |
| Retirement & Custodial Accounts | Yes | No |
| Screeners and ETF Research Tools | Extensive | None |
| Interactive Charts & Intuitive Trading Tools | Extensive | Minimal |
Final Word
After a thorough review of Fidelity Investments, it’s no surprise that the company ranks among the leaders in its industry. Whether you’re stock trading, options trading, or investing for the long term, the platform is likely capable of providing the services you’re looking for.
However, Fidelity really shines in three areas:
- Education and Research. The educational resources and research tools are some of the most impressive we’ve come across in our many years of reviewing similar services.
- Price. Although Fidelity is one of the longest-lived traditional brokerages in the U.S., its pricing scheme is competitive with younger, tech-focused competitors. If you play your cards right, you can invest without paying any fees, even including expense ratios on funds. Of course, that excludes regulatory trading fees that amount to a fraction of a penny per share in most transactions.
- Overall Wealth Management. Fidelity doesn’t just take an interest in your investment account; the company provides tools to help you with your overall wealth management. You can buy and sell stocks on the same platform you use to make informed budgeting decisions.