Fidelity Investments Review: Are they worth the hype

Fidelity Investments
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Fidelity Investments was founded in 1946 and has become the go to platform for investors looking for profitable stocks to invest in. The company launched its internet presence in 1995 and has developed into a powerful player in the internet brokerage industry.

Fidelity continually provides exceptional value to investors by providing top-notch research, practical tools, and a wealth of educational materials. Most importantly, the firm is dedicated to reducing expenses for investors and has continued to improve its platform with remarkable features. Compared to many online brokers, Fidelity Investments provide customers access to a variety of stocks they can start investing in. 

In today’s post, we will provide a detailed breakdown of the broker’s features, fees, and resources and allow you to determine if Fidelity is the best fit for your trading or investing style.

Who Is Fidelity For?

Fidelity, one of the major brokers in the United States, offers services to all kinds of clients, including those who are self-directed or want highly individualized guidance, as well as novices and experts.

Fidelity offers a wide range of tools, research, resources, and simple order input for the casual, buy-and-hold investor. Fidelity’s Active Trader Pro, a downloadable program with real-time streaming data and a customizable trading interface, is available to more serious investors and traders.

A few well-liked trading products, namely futures, commodities, and cryptocurrencies, are absent from the company’s lineup, even though it supports a respectable array of offerings.

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MIN. DEPOSIT

$250

EXCL. OFFER

USER RATING

9.8

4.9/5

73% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

MIN. DEPOSIT

$50

EXCL. OFFER

USER RATING

9.7

4.8/5

CFDs are complex instruments and carry a high risk of losing money quickly through leverage. 78% of retail investor accounts lose money when trading CFDs from this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

MIN. DEPOSIT

$250

EXCL. OFFER

USER RATING

9.3

4.5/5

CFDs are complex instruments and involve a high risk of losing money quickly because of the leverage effect. 65.3% of retail investor accounts lose money trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • Stocks, penny stocks, ETFs, and options are available for trading commission-free through Fidelity (a contract charge of $0.65 is applicable). 
  • The majority of the account costs that brokers used to impose, such as transfer and account closure fees, domestic wire fees, and check fees, have also been eliminated by the corporation.
  • Fidelity has improved the price improvement focus of its trade execution algorithms. After an order is accepted and directed to a market center, Fidelity receives a National Best Bid and Offer (NBBO) quotation. 
  • Approximately 50 market centers receive orders from the company, including exchanges, market makers, and automated trading systems, and they compete to bring in customers by lowering their prices.
  • To assist you in identifying your next trade, Fidelity offers a variety of powerful research tools and asset screeners.

Pros

  • It is inexpensive.
  • Exceptional execution of trades.
  • Detailed research and asset screeners.
  • A wealth of educational resources.

Cons

  • Futures, commodities, and cryptocurrencies aren’t available.
  • Only available to U.S and main islands residents.
  • There is no live streaming of news or data on the web platform.
  • The broker-assisted trading fee is high.
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Top perks

Fee-free access to all Fidelity mutual funds

Fidelity offers a variety of well-regarded mutual funds known for their long-term performance and competitive costs. Furthermore, using Fidelity’s highly rated funds online is free of charge.

Compared to competitors, there are fewer account fees

Besides commissions, brokers also charge fees for bank wire transfers, insufficient funds, and outgoing account transfers. These services are accessible at Fidelity, unlike some of its competitors.

International trading

International markets are one of a few products offered by Fidelity. Depending on the exchange, higher commissions may apply to trading on 25 different markets and exchanging money in 16 different currencies.

Branch offices

Speaking with a Fidelity representative in one of their offices can offer great peace of mind, especially when you have issues that are hard to resolve on the phone. 

There’s probably a Fidelity investment branch near you since the company has investment branches throughout the U.S.

Fractional share investing

In many cases, investors can place orders for fractional shares down to three decimal points, all with a minimum of just $1 per stock or ETF. Fidelity offers fractional stock shares, called “Stocks by the Slice.” It means that you can buy Amazon.com shares for 0.001.

What needs to be improved

Options contract fees

Despite offering no commissions on options trades, Fidelity charges $0.65 per contract compared to many leading options brokers.

Margin rates

Fidelity is a better option for investors who don’t actively trade on margin, mainly minor balance holders. For most investors, it has higher margin rates than average.

Usability

Fidelity makes it easy to open a brokerage account, especially if you already have another form of Fidelity account (e.g., an IRA). If you wish to add account services like margin or options trading, you will need to complete further documentation, which can take time. 

Once you uncover several sub-menus, Fidelity.com is often simple to navigate. On most pages, you’ll find a search box at the top.

Fidelity’s web-based platform should be enough for casual investors who stick to buy-and-hold investing techniques. Quotes, charts, watchlists, etc., are all available on a simple platform. 

You can view pertinent analyses and news without leaving the platform using the “Positions” feature, which combines research into your portfolio. Because order entry takes time, the web-based platform is better suited for long-term investors. 

To obtain an order ticket, click “Trade” after moving your mouse over the main menu item “Accounts and Trade.” The trade ticket can also be accessed from a submenu in the account view with only one click.

The downloaded trading program from Fidelity is called Active Trader Pro (ATP). As ATP is entirely customizable, you can arrange your workspace as you see fit. You may trade right from the chart, keep an eye on pertinent news feeds, obtain real-time insights, set up custom alerts, and monitor them.

The user-friendly Fidelity mobile app is accessible on Android, iOS, Amazon devices, and gadgets with Google Assistant.

You can trade the same asset classes on mobile except bonds on Fidelity.com or Active Trader Pro. 

The app offers a limited selection of charting, research tools, and streaming real-time quotations and news. All Fidelity platforms have access to custom watchlists.

Trade Experience

You can link to news and research from symbols in your portfolio or watchlist on the web platform, and its procedure is comparatively simple. You must click the refresh button at the top of the page for the most recent quotes and news since they do not update automatically. 

But if you turn the streaming option on, you can see streaming quotes in a watch list. There are a few defaults you can set online, such as whether to place a market or limit order, for most trading decisions, but you must make them when you place the trade.

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Compared to the web alternative, Active Trader Pro has more functionality and customization options. Custom layouts are available to display the information most relevant to you. To browse the platform and expedite order entry, you can also establish shortcuts and trade settings and employ hotkeys. You can stage orders for future execution and execute basket trades on the site. Chart trading is also supported. 

Everywhere on the site, including watchlists, charts, order entry tickets, and options chains, there is streaming real-time data. A probability calculator, analytics for options, cross-account concentration measurements, and much more are also available on the platform.

Fidelity’s Mobile Experience

With the Fidelity mobile app, you can trade stocks (including fractional shares), ETFs, options, and mutual funds, but not fixed income. The mobile offering is extensive and has many of the same features as the desktop version. 

However, there are limitations to fundamental analysis, charting, and the ability to place conditional orders.

Recently, Fidelity unveiled an opt-in beta mobile experience that fulfills many of the features those new clients most frequently ask for, including:

  • A new home screen with a clean, contemporary design.
  • A quicker information delivery method using a fresh quote experience.
  • An improved trade ticket that is quicker and simpler to use.

Range of Offerings

Stocks, ETFs, options, fixed income, foreign exchange, and mutual funds are just a few of the assets available with Fidelity. If you are interested in trading forex, it is advisable to contact Fidelity since there is no information on their website. 

The mobile app makes it simple to place and manage trades from anywhere because it offers all the same asset classes as Fidelity’s web and Active Trader Pro platforms. Fidelity doesn’t offer futures, futures options, or cryptocurrency.

Trading Technology

Excellent trade execution is a strength of Fidelity. Fidelity Dynamic Liquidity Management (FDLM), a patented smart order routing system used by the corporation, actively seeks out the lowest price. 

FDLM can access various market venues, including dark pools, exchanges, and market-makers—as well as Fidelity’s CrossStream ATS. It was initially designed for usage by institutional clients. 

Multiple venues can be consecutively accessed and sprayed using smart order routing technology. Fidelity uses sophisticated order routing technology from a third party for its options.

A sale above the bid or purchase below the offer constitutes a “price improvement” on 87.36 percent of the shares, and the average execution speed is 0.05 seconds. 

Moreover, 98.5 percent of the shares are part of the National Best Bid and Offer (NBBO). Fidelity’s figures from January 2021 to December 2021 show that executing 1,000-share marketable orders results in $19.24 on average transaction cost savings compared to the quote upon order entry. This price increase is significantly more significant than the average for the sector.

Any of the eight available options exchanges can receive options orders from traders utilizing Fidelity.com. Even though Fidelity.com doesn’t offer direct internet routing for stocks, you can still place orders through a salesperson.

You can backtest trading methods through Wealth-Lab Pro, a premium product accessible to qualified Fidelity brokerage customers. If you meet the requirements for automatic trading, which include having $100,000 in equity and making at least 500 trades annually, you can put a trading strategy into action in Wealth-Lab Pro.

A brief overview of fidelity fees

A brokerage account has other costs in addition to commissions. We looked over Fidelity’s list of fees and identified a handful that needed more explanation.

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No-transaction-cost mutual funds have a $49.95 fee, so investors should use caution while actively trading them. If you redeem shares of any non-Fidelity NTF mutual fund held for less than 60 days, the business will charge you a $49.95 fee. Brokers commonly charge these fees to deter clients from aggressively trading in and out of mutual funds.

ATM fees: Obtaining a Fidelity debit card and linking it to your account, as well as making any withdrawals from ATMs each month, including those from foreign ATMs, are free. 

The debit card’s only expense is the cost of foreign currency exchange.

Fees for Fidelity IRAs, a conventional Roth, SEP, or Rollover IRA has no costs. For SIMPLE IRAs, there is a $25 fee, nevertheless. It’s doubtful that your IRA is a SIMPLE IRA (since they are employer-sponsored. SIMPLE IRAs are a rather unusual sort of IRA). This makes Fidelity one of the top IRA stock brokers and other benefits.

Customer service

Discount brokers may forego sending you a holiday card every year, but that doesn’t mean they compromise on customer assistance. For brokerage accounts, Fidelity offers round-the-clock phone support. From 8 a.m. to 10 p.m. ET, Monday through Friday, there is an online chat service available. (We asked about the support hours using the live chat option and got a response in 30 seconds.)

Visit one of Fidelity’s 197 branch offices, spread out around the country, if you’d prefer to talk to someone in person. Working with a large financial institution has advantages because they have the resources to provide round-the-clock phone service and branch offices in almost every major city.

Conclusion

Each broker has a standout feature or function that makes it a better fit for a particular group of investors. If most of the following assertions apply to you while considering Fidelity’s value proposition, we believe it would be a wise decision. Here are some reasons you should give Fidelity a try. 

  • Fidelity or iShares funds are the ones you want to invest in. It’s reasonable to argue that you could quickly put together a diverse portfolio of investments using only the no-transaction-fee mutual funds that Fidelity offers. Fidelity can be a no-brainer if you choose between Fidelity and iShares funds.
  • Low prices are important to you. Despite ranking near the top for research, screening tools, and commission-free fund options, Fidelity is one of the least expensive brokers, with a price of $0 per stock and ETF trade.
  • It suits you to have easy access to research. More independent research reports are available from Fidelity than any other bargain broker, especially for specific stocks. 
  • It also provides daily market updates and thematic research and does a beautiful job of highlighting to investors which analysts are worth paying attention to, courtesy of StarMine.
  • You value in-person customer service. With nearly 200 locations across the country, obtaining individualized assistance is simply a short drive away. Fidelity also provides support via the phone and online if that is more convenient for you.
  • You wish to buy and sell equities on global exchanges. Fidelity provides access to international markets, not simply foreign stocks that trade in the United States, which may be valuable to investors based in the United States who desire to transact abroad. Real-time streaming quotes for international marketplaces allow you to trade and watch foreign markets. Although not to the same extent as the U.S. markets, some research is also available for stocks in international markets.
  • You desire the option of purchasing fractional shares. This can be a significant benefit for newer investors and those who don’t have a lot of startup money.
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