Fidelity Investments is a name that is synonymous with retirement. Long known as a firm that specializes in managing nest eggs, Fidelity is also making a big play for online investors. A recent company campaign insists that you can “Expect More” from Fidelity. In this BankShout review, we will take a look at how Fidelity’s online trading stacks up against the competition.
One of the first things I noticed about Fidelity–besides all the new commercials during college basketball’s March Madness tournament–is how comprehensive their website is. Going beyond online trading, Fidelity describes retirement strategies and investment products in very easy-to-understand language; it is clear that the company wants to educate its customers, in order to help build wealth. Fidelity’s pricing for online trading is, like some of the other big brokerages, a bit of a mixed bag. This brokerage will definitely attract investors who want a strong combination of do-it-yourself research tools and individual attention through customer service.
Like the other big investment firms, Fidelity can’t compete on price with the cut-rate, online only brokerages like Just2Trade or Zecco. This is to be expected; there is a premium to be paid for better service and additional trading tools and research. A great benefit with Fidelity, however, is that their trade pricing compares very favorably with the other traditional brokerages such as Schwab and AmeriTrade. All online equity trades are $7.95. Options cost $.75 per contract. Bond trade concessions are free for U.S Treasury auctions, and $1 for corporate and municipal bonds.
Even better, Fidelity has extremely attractive pricing on over 1400 mutual funds (which have no transaction fee). On exchange-traded funds, the ever popular funds that can be traded daily like stocks, Fidelity has 25 different commission free ETFs through iShares, which include U.S. equity funds, fixed-income varieties, and international funds. (Schwab and Ameritrade charge $8.95 and $9.99, respectively, for ETFs.) On the negative side, Fidelity charges $12.95 for trades by phone and a whopping $32.95 for broker-assisted trades. You need at least $2500 to open an account. There is also a short-term mutual funds trading fee of $75.
Trading tools are where Fidelity really separates itself from the pack. Whereas some online brokers have “one size fits all” platforms, Fidelity has great variation in its trading applications. In addition to platforms dedicated to active traders, the company has a range of advanced orders like basket trades and trailing stops. OptionTrader Pro is available if you move 20 contracts a month, minimum, and includes “full Greeks,” which are mathematical computations that help you to trade.
Fidelity also has bond laddering with no minimum investment (although the company suggests your portfolio should be at least $100,000 to get the most benefit from the strategy), as well as mobile trading with full portfolio tracking and research capabilities. If you make at least 120 trades per year and have $25,000 in investments with Fidelity, you can get the upgraded trading platform, which is called Wealth Lab and contains such advanced tools as “backtesting” strategies.
Fidelity also manages to separate itself through the sheer number of support services provided. For instance, the brokerage provides equities research reports–for free, no less–from 10 different independent firms, the most in the industry, according to Fidelity’s website. They also have a neat feature to “analyze the analysts,” a ranking system for stock researchers to keep track of analyst accuracy.
Fidelity also offers a “1-second guarantee” on trade executions. The brokerage publishes their execution statistics right online, which is reassuring as well. The theme of Fidelity’s website is that it is comprehensive, but not cluttered or filled with broker-babble, terms that the relatively new investor wouldn’t understand. Glossaries explain trading strategies and terminology, and web seminars and an online trading knowledge center are also available.
- Pricing is below many of the bigger brokerages
- Outstanding research and analysis
- Multiple trade platforms and tools suit every kind of trader
- Trade execution guarantee
- High fee for telephone trades
- Broker-assisted trades expensive
- Short term funds fee
- Account minimum requirements to upgrade to best trading platform