The biggest development in trading over the past decade, arguably, is the rise of the discount broker. A flood of cheaper online alternatives to big-name investment brands has allowed everyday traders a crack at the markets.
That doesn’t mean big-name investment brands are going anywhere. Quite the contrary; most have developed extensive online trading platforms themselves to throw their weight around in the market, and Fidelity is no exception.
Here, we’ll provide an overview of Fidelity and explore its online trading offerings, including costs, fees, asset availability, special features, customer service, and other important factors.
What Is Fidelity?
Fidelity is one of the largest financial services companies in the world. Dating from 1946, Fidelity claims roughly $1.5 trillion in assets under management (as of 2010). It also offers online discount brokerage services that give access to the full arsenal of financial products developed by Fidelity over the years. As of 2012, Fidelity claims 18 million brokerage accounts, with 190,000 commissionable trades per day, on average.
What Can You Trade With Fidelity?
With Fidelity, you have a pretty broad range of assets and asset classes to choose from. You can trade:
- Mutual funds
- Precious metals (commodities)
The forex offering is a bit disappointing; you are only allowed to trade 13 currencies, and it functions more as a currency exchange method than an actual forex platform. But, you can trade commodities and CDs, two classes not commonly offered elsewhere. You can also trade stocks in 17 different countries. Plus, Fidelity lets you trade bonds with a level of sophistication not seen elsewhere very often with its Bond Ladder tool.
You can’t trade futures with this broker, which is disappointing for futures traders.
How Much Does It Cost?
How much does it cost to trade with Fidelity?
For stocks, Fidelity offers a flat-rate of $7.95 per online trade, with unlimited trades and shares. This comes with a 1-Second Execution Guarantee. As they claim, their commissions are lower than competitors E*TRADE, TD Ameritrade, and Schwab, although they are not the lowest you can find (that generally is around the $4.95 mark).
Per options trade, Fidelity charges $7.95 plus $0.75 per contract. The per-contract fee isn’t very high, but the per-trade charge is. You can find better per-trade options prices elsewhere.
Fidelity offers 1,400 no-load mutual funds. Additional fees vary by mutual fund. FundsNetwork Transaction Fee funds are charged a $75 flat fee. Margin rates vary.
As far as ETFs are concerned, ETFs are $7.95 per trade; 30 iShares ETFs are free.
U.S. Treasury securities are free, as are primary market CDs; agency securities, secondary CDs, municipal bonds, corporate bonds, and secondary market CDs are all charged at a rate of $1.00 per bond. Margin rates vary.
Minimum Account Size
Every tradable asset is traded from one central account. To open a Fidelity account, you need a minimum account balance of $2,500.
Fidelity is pretty upfront with its fees, and its fees aren’t unusual or excessive for the industry. Its margin rates are as low as 3.75%, which aren’t the lowest but are competitive.
How Does Fidelity Do Customer Service and Education?
Here are two areas where Fidelity shines. As a big-name brand, Fidelity has excellent customer service. They are professional and knowledgeable and eager to help. Opening an account is easy and dealing with your account is simple as well.
The research materials and tools – including commentary, historical trading data, stock screeners, stock research, and other research reports – are fantastic, easily some of the best in the business. If you want a lot of independent data and research at your disposal, Fidelity offers it in spades.
How Is Fidelity’s Trading Platform?
The platform used by Fidelity isn’t the best in the business. In fact, it is average at best – which means anyone interested in high-powered, bells-and-whistles trading platforms can do better elsewhere. The user interface is basic but lacks the ability to modify orders and perform other very basic tasks. Plus, organization for the interface is about as good as it is for the website – which is to say, not very well executed.
How Does Fidelity Match Up?
Fidelity is a solid competitor when it comes to big-name brands. It doesn’t have as powerful a trading platform as some of its competition in the big-label market, but the educational materials and research tools it has at its disposal are impressive. The rates aren’t as low as some other places, like Zecco or TradeKing, but you’re really paying for excellent information and service.
Millions of people use Fidelity for a reason, and this company is a good example of how you can always turn to an experienced name in the business for solid – if not spectacular – performance.