Fidelity Investments Review 2020: Low Cost Fees & Real Customer Value

Fidelity Review 2020

Fidelity Investments have led the way in research and reduced fees with no commissions on stock, ETF or options trades, as well as a comprehensive online learning center.

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Fidelity - Reviews & Ratings

Fidelity are a transparent, robo advisor. They offer $0 trading commissions, over 3700 mutual funds with no transaction fees and high quality research tools. However, some features are below the standard of other more experienced robo advisors.
8/10

FAST FACTS:
• Account Minimum: $0
• Fees: $0
• Best for: Low Commissions
• Highlight: Large range of research providers

Usability: 8/10
Research and Education: 9/10
Customer Service & Help: 8.5/10
Commissions & fees: 7.5/10
Tools & Resources: 7.5/10
Investment Options: 7/10

Investor Warning: Fidelity Investments allows customers to trade options, among other assets. Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk.

Fidelity is a household name with $3T in client assets, offering customers value through $0 stock trades, extensive researching and learning opportunities, comprehensive retirement services, and an easy-to-use mobile app.

With mobile-focused broker Robinhood pushing for more accessibility through lower prices, Fidelity and others are being forced to adapt to a changing and diverse market. This is an exciting time for traders as companies think of new ways to better serve their customers.

Overview and Summary

Fidelity have several key points in 2019, we’ve rounded up their top 5:

  1.  Fidelity International is a global leader in investment, managing $3T customer assets globally.
  2.  Fidelity’s online Learning Center contains an array of educational material including videos, webinars, articles and infographics
  3.  Fidelity is a leader in low-cost commissions and in October 2019 they completely eliminated commissions for exchange-traded funds, options and stock.
  4.  Fidelity is the first company to bring to the market index funds with absolutely zero expense ratio, and non-customers can buy it, too
  5.  Fidelity is best suited to longer-term investors looking for comprehensive strategies that cover investments including mutual funds and bonds.

What is Fidelity?

Fidelity International is a global leader in investment, managing $3T customer assets globally, from private individuals to institutions such as pension and sovereign wealth funds. It is a privately owned firm and has been around for over 7 decades after opening its doors in Boston in 1946.

In 2017, the companies Assets Under Management (AUM) rose 15% to $2.45 trillion, making it the fourth biggest asset manager, losing out to BlackRock, Vanguard and of course, Charles Schwab.

Here’s some highlights of their history:

1965

The company stays on trend, buying its first computer in 1965 and computerized trading stock in 1984.

1983

Fidelity shows their commitment to customer service in 1983 by opening their first Investor Center on Congress Street Boston.

1995

Fidelity are the first mutual fund company to create an online landing page.

2011

By 2011 Fidelity show commitment to their customers again by launching The Fidelity Patent Program. This program was launched to protect Fidelity’s investors and best ideas through the creation and application of patents.

2016

Abigail P. Johnson became the chairman of FMR LLC. She is the third generation to lead the privately owned company

Robinhood has been credited with pushing companies including Fidelity and Charles Schwab to offer commission free services, to make investing more accessible to a younger audience.

Charles Schwab Acquires TD Ameritrade & What This Could Mean for Fidelity

In light of the increased pressure, the best online brokers – with Fidelity leading the pack – are facing to retain market share, Charles Schwab announced its acquisition of TD Ameritrade in late November 2019. This move both increased Schwab’s client base by 12 million and removed a key competitor from the industry, all at once.

Why a Bigger Schwab Could Be Bad for Fidelity

Fidelity has been chasing Clarles Schwab for a while now but this utter power-move of an acquisition could push Schwab too far ahead for Fidelity to catch up.

Once the acquisition gets approved, Schwab’s division will own 51% of the RIA market. This means that Fidelity’s RIA division will be less than just half the size of Schwab, a gap that could prove to be devastating for the broker. Charles Schwab will now look to take advantage of these economies of scale, reducing inefficiencies across the board and potentially outperforming competitors.

Fidelity remain optimistic with Head of Fidelity’s RIA division, David Canter referring to it as a “tremendous opportunity” and pointing to their “steady flow of unsolicited calls as proof.”

Nonetheless, Fidelity and competitors will need to be more innovative in their appeals to customers and keep their eyes open in this ever-changing, fast paced time for the industry.

How Does Fidelity Work?

Signing up for a Fidelity account is easy and will only take a few minutes. In fact, transferring is easy too and should take less than a week.

Who Fidelity is Best For

Fidelity is best for you if you consider yourself one of the following:

  • Low minimums
  • Goal Focused
  • Beginner
  • Intermediate
  • IRA Investor
  • Guidance
Fidelity is best suited to longer-term investors looking for comprehensive strategies that cover investments including mutual funds and bonds.

Fidelity Will Help Create Your Investment Strategy

Watch Fidelity’s “Investing & Risk” video.

How to Start Investing at Fidelity.com

Fidelity will help you learn how to choose investments and build a portfolio “that’s appropriate for your feelings about risk”

The 3 A’s of Successful Investing with Fidelity

Fidelity believe that a strategy grounded in the three A’s: amount, account, and asset mix will make you more likely to achieve your goals.

Cognitive Computing & Customer Service

Fidelity offers customers superb customer support when you need it. The team are known for checking in with customers when there’s any feature updates and are always online to answer questions in real time.

If you’d like a more personal, face-to-face experience then you are always welcome to visit one of their almost 200 branches across the U.S.

Impressively, Fidelity is building a cognitive computing platform so they can offer customers real, conversational experiences and interact with Fidelity in increasingly human ways.

Fidelity offers full banking capabilities, in addition to a range of insurance products. Fidelity also offers two money market funds for cash that offer 1.82% interest. If you would like to take out coverage of securities, Fidelity have no account limit.
While Fidelity score high in customer service, they broker has had several outages in the past year due to increased activity but it will not disclose how many people the platform can handle logging on simultaneously.

Where Fidelity Shine

Fidelity’s Pricing: A Market Shake-up & Better Value

With this decision, Fidelity is taking a different path from the industry. We are providing customers unmatched value while challenging industry practices that appear to give value in one place when they are actually having customers pay in other ways. Kathleen Murphy, president of Fidelity Investments’ personal investing business stated.

Fidelity joined the move towards eliminating fees for online trading by introducing zero commission fees in October 2019, but they also went a step further by introducing zero-expense mutual funds and reduced index funds, too; a move which undercuts most of their competition.

Fighting for a Share: How Fidelity Offers Real Value

To compete for a loyal millennial audience, Fidelity wants to offer customers real value. To do this, they’re showing an understanding of customers frustrations around misleading industry practices; giving a false sense of value by reducing costs in one way but adding them in another.

Zero Minimums & Fees

Fidelity offer customers a zero minimum investment to open a retail brokerage account. But to stop customers from getting any extra sneaky charges on things like payments and bank wires, they eliminated account and domestic money movement fees on its accounts, too.

Mutual Funds

Fee Free Funds

Fidelity is the first company to bring to the market index funds with absolutely zero expense ratio, and non-customers can buy it, too. Without a fee or annual expense, account owners could build a virtually free retirement portfolio.

Reduced Existing Index Funds

The Broker also greatly reduced their index mutual funds. On average, the asset-weighted annual expense across their index fund portfolio will be cut by 35%. Other funds fees will be as low as .015%. This beats most of their competition on price and Fidelity have estimated that the change will put $47 million back in investors pockets annually.

Commissions

Fidelity led the way with low-cost commissions, but in October 2019 they completely eliminated commissions for exchange-traded funds, options and stock.

Track Your Finances: Fidelity’s Full View

One of Fidelity’s most loved features is Full View; a convenient way to keep track of your finances, including investments accounts outside of Fidelity. It’s free for all Fidelity customers and helps you gain more control over your finances.

Some of Full Views key features include:

  • Consolidate all your accounts
  • Track your net worth over time
  • Create and manage your own budget
  • Use anytime, anywhere

With Full View customers can view a single page of either their Fidelity account or an outside account. Forget trying to add all your different accounts, full view allows users to monitor their entire portfolio and see their total net worth. Keep track of your spending, set goals and categories your expenses with Full Views budgeting and reporting tools, and manage your cash flow.

Overview

Full View is an easy way to help you stay on top of and get some control back of your finances, and it’s free. While Full View allows you to add accounts outside of Fidelity, once you do it can become slower and harder to customize.

Portfolio Analysis & Reports

Fidelity have a great variety of tools and analysis. You’ll have access to a comprehensive list of tools and analysis that can help you find investments that meet your needs. Fidelity provide research stocks, fixed income, options and mutual funds research to help you meet your investing strategies.

You can also set up alerts to ensure that you’ll be notified about any updates to securities on your watch lists.

You can also set up monitoring so that you’ll receive an alert when there’s an update to one of the securities on your watch list.

Active Trader Pro

  • Get trading ideas with real-time alerts
  • Discover insights to help you buy and sell at the right time
  • Monitor events that impact your portfolio

Active Trader pro offers real-time insights, trading tools and visual snapshots to monitor your investments. The visual snapshots page include social, environmental and governance rating from MSCI.

On Active Trader Pro you will be able to spot trading opportunities with real-time alerts from Real-Time Analytics. You’ll be on top of stock highs and lows, and know when it experiences an intraday high in comparison to its historical value, crosses over a key technical level, and more.

Active Trader Pro will help you create your entry and exit strategies and see a trade’s possible risks risk and reward, and set alerts to keep on track of changing prices, with Trade Armor®.

Lasty, you can use Active Trader Pro to find actionable information on it’s multi-purpose Daily Dashboard. This includes real-time news updates, economics event tracking and earning announcements all customized to you.

Fidelity Stock Research

  • Find stock
  • Research Stocks
  • 5-step guide to trading

Fidelity stock research offers a range of data points so you can make educated investment plans. See how to Get the Most out of Fidelity’s Stock Research in their short video.

Overview

Fidelity is a leader in research and market analysis. Active Trader Pro, offering real-time alerts, insights and event monitoring tools, and their stock research will help any trader make the right decision. Fidelity’s only competitor is arguably Schwab with its Insight & Ideas articles on topics including Market Commentary, Retirement and Trading.

Educate Yo’self: Fidelity’s Learning Center & Commitment to Education

Fidelity Mentors Children in NeedFidelity believe that access to education will result in more confident and better decision making with better results. Along with providing an Online Learning Centre for customers, Fidelity also mentor children in need. This shows their commitment to education across the board for customers and communities alike.

Mentorship for Children in Need: A Commitment to their Community

Fidelity work with nonprofit organizations and regional school systems with a focus on creating volunteer opportunities for their employees to bring some of their insights and experience to children in need.

Foundational & Financial Education

Fidelity mentor children in need on both foundational and financial education. Their foundational education ranges from “ tutoring and creating academically enriching apprenticeships to refurbishing schools and donating books and supplies.

While their financial education is focused on “teaching students the basics of personal finances through in-classroom discussion, hands-on simulation activities, and interactive games.

Online Learning Center: A Commitment to Customers

Fidelity’s online Learning Center contains an array of educational material for customers including videos, webinars, articles and infographics on topics such as fixed income selection, options trading, fundamental and technical analysis, and retirement planning.

Customers can watch webinars and receive online coaching sections for more advanced topics. Beginners can also avail of programs in the mobile apps.

Get Rated Stocks (Without the Hassle)

Fidelity’s Equity Summary Score (ESS) is a rating for individual stocks. Each score consolidate view of the ratings from the platform’s independent research providers. Traditionally, there has been 10-12 providers.

However, some stocks are not rated. Since this feature uses several ratings to reach an Equity Summary Score, stocks will need 4 or more ratings before they’ll get an ESS. This makes it quick and simple to get a consensus without needing to spend hours researching.

Fidelity Features You’ll Love

Manage Your Money: Fidelity’s Mobile App

Fidelity’s app with help you manage your money and is available for iOS and Android phones. With the app you’ll have quick access to all your account at Fidelity while also being able to make payments and transactions. Their self-registration feature will give you access without having to make a trip to your local branch.

Some customer favourite features includes:

  • Real-time market quotes
  • Real-time news stories
  • Percentage of top stock winners, losers and most actives
  • Balances, positions and intraday changes

Where Fidelity Fall Short

Apart from having a website with far too many drop-down menus, Fidelity have always been a customer favourite and are hard to fault. They’ve led the way on reduced fees and continue to offer customers value in new ways.

They have however, recently been criticised for a certain “lucrative field” that may put the Johnson family first.

A Not so Customer First Approach: Fidelity’s Private Venture Capital Arm

Fidelity runs the risk of losing investors by competing with the funds that serve them

Tim McLaughlin writes that, F-Prime Capital Partners, a private venture run on behalf of the family, directly competes with Fidelity mutual funds in which the public invests. This is a situation that securities lawyers have agreed is an unusual conflict of interest.

When asked about F-Prime, Fidelity said that its mutual funds get priority over the Johnson Family’s interests, “When both our proprietary venture capital group and our funds express interest in investing in the same private companies, the funds always prevail.”

While business lawyers have called it, problematic because it “directly pits the interests of Fidelity fund investors against those of Fidelity’s owners and elite managers.”

In either case, while it might not affect the everyday investor, this arrangement requires the highest level of integrity. In the midst of a changing industry, Fidelity need customers on their side now more than ever.

Comparison of Brokers

Comparison Chart

Comparison of Robinhood, Charles Schwab, Fidelity:

  • Overall rating: Robinhood 7.5/10, Charles Schwab 9.5/10, Fidelity 7.5
  • Account min: Robinhood $0, Fidelity $0 Charles Schwab, $0
  • Fees: Fidelity $0, Charles Schwab $0 , Robinhood $0
  • Highlight: Large range of research providers, Charles best online broker for stock traders, Robinhood Pioneer of commission free stock

What Does This All Mean?

Fidelity is a great choice for a broker with a diverse range of features and an overall customer centric approach to their business. Their recent price changes and adaptations can only be seen as a positive for traders in this exciting time.

Fidelity’s, well-regarded mutual funds and fee-free funds, top tier research and online learning centre and move towards zero-commission fees and no minimum account are appealing for any investor.

Also check out: If you enjoyed reading about Fidelity’s research, then Merrill Edge and Charles Schwab are other great options.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (protechcap.com).