Is Fidelity a Scam

Is Fidelity Safe and Legitimate?

Is Fidelity Investments a legit, safe, and trustworthy firm? Or is Fidelity a scam or a fraud? Fidelity reviews and complaints.

Is Fidelity Investments Safe?

Fidelity Investments is a household name in the brokerage industry. We have analyzed Fidelity in order for you to be able to decide if you believe Fidelity is a trustworthy company and if you should choose them as your broker.

Fidelity Company Overview

Fidelity is one of the longest-standing brokers that are still around today as they have been in business for over 75 years. They are one of the largest privately-held businesses in the U.S. Fidelity’s business spans the entire globe employing over 50,000 people worldwide and operating in over 9 different countries.

When analyzing the numbers that Fidelity’s business does, they are staggering. Fidelity services over 40 million individual clients, over 23,000 employer-sponsored retirement plans, and over 3,600 advisory firms. Between its retail clients and institutional clients, they process over 3.1 million trades per day on average. They have over $4.3 trillion of assets under management and over $11.3 assets under administration.

Fidelity Better Business Bureau (BBB)

The first place that most people start when trying to determine if a business is legitimate, is the BBB. Fidelity has an A+ rating with the BBB. They have a 1.12/5-star rating with the BBB based on 114 customer reviews. However, you have to take that star rating with a grain of salt because typically, most people filing any type of review or comments with the BBB are angry or are in the minority that had one extremely bad experience. Fidelity has 739 closed complaints with the BBB in the last 3 years which might sound like a lot but when you consider the fact that they have over 40 million clients, that is a microscopic percentage.

Is Fidelity trustworthy?

Fidelity Regulators and Oversight

Fidelity operates in one of the most heavily regulated industries in the world – the financial industry. Not only that, but being a broker/dealer, they are in a sub-category of the financial industry that makes them subject to extremely stringent regulations.

Dozens of state securities regulators, the Financial Industry Regulatory Authority (FINRA), the Internal Revenue Service (IRS), the U.S. Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Office of Foreign Assets Control (OFAC) are just some of the watchdogs that oversee Fidelity’s business. Fidelity is subject to strict reporting requirements by these authorities on a regular basis.

Fidelity and Competitors

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Fidelity FINRA & SEC Registrations

As mentioned, Fidelity is registered and regulated by both the SEC and FINRA. Fidelity’s CRD# with FINRA is 7784 and their SEC# is 8-23292, if you would like to look them up. Fidelity is FINRA licensed in all 53 U.S. states and territories. Fidelity has a total of 136 disclosures with FINRA, an extremely small number considering how long they have been in business and their size, which are all available to the public for review on FINRA’s website.

Is Fidelity legit?

FDIC & SIPC Insurance

One way to inspect the legitimacy of a broker is to look at what type of protection they offer you and your money. Fidelity offers both FDIC and SIPC insurance, depending on the type of cash holding you have. If you use Fidelity’s FDIC Insured Deposit Sweep Program to hold your cash, you can be covered by FDIC insurance for up to about $1.25 million of cash through multiple banks.

Is Fidelity safe?

If you hold your cash in money market funds, you are covered by SIPC insurance for up to $250,000 of cash. In addition to your cash protection for either FDIC or SIPC, up to $250,000 of your securities are covered by SIPC. For further safety, Fidelity also provides special insurance coverage in excess of SIPC for up to certain dollar limits of securities for each client.

Fidelity Alternative Account Protections

If Fidelity’s insurance protections don’t give you enough peace of mind, then their Customer Protection Guarantee should help ease your nerves. Fidelity’s Customer Protection Guarantee states that they will reimburse you for losses from unauthorized activity in your accounts as long as it’s due to no fault of your own. All clients are automatically covered by this guarantee for all cash and securities in eligible accounts.

Fidelity Account Security

Fidelity has an impressive amount of security measures in place to protect investors’ accounts from scams and hackers. For the Fidelity mobile app, you can setup up biometric login using either your fingerprint or face, depending on your phone. If you ever have to call Fidelity customer service, you can choose to enroll in their Fidelity Myvoice system which verifies your identity based on your unique voiceprint.

Fidelity allows you to set up an optional 2-factor authentication for any time that you are logging in to the website or mobile app. You can also set up security text alerts for different types of triggers on your account such as any time a new bank account is linked to your Fidelity account. Lastly, Fidelity offers a feature called Money Transfer Lockdown which is an optional feature that you can turn on and off yourself that blocks any money electronically leaving your account when turned on.

Is Fidelity a Scam or Legitimate? The Verdict.

It would be the largest and most sophisticated scam in the history of the world for Fidelity to pull off what they are doing without being a legitimate operation. The sheer size of Fidelity’s worldwide business and the numbers of their business alone are proof enough that they are running a clean operation. Plus, when you take into consideration the amount of regulation and scrutiny that Fidelity’s business undergoes every single day, the clear verdict is that Fidelity is not a scam, and they are completely legitimate.

Fidelity Review: Accounts Offered

There really isn’t an investment account type that you can’t find at Fidelity. They offer a few dozen different types of accounts such as cash trading accounts, margin trading accounts, IRA’s, non-retirement brokerage accounts, health savings accounts, college savings accounts, small business retirement accounts, institutional custody accounts, trust accounts, business accounts, portfolio margin accounts, managed accounts, annuities, and life insurance.

One of the hidden gems of Fidelity’s account offering is their Giving Account through Fidelity Charitable. The Giving Account is a donor-advised fund account that allows you to make tax-deductible donations of cash or securities, grow those donations through a number of investment choices, and then at a later date donate the funds to your favorite charity.

Fidelity review

Fidelity Products Offered

Fidelity has a great offering of brokerage products overall however, they do have some big holes in their brokerage offering. Fidelity offers trading in all the standard securities you would expect such as stocks, ETFs, mutual funds, options, bonds, CDs, and IPOs. Fidelity, unfortunately, doesn’t offer any trading in futures or FOREX. And perhaps Fidelity’s biggest missing piece is the fact that they don’t offer any trading directly in cryptocurrency.

Fidelity does offer a fractional share investment program that allows you to get started investing in over 7,000 different stocks and ETFs for as little as $1. Fidelity also offers an automatic dividend reinvestment program which is ideal for long-term investors. In addition to offering regular margin trading, Fidelity offers a special type of limited-margin trading in IRA accounts that allows for day trading in IRAs.

Fidelity Services Offered

Fidelity is essentially a massive conglomerate made up of a large network of different businesses related to investing. As a result, Fidelity offers an incredible number of services that meet the needs of all types of investors. Fidelity has services to offer for everybody such as a brand-new investor with just $50 to start all the way to the largest companies in the world.

Some of Fidelity’s services include wealth management programs, 401k plans for small to large companies, many different types of managed accounts for small and large investors, retirement planning consultations, one-on-one relationships with Financial Consultants, access to over 200 investor centers, clearing and custodial services for advisory firms, asset management programs, and a fully paid lending program.

Fidelity Pricing & Commissions

Like most large discount brokers today, Fidelity offers commission-free online trading in U.S. exchange-listed stocks, options, and ETFs. All options trades carry a fee of $.65 per contract. What separates Fidelity from the other brokers though is its $0 commissions and no per contract fee on buy-to-close options orders of $.65 and under.

For mutual fund investors, Fidelity offers over 9,500 mutual funds with over 3,300 of the funds having no transaction fees when purchasing. Fidelity’s margin rates range from 9.075% for borrowing under $25,000 to 4.75% for borrowing over $1 million. Fidelity has one of the best fixed-income price offerings charging $0 commissions for all new issues including treasuries, $0 commissions for treasuries on the secondary market, and $1 per bond on all other secondary market transactions.

You will be hard-pressed to find many fees that Fidelity does charge you. Fidelity doesn’t charge any account opening fees, account closing fees, or maintenance fees. They don’t charge any outgoing wire fees, transfer fees, or voluntary or mandatory reorganization fees. They also don’t charge any fees for level 2 quotes, streaming news, or access to their desktop trading platform.

Fidelity complaints

Fidelity Review

Read a complete review of Fidelity under this link.

Fidelity Trading Platforms

You can trade with Fidelity on three different platforms including its website, mobile app, and downloadable desktop platform called Active Trader Pro. Each of the three platforms has its own pros and cons. The Active Trader Pro platform is excellent for advanced charting and for short-term traders, but it does have a learning curve that might make it a bit difficult to use for new investors. The mobile app is great for new investors and for trading on the go, but it lacks any advanced charting features. The website checks all the boxes for a good trading experience however, the general navigation on the website can be confusing at times when trying to find certain things.

Fidelity Planning Tools

Fidelity provides some amazing free planning tools on its website and mobile app for investors looking for help planning any kind of financial goal such as retirement. One of the main planning tools is a retirement planner that analyzes information like your goals, assets, and income and then produces a fully detailed retirement projection that includes personalized recommendations. Another key planning tool is a library of common financially impactful life events that you can choose from and receive guidance on how to best handle that life event for your finances.

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Fidelity Research Tools

Fidelity is home to numerous powerful and easy-to-use research tools across its website, mobile app, and Active Trader Pro. You can research all the investment types that Fidelity offers with their research tools including stocks, options, and bonds. For stocks, ETFs, and mutual funds, you can use a screener that allows you to do customized searches using dozens of different criteria and then analyze and compare the results. For options, you can do customized market scans for a number of different criteria such as high volume, you can browse through pre-built trade ideas, and you can run simulations on a probability calculator.

Fidelity reviews

Fidelity Education Resources

Whether you are a seasoned veteran investor, a brand-new options trader, or simply a 401k account holder with no idea how the stock market works, you will be able to learn something through Fidelity’s huge inventory of educational resources. Fidelity’s education hub is called its Learning Center. In the Learning Center, you will find hundreds of hours’ worth of content on an incredible range of topics from basic financial planning concepts all the way to advanced trading strategies using margin.

Fidelity Customer Service

Fidelity’s customer service is top-notch. The representatives are knowledgeable and easy to deal with whether you are chatting, emailing, or talking on the phone. You can reach Fidelity’s customer service 24/7 on the phone and through chat.

Fidelity Review Conclusion

In this review, Fidelity easily earns 4-5 stars across almost every category of ratings. For professional day traders and traders of FOREX, futures, and crypto, there are certainly better brokers than Fidelity. But, for the average investor and for most people, Fidelity is a fantastic choice to use as your broker.

Updated on 6/15/2022.

About the Author
Paul Johnson is a Licensed Stockbroker with 7+ years of experience in the financial services industry. Paul enjoys teaching about investing and writing about financial topics. He is a husband and father of twin boys.