Pros and Cons of Fidelity Overview
Although Fidelity is well known for its many positive attributes, the broker also has some drawbacks. This article will analyze Fidelity disadvantages
and advantages, and see how the firm compares to its major rivals.
Fidelity Pros
Fidelity has a history of providing excellent customer service. The broker's representatives are usually well trained and can provide assistance with a wide variety of financial issues. The company has more than 180 brick-and-mortar branches located across most states. Fidelity's phone service is open 24 hours a day, 7 days a week. Furthermore, the Fidelity website has on-line chat, a nice feature. Phone numbers are also available for clients who travel internationally. These services are much better than those offered by Vanguard, who doesn't provide 24/7 service, on-line chat, or local branches.
Fidelity offers 240 exchange-traded funds that are free to trade. Many of these securities have low bid-ask spreads with expense ratios below 10
basis points. Other brokerage houses offer fewer commission-free ETF's, including Wellstrade and Interactive Brokers.
Firstrade, however, offers all ETF's with $0 commission!
Besides a good selection of ETF's, Fidelity also has a large supply of mutual funds. The broker's screener returns 11,521 products that are open to new investors. Approximately 3,500 have no transaction fee, and about half of these also come with no load. Capital One Investing has far fewer funds available, with less than a thousand carrying no load and no transaction fee.
Fidelity has some good trading technology. It is the only low-cost broker that has a platform for Apple TV. It also offers an app for Apple Watch. Both are free to use.
The firm offers an advanced desktop trading system for active traders. Other brokerage houses don't offer a platform. WellsTrade and Vanguard are two examples.
Website charting on the Fidelity site comes with some helpful technical indicators. These include Keltner Bands, MACD, and the relative strength
index. Drawing tools and company events are also available. A graph can be displayed full screen, and the software is very customizable. A chart
on some other brokers' website, by comparison, cannot be displayed the width of the monitor.
Fidelity operates its own lineup of mutual and exchange-traded funds. They are always free to trade on the broker's website. There are 316 Fidelity mutual funds and 21 ETF's. Other brokers, including E*Trade and TD Ameritrade, don't operate their own funds.
The Fidelity website has a very large selection of educational materials. These resources would be ideal for new traders who need some guidance
navigating the financial world. There are articles and videos that cover many different areas, including fixed-income products, estate planning,
retirement issues, how to trade options, and many more. Several other firms, including Interactive Brokers and Firstrade, have far fewer materials.
Fidelity customers also have access to very good stock research tools. The broker's equity screener can look for stocks based on criteria such as earnings surprises, short interest, dividend yield, and much more. The tool has more searchable criteria than WellsTrade's screener.
Free stock reports can be downloaded from Fidelity's website. The broker offers reports from many different analysts, including S&P Capital IQ,
Ford Equity Research, Zacks, Ned Davis, and more.
Although Fidelity has many self-directed accounts, the firm also offers financial advice and portfolio management. Limited investment advice can
be obtained for free over the phone. More in-depth advice can be secured for an additional fee. Managed portfolios begin at 0.35% for a
robo-advisory service, and increase up to 1.7% for human advisors who trade stocks and fixed-income products (M1 Finance
offers this service free of charge).
Cash management features at Fidelity are very generous. The broker sends out checks and a Visa debit card free of charge. They carry no annual fees. ATM fees are also refunded by the broker.
Fidelity Cons
The most important among Fidelity Investments cons is high commissions to buy mutual funds that are not in the no-fee program (most popular
Vanguard funds will be there) - $49.99 per transaction. To compare: E*Trade is charging $19.95 for the same trades, Ally Invest is at $9.99, and
Firstrade is charging $0 to buy or sell all mutual funds.
The Fidelity mutual fund screener has fewer criteria to search by, compared to the screeners of several other brokers. These include Merrill Edge
and TD Ameritrade. Fidelity's screener also only has the ability to specify NTF funds, not funds with both no load and no transaction fee.
Other brokers offer discounts to active traders or customers with certain account balances. Ally Invest, Vanguard and E*Trade all offer discounts to certain traders. These concessions can reduce their stock commissions to levels below Fidelity's rate.
While Fidelity has a good selection of commission-free ETF's, Vanguard, TD Ameritrade, and Firstrade all have more.
There is an initial funding requirement at Fidelity of at least $2,500. Several other firms have no minimum, including M1 Finance, Ally Invest and
TD Ameritrade.
Several discount brokers are affiliated with large banks, a relationship that some investors may find appealing. Many of these brokers also offer discounts to
banking clients. Unfortunately, Fidelity has no such relationship or discounts.
Recommendation
Fidelity's strengths far outweigh its disadvantages, and most investors will find a good value with the broker. Active stock and option traders will be better
served with ZacksTrade.
Investors who want to buy mutual funds that are not in Fidelity family, should take a look at the Ally Invest.
Fidelity Pros and Cons
reviewed by Brokerage-Review.com.
Rating: 4.5
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