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What Happens If Fidelity Goes Bankrupt in 2025?
What happens to client stocks, money, and account investments if
Fidelity goes out of business/bankrupt? Is Fidelity in financial trouble and could it fail?
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Can Fidelity Fail?
It’s hard to know when big financial firms might collapse, and it usually comes as a surprise. While it’s unlikely that Fidelity will shut down soon, you may wonder what would happen if it did. Keep reading to learn more.
What Happens If Fidelity Goes Bankrupt?
• If Fidelity fails, insurance would shield customers from losses.
• Client accounts are generally protected by SIPC or FDIC insurance.
• SIPC covers up to $500,000 per investor, and an extra plan called Excess of SIPC adds more. FDIC covers up to $250,000 per depositor per bank, with higher limits possible by spreading funds across different banks.
Why Fidelity Going Bankrupt Is Unlikely
Any company can fail, but some are far less likely to do so. Fidelity is one of those companies.
Fidelity has been in business since 1946 and remains a leader in finance. In 2023, it was the 11th‑largest private company in the U.S., valued at more than $25 billion. Fidelity also manages assets worth over $14.1 trillion, making bankruptcy improbable.
What Happens If Fidelity Goes Bankrupt?
Though Fidelity is strong, it’s smart to know what would happen if the broker became insolvent. Would your money be safe? Are there ways to boost your coverage?
If Fidelity collapsed, its insurance would step in to protect investors. Fidelity uses two main kinds of coverage.
Fidelity Investments Insurance
Most customer accounts are covered by SIPC or FDIC insurance. SIPC protects securities and some uninvested cash in brokerage accounts. FDIC protects cash held in Fidelity’s sweep program.
Here’s how each type of insurance works:
SIPC
Fidelity has two SIPC layers. The first covers up to $500,000 in securities, including up to $250,000 for cash.
The second, Excess of SIPC, adds protection once the basic limit is used. Provided by Lloyd’s of London, it adds up to $1.9 million more for cash and places no stated cap on investment value.
Safe Competitors
FDIC
FDIC insurance covers cash in Fidelity’s sweep program and brokered CDs.
Standard FDIC limits are $250,000 per depositor per bank. Because Fidelity’s sweep program uses 20 partner banks, clients can get up to $5 million in coverage.
Many Fidelity accounts—such as Cash Management, retirement plans, and HSAs—use the sweep program. Fidelity moves deposits across partner banks to maximize each customer’s insurance. When one bank hits its limit, deposits shift to the next bank, continuing until all limits are reached.
Separation of Assets
Some investments also gain safety through “separation of assets.” Privately held mutual funds, for instance, are separate legal entities, so their assets aren’t at risk if the broker has financial trouble.
Mutual funds bought through a broker’s platform, however, count as securities and don’t have the same separation. If you need a special type of mutual fund, talk with a Fidelity representative.
Updated on 4/17/2025.
I work in investment analytics and have been investing in the market since I was in high school. I enjoy anything that involves lots of strategy (i.e. a good game of chess), which is why I was naturally drawn to investing and researching companies. Outside of investing, I’m a big fan of the outdoors. In summer, you’re most likely to find me kayaking, camping, and hiking in the mountains.
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