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What Happens If Fidelity Goes Bankrupt?
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Can Fidelity Fail?
It is not always possible to predict when major financial institutions will go bankrupt, and it is usually a surprise when it happens. Although it is doubtful that Fidelity will go belly up any time soon, you might be wondering what would happen if Fidelity went bankrupt.
Keep reading to find out.
What Happens If Fidelity Goes Bankrupt?
• If Fidelity goes bankrupt, account-protection programs could protect eligible customer assets from certain types of loss, but they would not protect investors from market losses.
• Customer accounts are usually protected by either SIPC or FDIC, depending on the account type and where the assets are held.
• SIPC covers up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account. Fidelity also provides excess SIPC coverage. FDIC coverage generally applies to eligible cash swept to program banks, subject to FDIC limits and program rules.
Why Fidelity Going Bankrupt is Unlikely
While it is certainly possible for any company to go bankrupt, some organizations have a much smaller chance of that ever happening. Fidelity is a good example of such a company.
There are many reasons to think that Fidelity going bankrupt is unlikely. For one thing, Fidelity Investments
has been in operation since 1946 and has maintained a major role in the financial sector ever since. Another
thing that makes it difficult to think Fidelity would go bankrupt is its sheer size. Fidelity reported $37.7 billion in revenue, $18.0 trillion in assets under administration, and $7.1 trillion in managed assets for 2025.
What Happens If Fidelity Goes Bankrupt?
Despite the unlikelihood of Fidelity becoming insolvent, it is good to know what would happen if the broker did go bankrupt. Would your money be safe? Are there any ways to maximize the potential coverage you can receive?
If Fidelity went bankrupt, account-protection programs could help protect eligible customer assets if a covered brokerage or bank failure occurred. Fidelity uses two main types of protection, and both protect investors in different ways.
Fidelity Investments Insurance
In most cases, customer accounts are protected by either SIPC or FDIC. SIPC covers securities and some uninvested cash in brokerage accounts, while FDIC covers eligible cash balances swept to participating program banks.
Here is how both forms of insurance work.
SIPC
Fidelity brokerage accounts are covered by SIPC. SIPC covers up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account, if a brokerage firm fails and customer assets are missing.
The other policy, Excess of SIPC, is built to add an extra layer of protection. It is designed to kick in when the primary SIPC coverage is used up. Fidelity’s total aggregate excess SIPC coverage is $1 billion. Within this excess SIPC coverage, there is no per-customer dollar limit on securities coverage, but there is a per-customer limit of $1.9 million on cash awaiting investment. Excess SIPC does not protect against market losses.
Safest Brokers
FDIC
The other form of protection offered through Fidelity is FDIC insurance. FDIC insurance can apply to brokered CDs and to cash held through Fidelity’s FDIC-Insured Deposit Sweep Program.
FDIC insurance is generally limited to $250,000 per depositor, per insured bank, for each account ownership category. Fidelity may use multiple program banks to increase the amount of eligible FDIC coverage. Assuming all banks have available capacity, a customer could have up to $4 million of uninvested cash in Fidelity Cash Management and IRA accounts covered by FDIC insurance.
Many accounts at Fidelity can use the FDIC-Insured Deposit Sweep Program as an eligible core position option, including the Fidelity Cash Management Account, certain eligible retirement accounts, and the Fidelity Health Savings Account.
Fidelity automatically moves eligible uninvested cash between the account and program banks. If more than $245,000 in uninvested cash is in the account, Fidelity’s program is designed to spread the cash across multiple banks to help maximize FDIC insurance eligibility. Customers are still responsible for monitoring their total assets at each program bank because deposits held at the same bank outside Fidelity can count toward the same FDIC limits.
Separation of Assets
In addition to Fidelity’s account-protection programs, certain investments provide safety through a process called separation of assets. Fidelity mutual funds are separate legal entities from Fidelity. The assets of each Fidelity fund are held by the fund’s custodian, separate from assets belonging to Fidelity or any other fund, and neither Fidelity nor its creditors may access those assets to satisfy Fidelity’s obligations.
Mutual funds held inside a Fidelity brokerage account are considered securities for SIPC purposes. Directly held Fidelity mutual fund accounts are not covered by SIPC or excess SIPC, but the fund assets are still separate from Fidelity’s own assets.
Updated on 6/11/2026.
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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