How Does Fidelity Make Money?
If you've looked at Fidelity's pricing schedule, you may be wondering how the broker generates revenue. In the past, brokers made a meaningful share of their income from trade commissions, and Fidelity was no exception. Today, however, commissions have been removed from many of the most common online trades.
With many trade commissions gone, Fidelity now relies more heavily on other sources of
revenue. Some of these methods are familiar, while others may be less obvious.
Keep reading to see how Fidelity makes money.
How Fidelity Makes Money
Fidelity does not charge commissions on many common online stock and ETF trades, and it keeps many routine account services free. But not every trade, account service, or cash-management feature is free. So, how does Fidelity sustain its operations? Let's look at some of the main ways the broker generates revenue.
One approach is through margin interest rates for trading activities and loans. Fidelity also earns interest on money market funds and cash sweep programs. On top of that, it charges fees for automated advisory services, personal advisory services, and professionally managed portfolios. Fidelity also collects commissions or fees on certain investments and transactions, including options, bonds, mutual funds, foreign stocks, and some account-related services.
Here's a breakdown of how Fidelity generates revenue.
Selling Order Flow
One common practice among commission-free brokers is selling order flow to earn income from investment transactions. High-frequency trading firms are willing to pay a meaningful amount to receive order flow as it is routed to exchanges or market centers. These firms try to profit from bid-ask spreads. While some investors dislike this practice, others do not see it as a problem.
If you find the practice of selling order flow unsettling, you'll be pleased to know that Fidelity does not take payment for order flow from market makers for stock and ETF trades. However, Fidelity's order-routing disclosures do show compensation tied to some options order routing.
Margin Interest Rates
Fidelity generates revenue through margin interest rates, which represent one of the broker's income streams.
If you want to short stocks, increase your buying power with borrowed funds, or use margin for another purpose, you will pay margin interest. Fidelity bases its margin rates on the size of your debit balance, so larger balances generally receive lower rates.
It's important to note that margin rates can change. Currently,
Fidelity's published margin rates range from 11.825% to 7.50% for accounts with debit balances ranging from $0 to over $1 million.
Fidelity Makes Money With Loan Programs
In addition to earning revenue from margin used for trading, Fidelity also earns interest from margin-based borrowing. These loans can contribute significantly to the broker's income for a few reasons. One major reason is that loans backed by securities in a brokerage account can be large and may remain outstanding longer than borrowing used simply to short a stock or open a leveraged long position.
The interest rates charged on these loans are generally the same margin rates used for trading, although the final rate can vary based on loan size and related factors.
Cash Sweep Program
Fidelity also generates revenue through its cash-sweep and cash-core programs. Fortunately, investors can earn income through these features as well.
Fidelity uses two main approaches for handling uninvested cash.
The first approach is the core position inside a brokerage account. Opening a Fidelity brokerage account automatically creates a core position, and depending on the account type, investors may be able to use SPAXX, FZFXX, or FCASH as that core position.
Fidelity also works with partner banks for cash sweep features, especially through the cash management account. Investors who choose the FDIC-Insured Deposit Sweep can have uninvested cash moved into program banks, where it earns interest. The current rate on the Fidelity Cash Management Account's program-bank sweep is 1.82% APY (1.84% interest rate), which is well above 0.01% but still below the recent yield available in SPAXX.
Managed Portfolios, Planning, and Advice
As a full-service broker, Fidelity offers its clients many managed solutions, including managed portfolios, planning services, and professional advice.
Fidelity Go
Investors can use the Fidelity Go robo-advisor service with no advisory fee while the account balance is under $25,000. Once the balance reaches $25,000, the advisory fee is 0.35% per year. There is no minimum to open the account, although Fidelity generally starts investing once the account reaches $10.
Fidelity Personalized Planning and Advice
Fidelity also offers personalized planning and advice services. Fees and minimums depend on the specific program or workplace plan involved.
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Fidelity Wealth Management
For larger accounts, Fidelity provides dedicated advisory services. The first of these is Fidelity Wealth Management. This service can cost from 0.50% to 1.50% per year, depending on the program and account size. Minimum investment levels start at $50,000 for Fidelity Wealth Services, although clients who work with a dedicated Fidelity advisor typically qualify based on broader relationship factors, and $500,000 in eligible Fidelity assets is a common example.
Fidelity Private Wealth Management
The second dedicated advisory service is Fidelity’s private wealth management service. Clients typically need at least $2 million invested through Fidelity Wealth Services and/or Fidelity Strategic Disciplines and at least $10 million in total investable assets to qualify. Gross advisory fees can range from 0.20% to 1.04%, depending on the program selected.
Account Management
For many brokers, account-management services such as deposits, withdrawals, account transfers, account closures, insufficient funds, and many others create a steady revenue stream. At Fidelity, that is only partly true.
Many routine account services at Fidelity are free, but not every account-related activity is free. Standard transfers of assets and many basic cash movements cost nothing, although some services—such as certain foreign-stock transactions, foreign-currency wires, stock certificate delivery, and margin liquidations—can carry fees. Here is a comparison from Fidelity’s website:
Fees Related to Options, International Securities, Mutual Funds, and Bonds
Although Fidelity is known as a no-commission broker, there are still trading-related charges that help produce revenue. These fees apply to options, international securities, mutual funds, bonds, and certain regulatory pass-through charges. The broker clearly tries to keep costs low, but some fees still remain. Here’s what you can expect to pay if you invest in any of these securities.
Fidelity Makes Money With Options
Options trades come with $0 base commissions, but there is a $0.65 fee for each contract. Sell orders are also subject to an options regulatory fee.
Fidelity Makes Money With Bonds
New issues of most bonds are free at Fidelity, and secondary U.S. Treasury trades placed online are also free. Other secondary bonds generally cost $1 per bond online.
New issue U.S. Treasury products are also free, while representative-assisted Treasury trades cost $19.95.
Fidelity Makes Money With Mutual Funds
Fidelity’s mutual funds are free. NTF (no transaction fee) funds from other financial institutions are generally free to buy, but Fidelity charges a flat online fee of $49.95 for selling FundsNetwork NTF shares held less than 60 days.
Transaction-fee funds (not from Fidelity) come with a purchase fee of either $49.95 or $100, depending on the fund. To compare,
Charles Schwab
is at $0.
Foreign Stock
For foreign stocks, commissions and fees depend on the trading method. Fidelity’s International Trading service uses country-specific commissions, while foreign ordinary shares traded through the domestic ticket follow the domestic stock commission schedule. A $50 fee applies to foreign ordinary stocks that are not DTC eligible, and country-specific taxes, fees, and currency-conversion charges may apply as well.
Fidelity Charitable ‘Giving Account’ Fees
Fidelity also offers the Fidelity Charitable 'Giving Account' that enables donors to grow their charitable contributions. The associated fees for this account consist of an annual administrative fee of either 0.60% or $100 (whichever is greater) and investment fees ranging from 0.015% to 0.89%.
Which Fees and Payments are Passed on to Customers?
Additionally, Fidelity passes on certain regulatory and clearing fees to its customers as part of common industry practice in commission-free trading. These charges can come from entities such as the OCC, FINRA, and SEC. While the amounts are usually very small on a single trade, they can add up when trading larger positions.
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Updated on 3/31/2026.
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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