Fidelity Online Stock Brokers Review

Fidelity, a pioneer in mutual funds, was founded in 1946 by Edward Crosby Johnson II and launched its first mutual fund, Fidelity Puritan Fund, the next year. Fidelity was the first to:
  • Develop a direct, cost-effective sales plan to attract individual investors, via advertising and a toll-free number.
  • Allow check writing on money market funds.
  • Offer quotes 24 hours a day through a computerized telephone system.
  • Offer a tax-exempt money market fund.
Fidelity surpassed the $1 trillion in assets under management mark in 2000. From its beginnings as a mutual fund company, Fidelity has developed into a competitive discount brokerage that offers a wide range of additional financial services, including wealth management and estate planning, life insurance, and retirement services. The company’s stated mission is to assist investors with reaching their goals by using a long-term strategy.

Core Services and Fees
Fidelity accounts are tiered according to trade activity and account balances. They feature real-time stock quotes, portfolio performance figures and tax status. The company also offers a one-second execution guarantee on certain trades or they are commission-free.

Market: $8 - $19.95
Limit: $8 - $19.95
Options: $8 - $19.95 + $0.75/contract
Account minimums: $2,500
Margin Rates: 6.0% to 11.05%

Additional benefits
  • Comprehensive independent research (much of it free) from 10 independent firms, including Zack’s, S&P, Ned Davis Research, Thomson Financial, Argus.
  • Fund ideas and analysis.
  • Planning tools for analysis and strategy identification.
  • Stock and fund screeners.
Trading Platforms
Active Trader Pro - This is a web-based trading platform that features multi-trade order entry, trailing stop losses, conditional orders, one-click trading, skip order preview and directed trading from multiple market centers. More active customers also receive streaming market data, including Level II quotes, time and sales, watch lists, interactive advanced charting, real-time margin balances, cost basis tracking, and profit and loss details.

Wealth-Lab Pro - A Windows-based software application, features assistance with designing and back-testing customized trading strategies.

OptionTrader Pro - Offers streaming pricing, directed trading, full Greeks and analytics.

Additional benefits
Fidelity’s customers may also utilize wireless trading with its Fidelity Anywhere product, which provides stock quotes, price triggers, and allows viewing of accounts and trading directly from your web-enabled cell phone.

Available Investments
Fidelity customers can trade stocks, more than 4,500 mutual funds (1,400 NTF, NL), over 7,000 municipal, corporate and government bonds, options, IPO’s, more than 150 ETF’s. Customers may also establish college savings plans, buy annuities, insurance and establish retirement accounts.

Non-Core Services
Fidelity offers a vast array of additional financial services to its investors:
  • Financial advisory products.
  • Cash management, including checking accounts, credit & ATM cards, CDs, loans and bill pay.
  • Annuities.
  • Estate planning.
  • Tax learning center.
  • Educational services.
The company also provides products and services geared toward small businesses, institutions and financial advisers.

The company’s Trading Knowledge Center assists customers with designing trading strategies, analytical tools, risk management and offers active trader events.

Media Reviews

Barron’s gave Fidelity’s software-based broker as well as its web-based trading platform 4.4 out of 5 stars, lauding its research amenities, portfolio analysis and trade experience.

Kiplinger ranked Fidelity fifth out of the 11 online brokers it reviewed, giving it high marks for research, but penalizing it for routing a large percentage of orders through firms it owns, as well as for its higher margin rates.

Brokebrokers noted that many investors are introduced to Fidelity at work through their Netbenefits retirement platform. They then go on to open up individual investment accounts. However, stock and options trading is so much more expensive for smaller accounts at Fidelity than for online discount brokers that it’s only a truly viable option for the affluent.

J.D. Power & Associates rated company’s informational resources - 4 of 5, trading charges and fees - 3 of 5, Trade execution - 3 of 5, with overall trading experience 4 of 5, above average score in their online brokers reviews listing.

Consumers Rating

  • Wide array of product and services.
  • Commission rates have become more competitive with the deeper-discounters.
  • Excellent research available, most of it free.
  • Products for very active traders are limited.
  • Higher account minimums are not as attractive to small investors as some of the company’s peers.
Fidelity has reduced its commissions to better compete with its deeper-discount brethren. The company excels with its vast range of products and services, but its high minimum balances will deter small investors. The company’s wide range of products will appeal to the more-than casual investor and slightly active trader, who need more services than they can find at the typical discount brokerage.

Contact Information
HQ Address: 82 Devonshire Street, Boston, MA 02109-3605
Phone: (800) 581-5800

Sources and Additional Information:

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