Fidelity Investments Review 2020: Pros, Cons and How It Compares

Fidelity is one of the most well-rounded brokerages available today, with no commissions on stock, ETF or options trades and a selection of no-expense-ratio index funds.

Arielle O'SheaJune 26, 2020

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Our Take

5.0

NerdWallet rating 

The bottom line: Fidelity offers $0 trading commissions, a selection of more than 3,500 no-transaction-fee mutual funds and top-notch research tools and trading platform. Its zero-fee index funds and strong customer service reputation are just icing on the cake.

Best Broker for Beginning Investors, Best Index Funds

Fidelity

Fidelity

Fees

$0

per trade

Account Minimum

$0

Promotion

None

no promotion available at this time

Pros & Cons

Pros

  • Commission-free stock, ETF and options trades.

  • Large selection of research providers.

  • Strong customer service.

  • Expense-ratio-free index funds.

Cons

  • Relatively high broker-assisted trade fee.

Compare to Similar Brokers

Interactive Brokers IBKR Lite
You Invest by J.P.Morgan
SoFi Active Investing
Fees

$0

per trade

Fees

$0

per trade

Fees

$0

per trade

Account Minimum

$0

Account Minimum

$0

Account Minimum

$0

Promotion

None

no promotion available at this time

Promotion

Up to $725

when you open and fund a You Invest Trade account with qualifying new money

Promotion

Free

career counseling plus loan discounts with qualifying deposit

Full Review

Fidelity Investments has a strong reputation for its mutual funds, but its brokerage arm is no slouch either: It offers $0 trading commissions, a swath of research offerings and an easy-to-use platform that also can be customized for more advanced traders.

The reputation for funds isn't wrong, either: The broker scored five stars from us across every funds category with a large selection of no-transaction-fee funds, including its Fidelity Zero index funds, which have no expense ratio and no minimum investment requirement. These investor-friendly practices save customers a lot of money.

Fidelity Investments is best for:

  • Retirement investors.

  • Active traders.

  • Premium research.

  • Low fees.

  • Commission-free stock, ETF and options trading.

Fidelity Investments at a glance

Account minimum

$0

Stock trading costs

$0

Options trades

No base commission; $0.65 per contract

Account fees (annual, transfer, closing, inactivity)

None

Number of commission-free ETFs

All ETFs trade commission-free

Number of no-transaction-fee mutual funds

More than 3,500 no-transaction-fee mutual funds.

Tradable securities

• Stocks. • Bonds. • Mutual funds. • ETFs. • Options.

Trading platform

Fidelity.com and Active Trader Pro for desktop and browser. Both free for all customers.

Mobile app

Available for iOS and Android; advanced features.

Research and data

Free and extensive

Customer support options (includes website transparency)

Phone, email and live chat 24/7; 197 local branches. Some information is difficult to find on website.

Promotion

None.

Where Fidelity Investments shines

Commissions: Fidelity was already a leader for low-cost commissions, but the company eliminated commissions completely in October 2019 for stock, ETFs and options. Before that, the company did away with nearly all account fees, including the transfer and account closure fees that are commonly charged by brokers.

High cash sweep rate: Fidelity automatically directs all cash in new retail brokerage and retirement accounts into its Fidelity Government Money Market Fund (SPAXX), which had a 1.61% interest rate as of Oct. 6, 2019. Customers can opt to sweep cash into a lower-rate FDIC-insured account instead.

Mutual funds: The war among brokers to cut mutual fund fees has brought good changes to Fidelity: The company was the first broker to bring to market index funds with absolutely no expense ratio: the Fidelity Zero Total Market Index Fund, the Fidelity Zero International Index Fund, the Fidelity Zero Large Cap Index Fund and the Fidelity Zero Extended Market Index Fund.

Investors could build a balanced — and virtually free — retirement portfolio with these zero-expense-ratio funds alone, but even the Fidelity index funds that do charge an expense ratio undercut much of the competition on price. In total, investors at Fidelity have access to over 3,500 no-transaction-fee mutual funds and over 700 mutual funds and index funds with expense ratios of 0.50% or less. Those funds come from Fidelity and other mutual fund companies.

Fidelity also offers a large selection of funds with low or no minimum — all Fidelity funds for individual investors require no minimum investment.

Research: Fidelity is unmatched here, with stock research from 20 third-party providers, including Recognia, Ned Davis, Thomson Reuters and McLean Capital Management. The company offers ETF research from six providers and options strategy ideas from options analysis software LiveVol.

Stock quote pages show an Equity Summary Score, which is a consolidation of the ratings from these research providers. It gives an “accuracy-weighted sentiment derived from the ratings of independent research providers on Fidelity.com,” according to the website.

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This number of research firm offerings might seem like too much to wade through, but investors can take a short quiz to identify providers that match their investment style. A research firm scorecard evaluates the accuracy of the provider's recommendations.

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Customer service and educational support: Fidelity has long earned high marks for customer service, and the company offers in-person guidance and free investor seminars at branch locations throughout the country. Seminars cover such topics as how to navigate the company’s website, when to take Social Security, and the basics of technical analysis. Online, Fidelity’s learning center offers guides and webinars on a similar range of issues.

Platforms and tools: Like other brokers, Fidelity offers trading via its website and mobile apps, plus a desktop platform for active traders.

The company’s online trading platform is easy to navigate and fairly comprehensive — highlights include advanced screeners using the aforementioned research and strategy-testing tools based on 10 years of historical data. Fidelity’s mobile app is equally impressive, with real-time quotes, multi-leg options trading, a consolidated version of the company’s research offerings, and a notebook where you can save ideas and articles from your mobile browser.

Active traders will prefer the company’s Active Trader Pro platform, which is available to all investors for free as of this year. Active Trader Pro includes both a downloadable desktop version and a web alternative at ActiveTraderPro.com. Investors can toggle seamlessly between the two. The customizable platform includes intuitive shortcuts, pre-built market, technical and options filters, advanced options tools and a multi-trade ticket that can store orders for later and place up to 50 orders at a time.

Finally, the company’s Wealth-Lab Pro is desktop-strategy-testing software that allows investors to customize strategies and access up to 20 years of daily historical data. Wealth-Lab Pro is a premium product, available only to customers who trade over 36 times in a rolling 12-month period and have a minimum of $25,000 in assets in eligible Fidelity brokerage accounts. The company does offer a free 30-day trial to those who aren't eligible.

» Need help learning to trade? See our guide on how to buy stocks

Cash management account: Fidelity offers a cash management account with FDIC insurance that can be paired with a Fidelity brokerage account. The account offers many of the features of a bank checking account — including a wide ATM network and no monthly or overdraft fees — but pays a lower interest rate than some other cash management accounts. (Read our full review of Fidelity's cash management account.)

Where Fidelity Investments falls short

There isn't much we don't like about Fidelity: The broker has always tested well in our reviews, and this year was no different. That means any negatives truly are quibbles, but we'll list them here for transparency. Fidelity got its lowest marks from us for:

  • A website that can be tough to navigate. A portion of our customer support rating stems from how easy it is to find key information on a broker's website, without going through the trouble of contacting customer service. We had trouble locating directions on how to close an account.

  • A broker-assisted trade fee that is higher than we like to see, at $32.95.

» Want more choices? See our best online brokers for stock trading

The bottom line

Fidelity is the rare broker that's able to serve both active traders and retirement investors alike. The company brings it on every level, starting with a mutual fund selection that stacks up to any other broker and even includes free offerings. But Fidelity also offers features that matter to stock traders, including strong trading platforms, zero trade commissions and a wide range of research offerings. We can't think of an investor who won't be well-served by Fidelity.

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