Fidelity review

As one of the world’s largest investment brokerages, Fidelity offers investors comprehensive self-directed investment tools. But if you want some, or all of your portfolio professionally managed, they also provide portfolio advisory services, wealth management, and even a dedicated robo-advisor platform.

Fidelity is well-suited to virtually any type of investor, from new investors to active traders.

Founded in 1946, Fidelity is one of the largest financial services companies in the world. As of the end of 2017, the company had $2.45 trillion in assets under management. Once best known for its mutual funds—the Fidelity Funds—the company is now a diversified investment brokerage, offering the full range of investment products, and some of the lowest trading fees available in the industry.

The company remains a major player in mutual funds. The Fidelity Contrafund is the largest non-indexed fund in the US, and has more than $107 billion in assets.

Fidelity also offers more than 140 local branches. This is becoming increasingly rare among investment brokerage firms, as the majority now operate as online platforms only. With Fidelity, you can work online, or in-person if you prefer.

Fidelity is a well-respected investment brokerage firm. They earn high ratings from various recognized third-party sources, including:

• Investor’s Business Daily—Best Online Broker 2018(for the fourth year in a row).
• StockBrokers.com—Best Online Broker 2018.
• Barron’s—Best Online Broker 2017 (and 2016).
• Kiplinger’s—Best Online Broker 2017 (and 2016).
• Nerdwallet—Best Online Broker for Research 2017.

Minimum initial investment

$0 to open an account, but mutual funds typically require a minimum of $2,500. However, you can avoid the mutual fund minimum initial investment by setting up automatic investments of at least $200 per month.

Available accounts

Commission-free taxable brokerage accounts, managed accounts, 529 college savings plans, Fidelity Go robo-advisor (see below), and traditional, Roth, and rollover IRAs.

Fidelity also offer small business retirement plans, including SEP and SIMPLE IRAs, self-employed 401(k) plans, and investment only retirement accounts.

Also available: Roth IRA accounts for kids.

Investments offered

Stocks, options, and exchange traded funds (ETFs). Fidelity offers over 10,000 mutual funds, both Fidelity and non-Fidelity, including sector funds. They also offer more than 40,000 new issue and secondary market bonds and certificates of deposit (CDs).

Fidelity Cash Management account

This is an investment account with checking and ATM access. There are no minimum balance requirements, and no monthly fees. As well, all ATM fees are automatically reimbursed nationwide.

You can also scan and deposit checks with your mobile device. Fidelity BillPay is available for free, and enables you to pay your bills online or on your mobile device.

Fidelity mobile apps

Available for Apple iOS, Apple Watch, Apple TV, and Android and Amazon devices. The enables you to monitor your portfolio, manage workplace accounts, trade, receive alerts, pay bills, and deposit checks.

Customer service

Fidelity offers customer service by phone, email and live chat, 24 hours a day, seven days per week. They also have more than 140 local branches if you prefer face-to-face contact.

As one of the largest and most comprehensive investment platforms in the world, Fidelity offers a wealth of trading tools and investment education.

Security and stock screeners

You can use this tool to identify potential investments. For example, you can view lists of stocks in the theme that interests you. You can build your own screen using over 40 criteria that meet your investment goals. You can also use prebuilt strategies from independent research experts. The screener is available for stocks, preferred securities, ETF’s and closed-end funds.

Stock research center

This tool will show you the market movers, the top-rated sectors and even orders by Fidelity customers. This can help you stay on top of where the action is in the markets.

Active market pro

This is a fully customizable desktop platform that provides real-time streaming for account, order, and market data updates. It also provides real-time analytics to help you make informed trading decisions. For example, you can use the platform to create and save up to 50 equity or option orders simultaneously, and place up to 20 orders at once with a multi-trade ticket.

Portfolio advisory services

You can invest with a digital advisor—Fidelity Go—Fidelity’s robo-advisor platform, or partner with a Fidelity investment professional.

These are traditional human investment advisors that will manage your investments on a one-to-one basis. They have required minimum investments, ranging from $50,000 to $2 million. Management fees are comparable to the rates charged by traditional investment advisors.

Wealth management

Fidelity will provide you with a dedicated financial advisor. This person will help you create a personalized strategy that’s based on your entire financial life, rather than in individual investment goals. This will include designing tax strategies that will reduce taxes from your investing activities.

Robo-advisors are becoming increasingly popular. Once dominated by standalone platforms like Wealthfront, today most major investment brokerage firms have their own version. Fidelity’s robo-advisor platform is Fidelity Go.

The fact that it’s offered by one of the most comprehensive investment brokerage firms makes Fidelity Go an even more attractive option. If you’re a new or small investor, you can start out having your portfolio fully managed through Fidelity Go. But as your portfolio grows, and you learn more about investing, you can branch out into self-directed investing. Fidelity’s brokerage platform is one of the best in the industry for that purpose.

There are a few factors that set Fidelity Go apart from other robo-advisors:

Fidelity Go invests in both ETFs and mutual funds

Most robo-advisors invest strictly in ETF’s, in an attempt only to match the performance of the market. Mutual funds however offer an opportunity to outperform the market. Fidelity Go provides this opportunity. The difference is that ETF’s are invested in index funds, which are passive investments. Mutual funds are actively managed, and attempt to provide higher returns.

You can manually adjust your asset allocation and investment percentages

Most robo-advisors determine your portfolio allocation at the very beginning, then continue until there is a significant change in your profile. Fidelity Go allows you to manually change your allocations.

Annual strategic review

Each year, Fidelity will contact you and review your profile information. If there are any significant changes from your initial profile determination, they may revamp your investment strategy. They may even make the change automatically if they determine that your portfolio is riskier than your profile indicates.

Fidelity Go Specifics

Minimum initial investment

Technically, zero. But you do need a minimum of $10 to begin investing.

Accounts available

Individual and joint taxable accounts, traditional, Roth and rollover IRAs.

Investment funds used

Domestic and foreign stocks, bonds, and short-term investments. The portfolio will be comprised of a combination of Fidelity Flex mutual funds. These are proprietary funds offered by Fidelity, that have zero expense ratios and do not charge management fees. The funds can be either active or passive.

Rebalancing

Fidelity Go continuously monitors your portfolio, as well as the prevailing investment environment. If your portfolio moves significantly from the preferred allocation, it will be rebalanced accordingly. Unlike other robo-advisors, Fidelity Go doesn’t base rebalancing strictly on percentage moves in your allocations.

Target tracking

The platform enables you to choose a target amount for your portfolio to reach by a certain date. Fidelity Go will then estimate the likelihood of you reaching that goal. If it’s unlikely, they’ll offer recommendations to increase your chance of reaching the goal.

Fees

Fidelity Go charges an annual fee of 0.35% of your portfolio. This is deducted from your account quarterly.

Customer service

Available by phone and live chat, Monday through Friday, from 8:00 AM to 8:00 PM, Eastern time.

Fidelity Go factors to be aware of

All robo-advisors are strong in certain areas, but weak in others. Fidelity Go is no exception. There are three areas where Fidelity Go falls into the “needs improvement” category:

Fees

The basic annual fee of 0.35% falls in about the middle of the robo-advisor fee range. Some of the top robo-advisors, Betterment and Wealthfront, charge just 0.25%, while Fidelity competitor, Charles Schwab, offers their Intelligent Portfolios platform with no service charge.

No tax-loss harvesting

This was a novel concept when it came out a few years ago, but now it’s a common offering by robo-advisors. The basic strategy is to sell losing positions, to offset gains on winning positions.

The losing positions are replaced with comparable investments shortly after. This allows capital gains to defer year after year. It’s a service typically offered on taxable accounts, though not with retirement accounts, since they’re already tax-sheltered. But Fidelity Go doesn’t offer this option.

Fidelity Go uses proprietary funds

This factor really isn’t bad or good, it’s just very unusual in the robo-advisor space. Your Fidelity Go portfolio is invested entirely in Fidelity Flex funds. Robo-advisors typically invest your portfolio in unaffiliated funds, commonly from Vanguard and/or iShares.

Even competitor Charles Schwab specifically excludes its own proprietary mutual funds from its Intelligent Portfolios robo-advisor.

Fidelity offers one of the lowest trading fee schedules in the industry.

• Stocks and ETFs: $0 per trade
• Options: $0, $0.65 per contract
• Bonds and CDs: $0 on new issues, $1.00 per bond on secondary issues
• US Treasuries: auctions and secondary issues—$0 ($19.95 on broker-assisted trades)
• Mutual funds: Fidelity funds: $0
• Mutual funds: No Transaction Fee (NTF) non-Fidelity funds: $0 on purchase; $49.95 on redemption if held less than 60 days
• Mutual funds, non-Fidelity funds: $49.95 per purchase, $0 on redemption
• Account fees: Fidelity charges no annual or monthly account fees on brokerage accounts. There is however one exception, and that’s a $25 annual fee for SIMPLE IRA accounts. They do charge a $50 closure fee that applies to all accounts

Fidelity pros

• Fidelity’s fees and commissions are among the lowest in the brokerage industry. This is a major advantage for high frequency traders.
• 140 branch locations in and around most major metropolitan areas in the US.
• The ability to have some or all of your portfolio professionally managed, while still retaining the capability for self-directed investing.
• Availability of self-employed retirement plans, like SEP and SIMPLE IRAs and small business 401(k) plans. Though you may not be self-employed now, it’s good to know you’d be able to slide right into specific retirement plans should that situation change in the future.
• Fidelity offers one of the widest varieties of trading tools and education resources in the investment brokerage industry.

Fidelity cons:

• The fee structure for the portfolio advisory services and wealth management are comparable to those of traditional investment managers.
• The Fidelity Go robo-advisor is a bit high on the annual fee side, and doesn’t offer tax-loss harvesting on taxable investment accounts.

You can search a lot of different investment platforms, and you’d be hard-pressed to come up with one that matches Fidelity. It’s a platform well-suited to new and small investors, passive investors who prefer professional management, self-directed investors, and active traders. Fidelity has comprehensive services available for each type of investor.

Along with their state-of-the-art trading platform, Fidelity offers among the lowest trading fees in the industry, at $4.95 per trade. But perhaps the biggest advantage is the ability to grow on the platform. Fidelity’s many different investment services make this possible.

For example, as a new investor, you can start by investing with Fidelity Go. As you gain experience, you can move over to self-directed investing, taking advantage of the low trading fees. As your wealth grows, you can take advantage of their Portfolio Advisory Services or Wealth Management. This is a big advantage over many of the single-purpose investment platforms, that offer only self-directed trading or robo-advisor services. With Fidelity, you can have it all, and have it when you’re ready to take advantage of it.

If you’d like more information, or if you’d like to sign up for the service, visit the Fidelity website.