How Much Do I Need to Open a Fidelity Account

Fidelity was founded in 1946 and made its internet debut nearly 50 years later, in 1995. The company has evolved into a significant force in the online brokerage space. Fidelity has consistently offered investors high value with excellent research, useful tools, and extensive educational resources. Most importantly, the company has continued to improve its platforms and is committed to lowering costs for investors.

To help you decide if Fidelity is the right fit for your trading or investing style, we'll take an in-depth look at how the broker stacks up in terms of features, costs, and resources. If you're interested in Fidelity's robo-advisory services, we've reviewed Fidelity Go separately from the main brokerage offering.

Key Takeaways

Excellent educational resources for new investors entering the market for the first time.
Increased focus on execution quality and cash management help clients improve investing returns.
Casual investors and traders will appreciate Fidelity's excellent research and asset screeners.
Fidelity offers a standard assortment of investment products, but futures, commodities, and crypto traders will have to look elsewhere.

Who Fidelity Is For

As one of the largest brokers in the United States, Fidelity services all types of customers—from novice to expert and from self-directed to those seeking highly personalized advice. For the casual, buy-and-hold investor, Fidelity provides a broad selection of tools, research, and resources coupled with easy order entry. For more serious investors and traders, Fidelity offers Active Trader Pro, a downloadable program with streaming real-time data and a customizable trading interface. While the company supports a decent range of offerings, a few popular trading products—namely, futures, commodities, and cryptocurrencies—are missing from its lineup.

Pros

Low costs
Excellent trade executions
Robust research and asset screeners
Rich educational offerings

Cons

No futures, commodities, or crypto trading
Restricted to U.S. and main island residents
No streaming news or data on the web platform
High broker-assisted trading fees

Pros Explained

Fidelity offers commission-free online trading for stocks, penny stocks, ETFs, and options (a $0.65/contract fee applies). The company has also eliminated most of the account fees that brokers traditionally charge, including transfer and account closure fees, domestic wire fees, and check fees.
Fidelity has fine-tuned its trade execution algorithms to emphasize price improvement. Once an order is accepted and routed to a market center, Fidelity captures the National Best Bid and Offer (NBBO) quote. The company routes orders to up to 50 market centers—including exchanges, market makers, and automated trading systems—that compete for customer order flow by improving the price. Fidelity reports a net price improvement of $0.0116 per equity share and $0.0598 per options contract.
Fidelity provides a suite of robust research tools and asset screeners to help you find your next trade. Several pre-built and customizable screeners are available for stocks, ETFs, options, and fixed income. The stock screener has more than 140 criteria and about 20 themes such as artificial intelligence, drones, and cloud computing. The ETF-focused research is extensive and includes analyst ratings, themes, and the option to search funds by a specific stock.

A rich assortment of educational offerings helps Fidelity consistently rank high in our Best for Beginners category. The learning center offers educational content in various formats, including articles, videos, webinars, infographics, and recorded webinars. There are also live, interactive sessions with the "Trading Strategy Desk", where you can ask professional coaches your trading-related questions.

Cons Explained

Fidelity offers the standard investment products, including stocks, ETFs, options, and mutual funds. However, it's missing futures, commodities, and cryptocurrencies, which could be a deal-breaker for some active traders.
You must be a U.S. or main island (Puerto Rico, Guam, and U.S. Virgin Islands) resident to open an account with Fidelity.
The mobile app and Active Trader Pro platforms offer streaming real-time news and quotes, but you won't find this functionality on Fidelity.com. Still, you can manually refresh a ticker via a refresh button next to the ticker symbol on the web-based platform.
If you require a live person to help you place a trade, it will set you back $32.95. This broker-assisted fee is on the high side for the industry—and it's the highest among the brokers we reviewed. For reference, this fee typically falls somewhere between $0 and $20.

Usability

Opening a brokerage account with Fidelity is simple, especially if you already have another type of Fidelity account (e.g., an IRA). If you want to add account features such as options trading or margin, you'll need to fill out additional paperwork that can be time-consuming. Overall, Fidelity.com is easy to navigate once you find the numerous sub-menus. If you have trouble finding what you're looking for, there's a handy search bar at the top of most pages.

Casual investors who stick to buy-and-hold strategies should find Fidelity's web-based platform adequate for their needs. You'll find quotes, charts, watchlists, and other tools packed into a basic, no-frills platform. The "Positions" page integrates research into your portfolio, so you can view relevant analysis and news without leaving the platform. Order entry isn't fast, and this is one reason the web-based platform is better suited for long-term investors. You have to hover your mouse over "Accounts and Trade" on the main menu and choose "Trade" to get an order ticket. Alternatively, there's a sub-menu with one-click access to the trade ticket in the account view.

Active Trader Pro (ATP) is Fidelity's downloadable trading platform. Designed for active investors and traders, ATP is fully customizable, so you can set up your workspace to suit your preferences. You can monitor relevant news streams, get real-time insights, set custom alerts, and trade directly from the chart.

The easy-to-use Fidelity mobile app is available for Android, iOS, Amazon devices, and Google Assistant-enabled devices. Except for bonds, you can trade the same asset classes on mobile as on Fidelity.com or Active Trader Pro. You'll find streaming real-time quotes and news on the app, plus a limited array of charting and research tools. Custom watchlists are accessible across all Fidelity platforms.

Trade Experience

The web platform has a relatively easy workflow, and you can link to news and research from symbols in your portfolio or watchlist. Quotes and news don't update automatically, so you must click the refresh button at the top of the screen to see up-to-date information. However, you can view streaming quotes in a watch list by toggling the streaming button on. You can set a few trading defaults on the web, such as whether you want a market or limit order, but you have to make most choices when you place the trade.

Active Trader Pro is more robust than the web option and it's also more customizable. You can create personalized layouts to view the information that's most important to you. You can also set trade defaults, create shortcuts, and use hotkeys to navigate through the platform and speed up order entry. The platform supports chart trading, and you can stage orders for later and place basket trades. There's streaming real-time data across the platform, including in watchlists, charts, order entry tickets, and options chains. The platform also provides a probability calculator, options analytics, measures of cross-account concentrations, and much more.

Fidelity's Mobile Experience

On Fidelity's mobile app, you can trade stocks (including fractional shares), ETFs, options, and mutual funds—but not fixed income. The mobile offering is comprehensive, with much of the same functionality as desktop. That said, fundamental analysis and charting are limited, and you can't place conditional orders.

Fidelity has recently introduced an opt-in beta experience for mobile that delivers on many of the most requested features from new customers, including:

A new home screen with a simplified, modern view
A new quote experience that delivers information more quickly
A new, streamlined trade ticket that is easier (and faster) to use

Range of Offerings

Fidelity offers a good selection of assets, including stocks, ETFs, options, fixed income, forex, and mutual funds. If forex is your preferred trading instrument, it's best to call Fidelity for information—forex details are not available anywhere on the Fidelity website. The mobile app has all the same asset classes as Fidelity's web and Active Trader Pro platforms, making it easy to place and manage trades from anywhere. Missing from Fidelity's range of offerings are futures, futures options, and cryptocurrency. Fidelity's product lineup includes:

Stocks long and short (2,800 on the easy-to-borrow list)
OTCBB (penny stocks)
Mutual funds (about 3,500 no-load, no transaction fee)
Bonds: corporate, municipal, treasury, CDs
Single and multi-leg options
Robo-advisory integrated into the website and mobile app
International (access to 25 countries in 16 different currencies)
Forex (16 pairs)
Fractional shares
Other securities include ETPs, IPOs, foreign ORDs, foreign ADRs, preferred shares, rights, warrants, Treasury Inflation-Protected Securities (TIPS), municipal reset bonds, high yield corporate bonds, precious metals, and principal-protected notes

Order Types

Fidelity supports numerous order types on the web and Active Trader Pro platforms, including the usual suspects (market, limit, stop, and trailing stop orders) and conditional orders like one-cancels-the-other (OCO) and one-triggers-the-other (OTO). Conditional orders aren't currently available on mobile.

It's easy to close a position or roll an options order from the "Positions" page. With Fidelity's basket trading services, you can select a basket of up to 50 stocks that you can monitor, trade, and manage as one unit. You can automatically allocate investments across multiple securities with an equal dollar amount or number of shares—a capability that's not available at many online brokers.

If you buy into a particular stock over time, you can select the tax lot when closing part of the position. Alternatively, you can set an account-wide default for the tax lot choice, such as average cost or last-in, first-out. You can also set an account-wide default for dividend reinvestment.

Trading Technology

Fidelity boasts excellent trade execution. The company uses proprietary smart order routing technology, Fidelity Dynamic Liquidity Management (FDLM), that seeks the best available price. Initially developed for use by institutional clients, FDLM can access all types of market venues, including dark pools, exchanges, and market-makers—as well as Fidelity's CrossStream ATS. The smart order routing technology can both sequentially access and spray multiple venues. Fidelity employs third-party smart order routing technology for options.

The average execution speed is 0.08 seconds, and 85.53% of shares are "price-improved," meaning a sale above the bid or a buy below the offer. Also, 98.10% of shares fall within the National Best Bid and Offer (NBBO). According to July 2020 to June 2021 statistics, if you execute a 1,000-share marketable order, you will save an average of $18.97 on the transaction compared to the quote at order entry. This price improvement is notably higher than the industry average.

Options traders using Fidelity.com can direct their options orders to any of the eight available options exchanges. While there's no direct online routing for equities on Fidelity.com, you can direct orders through a representative.

You can backtest trading strategies via Wealth-Lab Pro, a premium feature available to eligible Fidelity brokerage customers. You can execute a strategy trading in Wealth-Lab Pro if you qualify for automated trading, which requires having $100,000 in equity and placing at least 500 trades per year.

Costs

Fidelity has ranked highly in our Best for Low Cost category every year. It offers commission-free online U.S. stock, ETF, and options trading—and there are no account fees or minimums to open a retail brokerage account. Fidelity's fees are as follows:

Fidelity charges no commissions for online equity, ETF, options, and OTCBB trades.
The per-contract options fee is $0.65.
An order for 50 options contracts is $32.50.
A covered call trade of 500 shares plus five contracts would cost $3.25.
Mutual fund commissions for funds outside the No Transaction Fee program are $49.95 on the buy and no charge on the sell.
Margin interest is 8.325% for a $10,000 balance and 6.825% at $100,000 (as of May 2021), which is below the industry average.
There are no fees for software, inactivity, account closure or transfer, exercise/assignment, domestic wires, checks, or paper statements and trade confirmations.
Most orders incur exchange fees, typically fractions of a penny per share or contract, which Fidelity passes through to customers.
Certain mutual fund families, including Vanguard, CGM, Dodge & Cox, and Sequoia funds, are charged $75 on the initial purchase.
The live broker fee is $32.95 per trade.
International trades incur various fees, so take a careful look at those commissions before entering an order.

How This Broker Makes Money From You and for You

With fewer brokerages charging commissions these days, it's less obvious how they stay in business. Here are some behind-the-scenes ways Fidelity makes money from you—and for you.

Interest on cash: Fidelity clients are automatically enrolled in cash sweep programs that pay nominal interest rates. Fidelity makes money from the difference between what it pays you on your idle cash and what it earns on customer cash balances. The automatic enrollment is an advantage to customers, however, as many brokers still do not share any interest on idle cash.
Margin interest. Fidelity's margin interest rates are below average for the industry. The rate is 8.33% for a $10,000 balance and 6.83% for $100,000.
Payment for order flow: Some brokers earn money by accepting payments from market makers for directing equity and options orders to them—a practice called payment for order flow (PFOF). Fidelity does not accept PFOF for equity trades, but it receives an average of $0.2514 per options contract.
Stock loan programs: Fidelity earns revenue by loaning stocks in your account for short sales—with your permission, of course—and it shares that income with you. Fidelity has told us that for two months of lending certain hard to borrow securities, 38% of accounts earn $100 or less, 37% earn between $100 and $1,000, and the remaining 25% earn more than $1,000.

Price improvement: On average, equity orders receive $0.0116 per share in net price improvement; options orders receive $0.0598 per contract.
Portfolio margining: Fidelity clients who qualify can apply for portfolio margining, which computes real-time margin for stock and options trades based on risk instead of fixed percentages.

Account Amenities

Fidelity has all the account and research amenities you would expect from a large broker. These include flexible screeners, trading idea generators, advanced charting, access to in-house and third-party research, and more.

Stock Screeners

The stock screener makes it easy to match your ideas with potential investments. You can view lists of stocks in a theme that's interesting to you—such as data services or drones. You can also build your screen using more than 140 criteria that meet your goals, including environmental, social, and governance (ESG) scores from MSCI. Several expert and thematic screens are built-in and can be further customized.

ETF and Mutual Fund Evaluator

Fidelity's ETF/ETP screener is an easy way to find ETFs that match your investment objectives on the web, desktop, and mobile platforms. You can build your screen using 88 criteria, from exposure and trading characteristics to volatility and analyst ratings. Alternatively, you can narrow your ETF search by choosing one of the themes, such as market cap, fixed income, or socially responsible investing (SRI). When researching ETFs, you can type in a symbol to find ETFs that contain that stock. The mutual fund evaluator looks closely at each fund's characteristics. While it tends to promote Fidelity funds, that's not unexpected given who owns the platform.

Options Screeners

The options market scanner, powered by LiveVol, offers some built-in scans that you can use or you can create a custom scan based on criteria like volume, implied volatility, order flow, and time spreads. Active Trader Pro has 26 predefined filters to search for options trading opportunities based on volume, open interest, option contract volume, volatility differentials, earnings, and more. You can create custom screens from about 200 individual criteria.

Fixed Income Screeners

Fixed-income investors can use the bond screener to narrow down the nearly 120,000 secondary market offerings. The yield table updates every 15 minutes, and clicking on any yield value displays a list of all the bonds or CDs that meet the product type, ratings range, and time to maturity (TTM) criteria you selected. This scanner is flexible, but the layout takes some getting used to. There's also a bond ladder tool that helps you build a staggered fixed-income portfolio to provide a steady income stream.

Charting

All Fidelity platforms have charting capabilities. The web-based platform has integrated technical patterns and events powered by Recognia, as well as social sentiment scores provided by Social Market Analytics. The charts on Active Trader Pro offer the most flexibility of all the platforms. You can select from various chart types (OHLC, line, mountain, candlestick) and time-based chart periods. There are also more than 60 fully customizable technical indicators and all the standard drawing tools you would expect. While the charting on the mobile app is relatively limited, it's a step up from what's offered by many other brokers.

Tools and Calculators

Fidelity offers an impressive variety of tools and calculators, which are gathered in one place on the "Tools and Calculators" page. They are intended to help you with nearly any financial need, from creating a budget to reviewing your investment strategy. The tools include the "Guided Portfolio Summary", which provides an in-depth analysis of your current portfolio and identifies areas that may need more attention. There's also the "Hypothetical Trade Tool", which shows how a future trade would affect your portfolio's asset allocation.

Trading Idea Generators

Fidelity offers several trading idea generators to help you find, analyze, and implement options trades. The market scanner lets you scan using preset or custom filters. The Argus Options Report provides ideas for both covered calls and calendar spreads. You can use the "Strategy Ideas" tool to find real-time data on specific option trading ideas based on the criteria you select. Fidelity also offers a profit and loss calculator, a probability calculator, and a strategy evaluator to help you evaluate options strategy alternatives.

News

News is available on all platforms from various sources, including Briefing.com, Business Wire, Market Wire, MCT Business News, PR Newswire, Reuters, and SourceMEdia Bond Buyer. Streaming real-time news is available only on Active Trader Pro.

Third-Party Research

Fidelity offers integrated third-party research from sources like Standard & Poor's, Hightower Report, Ned Davis Research, and Zacks. In Sectors and Industries, you can check out suggested allocation strategies based on CFRA research. Quantitative and qualitative measures on each stock research page include MSCI data and standings against peers. You'll find additional proprietary and third-party research on each stock or ETF page.

Cash Management

Fidelity clients are automatically enrolled in cash sweep programs. Your uninvested cash is automatically swept into your choice of money market funds.

Dividend Reinvestment Program (DRIP)

You can specify dividend reinvestment when you buy a dividend-paying stock.

SRI/ESG Research Amenities

Fidelity enables you to screen based on ESG/SRI factors. One criterion in the stock screener is the "MSCI Overall ESG Rating", and there are also individual environmental, social, and governance criteria. In the mutual fund evaluator, there is a socially responsible theme by Morningstar. For ETFs (in the ETF/ETP Screener), there is an overall socially responsible theme, plus individual themes for ESG and the elements making it up (environmental, social, and governance).

Portfolio Analysis

Fidelity offers a variety of tools to help you figure out if your portfolio is on track. The "Guided Portfolio Summary" shows an overview of your top positions and ratings, asset allocation, stock analysis, and fixed income analysis. From there, you can click through to the "Planning & Guidance Center" to see if your portfolio is still on course, considering any recent market volatility.

Another helpful tool is "Full View", which consolidates all your accounts—Fidelity and otherwise—into one convenient view. You can use it to track your net worth over time, create and manage your budget, view your recent transactions, and integrate it with other Fidelity planning tools.

Unrealized and realized gains/losses, account balances, margin, buying power, and internal rate of return all display in real-time. Fidelity provides access to third-party tax reporting programs, including TurboTax, H&R Block, and TaxAct. Tax-related reports show up online and you can download them as CSV and PDF files. You can maintain a trading journal and attach notes, graphs, and other market data to your trades.

While the trade ticket calculates a short-term or long-term gain/loss for the order, there isn't a standalone tool to calculate the tax impact of future trades.

Education

The Fidelity Learning Center offers educational content in various formats, including articles, videos, webinars, infographics, and recorded webinars. There's a mix of Fidelity and third-party content, including courses intended to guide learners forward. An easy way to find topics is to enter a few keywords in the "What can we help you find today?" box.

Fidelity also hosts coaching sessions with the "Trading Strategy Desk", where you can discuss questions with a professional trading coach. The sessions are interactive and usually have fewer than 100 participants. Sessions are broken down into six topics: daily market briefings, options trading, trading tools, trading basics, technical analysis, and live webinar follow-up.

The "Life Events" page (under the "Planning and Advice" menu) is intended to guide you through major life changes, including marriage and partnering, getting divorced, navigating the college journey, losing a loved one, buying a home, and so on.

The mobile apps feature "Learning Programs" to help beginners better understand market and investing concepts. In July 2020, Fidelity launched a separate mobile app called Fidelity Spire, designed to help you "plan, save, and invest smarter." You can set and prioritize goals, and the app's decision tool will help you figure out where to invest, so you get the most bang for your buck. Spire also serves up helpful articles related to your goals.

Rounding out Fidelity's educational offerings are an investing glossary, a comprehensive FAQ section, and guest access for non-customers to use its research and education.

Customer Service

24/7 phone line
Online chat with a live agent
You can talk to a live broker (there is a surcharge for any trades placed via the broker)
A chatbot (Fidelity Virtual Assistant)
Fidelity no longer tracks the average wait time on hold for customer service

Security and Reliability

Fidelity's security is up to industry standards:

Two-factor authentication is offered on all platforms.
Higher-risk transactions, such as wire transfers, require two-factor authentication.
Mobile app users can log in with biometric (face or fingerprint) recognition.
Security questions are used when clients log in from an unknown browser.
Fidelity carries excess Securities Investor Protection Corporation (SIPC) insurance with a $1.9 million limit on uninvested cash. According to Fidelity, this is the maximum excess SIPC protection currently available in the brokerage industry.
Fidelity's Customer Protection Guarantee protects you against losses from unauthorized activity in covered accounts that occur through no fault of your own.
Fidelity reported no widespread or serious platform outages during 2020.
The Identity Theft Research Center reported no significant data breaches during 2020.

Transparency

Fidelity has one of the most transparent and easy-to-understand pricing schedules in the industry. There are no minimums to open an account, and its margin rates are some of the most competitive in the industry. Commission, fees, and margin rates are all stated clearly in one place. Stocks, ETFs, and options have zero commissions, and many fees that brokers traditionally charge—such as account transfer fees and bank wire fees—have been eliminated. The only costs you may have to hunt for involve forex—the company doesn't post information about that asset class on its website, so you have to call for details.

Our Verdict

Fidelity has been one of our top picks in a variety of categories for three years running. It's one of the more well-rounded brokerage firms out there, and it can be a good fit for retail investors and traders of all experience levels. Buy-and-hold investors will likely find all the tools they need within the web platform. More active investors and traders can use Active Trader Pro, which offers more bells and whistles—and more customization options. Overall, Fidelity shines with low costs, robust screeners, excellent trade executions, and a rich assortment of educational offerings.

That said, Fidelity may not be the right choice for everyone. Anyone who wants to trade futures, commodities, or crypto will have to look elsewhere. And, while there are tools for options traders, competing platforms do a better job of helping you find trading opportunities. For the average investor, however, Fidelity makes a strong case for being the online brokerage of choice with its deep feature set and commitment to making and saving you money.

Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker's platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system. Click here to read our full methodology.

How Much Do I Need to Open a Fidelity Account

Source: https://www.investopedia.com/fidelity-review-4587897