Evaluating Fidelity Investments as a Stock and Options Broker

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NOTE: This article was originally published in 2009 and is now out of date. We keep it for a historical reference only.

Before we get started, we feel it is important to note that we were not asked by Fidelity Investments to conduct this review nor were we compensated in any way for doing so. This review is part of a series of reviews of many different stock and options brokers we are conducting for the benefit of our readers.

[VIDEO] Evaluating Fidelity Investments as a Stock and Options Broker

Fidelity Investments is a privately held company that was founded in 1949.

Fidelity Investments consitently ranks highly in broker comparisons. However, we are not too concerned with other outside ratings. We are more concerned with how Fidelity Investments may or may not fit with your trading objectives and style.

Let’s take a look at who may benefit the most from opening a Fidelity Investments account and who may find better luck elsewhere.

Target Audience for Fidelity Investments

The target audience for Fidelity Investments seems to be longer-term investors who are looking for comprehensive financial planning help that covers more conservative investments like mutual funds, bonds and other income-producing investments—i.e. annuities, CDs, etc. For instance, if you are an investor who is looking for inexpensive buy-and-hold investments, like low-fee mutual funds, or you are an investor who is entering retirement and need to start living off of your investments, Fidelity Investments has many products and services that may interest you.

Of course, Fidelity Investments or any other broker will say that they would love to work with any investor, regardless of their holdings, but the product offering and commission and fee structure seem to benefit passive investors who are looking to create a conservative financial plan.

Products Available at Fidelity Investments

The product lineup at Fidelity Investments is one of the broker’s strong points. You have access to all of the following products at Fidelity Investments:

– Stocks
– Options
– Bonds
–¬†Exchange-traded funds (ETFs)
–¬†Mutual funds
– CDs
– Annuities
– Bank accounts
– Credit / Debit cards
– Bill pay

If you are looking for product flexibility without the hassel of switching back and forth between accounts, opening an account at Fidelity Investments is a good option.

Commissions and Fees at Fidelity Investments

Fidelity Investments has an extremely competitve commission and fee structure if you are a longer-term mutual fund investor. If, on the other hand, you are a semi-active or active stock or option trader, Fidelity Investments is on the higher end of the commission and fees spectrum.

If you are concerned with having all of your investments—mutual funds, stocks, options, etc.—under one roof, however, and you aren’t an extremely active stock and option trader, the commissions and fees aren’t so high as to be a huge deterent.

Ease of Use with Fidelity Investments

Fidelity Investments has made a name for itself by providing comprehensive financial planning services for individuals who are looking for a lot of help and guidance. If you are looking for help examining the big picture and setting up a longer-term investment plan, you will find a stream-lined process at Fidelity Investments.

Plus, you can access your Fidelity Investments account from any computer with an internet connection because it is a web-based platform—not a client-based (software that lives on your computer) platform. Of course, client-based platforms are typically a little faster on their fills and such so you might experience some sluggishness in your order-entry process using the web-based platform, but that shouldn’t be much of a concern unless you are an extremely active day trader who controls huge positions.

Pros and Cons of Fidelity Investments

To summarize what we’ve discussed above, the following are the pros of working with Fidelity Investments:

– Access to financial planning tools and help
– Low-cost mutual fund investing
– Access to a broad range of income-producing investments

The following are the cons of working with Fidelity Investments:

– Relatively high commissions on stock and options trades when compared to other online brokers
– Trading commissions and fees are tied to how often you trade and your net worth. So if you’re a small potato who doesn’t trade a lot, you will have to pay more.