Fidelity Investments Review 2022: Pros & Cons

You probably know Fidelity Investments is a giant star, popular investment party. Our Fidelity revue will help you figure out whether the brokerage tauten should be your investment company .
possibly you ’ re looking for a brokerage house. possibly you ’ rhenium curious about how your current investment company stacks up .
Either manner, read on to understand why Fidelity is one of the investment companies that money adept Clark Howard recommends.

Table of Contents

Fidelity Investments Review: Quick Look

Company Name Fidelity Investments
Company Type Investment and financial services company
Key Features Minimal fees, strong education and research
Downsides Customers need to take care to avoid more expensive funds
Best For Almost everyone

What Is Fidelity?

Commissions Minimum
Robo-Advisor Financial Advisor Android App Rating iOS App Rating
$0 for stocks, ETFs and options $0 Yes Yes 4.3 4.8

Founded in 1946, Fidelity Investments is based in Boston. With $ 4.5 trillion assets under management as of May 2022, Fidelity is one of the largest asset managers in the world .
Fidelity ’ s biggest competitors are Vanguard and Schwab. Clark powerfully recommends ( and actively does clientele with ) all three .
In accession to offering free trades on stocks, common funds, exchange-traded funds ( ETFs ) and options, Fidelity requires no minimum deposit. Customers can open the succeed report types :

“ Fidelity is a brilliantly-run party, ” Clark says. “ They have this ability to cut through the clutter and offer certain things that are intelligibly better than other people.

“The 2% credit card is a perfect example. And the other thing they do is the Fidelity Zero funds where you pay no commission, no ongoing expenses. And they use these things as magnets to pull people into the organization because a lot of stuff at Fidelity is not cheap. It’s a really, really smart strategy.”

Who Should Use Fidelity Investments?

If you ’ re plainly looking for the strongest overall investment company, it ’ mho actually hard to beat Fidelity. even compared to Vanguard and Schwab, Fidelity may be the best overall .
hera are some examples of the types of investors whom Fidelity serves particularly well :

  • Beginners. In my opinion, Fidelity’s investor education is the best in the industry. Combine that with free trades, no minimums and strong execution on trades, and Fidelity does a good job of putting newbies in a position to succeed.
  • People with only a small amount of money to invest. There is no minimum investment at Fidelity. Vanguard is Fidelity’s closest competitor, and most of its funds require a $3,000 minimum investment. Fidelity also offers the opportunity to buy fractional shares.
  • Fundamental investors. Schwab (including TD Ameritrade, which it acquired in 2020) is the only brokerage firm that is comparable in terms of research and tools. If you’re a regular Warren Buffet who likes to stick to scouring a company’s financial statements before making long-term investments, Fidelity is a great choice.
  • Swing traders. Fidelity is excellent at order execution. Unlike day trades, which Clark discourages and which rarely involve holding positions overnight, swing trades can take a few days to a few months. Fidelity’s fee structure and order execution make it an ideal brokerage for this strategy.
  • Investors who follow Clark’s “dull” retirement advice. Clark recommends target date funds and/or basic index funds. He also likes IRAs for retirement investing. Fidelity is strong on all of them.

Where Fidelity Shines

Our Fidelity review uncovered an investment company that offers free trades, low fees and excels at investor education.
If there ’ s a particular feature or service that matters to many people, chances are Fidelity is one of the best in the business for what you want .
here are some of the things that Fidelity does well : ad

  • Fees. Fidelity doesn’t charge commission on stock, ETF or options trades. That’s now standard for most serious brokerage firms, but Fidelity has also removed many common account-related fees. It doesn’t use Payment for Order Flow (PFOF) as a revenue stream, and it even offers some funds with zero-expense ratios.
  • Order execution. Not using PFOF helps customers get the best possible price on trades. Fidelity takes things a step further with Fidelity Dynamic Liquidity Management (FDLM), which helps facilitate price improvement. The company has improved significantly on order execution in the last several years. According to Fidelity’s stats, it executed stock trades at the same price or at a better price than the listed quote more than 96% of the time.
  • Investor education. Fidelity excels at offering reliable perspective for all types of investors. There are better websites out there as far as user experience. But it’s hard to compete with Fidelity’s depth of in-house (and even in-person) educational materials and opportunities. It also offers its users streaming news feeds and video from Bloomberg TV.
  • Research. There are more ways to evaluate investments than you can count. Fidelity offers more options than any other brokerage (except possibly Schwab).
  • Perks. Fidelity is a massive company with savvy marketing and plenty of capital. It makes sense, then, that it offers customer incentives like Fidelity Zero funds, the Fidelity Rewards Credit Card (more on those below), in-person help at physical locations, seminars and more. Keep reading our Fidelity review for more details on some of those perks.

Where Fidelity Falls Short

Fidelity Investments pays low interest on uninvested cash and offers some funds with high expense ratios.
particularly if you ’ re making standard investments, the “ cons ” for Fidelity credibly seem like nitpicking. If you want to follow Clark ’ second advice on saving and investing, Fidelity is an excellent choice .
however, no restaurant can be all things to all people. The lapp goes for brokerage firms .
People who want the best sushi aren ’ t necessarily best served by a five-star french restaurant that happens to serve sushi. particularly when there ’ s a japanese restaurant up the street that specializes in it .
here are some of Fidelity ’ second shortcomings :

  • Range of prices on funds. I’ll discuss the Fidelity Zero funds in more detail shortly. However, investors should consider the “best” funds that a brokerage offers as well as the breadth of funds that it offers. Fidelity has plenty of funds with acceptable or excellent expense ratios.
  • Not always the best choice for specialists. Fidelity offers a respectable platform for active traders. But those who trade at a high volume on a daily basis are probably better off elsewhere. Fidelity’s fractional shares program isn’t as extensive as some competitors’. You can’t buy individual cryptocurrencies on the platform.
  • Cash management account pays little interest. Fidelity pays 0.01% APY on your uninvested dollars. That’s paltry even in this low-interest environment.
  • Information and platform overload. Fidelity caters to active and passive investors separately. That includes a different set of educational materials, charts, tools and trading platforms. If you prefer simplicity, other investment platforms may be more appealing to you. If you’re someone who uses both passive and active investing strategies, you may need to toggle back and forth between different platforms.
  • Allows retirement investors to speculate on crypto. Fidelity became the first major retirement provider to announce that it will allow individuals to invest in Bitcoin. Clark calls Bitcoin “a strictly speculative endeavor,” likening it to spending money at a casino.

Fidelity Review: Zero Index Funds

In 2018, Fidelity became the first brokerage house to offer 0 % expense ratio funds. It besides doesn ’ t require a minimum investment. For many people, those two things are the real headline. not even Vanguard, recognized as the drawing card in low-cost exponent investment company invest, can claim either of those features .
The Fidelity Zero funds are :

  • Large Cap Index Fund (FNILX)
  • Total Market Index Fund (FZROX)
  • International Index Fund (FZILX)
  • Extended Market Index Fund (FZIPX)

Consider these three things before you purchase Fidelity Zero funds.

  1. Tax obligations ETFs tend to be more tax-advantaged than reciprocal funds. common funds have to distribute capital gains ( which are taxable ). sol if you have a retirement report and don ’ t have to worry about capital gains taxes, zero-expense funds are great. But the bottom-line costs may make these funds a net negative compared to ETFs if you have a taxable score.
  2. Not every Fidelity fund includes a superior expense ratio Fidelity has continually improved its fees, minimums and expense ratios. But relative to competitors like Vanguard and Schwab, it still offers a reasonably eminent share of funds with costly expense ratios.
  3. Consider the big picture You can get funds with near-zero expense ratios at Fidelity, Vanguard, Schwab and others. Yes, there ’ s a difference between paying 0 % and 0.10 % per year. But if you ’ re presently invested in low-cost funds at another brokerage, you ’ ll have to close those positions to move your money into Fidelity Zero funds. That move could cost you in taxes and/or fees, so you need to do the mathematics. Plus, even with index funds tracking the same benchmark, there can be operation differences big enough to overcome a 0.10 % difference.

Fidelity Review: Rewards Credit Card

Clark loves the Fidelity Rewards Visa Signature Card, which we recently reviewed .
The calling card offers customers 2 % cash back on all purchases. That ’ s highly competitive, particularly considering that it doesn ’ t charge an annual fee or require you to spend within certain categories .
The cash back is unlimited. then for every $ 1,000 you spend using your fidelity Rewards Visa Signature Card, you ’ ll get $ 20 in rewards. ad

You aren ’ triiodothyronine forced to put your cash back into a Fidelity account, but you can. It ’ s a dainty automated room to build your investment portfolio ( and, of course, keeps your money at Fidelity ). You can put your cash back into the postdate report types at Fidelity :

  • Brokerage account
  • Fidelity Cash Management Account
  • Fidelity 529 College Savings plan
  • Retirement account such as an IRA
  • Fidelity Go account
  • Fidelity Charitable Giving account
  • Health Savings Account (HSA)

rather of cash, you can besides exchange your rewards points for locomotion, giving cards, recognition calling card statement credits or trade.

Fidelity Review: Investor Education

If I had to describe Fidelity in one word, I ’ vitamin d pick “ comprehensive. ”
That extends to the company ’ s educational content, housed within the Fidelity Learning Center. We ’ ra talking articles, podcasts, videos, webinars, in-person help and third-party message from Bloomberg .
If there ’ s a quibble, it ’ mho that Fidelity ’ s web site doesn ’ metric ton feel modern a far as message pulmonary tuberculosis goes. There are other brokerages that offer sites with better design and navigation .
But if you ’ ra looking for learning material you can trust, Fidelity may be unmatched. It ’ s an add benefit that Fidelity designs its contented with different audiences in mind, catering to investors of all levels .
And Fidelity has lots of webinars. The week I wrote this article, there were four webinars scheduled in three days. You can besides watch these webinars on demand, take classes for beginners or sign up for virtual coach sessions .

Frequently Asked Questions About Fidelity

Does Fidelity Have Physical Locations?

Yes. Fidelity operates forcible branches throughout the United States. According to Fidelity ’ s web site, it has 210 locations in 37 unlike states, plus Washington D.C .

Does Fidelity Offer a Robo-Advisor?

Yes. In fact, Fidelity Go made my list of the best robo-advisors .
Its portfolios are more correlate with large-capitalization U.S. stocks than most robo-advisors, so it has performed well in the last respective years. ad

Fidelity Go doesn ’ t charge an annual fee until you invest $ 10,000. then it ’ randomness $ 3 per month until you invest $ 50,000, at which time the price levels out at 0.35 % annually .
It ’ s the only robo-advisor I ’ ve reviewed with no underlying expense ratios, so the numbers you fair read are all-in costs .

What Are Fidelity’s Financial Advisor Options?

Fidelity has three tiers to its fiscal adviser services :

Name Minimum Investment Annual Fee
Personalized Planning & Advice $25,000 0.50%
Wealth Management $250,000 0.5%-1.5%
Private Wealth Management $2 million via Fidelity, $10 million in total assets 0.20%-1.04%

Fidelity ’ s fiscal advisors are fiduciaries, which Clark says is a must .
He ’ s a fan of loanblend options that use digital or “ robo ” advisors to handle your investments while offering you full-fledged access to Certified Financial Planners ( CFPs ) .
however, Clark prefers Vanguard ’ s Personal Advisor Services ( $ 50,000 minimum, 0.30 % annual tip ) and Schwab ’ s Intelligent Portfolios Premium ( $ 25,000 minimum, erstwhile $ 300 planning fee, $ 30 per calendar month ) .
If you have adequate assets to take advantage of Fidelity ’ s higher-tier fiscal adviser options, you ’ ll get perks like a credit card with 3 % cash back and access to CFP specialists who focus on things like tax scheme .
Read more of Clark ’ randomness advice on fiscal advisors here .
target date funds are a simple yet effective way to invest for retirement. They ’ re one of Clark ’ s top investment recommendations .
however, if you choose to utilize Fidelity ’ s target date funds, be very careful. Upon first glance, does it seem like there would be a major difference between these ? ad

  • Fidelity Freedom 2055 Fund (FNSDX)
  • Fidelity Freedom Index 2055 Fund (FDEWX)

That one excess bible makes a huge dispute. The beginning store, which is standard at Fidelity, is actively traded with a 0.65 % expense ratio. The second fund — the matchless with the give voice “ index ” in it — is passively traded with a 0.12 % expense proportion .
Guess how little the operation remainder has been since the origin of FNSDX in July 2017 ? The matchless that ’ second more than five times cheaper has earned an annual ROI of 8.33 %, equitable 0.18 % behind the more expensive translation .
If you use a Fidelity aim fund, take concern to pick the matchless with the word “ index ” in it .

Can I Use Fidelity As My Bank?

Yes. Fidelity offers cash management accounts. You can invest from these accounts, but they besides offer many features of a traditional bank including :

  • A debit card
  • Free checking
  • Free ATM access at any bank
  • Electronic bill pay and transfers
  • $0 monthly fees
  • $0 minimum account balance
  • 0.01% APY on uninvested cash
  • Money insured by the FDIC up to $1.25 million

As you ’ vitamin d expect after reading this Fidelity reappraisal, the ship’s company excels in this area, excessively : It doesn ’ deoxythymidine monophosphate cathexis the types of fees that many of the big banks do .
however, Fidelity is set up to make a decent amount of profit on your cash, so you ’ ll find much better interest rates at some on-line banks and credit rating unions.

Final Thoughts

As you can tell from my Fidelity follow-up, whether you ’ re just getting started or you have a goodly portfolio, we here at think it ’ s a great place to invest .
In about every major class, it ’ mho difficult to find a individual brokerage that ’ s better than Fidelity. If I want to pick some nits here, I would say that Vanguard has a better overall selection of exponent funds. And particularly after purchasing TD Ameritrade, Schwab may edge Fidelity in terms of research .
Fidelity ’ randomness strengths are decent. But its lack of weaknesses is what impresses me the most. If you ’ re looking to invest with the best all-around brokerage, you can pick Fidelity and not think twice .

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