My Fidelity Brokerage Account Review

Fidelity Investments is one of financial service provider that offers to buy stock online with various trading platforms for its investors. In addition to low cost stock and options trading, Fidelity also has investment management, retirement planning. Fidelity is the largest mutual fund company in the US. They also offer various accounts specialize in IRAs/Rollovers (Roth IRA, Traditional IRA and 401k), CDs, Bonds, and 529 Plans. Fidelity also offers mobile trading application.

For me, the brokerage needs to satisfy the following requirement:

1. Low commission fees to trade stocks, etf, mutual funds (if necessary)
2. Reliable, can be access freely thru web, stable trading platform
3. Offer ACH electronic transfer
4. Responsive and contactable customer service

Fidelity definitely fit into my criteria. Ever since they offer 25 ishares ETF for free, my interest using fidelity is growing even more. I have been using my fidelity account for the past 3 years for Roth IRA, investment brokerage account and interest checking account. I also use their credit card which provides 2% cashback on any daily purchase. This is one of the best credit card cashback from my experience. Also please check my other brokerages review such as Just2trade, Vanguard, Lightspeed, E*trade, TD Ameritrade, Scottrade and Zecco.

Fidelity was founded on 1946 with headquarter at Boston, MA, USA. As a private held company, Fidelity is not listed in US Stock Exchange. Fidelity offers product such as stocks, options, bond, mutual funds and more. The minimum fund to open an account is $2500. There is no inactivity fee. The client asset is being held Fidelity (National Financial Services llc), member of FINRA and SIPC. This account is insured under SIPC up to $500,000 ($100,000 for cash).

• Products: Stocks, bonds, mutual funds, annuities, insurance, commercial paper, CDs, IPOs, precious metals, managed portfolios
• Market Orders: $7.95
• Limit Orders: $7.95
• Phone FAST Orders: $12.95
• Broker Assisted: $32.95
• ishares ETFs Orders: $0.00 for 25 ishares ETFs
• Mutual Funds: $0.00 for Fidelity & NTF funds. Non-NTF: $75.00.
• Options: $7.95/trade+$0.75/contract
• Minimum to Open: $2500
• Inactivity Fee: $0.00
• Some Other Fees: Tender Fee: $38.00.
• Maximum Margin Rate: Based on proprietary base rate.

Opening account is straight forward; you just need to fill the online application through fidelity website. You can open various accounts whether it is individual or joint account such as:

• Retirement account: Rollover IRA, traditional IRA, Roth IRA, Simple IRA, 401k for large company, SEP IRA, etc
• Investing & Trading: Brokerage account, Brokerage Account with Cash Management
• Education Saving account: 529 account, custodial account
• Managed Accounts by advisor: Fidelity Portfolio Advisor service, Fidelity Private Portfolio service, and Fidelity Personal Trust
• Term Life Insurance
• Charity & Estate planning

They may require you to submit some identifications such as Driver license if needed. If you a US resident on H1 visa, you may require to submit the I-129. Though, I didn’t have to send anything when I opened my account 3 years ago. The application only takes about 10-15 minute.

For International or Foreign investor or non US resident, you can apply fidelity account through their website. It will direct you to your regional international website such as Austria, Canada, France, Germany, Hong Kong, Japan, Netherlands, Spain, Sweden, Switzerland, Taiwan, UK and other International regions (Fidelity Investment Managers website). Typically, you will need to submit your account by mail or visit their international branch. You will need to submit W-8Ben and ID or Passport along with your application.

As typical brokerage firm, there are 4 different ways to fund your fidelity account:

1. Wire Transfer – usually can be done same business day
2. Transfer an account from other brokers. This will take more than 7-10 business days
3. Mailing a check will take 5 business days
4. Electronic Transfer (ACH transfer) will take up to 1-2 business days.

For Margin account, you can apply through online process as well. If you have opened for cash account, you can apply for margin account later. I opened a cash account before and am able to change to margin account after submit the online agreement.

For stock or ETF order, the standard commission is $7.95 per trade with no limit of shares amount. As noted, for broker-assisted trades, the commission fee is $32.95 per trade. There are 25 ishares ETFs that can be traded for free.

There are various stock order can be executed through Fidelity such as Market order, Limit order, stop order or stop limit order, trailing stop order ($ or %), trailing stop limit ($ or %), and conditional order.

Stock trading (i.e. buy stock online) can be done through web based platform as well as software platform such as Active Trader Pro. This feature is available to customers making 36 or more trades per year, offers an improved trading experience and there are better charts but neither features are top tier compare to independent charting.

For option, the cost of 1 contract will cost $8.70 commission fee, while 10 contracts will cost $15.45 commission fee.

For mutual funds, 4,500 mutual funds are available. Fidelity also offers >200 fidelity mutual funds with no load and no transaction fees funds. There are more than 1,500 mutual funds with no load and NTF funds. For transaction fees fund, the commission is $75.00 per trade of mutual fund.

One of the reason I still use fidelity due to their offering of 25 ishares ETFs for free since February 2010. Most ETFs are tracking certain market index such as S&P 500, international etc. For example S&P 500 ETF with ticker IVV, this etf is tracking the S&P 500 index. This IVV ETF only has 0.09% expense ratio. There is no limit to buy and sell of these ETFs. I provide the following table for detail comparison. Note: Only buy and sell ETF is free. Option is not free.

The following are the features of these ETFs:

• You can trade the most commission-free of 25 iSharesETFs online
• These ETF can provide another way of diversification with their wide selection from the ETF leader provider
• You can access to major U.S. stock ETF, international stock ETF, and fixed income markets (i.e. bond ETF)
• Fidelity can prebuilt portfolios of commission-free ETFs

On 2011, Fidelity add 5 more iShares ETFs for free trade including:

• Dow Jones International Select Dividend (IDV)
• MSCI ACWI ex US (ACWX)
• Dow Jones US Real Estate (IYR)
• iBoxx High Yield Corporate Bond (HYG)
• Dow Jones Select Dividend (DVY)

Pros

• Strong offering of 3rd party research such as S&P, Ford Equity Research, Zacks Investment, Ativo, Columbine Capital Services, Sterne Agee & Leach , Eva Dimension, Thomas White, Market Edge, etc
• Many local branch offices. In my area within 50 miles, there are 7 investor centers.
• Extra services for banking (checking, credit card) and retirement (IRA, rollover, Roth IRA).
• 25 ishares ETFs for free trade
• No maintanenace fee
• Widest selections of 4,500 mutual funds are available.
• Also offer mobile trading for blackberry, apple iphone and other smartphones.

Cons

• Need to make 36+ trades per year to utilize top platform
• Limited tools for options traders
• Commission fees are a bit high compare to other discount brokers such as Just2trade, Lightspeed.

Fidelity online web based platform is complete. You can trade stock or etf online with ease. I you are an active trader with > 36 trades per year, the Fidelity Active Trader Pro is a great tools though the commission is rather high. It also provides a mobile application. The mobile application is available in two versions: one built specifically for the iPhone and the other that is typical in nature and supports BlackBerry and most other smartphone handsets.

The Fidelity web based stock and options trading platforms are average. The commission fees are not really one of the cheapest for brokerage. If you want to trade actively, please consider just2trade and lightspeed trading. I do like their research report service. If I want to buy any stock using other broker, I usually try to read some of the research from fidelity. I definitely recommend you using fidelity if you invest in mutual fund as well as ishares ETF. Fidelity is definitely the right choice since Fidelity provides one stop shop for banking service with their cash management of mysmart cash account and credit card offering. Trading option is not one of the cheapest as well. Margin rates are excessive except for those with $500,000+ loan balances of asset. One of the better aspects of the service is the excellent research tools. I definitely recommend using fidelity for the commissions free ETFs and mutual funds offering. Compare to Vanguard, these ETFs offering is not the most complete, but it does provide enough diversification.

Other customer issue from research:

• Issue with callable bond
• Some short trades were canceled due to margin
• Restricted account due to actively trading cash account. This is due to customer error.
• Need large account balance to trade in international market
• Issue with phone service

On 2011, Fidelity was identified as number 1 online brokerage account by Kiplinger Magazine. It is known as "Top notch all around online brokerage account." with overall score of 5 stars. 

Disclosure: I have no affiliation with Fidelity Brokerage. I'm using Fidelity to buy and sell mutual funds, ETF and stock. Please do your own research about the details.