Fidelity Investments Review – For Self-Directed Trading and Managed Options

Do you prefer DIY investing, robo-advisors… or both? Here’s what Fidelity can offer for you.

fidelity review

If you’re a self-directed investor, looking for a comprehensive investment brokerage firm that offers all the tools and investment options you need, look no further than Fidelity. The company offers you the ability to trade just about any securities you choose, but also provides managed investment options as well. You can even split your portfolio between self-directed investing, and a fully managed portion.

About Fidelity

Fidelity offers one of the world’s largest diversified investment platforms. Though it was once primarily known as the Fidelity Funds, one of the largest fund companies in the world, it has since branched out to become a full-service investment source. You can trade the full range of individual securities, as well as thousands of funds, including Fidelity funds. What’s more, the company has one of the lowest trading commissions available in the industry.

Fidelity has nearly $2.5 trillion in assets. That includes individual brokerage accounts, retirement accounts, and institutional accounts. But apart from a wealth of self-directed trading opportunities, Fidelity also offers several managed investment options. This is one of the major advantages of being with a very large investment firm. You don’t have to choose self-directed investing or managed options–you can have both on the same platform.

The firm is also very well regarded throughout the investment industry. In 2018 alone, Fidelity was recognized as the Best Online Broker 2018 by Investor’s Business Daily (for the fourth year in a row), and with the same award by StockBrokers.com.

How Fidelity Works

We can think of Fidelity as a full-service broker with discount trading fees. That is, they offer every possible investment tool and benefit, but with trading fees that are among the lowest in the industry (see Fidelity Pricing and Fees section below).

Here are some of the details of a Fidelity self-directed brokerage account:

Minimum Initial Investment – Zero, but naturally you’ll need money in the account to begin trading. Mutual funds typically require a minimum of $2,500.

Available Accounts – Individual and joint taxable brokerage accounts; traditional, Roth and rollover IRAs; 529 college savings plans and five different managed account options.

Available Investments – Stocks, bonds, options, exchange traded funds (ETFs), more than 10,000 mutual funds (including Fidelity funds), and certificates of deposit.

Customer Service – Available by phone, email and live chat, 24 hours a day, seven days per week. Fidelity also has more than 140 local branches throughout major metropolitan areas in the US.

Fidelity Mobile App – The app is available for Android, Amazon, and Apple iOS, Apple TV and Apple Watch devices. It has all the features of the desktop version for both trading and cash management.

Account Security – All Fidelity accounts are protected by multiple layers of financial insurance. For example, cash balances are protected by FDIC for up to $250,000 per depositor. Investment accounts are protected by SIPC for up to $500,000 in securities, including up to $250,000 in cash held in a brokerage account. (SIPC insurance covers broker failure, not loss in investment value due to market fluctuations or investing losses.)

Fidelity Features and Benefits

Fidelity’s investment tools and research features are equal to the best in the industry. Here is some of what you can look forward to by opening a Fidelity account:

Fidelity Cash Management Account – This is the basic investment account, but it offers checking account features. This includes not only check writing, but also ATM access, mobile deposits, and Fidelity BillPay. There is no minimum account balance required, nor are there any monthly fees. In addition, ATM fees are reimbursed nationwide.

Active Market Pro – Fidelity offers this as a fully customizable trading platform. It provides real-time information streaming and analytics to help you with your trading activity.

Stock Research Center – This tool will provide you with everything you need to know about any stock or fund you want to invest in. It will show you the top-rated sectors and major market movers. It can help keep you apprised of where the action is in the markets.

Security & Stock Screeners – Fidelity offers this tool to help you narrow down specific investments. You can create lists of stocks you want to follow, using more than 40 criteria. The tool also offers prebuilt strategies from independent research experts. It can be used for stocks, preferred securities, ETF’s and closed-end funds.

Fidelity Managed Investment Options – See below.

Fidelity Pricing and Fees

Below is a list of trading fees for self-directed investing with Fidelity. It does not include fees for investment management services, which we’ll cover in the next section.

  • Stocks and ETFs: $4.95 per trade (Fidelity also currently offers 92 commission-free ETF’s, including 22 Fidelity ETFs)
  • Options: $4.95, plus $0.65 per contract; Buy to close orders of $0.65 to $0.11, $4.95 flat; Buy to close orders of $0.10 or less, $0
  • Bonds and CDs: $0 on new issues, $1.00 per bond on secondary issues
  • U.S. 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

There are no annual or monthly account fees with Fidelity brokerage accounts. The one exception is a $25 annual fee for SIMPLE IRA accounts. The other fee to be concerned with is a $50 account closure fee that applies to all account types.

If you’re interested in trading on margin, Fidelity offers the following rates, as of September 25, 2018:

Fidelity Managed Investment Options

Fidelity offers five different managed investment options:

  • Fidelity Go, Fidelity’s robo-advisor option
  • Fidelity Portfolio Advisory Service
  • Fidelity Personalized Portfolios
  • Fidelity Separately Managed Accounts
  • Fidelity Wealth Management Advisory

The five options will give you a choice ranging from a fully managed portfolio (Fidelity Go), to various levels of assisted portfolio management, including comprehensive financial management and planning.

Fidelity Go

This is an excellent investment option if you are a new or small investor. Rather than taking a chance on self-directed investing, you can instead let the Fidelity Go robo-advisor handle complete investment management for you. Alternatively, if you’re primarily a self-directed investor, but want to turn a portion of your portfolio over to be professionally managed, Fidelity Go gives you that option.

The specific features of Fidelity Go include:

Minimum Initial Investment – You don’t need any funds to open an account, but you will need a minimum of $10 to begin investing.

Available Accounts – Individual and joint taxable accounts, as well as traditional, Roth and rollover IRAs.

Fidelity Go Customer Service – By phone and live chat, Monday to Friday, from 8:00 AM to 8:00 PM Eastern time.

Fidelity Go Account Fees – See Portfolio Advisors fees screenshot below.

Rebalancing – Like all robo-advisors, Fidelity Go will periodically rebalance your portfolio to make sure asset allocations remains consistent with desired target levels.

Annual Strategic Review – Fidelity Go reviews your investment profile each year. They may revise your investment allocations based on any significant changes.

Manual Asset Allocation Adjustment – This is a feature that makes Fidelity Go different from other robo-advisors. Typically, robo-advisors create an investment allocation for you, and you have little control over it. Fidelity Go allows you to make changes in your allocations.

Target Tracking – This feature enables you to choose target balances to reach by certain timeframes. The platform will estimate the likelihood you’ll attain the target amount, giving you recommendations if it looks like you won’t.

Fidelity Go Investment Methodology

Fidelity Go invests in a mix of U.S. and foreign stocks, bonds and short-term investments. These are held through a mix of Fidelity Flex mutual funds, which are proprietary funds that have zero expense ratios and no management fees. They can be either active or passive funds, which is significant.

ETFs are invested in market indexes, which are designed to match the underlying markets. Mutual funds are actively managed, and intended to outperform the market. By including mutual funds in the investment mix Fidelity Go holds the potential to outperform the market. This is fairly unusual as robo-advisors are concerned.

One area where Fidelity Go falls short of the competition is that they don’t offer tax-loss harvesting as part of the investment methodology. Tax-loss harvesting is when you sell certain asset positions to generate losses to offset gains in other sales. Similar assets are later repurchased to keep the target asset allocation in tact. It effectively creates continuous deferral of capital gains. However, it’s not a service Fidelity Go provides.

Fidelity Portfolio Advisory Service

Fidelity Portfolio Advisory Service provides professional money management. They’ll work to learn your goals, whether it’s retirement, tax management, or saving for a major purchase, then propose an investment strategy to help you get there. A dedicated team monitors and manages the risk in the markets, then offers exclusive investments typically not available to individual investors.

The service includes investment selection, ongoing management, and rebalancing.

You’ll need a minimum of $50,000 for this service. You’ll pay a flat fee for the service (see schedule below), with no trading commissions from Fidelity. Your investment strategy will be updated as your goals and time horizon change. Fidelity will also help you manage for taxes.

Your portfolio will be in an actively managed, diversified mix of funds, based on your risk tolerance, time horizon and investment goals.

Fidelity Personalized Portfolios

With this service, your portfolio is managed by Strategic Advisors, Inc, a Fidelity company. They will provide you with an actively managed personalized portfolio. Your account will be invested in stocks, bonds, mutual funds, ETF’s and separately managed accounts where appropriate. Various tax minimization strategies will be used in the creation and management of your portfolio, including tax-loss harvesting.

Once again, while your initial investment allocation is determined upfront, you’re free to discuss changing your asset mix at any time you feel necessary. Your account can be customized in a number of ways, including the addition of separately managed sub-accounts for specific goals.

Fidelity Personalized Portfolios requires a minimum of $200,000 to participate.

Fidelity Separately Managed Accounts

This service is just what the name implies. Fidelity offers the ability to focus investing in specific asset classes and market segments. A total of six portfolios are offered for equity, fixed income, and diversified investing.

The individual portfolios include:

  • Fidelity Tax Managed U.S. Equity Index Strategy (equities)
  • Fidelity Equity Income Strategy (equities)
  • Breckinridge Intermediate Municipal Strategy (fixed income)
  • Fidelity Core Bond Strategy (fixed income)
  • Fidelity Intermediate Municipal Strategy (fixed income)
  • BlackRock Diversified Income Portfolio (diversified)

You’ll need a minimum investment of between $200,000 and $500,000, depending upon the specific portfolio. Portfolio pricing is shown below.

Fidelity Wealth Management Advisory

This is a highly customized investment service, offered to high net worth individuals. You’ll be assigned a dedicated financial advisor, who will help you create a personalized strategy for your entire financial life. You’ll meet regularly with your advisor to make ongoing decisions. This will include coordination with outside advisors, like attorneys and accountants. The purpose of the service is to create a team that will provide comprehensive investing advice and financial planning.

Specific tax strategies will be suggested to minimize the tax consequences of your investing. Specific focus will be on your investments, retirement, protecting your income and your assets, and protecting your family.

Fidelity Wealth Management Advisory requires a minimum initial investment of $2 million, but you’re also expected to have at least $10 million in total investable assets to be eligible to participate. Portfolio pricing is shown below.

Fee Structure for Fidelity Investment Management Options

Each of the five Fidelity investment management options has its own unique fee structure. The fees for each are as follows:

Fidelity Pros and Cons

Pros:

  • Fidelity offers one of the lower trading commission structures among major brokers.
  • The firm offers five different managed investment options for every portfolio size.
  • Fidelity provides 24/7 customer service, as well as the advantage of 140 physical branches around the country.
  • Fidelity provides one of the most comprehensive investment platforms in the industry, complete with all the trading tools and educational resources needed for any level of investment expertise.
  • The company is particularly strong in the area of funds, especially with the Fidelity Funds.

Cons:

  • Fidelity Go doesn’t offer tax-loss harvesting (most robo-advisors now do), and their management fee (0.35%) is higher than better known competitors, Betterment and Wealthfront, which each charge 0.25%.

Should You Invest with Fidelity?

No matter what type of investor you are, Fidelity is an excellent investment broker to work with.

Now if you’re looking for a system to handle all of your financial needs including budgeting, cash flow analysis, calculating your net worth and managing your investments, Personal Capital is the tool for you. Find out why this platform is worth checking out in our Personal Capital Review.

For the seasoned, self-directed trader, Fidelity offers some of the lowest trading commissions in the industry, at $4.95 per trade. They also offer a wealth of trading tools, as well as educational resources to help you improve your skills.

If you’re a more passive investor, Fidelity has a large assortment of mutual funds and ETF’s. And if that isn’t enough, they offer five different managed portfolio options. This includes Fidelity Go, Fidelity’s robo-advisor, which you can open with no money at all.

Perhaps the biggest advantage is for the investor who wants a little bit of both–self-directed investing, and managed options. You can have both with the same brokerage with Fidelity.

If you’d like more information, or if you’d like to open an account, check out the Fidelity website.

Fidelity Investments

Fidelity Investments
9.2

Investment Options

9.0 /10

Fees

8.5 /10

Customer Service

9.8 /10

Added Features

9.5 /10

Pros

  • Low trading commission structures
  • Options for every portfolio size
  • 24/7 customer service

Cons

  • Fidelity Go doesn’t offer tax-loss harvesting
  • Fidelity Go management fee is higher than competitors
Topics: Investing
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2 Responses to “Fidelity Investments Review – For Self-Directed Trading and Managed Options”

  1. I no longer use Fidelity Go myself (when they changed the funds I didn’t want to commit to immediate tax implications) — but my understanding is that their fee is 0.35% total, whereas the likes of Betterment and Wealthfront are the ~0.25% management fee on top of the fund expenses which I think generally makes Fidelity lower overall?

  2. John Antolak

    When Fidelity introduced the 0% expense ratio index funds (which you didn’t mention), they also lowered the minimum investment on many of their index funds to $0 (not $2500 as you mention). One example is the S&P 500 index (FUSEX).

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