Fidelity is Fabulous If You Can Afford It
Written: Jul 08 '02 (Updated Jul 08 '02)
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Pros: World-class customer service, full range of offerings, excellent online account management.
Cons: High commission fees, no Coverdell IRA, privileges dependent on account worth.
The Bottom Line: If you have the required asset amount, like to be pampered, and don't mind paying the high commission fees, Fidelity is for you.
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| splum's Full Review: Fidelity Investments |
There are far more good things to say about Fidelity Investments than bad, so I’ll get my dislikes out of the way first.
Dislikes
Doing business at Fidelity is not cheap, commission can be as high as $55 per stock trade, transaction fee for certain mutual funds can cost $75, and the minimum balance to open a brokerage account is $2500.
Fidelity assigns one of three service levels to its customers: Bronze, Silver, and Gold. All customers are eligible for the Bronze status. To qualify for Silver, you must either have (in combined household assets) a) $100K+ in assets, b) $30K+ and 36+ trades per year, or c) no asset minimum and 72+ trades per year. For Gold status, you must have either a) $2M+ in assets or b)$30K in assets and 240+ trades per year. The commission you pay depends on your level and the method you use to trade (i.e., representative assisted, automated telephony service, or online). You can pay as much as $55 to trade up to 100 shares with the help of a rep at the Bronze level.
Real time streaming quotes is only available to customers who trade more than 100 trades per rolling 12 months period. If you don’t qualify, you'll get the delayed 2 minute quotes.
Fidelity carries a large selection of load and no-load mutual funds. You can find many no transaction fee funds but a number of popular funds (such as the Vanguard funds) incur a $75 transaction fee to purchase. And if you want to systematically purchase more of the fund (e.g., automatically on the 1st of each month), you have to pay $5 each time.
Fidelity does not offer Coverdell Education IRAs. This is probably because they administer 529 College Savings Plans for three states (the contribution ceiling for the 529 plan is much higher than the $2000/year allowed for the Coverrdell IRA).
As you can see, it’s not cheap to be a Fidelity customer and they appear to go after the high asset customer base. With that said, there is still much to like about Fidelity.
Likes
Fidleity was named by Kiplinger as the best “Average Commission $20 Or More” online broker and it’s easy to see why. There are a ton of features and services offered. The ones I especially like are listed here:
Customer Service - Fidelity’s customer service is top notch and they are available 24 x 7. They seem to have in house specialists in every product and service they offer. Their general customer service agents (who are mostly licensed traders) can usually answer the questions without deferring to a specialist. But if they are stumped, they will transfer you to the specialist. They have Rollover IRA specialists, annuity specialists, 529 College specialists, and more. These guys and gals are very patient and eager to help and educate (one time I got a tutorial on the difference between buy and sell stop limit orders). We have been with Fidelity for the past 8 years and I have NEVER had a negative experience with their customer service reps.
Excellent Web Interface – I just can’t praise their web interface enough. It is absolutely a delight to use and will satisfy the most critical human factors engineer. It is well thought out, easy and intuitive to use. The online tools and the wealth of information available are phenomenal. The site is constantly being improved.
“Household” statements – If your family has multiple accounts with Fidelity, you can request that they be combined (i.e., counted as one household) so that you can receive the best discount possible. All accounts are then combined in one monthly statement.
Full View – This tool allows you to aggregate and view all your financial holdings (banking accounts, other brokerage accounts) in one place. It will even sum up your stocks from across different brokerage accounts and sub-accounts (e.g., if you have 100 shares of IBM with brokerage firm A and another 100 shares with brokerage firm B, Total View will show that you have 200 shares of IBM). In addition, it will list the previous day closing price, and the change in value. Total View refreshes your account info every 24 hours.
Stock Research – Fidelity provides an easy and clear stock research section. It is well laid out, very intuitive to use, and with lots of informative subsections (Snapshot, Real-time Quotes, Analysts Research, Charts, News, Earnings, Recommendations, Competition, Key Ratios, Financials, Insiders, etc). You have access to up-to-date Market Guide, First Call, Argus, and Lehman Brothers reports.
Money/Share Transfer – You can easily move money between your Fidelity account and your banks. You can also move assets between your Fidelity accounts (e.g., fund your IRA directly from your taxable account). You can even make a charitable contribution directly from your account.
Market News – Fidelity provides an array of market news (from Reuters and CBS Market Watch) and commentary (from the SmartMoney premium content). News is presented as they cross the wire. Furthermore, news pertaining to stocks that are listed in your watch list will be filtered and captured for you to view.
Automatic Cost Basis Calculation – The cost basis for stocks/funds purchased in a taxable account are automatically recorded. The unrealized gain/loss in dollars and percentage are also calculated. You can get an updated snapshot of your investment cost basis in near real time.
Closed Position Summary – Fidelity tracks your closed positions along with information such as dates acquired and sold, proceeds, cost basis, gain/loss, and term classification (long or short).
Tax Information – Fidelity provides the current and past year’s tax information, such as long term or short term capital gain/loss, dividends and capital gain distributions, taxable and tax exempt income.
I can go on and on but I best wrap it up here.
Summary
To summarize the Pros and Cons:
Pros:
- Excellent customer service
- Excellent online account management and resources
- Access to many specialists including rollover 401K, annuity, and 529 college saving plans
- Free independent research reports (Argus, Lehman, S&P)
- Easy money transfers
- Automatic cost basis tracking, tax information, closed position summary
- Total View tool allows links to non-Fidelity accounts, providing an aggregate view of your assets
Cons:
- High trade commissions and outrageous mutual fund transaction fees
- Account balance and trades affect privileges and may affect customer service treatment
- Real time streaming quotes only available to those who make over 100 trades per rolling 12 months period
- No Coverdell (Education) IRA
Recommended:
Yes
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Epinions.com ID:
splum
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Reviews written: 5
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