Fidelity Investments
Now With Lower Commissions!

Back in 2010, Fidelity investments took the commissions fight to the discount brokers.

Schwab had lowered online trading fees for equity trades by more than 30% to $8.95.

Not to be outdone, Fidelity responded by lowering commissions to $7.95 per online equity trade.

In addition, 25 ETFs from iShares joined their growing cache of NTF (no transaction fee) offerings.

With an outstanding array of mutual funds and investing services to choose from, not to mention the brand name appeal, Fidelity raised the level of competition for all discount brokers.

What is "Fidelity Investments"?

Fidelity is actually made up of several different companies.

  • Fidelity Brokerage Services, LLC
  • Fidelity Investments Institutional Services Company, Inc.
  • National Financial Services, LLC
  • Pyramis Global Advisors

Discount Broker - Fidelty Logo

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The Pitch

Fidelity claims to have world-class investment management and research capabilities.

They make the case that you should park your hard earned dollars in their accounts because:

    "We employ one of the largest staffs of portfolio managers, analysts and traders in the industry, and manage hundreds of mutual funds and institutional strategies, encompassing virtually every investment class and category."

Unfortunately, there are no claims about making you money or keeping you from losing money. And rightly so, as there is no way for anyone to guarantee either.

The problem with the statement above is that the size of their accounts can't be used a proxy for your success. But that is exactly what they (and over other brokerage firm for that matter) are trying to say.

Give us your money...everyone else does.

Why Invest with Fidelity?

So after reading the above, why would you invest with Fidelity?

I chose to open a retirement investment account with Fidelity for 3 reasons:

  1. Access to No Transaction Fee (NTF) funds
  2. Access Fidelity Research
  3. Dividend Reinvestment Plans (DRIPs)

I keep costs low by using NTF funds, and the DRIP program automatically reinvests dividends for me. Since my retirement accounts are long-term investments, I am attempting to leverage the effects of compounding with an immediate tax burden.

As a bonus, I have access to Fidelity's research, which I can use for any type of investment, whether it is with Fidelity or another discount broker.

The Bottom Line

Active investors and traders have always looked for low-frill, low cost access to the markets. Since the beginning of online trading, discount and deep-discount brokers have met that need. Even with a lower commission rate, Fidelity can't compete.

But for most other investors and traders, the lower commissions rate now offered by Fidelity is too good to pass up, given their vast array of no transaction fee funds and tools.