Fidelity Investments: Troubled Times Ahead?

Fidelity Investments is one of the largest stockbrokers in the US, offering commission-free stock and ETF trading. The company has a great web trading platform and an extensive range of products, making it a good choice for beginners and advanced investors alike. However, there have been recent complaints from customers about long delays in accessing deposited funds, which some have attributed to financial trouble at the company. While Fidelity has denied these claims, the issue has caused frustration and financial hardship for many of its clients.

High fees for some mutual funds and margin trading

Fidelity Investments is one of the largest stockbrokers in the US, offering commission-free stock and ETF trading. However, it has been noted that some mutual funds have high fees and margin trading is expensive.

Fidelity's margin rates are higher than the industry average. The markup is +1.25% for a balance of 0-25k. The fees for non-free mutual funds are also high, with a trading commission of $49.95 or $75.

Fidelity's margin rates are competitive and shift with market interest rates and debit amount. The rates range from 12.575% for borrowing up to $24,999 to 8.25% for a $1 million or more debit balance.

While Fidelity offers commission-free US stock trading, international stock trade fees are relatively high. There is also a small charge on sell orders, with an activity assessment fee of $0.01-$0.03 per $1,000 of principal.

Fidelity's stock index options fees are about half of the industry average, at $0.65 per contract.

Overall, while Fidelity offers many benefits to investors, including commission-free trading and a wide range of investment tools and platforms, it is important to be aware of the high fees associated with some mutual funds and margin trading. These fees can impact the overall profitability of an investment strategy and should be carefully considered when choosing a broker.

Long account verification process

While Fidelity is a well-known investment broker with a wide range of products and services, there have been some complaints about its long account verification process. Some customers have reported that it takes longer to open an account with Fidelity compared to its competitors. In addition, there have been issues with deposits and transfers, with some users reporting that their funds were placed on hold for an extended period of time, causing inconvenience and financial hardship.

Fidelity has responded to some of these complaints, citing increased fraud prevention measures and internal errors as reasons for the delays. However, customers have expressed dissatisfaction with the lack of prior communication and the impact on their financial activities.

It is important to note that the long account verification process may be an isolated issue, as other aspects of Fidelity's services, such as trading platforms and investment options, have generally received positive reviews.

No negative balance protection

Fidelity does not offer negative balance protection. This means that if you lose more money than you have in your Fidelity account, you will be in debt to Fidelity.

Negative balance protection is offered by most forex and CFD brokers in Europe, the UK, and Australia. It only applies to retail clients, not professional clients.

The concept of negative balance protection gained attention in 2011 when the Swiss National Bank stopped holding its currency against the Euro at a fixed rate. The Swiss franc strengthened rapidly, and many traders who were shorting the franc ended up with huge negative balances, losing more than they had in their accounts.

If you have negative balance protection, your broker will not ask you to deposit more money or take action to collect the money you owe them. Instead, your loss cannot exceed the amount deposited in your account.

Some brokers that provide negative balance protection include Pepperstone, Markets.com, Plus500, and eToro.

Negative balance protection is especially important for new traders who may not be familiar with how quickly markets can move during announcements, market openings, or periods of volatility. It can help traders manage volatility and take advantage of high-volume trading sessions without worrying about debt.

However, not all brokers offer negative balance protection, and it is essential to research and choose a well-capitalized and reputable broker to ensure this protection.

Limited financial information available

Fidelity Investments is a well-known investment broker that offers a range of financial services, including mutual funds, index trackers (ETFs), and stock trading. While the company has a strong reputation in the industry, there have been some concerns about limited financial information being available to the public. This is primarily due to Fidelity being a privately-held company, which can make it challenging for investors to access detailed financial data about the firm.

• As a privately-held company, Fidelity is not required to disclose as much financial information as publicly-traded companies. This can make it difficult for investors and analysts to access comprehensive financial reports and data.
• The lack of publicly available financial information may make it challenging for potential investors to thoroughly evaluate the company's financial health and stability.
• Fidelity's financial reports and disclosures are regulated by the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These regulatory bodies ensure that Fidelity provides certain essential financial information to protect investors.
• While detailed financial reports may not be readily available to the public, Fidelity does provide some financial information on its website, such as fee schedules, pricing structures, and investment performance summaries.
• The company has been in business since 1946 and has a long track record of operating through various economic cycles. This extensive history can provide some level of assurance to investors.
• Fidelity is regulated by top-tier financial authorities and has a high level of investor protection in place. It is also insured through the Securities Investor Protection Corporation (SIPC) and the Federal Deposit Insurance Corporation (FDIC), providing additional safeguards for its customers.
• Despite the limited public financial information, Fidelity has a strong reputation in the industry and is considered a trusted and established investment broker.

Long hold times for deposits

Fidelity has addressed these complaints, stating that they have been in contact with affected clients to resolve the issues. However, many customers remain dissatisfied with the company's response, as they were not notified of the policy change and continue to experience difficulties accessing their funds. This situation highlights the importance of transparent communication and prompt issue resolution in maintaining positive customer relationships, particularly when implementing security measures that may inconvenience users.

Frequently asked questions