The numbers are in for Investor's Business Daily's 2021 Best Online Brokers ranking. Once again, Fidelity brokerage is among the top five best online brokerages in IBD's annual assessment.
In IBD's latest Best Online Brokers ranking — based on our survey of more than 5,000 investors, assessing their rankings of how their primary broker stacks up in 15 categories of performance — Fidelity ranked No. 2 overall. It was the ninth straight year that it ranked within the top five.
That's every year since the Best Online Brokers ranking began.
Competition this year was fierce and varied. It includes new, small players like the micro-investing apps popular among millennial investors. It ranges up to large, longtime rivals, with customer assets under administration (AUA) comparable to Fidelity's considerable financial heft.
Fidelity overall sported $8.8 trillion in AUA as of Sept. 30. Of that, $2.76 trillion was at work in Fidelity brokerage.
Fidelity Brokerage Defends Its Turf
Fidelity brokerage has copped the No. 1 or No. 2 overall spot in eight of the past nine years.
This time, the big Boston-based brokerage snared its top-five finish in IBD's Best Online Brokers overall ranking by finishing in the top five in 13 of the 15 categories of broker performance studied.
Customers ranked Fidelity brokerage No. 1 in three categories and No. 2 in one category.
- View The Full Best Online Brokers Special Report
- See Lists Of The Best Online Brokers Overall And In Every Category
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Get Details On The Survey Methodology
How IBD's Best Online Brokerage Rankings Are Done
IBD's annual rankings result from two survey phases. First, IBD and polling partner TechnoMetrica Market Intelligence surveyed brokerage clients to find out what they consider the most important broker attributes. In a second survey, we asked investors to rank their own primary broker on the 15 most vital and desirable broker traits.
Best Online Brokers Features: Fidelity |
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| Minimum to open an account: $0 |
| Number of accounts: 25.9 million |
| Shorting restrictions: Must consent to margin and short-sale terms-of-use agreement |
| Margin restrictions: Most equity securities have base requirements of 30% (long side), 35% (short side) |
| Commissions: $0/stock or ETF trade |
| Special features: Fractional share trading allowed; trade must have value of at least $1 |
| Website: Fidelity.com |
Fidelity Brokerage's Main Strengths
This year, Fidelity ranked No. 1 in Research Tools, Investment Research and Portfolio Analysis & Reports.
Fidelity brokerage research comes from 17 outside firms. Their names include Argus Research, Zacks Investment Research, MSCI and Refinitiv. "We invest in our research," said Scott Ignall, head of Fidelity's retail brokerage business. It's worth the cost. Research leads to success. "Informed clients are good, and will last," Ignall said. "As an investor, you can't skip research and analysis. Without those, your investments are just guesses."
Ron Hamilton, a 72-year-old Fidelity customer in Cerritos, Calif., who invests for himself and gives investment advice to friends and family, said, "I do like Fidelity's research. It's quite extensive. ... I use it quite a bit, and the more that I use it, the more I discover new features."
Access To IPOs
Fidelity scored No. 2 in IBD's Best Online Brokers ranking in Access To IPOs. "What that takes is access to IPO underwriters," Ignall said. That access is part of a symbiotic relationship.
Fidelity clients want access to IPOs, which can appreciate in value sharply. Underwriters need lots of investors — which Fidelity can bring to the table.
Fidelity Trade Execution
Fidelity landed in the No. 3 spot in Trade Execution Speed/Price, Website Security, Site Performance, Customer Service, Trade Ideas, Educational Resources and Original Programming.
That last trait includes services such as podcasts, videos and livestreams.
Joining other online brokers, in 2019 Fidelity slashed commissions on stock trades to zero.
In a separate policy, Fidelity does not accept payment from market makers for order flow. Fidelity executes its own trades. Fidelity says that practice enables it to provide customers with the best price savings on equity market and market limit orders.
Further, in early 2020 Fidelity began to let customers buy fractional shares of stocks and ETFs. This lets customers buy securities that have sky-high share prices for palatable costs.
Customer Comments
Customer reactions? A sampling finds feedback that reveals contentedness and lacks drama.
Trade execution and speed: "Fast enough for me," said Shri Bhamre, a 70-year-old retired electronics engineer who lives near San Francisco, who has been a Fidelity brokerage customer for about 20 years. As a CAN SLIM investor, he uses IBD as a key source of investment information.
Site performance: "The site is responsive and good," Bhamre said. "I never had a problem even in fast markets."
Customer service: "So far, I'm satisfied," said Brian Ingman, a 51-year-old electrician who lives in central Massachusetts and has been a Fidelity brokerage customer about two years.
Web security: "I still have my money, so I'm satisfied," Ingman cracks.
Growth Of New Rivals Like Robinhood
Newcomer rivals like Robinhood challenge older firms like Fidelity. Robinhood caters to a growing army of mostly young, highly engaged beginning investors. But Fidelity isn't taking the challenge lying down.
"We've had tremendous growth in young traders as well," Fidelity's Ignall said. "I can only comment on why they are joining us. It has to do with level of execution, access to experts, ease of using our platform and the Fidelity brand. And our fractional share trading is best in class."
Ignall believes Fidelity's fractional share trading tops its rivals because Fidelity offers access to a large number of stocks — more than 7,000 stocks in the National Market System and all nonleveraged ETFs. It offers real-time trading, while some rivals delay trades until volume hits a certain threshold. It also accepts limit orders as well as market orders.
Fidelity Brokerage's Plans For 2021
Ignall says Fidelity brokerage will continue to focus on customer-friendly technologies in 2021. That means creating a more streamlined login experience. It means applying machine learning and artificial intelligence to educational services for customers. It also means using those technologies to make it easier for customers to explore other opportunities while their trading ticket is open. Ignall's description makes those tickets sound like digital flying carpets, taking customers where they want to go.
Ignall said, "We need to use artificial intelligence, more personalization, more machine-based learning to get clients where they want quickly. We're doing the blocking and tackling to deliver new, streamlined research, trading tickets with embedded videos, positions and next best-action links and options trading."
Those steps could also boost customer engagement and translate into more revenue for Fidelity.
What it boils down to, Ignall said: "We're trying to build tools that help clients set goals, then reach them, quickly and without a lot of work."
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