Making IBD's list of Best Online Brokers for an 11th straight year, Fidelity brokerage came in No. 2 for 2023. The investment powerhouse had another strong showing in a very tough year.
However, the online brokerage business is in a scrum of fierce competition. Fidelity worked hard last year, bolstering its offerings to account holders and adding to its army of customer service reps. Yet that wasn't enough to overcome Charles Schwab, which came in No. 1 on 2023's Best Online Broker list. Fidelity had edged out Schwab in IBD's 2022, 2021 and 2019 Best Online Broker reports.
IBD builds its rankings using a two-part annual survey. TechnoMetrica Market Intelligence partners with IBD to conduct the poll. Investors were asked to rate their primary broker on 18 attributes that investors deem most important.
"We're continuously listening to our customers and innovating to meet their investment needs," said Bob Mascialino, head of brokerage at Fidelity. The Boston-based online brokerage earned high marks on its report card for most of the attributes it was graded on.
Fidelity finished in the top three in 12 of the 18 categories, and it finished first in availability of account types. A year ago investors ranked Fidelity brokerage No. 1 in seven attributes.
Fidelity Brokerage: Attribute Rankings
Fidelity scored the No. 2 ranking on six key traits: trade execution/speed/price, website security (a second-place tie with E-Trade), investment research, research tools, education resources and up-to-the-minute data on market-influencing statistics.
In 2022, Fidelity said it delivered $1.2 billion in trade price improvements to its customers. That's the attribute survey respondents rank highest of the 18 attributes surveyed. It also rolled out
a trading dashboard that account holders can access on the web without downloading software.
Fidelity ranked third on five other attributes in IBD's 2023 Best Online Brokers ranking: customer service, mobile trading platform/apps, portfolio analysis & reports, site performance and timely information on market shifts.
And, as part of its efforts to give customers more of what they want, eligible Fidelity brokerage customers can now trade Bitcoin and Ethereum on its mobile app with a Fidelity Crypto account.
Expanded Social Media Investing-Education Resources
Fidelity also expanded its social media presence. The 18-to-35 crowd, viewed as the next generation of investors, can now tune in to an education channel on Discord, a social media platform that hosts a wide range of communities. Or learn about investing via an interactive, gamelike metaverse experience.
Investors can also get investment questions answered by Fidelity on Reddit or receive investing ideas on TikTok from Fidelity portfolio managers.
Fidelity Account Features |
|---|
| Minimum to open an account: $0 |
| Number of accounts: 35.6 million |
| Shorting restrictions: Must consent to rules for margin trading and short sales |
| Margin restrictions: Most equity securities have base requirements of 30% (long side), 35% (short side) |
| Shorting leveraged ETFs initial margin: 60% to 90% of total investment |
| Special features: Fractional share trading allowed on 7,000-plus U.S. stocks and ETFs (trade must have value of at least $1); new Solo FidFolios allow you to create your own custom index and trade this basket of stocks and ETFs with a single click |
| Website: fidelity.com |
Upping their social game has paid off for Fidelity brokerage. Nearly half (45%) of its new retail accounts were opened by investors between the ages of 18 and 35, according to data from the quarter ending in September 2022. As the transition to a digital economy gains speed, the new mantra at Fidelity brokerage is simple: Meet customers where there are.
"Meeting our customers on the platforms they prefer to engage on is a key focus for us," Mascialino said. "It helps us better serve their needs." It also gives Fidelity real-time feedback on its products and services.
Fidelity Customer Loyalty
Fidelity brokerage had 35.6 million retail accounts at the end of the third quarter.
The firm's across-the-board strength is a big reason why it posted a higher overall grade from investors than all but one of the seven brokers competing in this year's ranking. Six of 10 (60%) investors said they were "very satisfied" with Fidelity brokerage in IBD's 2023 Best Online Brokers rankings.
But, that's down from 66% a year ago — though 2022 was far from a party for investors, with both bonds and equities falling significantly. All three major indexes posted their biggest declines since the 2008 financial crisis.
- Learn about this year's battle for top broker.
- Review IBD's profile of TD Ameritrade, No. 3 in 2023's report.
- Read our story on equity trading platforms and trade execution/speed/price.
- How much can you earn from brokerage incentives?
- What are the latest features in portfolio analysis, and how did brokerages help investors with trade ideas in last year's bear market?
Still, clients continue to exhibit strong brand loyalty to Fidelity. Retired chemical engineer Bill Kinner finds value in Fidelity's offerings. The 65-year-old trader from Mentor, Ohio, has been with the brokerage for more than a decade.
What he likes best about investing at Fidelity is that he can park all his assets in one place — equities, funds, bonds, retirement accounts and HSA funds. Kinner also gives Fidelity high marks for execution of the covered calls trades he places on his mobile app. Other plusses: Kinner says the research and research tools Fidelity provides let him know what's going on in the market and offer actionable investment ideas.
Fidelity's educational materials on options have also been a handy resource, Kinner adds.
An Army Of Customer Service Reps
Helping customers navigate market volatility and fine-tune their financial plans is also a big part of Fidelity brokerage's DNA. Fidelity continues to build its army of customer service reps. In the third quarter of 2022 alone, it hired and onboarded more than 5,400 new associates.
Jack Mozes, a retired investor from Delray Beach, Florida, holds Fidelity accounts that are 10 years old. What does Mozes like most about Fidelity brokerage? "Customer service," he said. He's not alone. Fidelity earned the third-best ranking for customer service in the 2023 survey.
"Our customers continue to contact us in record numbers to help them navigate their unique situations amid market uncertainty," Mascialino said. In the three-month span ending in September, appointments at Fidelity's more than 200 nationwide investors centers were up 33%.
Kinner also gives Fidelity high marks for customer service. "(They're) pretty easy to do business with," he said. "Fidelity makes you feel that you are a valued customer."
Educating The Next Generation Of Investors
To be sure, Fidelity remains a perennial power in the online brokerage space.
Among its biggest strengths is investor education. Fidelity brokerage is increasingly teaching its customers, especially younger ones, the ins and outs of trading. Many upgrades to Fidelity brokerage, such as the new interface on its mobile app, have come from customer feedback on social media.
"We continue to test and learn how to deliver financial education to the next generation," said Mascialino. "Young individuals are just beginning to take charge of their own finances."
He added: "Our goal is to reduce the barriers to getting started in investing by providing engaging (educational materials), a modern experience and tools."
IBD staffer Vidya Ramakrishnan contributed to this article.
