Fidelity brokerage, focused on tapping the growing ranks of investors making their own trades and managing their investments, once again ranks among the top brokers in the latest IBD Best Online Brokers survey.
In doing so, it's kept abreast of markets that are becoming more fast-paced, international and complex. The Fidelity Investments unit now has 19.4 million accounts, up 9% from a year earlier.
Its combination of customer awareness and product development enabled Fidelity brokerage to nail down a sixth-straight year as a top-five firm in IBD's annual Best Online Brokers Survey. And for the fourth year in a row, its customers gave it the highest Customer Experience Index rating among all the brokers in the survey.
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Rather than resting on laurels, the brokerage is fighting to increase its pace of innovation and development, adopting what Head of Brokerage Customer Experience Scott Ignall refers to as "a spirit of innovation and speed" injected into the environment over the past couple of years.
"We really embrace pace over perfection, knowing that our customers value constant innovation, and they want to get feedback and they want to get features from us on a regular basis, as opposed to waiting for big, long six-month or one-year projects," Ignall said.
The high-output model led to releases in 2017 of trading account facial recognition security software for Apple (AAPL) iPhone X users, security voice pattern recognition speeding customer service calls, and account monitoring capabilities for Coinbase cryptocurrency traders. Fidelity brokerage also jumped into a price war last February, cutting its commission for online stock trades by nearly 40%, to $4.95 per trade, competing with Charles Schwab (SCHW), TD Ameritrade (TD) and others.
Ram Subramanian, Fidelity's head of brokerage services, also emphasizes the company's investment during the past year in upgrading its half-dozen customer service centers spread from Merrimack, N.H., to Salt Lake City. This included improving the associate work experience at those sites by upgrading the centers physically; improving hiring, training and career advancement policies; and implementing new call center technologies.
Customer service has been a clear differentiator for Fidelity, which has consistently run at the head of the category for the past four years.
Fidelity Brokerage Customer Reviews
One Florida investor interviewed by IBD, Sy N. (who asked that his last name not be used for privacy reasons), is a former CPA and a highly active trader now in his 70s. He says he runs a portfolio of several million dollars through a Fidelity brokerage account, along with accounts at TD Ameritrade, Vanguard, Schwab and eTrade (ETFC).
All of these firms have wonderful people in the back office and, for the most part, they all know what they are doing, he says. But Sy says Fidelity is a cut above the others.
As the trustee of an estate, Sy N. was trying to do a certain type of 401(k) rollover. He ran into brick walls at several brokerages.
"It had a little complication — there was a trust involved — so it made them nervous," he said.
Fidelity also initially said it wasn't possible, but then transferred him to a specialist who figured it out.
"He helped me figure out how to do it, then he went back to the employer people, was with me on the phone, and it ended up getting done," he said.
Lynn Shelby, a Phoenix investor who retired in September, says Fidelity also outperformed, in her opinion, at the retail level. She switched her trading account funds, a little more than $100,000, from Scottrade to Fidelity brokerage about two years ago.
One reason for the switch was because she met an advisor at a Fidelity location near Shelby's home who began paying special attention to her account.
"We spent a lot of time. We developed strategies," she said.
Shelby and Sy N. are very different sorts of investors. Sy N. is moving millions of dollars in and out of stocks at a brisk clip. Shelby is taking advantage of growth stocks moving past buy points, but has really only been focusing seriously on investing since September.
Fidelity Trading Tools
But both investors fit what Subramanian calls a "self-directed investor," the type of customer who has become the target market for Fidelity's trading business.
"A self-directed customer is someone who likes to broadly engage in the market themselves. What they ask us is 'Provide me the education, the research and the experience at my fingertips so that I can engage,' " he said.
Customers, of course, can pick and choose their tools. Sy N. uses Fidelity brokerage's basic, web-based trading platform to chart stocks and execute trades. He uses Fidelity, Investor's Business Daily and Schwab, where he keeps an account, for the bulk of his research.
Shelby uses IBD's MarketSmith premium charting service for charting and tracking stocks and executes trades using Fidelity's online platform. She says she is making up for lost time in her market knowledge, reading books, taking seminars and also looking further into research offerings from the Fidelity brokerage.
"Every day we get up at 6:30," she said. "I say I'm not working, but really I have a little part-time job because I'm managing my money on a daily basis."
One aspect of the market that Fidelity is seeing take off among self-directed investors: options trading. The number of new options traders rose 27% in 2017, Subramanian says. Fidelity is piloting its Options Trade Builder program, which was designed to allow novice options traders to gather information and build trades.
"But what we are finding now is that even more experienced, self-directed investors are finding it handy," he said.
Fidelity is linked with both Alexa and Echo Show through Amazon.com (AMZN), increasing the capabilities and functions offered through voice control.
Fidelity Full View With Cryptocurrency Data
Through a partnership with Coinbase, Fidelity brokerage allows customers to include their cryptocurrency account in their Full View monitoring feature. This allows customers to include pertinent data from all their accounts with other banks and brokerages and put it into a single monitoring and tracking application.
But while Bitcoin and its digital peers are on Fidelity's radar, Fidelity does not offer access to cryptocurrency trades.
"And at this point we don't plan to," Subramanian said. "Our feeling is, we'll have to wait and watch. It is not an appropriate dealer offering," he said.
Looking further ahead, Subramanian says smartphone and tablet computer-enabled mobile trading is an increasing focus for future trading technologies.
"In fact," he said, "a lot of the work we are doing right now, we are telling our teams to focus on build it first in mobile, and then work backwards" into the web-based and downloadable applications.
Mobile Trading Volume At Fidelity Brokerage
Ignall says mobile is still comparatively small but is growing quickly. Some 14.2% of all Fidelity's DARTs — daily average revenue trades — were sent via mobile in 2017, up from 11.9% in 2016. He also says there is a link between that number and the rising number of investors under 35 years old, who constitute 15.5% of account holders now vs. 14.1% in 2015.
Given that the number of Fidelity brokerage accounts grew in 2017 by what Subramanian says was more than 8,000 per day, that's a lot of young investors. It is also a fresh, rising source of feedback for the new speed and innovation-oriented Fidelity.
"As we roll out new features and new products quicker, and in smaller, bite-size chunks, it allows us to get tighter with our customers to get constant iterative feedback from them," Ignall said. "And (we can) increase that feedback cycle that is so critical to creating great products and services."