Fidelity Investments Stock and ETF Trades now $4.95

fidelity_logoFidelity Investments has announced their online stock and ETF trades will now cost $4.95, down from $7.95 previously. The press release also points out that they also do not accept payment for order flow (unlike TD Ameritrade, Schwab, and E-Trade), and that their order routing has led to price improvement higher than industry average. I’m not sure of the dollar impact of all these factors taken together, but it could be significant if you trade a lot of shares.

Fidelity continues to offer 91 ETFs from Blackrock and Fidelity on their commission-free ETF list. The list includes many low cost iShares Core ETFs including:

  • iShares Core S&P Total U.S. Stock Market (ITOT)
  • iShares Core MSCI Total International Stock (IXUS)
  • iShares Core S&P 500 (IVV)
  • iShares Core Total USD Bond Market (IUSB)
  • iShares Core U.S. Aggregate Bond (AGG)

I don’t think it is a coincidence that Schwab recently cut their online trades to $6.95 per trade. (Update: Schwab will also drop to $4.95 starting March 3rd.) It’s interesting to see that the former “full service” brokerages all now offer trades at what used to be “discount” prices. (Scottrade rolled out $7 trades back in the 1990s.) I only hope that Fidelity keeps up its reputation for better customer service. Here’s a comparison chart from their press release:

fidocut1

Free trades? They do exist. Merrill Edge offers $6.95 trades normally, but will give you 30 free trades per month if you keep $50,000 in combined assets across Merrill and Bank of America deposit accounts (Platinum Preferred Rewards tier). With $100,000 in combined assets, you get 100 free trades a month. Moving over existing assets from another broker qualifies. Merrill Edge does not accept payment for order flow.

Robinhood offers $0 trades with no minimum required balance through their smartphone app (and less hand-holding). Robinhood does accept payment for order flow and now offers a set of premium paid features.

Comments

  1. Have maintained my stock account at Ameritrade (pre-TD) for many years – however, it appears that TD Ameritrade is uninterested in becoming more competitive versus its peers. Fidelity appears to be a clear-cut winner now in brokers, enough so that I may look into switching brokers finally.

    Have you used Fidelity’s mobile app at all?

    • The current version of Fidelity’s smartphone app is pretty good in my opinion. I don’t trade on it a lot but it provides a clear view of my holdings and supports both Touch ID and a Quick View option without having to sign in.

  2. How do you like that. It hasn’t even been two hours and your pricing chart is already outdated…:) Thanks for the info Jonathan

  3. Would it be possible for your to explain further what this means, “they also do not accept payment for order flow (unlike TD Ameritrade, Schwab, and E-Trade), and that their order routing has led to price improvement higher than industry average. “

    • Some brokerages sell access to their order flow to hedge funds and quant traders – this allows traders to use the data access for insight for exact breakdowns as to what stocks are trading and in what blocks. Quant traders and hedge funds use the data to alter their bid/ask spreads, letting them use your trade data to trade ahead of the market.

  4. Thank you, Jonathan. Certainly glad to see Fidelity listen to their customers. The move is a bit delayed, though.

  5. I thought you only need a combined balance of $25,000 in non-invested assets to qualify for the 30 free trades from Merrill Edge.

    • You need $25,000 in cash, or $50,000 in combined assets that can include equities. Given the low interest rates at Bank of America, simply moving over existing assets is usually better. Holding the same stocks at Merrill doesn’t cost me a cent more than at Fidelity or Vanguard or Schwab.

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