Fidelity Investments Offers Zero-Commission Online Trading, Other Changes

Tom Burroughes

11 October 2019

yesterday announced it now offers no commissions for online US equities, exchange traded funds and option trades. It also automatically directs retail investors’ cash into higher-yielding alternatives and also levies no payments for order flow for stock and ETF trades.

The firm brings in the commission trades from yesterday for individual investors and they become available for registered investment advisors from Nov. 4, 2019, it said in a statement.

“With this decision, Fidelity is taking a different path from the industry. We are providing customers unmatched value while challenging industry practices that appear to give value in one place when they are actually having customers pay in other ways,” Kathleen Murphy, president of Fidelity Investments’ personal investing business, president.

“This is why – in addition to offering zero commissions for online trading – we will continue to automatically offer retail investors choice for their cash at account opening and default them into the higher yielding option, as well as provide customers with the industry-leading trade execution that does not sacrifice customer interests. This combination is something that no other firm offers,” Murphy said.

Different firms operate a variety of pricing models. As reported here, Charles Schwab, the investment house, in April this year moved to a subscription-driven financial planning option for its digital advisory service, a move that plays to demand for more transparent pricing and choice on how people pay for wealth offerings. Charles Schwab adopted a new subscription pricing model for Schwab Intelligent Advisory™ and renamed the service Schwab Intelligent Portfolios Premium™. There are no pricing changes to Schwab Intelligent Portfolios®, the firm’s automated investing service, which charges no advisory fee.

As parts of the investment market become more commoditized, with modern technology platforms also biting into margins, firms are under pressure to show where they can add genuine value. The industry has also been affected by the rise over recent years of “passive” investment entities, such as ETFs, at the expense of more expensive, active management.