Boston-based brokerage and recordkeeping giant Fidelity Investments announced that it too will offer zero commissions on its 21.8 million online accounts.
Following Charles Schwab and TD Ameritrade, who made similar announcements recently, Fidelity upped the ante by noting “it is the only firm to offer zero commissions for online U.S. stocks, exchange-traded funds (ETFs) and option trades, automatically direct retail investors’ cash into higher-yielding alternatives available for new brokerage and retirement accounts, and provide industry-leading best execution practices with zero payment for order flow for stock and ETF trades.”
The changes take effect on October 10, 2019, for individual investors and will be available on November 4, 2019, for registered investment advisors (RIA).
“With this decision, Fidelity is taking a different path from the industry,” Kathleen Murphy, president of Fidelity Investments’ personal investing business, said in a statement. “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.
“This combination is something that no other firm offers,” she added.
A Schwab start
Schwab began the current fee frenzy on Oct. 1, when it said it would eliminate commissions for online stock trades, rattling competitors in a race to the bottom.
While brokerage accounts are still somewhat rare in 401k and related defined contribution plans, the move is part of an industry-wide effort to reduce what was traditionally seen as the excessive cost to invest, which can significantly lower returns for clients over the long-term.
Schwab’s announcement was timed with the release of founder Charles Schwab’s latest book, “Invested.”
“From day one, my passion has been to make investing easier and more affordable for everyone,” Schwab, largely credited with beginning the low-fee movement, said in a statement. “Beginning October 7, every Schwab client can trade U.S. stocks, ETFs and options commission-free. Eliminating commissions ensures my ultimate vision is realized—making investing accessible to all.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
