Investing with Fidelity Review
Updated: May 18, 2022
In this investing with Fidelity review, I will explain from my own personal experiences of using Fidelity for over 20 years, what I think about the platform and its services, what I like about it and what I don't like about it, along with the pros and cons and explanations of some of the key functionality you will need to use if you do decide to start investing with Fidelity at some point in the future.
My main experiences of using Fidelity are on the SIPP and ISA platform as well as the stocks and shares trading platform. Therefore, the majority of my Fidelity review will be based on those experiences and topics, although I will also expand on other functionality to give a broader picture.
Investing with Fidelity Review Contents
Who are Fidelity International?
Fidelity Investments is one of the most popular financial services in the world, with over £5 trillion in assets under management. The company was established in 1946 and has continued to grow since then.
In 1969 it branched out from the USA and formed an international arm, Including the UK, of which there are currently over 1,000,000 users.
Fidelity offers investment and financial services to individuals, small businesses, and institutions, including mutual funds, ISA's, SIPP's, ETFs and various other investment vehicles.
Fidelity has been rated one of the best companies to work for by Glassdoor for 8 years in a row.
Fidelity also operates asset management subsidiaries that offer global management of equity, fixed income, balanced and money market portfolios, private equity, real estate and hedge fund assets.
As of 2021, it had $7.57 trillion in assets under custody and administration and managed $2.37 trillion in assets on a discretionary basis globally.
Fidelity was founded in 1946 by Edward C Johnson II as a family office that primarily served financial institutions. Its client portfolio has since grown to include individuals from around the world, including myself.
Fidelity Account Types
The Fidelity platform allows investors to invest in several different types of accounts.
The most common are the ISA, (individual savings account) both adult ISA and junior ISA, and the Fidelity SIPP or self-invested personal pension, and also a stocks and shares trading account whereby individual stocks and shares or ETF’s can be traded.
The Fidelity ISA Account Summary
The Fidelity ISA as with most I says allow you to invest your 20,000 pounds I said allowance in a tax efficient way.
These investments can grow free of income tax and capital gains tax over the long term, thereby enhancing your total returns. You can start a regular saver ISA for as little as £25 per month and you can also invest in a selection of unit trusts, funds and ETF’s.
The Fidelity Junior ISA Account Summary
The junior ISA is the younger version of the adult ISA, whereby most things are similar, other than the junior ISA allowance of £9,000 for the 2022 tax year. The same funds as described above can also be held in a junior ISA.
The Fidelity SIPP Account Summary
For many investors, a SIPP account is a great long-term investment option. With a low minimum investment requirement, it’s one of your best opportunities to diversify in order to prepare for retirement in a tax efficient environment.
SIPPs or self invested personal pensions are for those investors who are planning to take some of their retirement funds into their own hands, and make investment decisions themselves.
You can currently put up to £40,000 per year, or up to 100% of your annual income into a SIPP, and enjoy tax relief at either the 20% marginal rate or alternatively 40% or 45% if you are taxed at those bands. There is also a minimum monthly contribution amount of £25.
It should be noted that personal pensions and any investments made into them cannot be withdrawn until at least the age of 55 at present which is rising to 57 in the not too distant future.
The stocks and shares trading account
The Fidelity stocks and shares trading account allows you to buy and sell individual stocks and shares or ETFs in a wide range of companies and businesses.
There is a trading charge of approximately £10 per buy and per sell. You can hold a stocks and shares trading account as well as an ISA account and a SIPP account if you so wish.
It’s important to realize that your relationship with Fidelity isn’t confined to just one account type. For example, when you invest in an ISA, it doesn't preclude you from also investing in a SIPP.
As such, we highly recommend that investors explore all of their options and do their due diligence before making a decision on what accounts they should open up at Fidelity.
Depending on how much money you have available for investing, there are several different types of accounts.
The Fidelity Investment Choice
• Stocks and Shares ISA
• Junior ISA
• Investment Account
• Junior SIPP
• Own brand funds
• Funds from other groups
• Stocks and shares
• Robo advice / ready-made portfolios
• Help building a portfolio
• Includes a shortlist of investments
• Pick your own funds
• Pick your own shares
What can you invest in with Fidelity?
We have already discussed what type of accounts you can open with Fidelity, but now we will look at what investment assets you can invest in via those accounts.
Mutual funds, sometimes just called funds in the UK, are a collection of companies or assets or even a mix of assets that are pooled together to provide a broad spread of risk, ie diversification, and these are all managed by a professional fund manager.
Mutual funds could consist of companies from one jurisdiction and one type of business or from all around the world spread across various sorts of businesses, large or small, growth or income etc. You can even include things like commodities such as gold silver platinum oil in mutual funds.
Trusts provide broad diversification in a similar way to mutual funds and are also managed by a professional fund manager as well as a board of directors. Trusts operate in a slightly different way to mutual funds in that they are able to borrow and therefore leverage on some occasions.
This can lead to trusts performing better than mutual funds during a bull market, but the flipside is they can perform worse if they are leveraged and the market falls. It was once thought that trusts had lower annual management fees than mutual funds, but I think that differential has reduced in recent years.
ETFs also known as exchange traded funds are either Asset backed or synthetic tracker's of Certain markets, and have been around for a decade or so, with a USP of very low annual management charges.
An ETF could track the performance of a stock market such as the Footsie 100, Dow Jones or NASDAQ or it could track the price of gold, silver, or platinum or oil or a mixture of any and all of them.
People used to be weary of ETF so especially synthetic, which means they don't own any of the assets, but nowadays ETF’s are part and parcel of every investors investment strategy because you can get various different exposures, at a relatively small charge.
Individual Stocks and Shares
As the title suggests, you can also invest directly in individual stocks and shares from both within your local territory and across the wider markets.
Fidelity Costs and Fees
Broadly speaking Fidelity's costs and fees are somewhere in the middle of the current investment platform providers range. They are better value than Hargreaves Lansdown, whereas they can be more expensive than the likes of Interactive Investor for those with smaller portfolios.
Fidelity's fees can be basically broken down as follows. The standard fee for a SIPP or ISA is 0.35% Of assets under management per year. So if you had a £100,000 pot of money, you would pay about £350 per year or just under £30 per month for the platform service fee.
Bear in mind that there are other fees that would need to be paid, such as the fund managers fee for running your fund.
For those with investment pots worth in excess of £250,000 the total fee reduces to 0.20% of assets under management, which almost halves your platform fees if you can reach this level.
Furthermore for those investors who either can achieve a £1,000,000 pot in their ISA or SIPP or combination of both, then there are no fees charged above the £1,000,000 mark, meaning that the maximum annual platform management fee is £2,000 per year. Which is £1 million * 0.20%.
By way of example Hargreaves Lansdown charges 0.45%.
Fidelity's fees broken down in full
• 0.35% if you have a 'regular savings plan' or £45 if you don't, on anything less than £7,500
• 0.35% for pots of £7,500 to under £250,000
• 0.2% for pots of £250,000 to under £1m
• 0.2% for pots for pots of £1m and no service fee for investments over this amount.
The maximum fee you will pay for all of your personal accounts is £2,000 a year.
Ongoing fund charges are set by the companies who manage the funds and start from 0.05%.
For shares or ETFs held within a stocks and shares ISA, the annual service charge is capped at £45.
• £10 to trade shares and investment trusts online
• £1.50 for deals as part of a regular savings or withdrawal plan, or for a reinvestment of income or a dividend
• £30 to trade shares and investment trusts via phone.
7 Pros of Investing With Fidelity
There’s a good chance you’ve heard of Fidelity Investments; it’s one of, if not the largest, financial services company in the world. These are seven of their pros:
1) Accessibility – There’s more than one way to invest and grow your money when you work with Fidelity. They have multiple investment products that can work well for individuals, groups, or retirement accounts alike.
2) Transparency – One major problem many people face is figuring out where their funds are going once they put them into an account. When you choose Fidelity as an investment partner, however, all information about your account is readily available online, which means nothing is left to question.
3) Customer Service – You deserve someone who listens to what you want and then helps make it happen—especially when we’re talking about something so important as your finances.
Thankfully, there’s no shortage of attention at Fidelity thanks to a helpful support team that goes above and beyond to take care of customers by answering questions and concerns promptly on any channel.
4) Stability – As long as you continue to do business with Fidelity, stability will never be an issue. Unlike other companies that come and go over time, Fidelity has been around since 1946 and shows no signs of slowing down anytime soon.
5) Experienced – It takes time to figure out how to become a successful investor—there's just no way around it. To truly succeed, though, consider working with someone who has years upon years of experience under their belt.
6) Professional Advice - Even if you don't need professional advice today, chances are at some point during your life (whether now or far in your future), you'll need some help making decisions regarding investments while looking toward goals such as retirement or a child's education.
Because Fidelity specializes in these sorts of things, they're equipped to offer expert insight and ideas.
7) Low Fees - Considering how much money you stand to gain with your investments, it pays off greatly to know you won't get hit with extra fees along the way. That's because Fidelity charges low fees on all its products.
3 Cons Of Investing With Fidelity
1. The £45 minimum fee for funds of less than £7,500 make Fidelity more expensive than some of their competitors for smaller investors which is a pity.
2. After Fidelity revamped their website and app several years ago, some of the functionality was lost. This was unfortunate as some of the lost functionality was quite useful, and hopefully Fidelity will bring it back as they continue to roll out future improvements and developments to their platform.
3. The initial lump sum of £1,000 is quite high for many investors, it would be better if Fidelity could reduce this initial lump sum payment down to £500, or maybe even £100 pounds like some other platforms do.
The Best Way To Start Investing with Fidelity
To begin with, it's important to familiarize yourself with how the Fidelity platform works.
Therefore, the best way to start investing with Fidelity would be to open an ISA or trading account with the minimum sum required of £1,000, and then practise investing, buying and selling, and switching the assets as you go along, so you can get a feel of how the process works.
It should be noted that when you buy, sell or switch investment trusts or funds it is not an instantaneous process. It usually takes at least three to five days for the full process to settle off.
This can be longer when you switch a fund as you have to go through the selling of one fund, and wait for a cash settlement, before buying the next fund with the proceeds.
It is quicker if you have cash in your account and you wish to buy stocks and shares, as that is instantaneous.
As with many things in life, it just takes a little bit of practise to get used to and familiar with the system and then you will be more at home with it.
Is Investing with Fidelity Worth It?
Whether you as an individual investor think it's worth investing with Fidelity is entirely a personal choice, and must be based on your own personal circumstances and potential size of your investment pot.
But from my perspective, I have been very satisfied with Fidelity, and that's why I've been with the platform for the best part of two decades now.
I would like to see a few improvements, including reducing the fees somewhat at some point in the future, but for now I have not been able to find any other platforms that can match Fidelity's value for money.
What Do Fidelity's Customers Say
In 2018, more than 37,000 customers took part in a survey run by FTN Research. The results showed that investors are most interested in mutual funds when they're saving for retirement.
Other top priorities were debt reduction and college savings. Only 4% of those surveyed mentioned investing for long-term wealth creation as their priority—yet 82% said it was very important to invest for long-term growth.
Some individual customers comments;
• 'Excellent website, good choice of funds, prompt transaction notes and timely valuations. Very good customer service with a named representative.'
• 'Good for information with daily ideas for investment.'
• 'Pretty good website and investor information. Their website seems to be pretty basic compared to other platforms. There is quite a lot you can't do. Dealing with them over the phone is a lengthy process.'
Is your money safe with Fidelity?
If Fidelity went out of business, you would be compensated by the Financial Services Compensation Scheme (FSCS).
The FSCS will cover up to £85,000 of investments per person, per platform. You can claim for free online and it shouldn't take more than seven days to get your money back.
Of course, you won’t be compensated for investments falling in value, or if a company in which you are invested goes bust.
Investing with Fidelity Review - The Bottom Line
To summarise my investing with fidelity review I would say that with fidelity you get a secure and safe pair of hands. They have recently upgraded their website and app, which has in the round made the whole experience better for investors.
The standard charge of a 0.35% admin fee is reasonable although not the cheapest in the market. This does not apply to investors with under £7,500, who pay a fixed fee of £45.
Fidelity starts to become much more attractive from a fee basis once you reach a pot larger than £250k, where by you pay 0.2% on the whole invested sum, not just the amount over £250k.
The fidelity fees are capped at £1m; so even if you had 10 million pounds under management, you would only pay fidelity 2000 pounds per year maximum each year. This makes Fidelity extremely competitive for large portfolios.
Key Fidelity Facts & Figures
£1,000 minimum initial lump sum investment amount
£25 minimum monthly amount for a regular savings plan