Fidelity Investments is the latest brokerage to eliminate commissions on online trades, matching a move made by key rivals last week.
As of Thursday, individual investors trading U.S. stocks, ETFs and options no longer pay commissions. And commissions will be cut to zero for investment advisors starting Nov. 4.
“With this decision, Fidelity is taking a different path,” Kathleen Murphy, president of personal investing at Fidelity, said in a statement Thursday. “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.”
Prior to the announcement, online stock trades cost $4.95.
On Oct. 3, E*Trade announced it would eliminate retail commissions for online trades in U.S. stocks, ETFs and options effective Oct. 7. The New York-based discount brokerage jumped on the zero-commission bandwagon just a day after Charles Schwab and TD Ameritrade had made their moves.
Prior to the change, E*Trade priced stock, ETF and options trades at $6.95, dropping to $4.95 for accounts with more than 30 trades per quarter. Options trades cost another 75 cents fee per contract, though that fee became 50 cents per contract in cases of more than 30 trades.
Schwab had started the ball rolling the afternoon of Oct. 1 by announcing it would no longer charge a fee for online trades, which had been set previously at $4.95 per trade.
Effective Oct. 7, Schwab said it was “removing the final barrier to making investing accessible to everyone.”
Schwab has some 12.1 million active brokerage accounts.
Only hours later, TD Ameritrade reported its plan to also drop to zero from the $6.95 previously charged per transaction for online trading of U.S. and Canadian stocks, ETFs and options in its customers’ existing 11 million client accounts — and for future customers — effective Oct. 3.
Boston-based Fidelity is the largest online brokerage with almost 22 million accounts.
Fidelity also announced earlier this week that most of its college savings plans will see significant fee cuts.
Fidelity is trimming fees from one to five basis points on 15 of its 22 plan portfolios. The drop for Fidelity 529 Plan portfolios is expected to save current investors “more than $4 million annually,” the company says, adding that current Fidelity 529 plan investors don’t need to do anything to receive the new pricing.
Fidelity is also launching eight 529 “blend” portfolios, which the company says will invest in both underlying index and active funds, and have similar investment objectives and composite benchmark components as the existing Fidelity actively-managed and Fidelity index 529 age-based portfolios.
“Saving for education costs is one of the largest financial challenges many families face,” said Eric Kaplan, head of Target Date and 529 Product at Fidelity Investments. “We designed the Fidelity Blend 529 portfolios to combine the advantages of active management with the lower cost of index investing.”