Posted by Chuck on October 10, 2019
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Published on October 10th, 2019 | by Chuck

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Fidelity Removes Commissions On Stocks, ETFs & Options (Plus Automatic Sweep to High-Yield Account)

Fidelity brokerage has announced that it will be removing commission on all online US listed Stocks, ETFs & Options. Options contracts will still be charged at $0.65 per contract (which is similar to what most other brokerage charge). This announcement follows on the heels of similar moves made by Charles SchwabTD Ameritrade, E*Trade, and Ally Bank.

Fidelity also recently added an option to automatically sweep any cash funds in your brokerage account into a competitively yielding money market fund. That makes them almost as good as the new Robinhood option which sweeps funds into an FDIC high yield savings account. I’m considering switching from Merrill Edge to either Robinhood or Fidelity for this sweep advantage.

 



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jan
jan

Current customer here. Do we need to call them for the auto sweep?

hal
hal

The default sweep is FCASH 0.94%. You can switch it to SPAXX (1.57%) or FZFXX (1.54%) for higher yield.

https://www.fidelity.com/mutual-funds/fidelity-funds/money-market-funds-fcash

PJ
PJ

You can also move funds into FZDXX (1.81%) in a retirement account without meeting the $100,000.00 minimum.

Andy
Andy

Thank you, I didn’t know about the change (in the last year?).

I went through the Money Market funds that are not State Municipal on:

https://www.fidelity.com/mutual-funds/fidelity-funds/overview

FZDXX (1.81%) with $10k minimum (initial) investment is indeed the best alternative to the current core position FDRXX (1.63%).

(I went to Trade, selected my IRA, Action -> Buy, then for each fund I entered its symbol to see current yield and minimum.)

I also found: https://www.bogleheads.org/forum/viewtopic.php?t=250239

I suppose the downside is that, because there is no margin, to buy something else I’d need to at least wait till the next day, because I’d need to sell FZDXX right away (the soonest for the sale order to be executed is the end of the current trading day).

Christine
Christine

A current customer as well. It seems that my cash position is already in a high yield government money market fund, ticker is SPAXX.

Oliver
Oliver

Same here

Crazy Dog Lady
Crazy Dog Lady

Me too, pretty pleased with Fidelity so far.

qmc
qmc

You already had the option to change your sweep account to something better than the default. There’s a set of choices for taxable and another set for retirement accounts.

Shane
Shane

Its becoming harder to stay with Merrill even though it gives me platinum honors status so makes the Premium Rewards card worth having.

HCL
HCL

I contacted their live chat and they matched me the $0 option commission rate + $0.65 per contract, which was nice. I didn’t ask for $0 commission on stock & ETF given that my status gave me enough Free trade. You can try to ask for a commission rate match too. It was approved pretty fast..

MoreSun
MoreSun

E*trade is $.50/contract with 30 trades per quarter for any active traders looking for matches use that.

fST
fST

You get 100 free trades every month with that status.

SamL
SamL

The value of MEdge Premium Rewards platinum honors status really is totally unaffected by these changes. I don’t see where your coming from with this.

whodidntante
whodidntante

Several things to complain about with Merrill. They block “active” ETFs from their platform. They charge commissions for options trading. Also, their commissions for Treasuries is quite expensive but is free elsewhere. Same with mutual funds.

SamL
SamL

I could add more to that list of things unsatisfactory about MEdge, but ideally (if possible) you park $100k of some buy&hold investment there for the Premium Rewards platinum honors status, with little or no opportunity cost, since you can use other places for other things if wanted. Everyone’s circumstances differ, but I find it hard to see how these recent changes would be the tipping point in quitting ME-PR-PH if it had made sense to be there before the changes, especially since ME already had enough free trades for most people.

Chucks
Chucks

But you get a handful of free trades a month as Platinum, right? Unless you’re day trading I’d imagine their allotment would be more than adequate

Ryan Goldstein

A bit unrelated, but I use Fidelity’s relatively new HSA offering (started offering that in November 2018), which is far and away superior to all other HSAs that I’ve found. They charge no fees, no minimums, you can invest 100% of your HSA funds (no need to have a $1k or $2k balance in cash, as is common with many others), and they have lots of no transaction fee funds, including FFLEX, their institutional premium class 2060 TDF with a minuscule 0.08% expense ratio. That fund normally requires a $100,000,000 minimum investment but is available to anyone with a Fidelity HSA. I definitely recommend Fidelity to anyone who invests HSA funds.

RC
RC

Recently did the same

Grant

Just signed up this morning to transfer funds from my current HSA (Navia / Avidia Bank).

qmc
qmc

Thank you for this! Time for me to transfer over my existing HSA.

SamL
SamL

True, Fidelity clearly has the best HSA, however note that if your employer sends HSA contributions from your paycheck to some other employer-chosen HSA, then there are tax advantages compared to doing that rather than contributing directly to your favorite HSA. The workaround is to then transfer funds from the employer-chosen HSA, to your favorite HSA.

Also note that the Fidelity HSA doesn’t offer a higher yielding sweep (just “FDIC-Insured Deposit Sweep” currently yielding 0.94%) but it doesn’t matter if you just invest it and leave nothing in cash.

Ryan Goldstein

All good points. Personally, I contribute via a “cafeteria plan” to my employer-selected HSA to avoid FICA taxes, then I do a direct transfer to Fidelity. A bit annoying, as it involves physical paperwork, but worth it for all the benefits of a Fidelity HSA.

SamL
SamL

Right. You knew all that stuff, but I thought I’d point it out for those who didn’t know the tax considerations. (I do the same as you.)

MoreSun
MoreSun

I gotta look into that. Thanks! Are they easy to pull money out of when paying expenses?

Ryan Goldstein

I don’t have any experience pulling out money to pay expenses; I pay health expenses out of pocket. Any documented health expenses you pay out of pocket while you’re covered by a HDHP can be used to withdraw against your HSA penalty-free at any time in the future, even decades later.

Shane
Shane

I looked into doing this but… May I ask what you are doing about receipts and proof? The way I understand that long-term savings HSA rule is not only do you have to prove the expense potentially years later but you also need to be able to prove that those expenses were never reimbursed in that time. That opens every tax return up to audit for the interval from expense to withdrawal. Personally I’m withdrawing at the end of the year of an expense just so I can start the audit clock on those expenses. But I would love to hear a better way.

SamL
SamL

There’s ultimately no way to absolutely “prove that those expenses were never reimbursed” (especially decades later).

Angie
Angie

All of this. They even allow options trading within the HSA account.

JV
JV

You sold me Ryan. I actually never thought that we could transfer an employer HSA to another provider, but i’d like to not be charge for an invested balance. Thanks

Ryan Goldstein

Happy to help; too bad they don’t offer a referral bonus. 😛

icemule1
icemule1

Do they offer an auto-investing option? I currently have HealthEquity and I signed up for the “auto-pilot” option and I’ve watched my investments get bought and sold pretty regularly and I don’t have to lift a finger. It’s done quite well and I’m curious if Fidelity has a similar offering.

Ryan Goldstein

I used to have HealthEquity, as that’s my employer-default HSA, and I used the self-driven investment option (which was expensive enough, 0.396% annually). The auto-pilot feature of HealthEquity charges an additional 0.08% MONTHLY, so an additional 0.96% annually – 1.356% annually in total. That is WAY too expensive and not worth it at all. Dedicated wealth management professionals don’t charge that much.

IMO, you’d be far better suited investing in a target date fund or a three-fund portfolio (https://www.bogleheads.org/wiki/Three-fund_portfolio). With a Fidelity HSA, you’d have access to their institutional premium TDFs (FFLEX, FFLDX, FFOPX, etc, selected based on your target retirement date), with a negligible expense ratio of just 0.08% annually. That’d be 17 times less expensive than the auto-pilot option at HealthEquity, not even including the expense ratios of the underlying investments at HealthEquity!

Even if you choose to stay at HealthEquity, you should definitely steer clear of the auto-pilot option, since it’s very expensive and will erode the value of your HSA.

SamL
SamL

Excellent advice (and saves me typing).

scott
scott

I just started a new job which offers a Fidelity HSA. Thanks for the advice.

John
John

You sure it’s for the cash management account? Link says it’s for the brokerage account which always had the sweep option.

Lrdx
Lrdx

CMA is a brokerage account.

John
John

Okay checked. Sweep is NOT an option for the CMA. It’s only an option for the brokerage account with was always available. No change in this front.

sam
sam

i commented on this topic above as well, because its annoying to me that they dont have the sweep option for the checking account. one thing i remember thinking, it might be possible to get checks issued for the brokerage account and then use that as a sort of checking account with the default sweep enabled.

MisterBill
MisterBill

Correct. You can do everything in the brokerage account that you can do in the CMA. Plus debit card fee reimbursement is available in the brokerage account without any balance requirements. You need to have a minimum balance to get it in a CMA.

Ray
Ray

You can just do all your normal banking (bill pay, ACH, direct deposits) out of your brokerage account as long as you have enough cash or money in FCASB/SPAXX/FZFXX and use the CMA only when you need to withdraw cash. I just transfer the amount I’m going to withdraw +$5 to cover any ATM fees whenever I actually need cash. But I don’t actually do any trading out of Fidelity so it doesn’t really bother me if my banking is mixed with my trading, I just use my brokerage account as a high yield checking with no requirements.

Andy
Andy

https://www.fidelity.com/cash-management/atm-debit-card

Under “ATM fee reimbursement”, footnotes 1 and 2, it seems no minimum balance for CMA, but certain account owners for Brokerage?

To see my account owner type, I go to “Accounts & Trade” > Portfolio, top right corner.

https://oltx.fidelity.com/ftgw/fbc/oftop/portfolio#summary

Please keep us posted when/if Fidelity offers free TurboTax again this year. Thanks!

P
P

Now if they can only fix their website and app to make it simpler and easier to navigate.

Anon
Anon

*opens one browser*
Fidelity: Would you like to chat with an agent?
Me: Yes.
Fidelity: YOU HAVE CONCURRENT INSTANCES!

Lrdx
Lrdx

Note the sweep options are still superior at Vanguard, and they have free ETF trades for a year now (but who cares of free ETFs, almost all their funds are lower costs than 3rd party ETFs).

I take a brokerage bonus like anyone else, but I find this no reason to switch. Vanguard is superior in costs, Merrill is superior with the CC benefits, and all have free ETFs.

SamL
SamL

I agree with you. The one thing Fidelity has the best of is their HSA.

Jon
Jon

That’s fair, but Vanguard doesn’t have free stock trading, free options trading, or free ETF’s that aren’t Vanguard. Fidelity also offers a no fee total market US market fund and a no cost international fund. Vanguard expense ratios are low, but not that low.

Different strokes and all that

Ben
Ben

They *have* had free ETF’s that aren’t Vanguard, for over a year now.

Jon
Jon

Oh yeah that’s right I must have missed that.

Alqotastic
Alqotastic

Come on Vanguard… everyone is doing it!

aquac
aquac

I thought Vanguard didn’t charge any fees on Vanguard ETFs already

Lrdx
Lrdx

Vanguard is doing free ETFs for more than a year now…

Matt
Matt

Vanguard also has individual stock trading (as well as options trading). There are several commission tiers for stocks (and options) at the Vanguard. At the moment, most Vanguard customers would be paying $7 per stock trade (and $7 + $1 per options contract).

SamL
SamL

I hope they don’t change that. I don’t want my Vanguard mutual fund expense ratios to subsidize someone’s individual stock trading.

Matt
Matt

Okay, but… Vanguard definitely will be changing to $0 commission. Paid stock commissions are definitely a thing of a past. Vanguard will be no exception. Or Vanguard will get out of the individual stock trading business. That’s a possibility as well.

As for your mutual fund expense ratios, that will continue to trend lower as well whether Vanguard charges for individual stock trades or not.

Stock trading commissions have been getting cheaper for decades. Mutual funds expenses ratios, load fees and whatnot have been getting cheaper for decades. ETFs expense ratios have been getting cheap for decades. Etc. Etc.

You don’t have to worry about your mutual funds. That will continue to get cheaper as well.

Superman
Superman

If Vanguard believes in buy-and-hold investing and discouraging day traders, then expect no better than Flagship fees for all. $0 for first 25 or 100 trades, $2 thereafter.

Jon
Jon

You can wish all you want. No one will pay it anymore regardless.

Vanguard will be forced to follow suit at some point

sam
sam

would be nice if they enabled the default money market sweep for the cash management (checking account). i called about a year back and they said they didnt allow it on checking accounts (there is some kind of default sweep, but its very low .1% sweep). i wonder if this new change will enable it. oddly, my dad, who is a long time fidelity client, has the money market sweep enabled on his checking account, so he mustve been grandfathered into an old policy or potentially otherwise might get some form of special treatment. if anyone here has more experience with getting a default money market sweep on checking accounts (1.5%-2%) then i would love to hear about it

Lee
Lee

Chuck Just set the Cash Management account to overdraft to a brokerage account with Fidelity. There’s no fee when you “overdraft” from it if you have sufficient funds in a qualifying fund (SPAXX or SPRXX money market funds are the two main ones I’ve used). You can get direct deposits sent to the brokerage, write checks from it, and basically use it like a checking. It’s awesome.

Ray
Ray

The yield has actually been increased, you can find it if you go to the account page for the CMA and click the blue text under “Cash Available to Withdraw” which reads “FDIC Insured Deposit Sweep.” It’s 0.94% right now which seems to match FCASH but isn’t as high as the other options in the brokerage account.

You can just do all your normal banking (bill pay, ACH, direct deposits) out of your brokerage account as long as you have enough cash or money in FCASH/SPAXX/FZFXX and use the CMA only when you need to withdraw cash. I just transfer the amount I’m going to withdraw +$5 to cover any ATM fees whenever I actually need cash. But I don’t actually do any trading out of Fidelity so it doesn’t really bother me if my banking is mixed with my trading, I just use my brokerage account as a high yield checking with no requirements.

Isabella
Isabella

Does TD Ameritrade, Schwab, or E*Trade have the sweep option?

Steven
Steven

Don’t do Robinhood. I don’t understand it fully but someone told me you buy stocks at a higher price with Robinhood because of bid/ask variance.

sam
sam

well you can always set a limit order, which means you wont buy stocks at a price you dont want. but the issue is they sell order flow, so your order may not get filled because someone at a different brokerage

Nick
Nick

Others could (obviously no guarantee but I’ve had it happen from time to time) buy at a price better than you wanted (i.e. limit order at $10.00, executed at $9.75), while Robinhood would probably happily pocket the $0.25 themselves and charge you the full $10 you “wanted”.

Same can happen for sell orders that has a limit (if it actually sells for $10.25 they’ll still only give you the $10 you “want”).

Is ‘free’ worth the $0.25? That’s a difficult question and I’m sure Robinhood has had customers and will continue to have customers that don’t care about this kind of ‘unnecessary details’ and would rather believe that “every firm does the exact same thing”.

Bhavik
Bhavik

Robinhood isn’t a great choice if you care about selling the specific lots to minimize tax burden as it sells in FIFO order.

Matt
Matt

In fairness to Robinhood, most (maybe nearly all? not sure) brokerages make money that same way. Fidelity is the only one I know of that doesn’t do that.

It’s certainly not unique to Robinhood. It’s an industry-wide thing (minus Fidelity and maybe some others I’m not aware of).

Though, of course, just because it’s an industry-wide thing doesn’t mean it’s a good thing. It would be nice if the entire industry was more transparent about this.

Jon
Jon

Its so weird that Robinhood gets hate for this when as noted nearly every firm does the exact same thing

Steve

The sweep feature isn’t a big deal for me. In my margin accounts at other brokerages at least, I don’t keep much cash there; if I want to buy stock, I pull money into the account after making the trade, and it posts before the trade settles (settlement is a couple days later).

The automatic sweep would be a little more convenient, but the sweep account rate is probably lower than my external savings accounts.

Charles Chang
Charles Chang

For margin account, that’s not a problem, but for IRA, HSA etc cash account, the high yield interest is very useful.

Nate
Nate

Another joins the bandwagon. Way to go!

Charles Chang
Charles Chang

Does Fidelity has any welcome cash bonus offer at this time? App/software perspective, TD is apparently the best for active traders. But let idling cash earning interest is also appealing. Merril on the other hand, does make the credit card spending more rewarding.

Jon
Jon

It looks like they currently have “X free trades” for moving money over. Clearly those promotions have no value anymore.

Wouldn’t be surprised if they offer something new, I know they used to offer $ for moving over money before based on I believe a % of the money you moved over.

SamL
SamL

“Does Fidelity has any welcome cash bonus offer at this time?” Only if you bring in $1M+

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