First, full disclosure. I did work for Fidelity Investments for 21 years, but I am not being paid any commission or fee or receiving consideration of any kind to discuss or write about their products.
I am writing about five of their products because my clients often come to me with established relationships with various financial institutions, including Fidelity, and they like to share what's working for them and to get my opinion. So here are the five Fidelity products I hear most about and some of my insight on them.
1) The Fidelity Rewards 2% Cash Back Rewards Card. Clients love that there is no annual fee with this card and that they can get 2% of their purchases directed into either their IRA or 529 College Saving Plan to boost savings. As long as you are paying off the balance every month this is a great way accumulate a little extra every month. The new Visa is also now linked with Apple Pay, Samsung Pay and Android Pay. I like this product a great deal. The Citi Double Cash Card is a similar alternative.
2) The Fidelity IRA match. I think clients love this one because of the very clever marketing and because of the parallels to the 401(k) match. Few will be able to max out the $1,950 over three years, but like the credit card, getting a boost, even a small one, can be worth it. There are other one-time bonuses that are currently available at Fidelity through a different promotion that may also be appealing to individuals. You have to be careful not to give those savings right back in high fee mutual fund products, but all things being equal, the boost is worth it and it helps reinforce good saving behavior.
3) The Fidelity ATM rebate feature. Clients love no stress ATM transactions and I do too. For Fidelity customers with a Cash Management account and a Cash Management Debit card, one of the most compelling features is the ability to have ATM fees reimbursed. All of a sudden your network of ATMs is every single ATM and you don't have to worry about getting dinged for those fees, as they are generally reimbursed. Not only are ATM fees annoying, but they really do add up over time. There are other benefits to the card as well, but the ATM reimbursements is the big one. E-trade, Schwab and USAA have similar products.
4) The Fidelity Charitable Gift Fund. With this product you can make a single tax deductible "donation/contribution" into your giving account, taking a tax deduction in the current year and then disburse the money over time to charities of your choice, potentially even growing the account through investment appreciation. This is a great option for the charitably inclined who may have received a lump sum or significant payout that is going to create a tax burden. Vanguard has a similar giving product.
5) Commission free ETFs. Clients love free. As of early 2016, Fidelity offers 85 commission free ETFs. That's a very good value considering ETF trades at most brokerage firms range from $8 - $12. There is also a fairly diversified mix of choices in that bunch that would aid in constructing a diversified portfolio. But even free isn't a no-brianer, you also have to take into account other factors such as the management fee, the early redemption fee, the tracking error and the index weighting strategy of the ETF. Still, having a base of 85 commission free ETFs to choose from is a great starting point for many. Schwab has a similar offering with over 200 ETF choices.
If you have any questions about these products or would like a second opinion on the products and services you are using, please use the link to schedule a free consultation.
- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.
- Past performance is no guarantee of future results.
- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.
- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.
- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.