Fidelity 401k Review: Is it Your Best Option?

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Fidelity 401k Review: Is it Your Best Option?

Fidelity Investments Inc. is an American multinational financial services firm based in Boston, MA. The company specializes in annuities, mutual funds, IRAs, and the Fidelity 401k plan, among other things. Fidelity is a brokerage firm – it helps with the buying and selling of financial assets. The company is commonly known for its retirement savings plan, which currently has over 58,700 active participants and accounts for $16.8 billion.

Founded in 1946 by Edward C. Johnson II, Fidelity started out as Fidelity Management & Research, and after 73 years, has expanded operations worldwide. The firm currently employs more than 50,000 people. In 2017,  it had an operating income of $5.3 billion while generating $18.2 billion in revenue. 

Fidelity currently has an ‘Assets Under Management’ value of $2.46 trillion. In 2019, the company announced that it would begin offering cryptocurrency trading to its customers.

Fidelity Leadership Team

Abigail Johnson – Chairman & CEO

Michael Durbin – President at Fidelity Investments & Fidelity Institutional

Jean Raymond – Chief Financial Officer

Mihir Shah – Senior Vice President & Chief Technology Officer

Brooke Allen Forbes – Head of Technology & Chief Information Officer

Fidelity 401k Plan Overview

Here are some of the features of Fidelity’s 401k Plan.

Trading Experience

In terms of trading, you can take a hands-off approach where you don’t primarily handle the investments yourself. You can opt for a Single Fund Solution with either a Target Date fund (based on expected retirement date) or a Target Allocation fund (based on risk tolerance). You can also choose a Managed Account, in which professional investors will analyze you and your retirement goals and invest accordingly.

The other option is a more hands-on approach, in which you research, monitor, and execute your investments yourself. With Fidelity’s trading tools, you can create a diverse portfolio and manage your investments.

Usability

Fidelity helps you turn your 401k savings into a steady stream of income once you retire. You can opt for an annuity, among other things, so that you get a guaranteed cash flow for your expenses. You can also take a loan out of your 401k account in case of an emergency (at 50% of the amount vested in the account).

Opening an account is extremely easy and you can begin trading with just a few clicks. In addition, the trading app is optimized and user-friendly.

Range of Features

Fidelity offers a flexible plan design with online access to your retirement accounts through the NetBenefits website. There are employer matching contributions and participation loans. Fidelity also has a mobile app where you can manage your portfolios.

The IRS maximum contribution is $19,000 per year, but you can put in an extra $6,000 if you’re older than 50. For employees, there are pre-tax contributions and tax-deferred growth potential. For employers, there are tax-deductible contributions.

Portfolio Analysis

Fidelity provides over 3,700 no-transaction-fee mutual fund options and zero-fee funds that you can invest in. You can also invest in stocks, fixed income bonds, ETFs, annuities, and options, among others. For investments in securities, you can invest in only one type, in several, or none at all.

Customer

When you sign up for a Fidelity 401k plan, you get clearly communicated administrative fees and full details about the competitive average expense ratios. You also get access to Fidelity’s tools, resources, and professional experience to tweak your 401k plan according to your needs. Fidelity offers education and communication programs that help people become ready for their retirement. You can call their 24/7 hotline (866-418-5173) and connect with retirement professionals to discuss your plan.

Fees, Cost, and Expenses

There are no opening and closing costs as well as no annual fees. However, there is a $4.95 fee for online US equity trades.

If you’re investing your 401k in a Rollover IRA, there is no minimum investment and no management costs. If you’re going towards Digital Investing & Advice, there is a minimum investment of $0-25,000 (depending on the type of account) and the management costs are 0.35-0.50% of the gross advisory fee. If you’re choosing Wealth Management, there is a minimum investment of $250,000 to $2 million, with a management cost of 0.50-1.50% of the gross advisory fee.

To find out more about investing your 401k with Fidelity, click here.

Margin Rates

The following are Fidelity’s margin rates.

fidelity-margin-rates

Fidelity 401k Review

Fidelity has a solid 401k plan. The following are some points that set Fidelity apart as a brokerage firm:

  • Fidelity has a Rating of 86, which is much higher than the average in its peer group.
  • The trade executions are fast, easy, and trackable.
  • All the research related to investment opportunities like Exchange-Traded Funds (ETF) is detailed and easy to understand.
  • You get access to Fidelity’s Active Trader Pro – an all-in-one trading platform that’s available to all customers.
  • Fees and commissions are extremely low and the fee structure is easy to understand.

The company provides access to tools, resources, and a wealth of information on their website, mobile app, and investment centers.

What is Fidelity Best Known for?

Fidelity plans come in the top 15%, in terms of generosity, salary deferral, and account balances. With over 59,000 participants and an average account balance of $290,000, the firm provides a high return on investments.

Fidelity is mostly known for:

  • Retirement Services
  • Stock Trading
  • Penny Stock Trading
  • ETFs
  • 401k Rollover Investments

Fidelity is mostly praised for having no account minimum and low fees, along with excellent customer support and employee benefits.

Is the Fidelity 401k Plan Right for You?

While things like flexible benefits plans work, a good retirement plan works better. Fidelity is one of the best companies out there for 401k plans, since it provides a great collection of mutual funds to invest in, along with multiple no-expense-ratio funds. With its easy-to-use trading platform, low fees & commissions, and user-friendly interface, Fidelity provides a solid retirement option.