Fidelity Investments
Financial services and asset management company
Fidelity Investments is a financial services company that provides brokerage accounts, retirement plans, mutual funds, and wealth management services to individual and institutional clients. It is one of the largest asset managers and…
Definition
Fidelity Investments is a financial services company that provides brokerage accounts, retirement plans, mutual funds, and wealth management services to individual and institutional clients. It is one of the largest asset managers and retirement plan providers in the United States, offering both self-directed investing tools and professionally managed investment products. The company also administers a large share of U.S. employer-sponsored 401(k) retirement plans.
Overview
Fidelity Investments has built its position over decades as both a brokerage for individual investors and a major asset manager running its own family of mutual funds and index funds. Unlike companies that focus purely on trade execution, Fidelity combines a full-service brokerage with an asset management business that creates and manages investment products directly, giving it a dual role as both a distribution platform and a manufacturer of the funds many investors hold. Mechanically, Fidelity generates revenue through several channels, including management fees on its proprietary mutual funds, fees for administering employer-sponsored retirement plans such as 401(k) accounts, interest on cash held in brokerage and banking products, and revenue from its brokerage operations even where individual stock trades carry no direct commission. Fidelity is particularly significant in the retirement plan administration space, where it serves as the recordkeeper for a large share of employer-sponsored retirement plans in the United States, meaning many people's workplace retirement contributions flow through Fidelity's systems regardless of whether they actively chose the company. Within the brokerage and asset management industry, Fidelity competes with Vanguard and Charles Schwab most directly, all three occupying similar positions as large, diversified providers combining low-cost investment products with brokerage and advisory services. Fidelity distinguishes itself somewhat through a larger active fund management lineup alongside its index funds, compared to Vanguard's stronger historical association with low-cost passive investing. In practice, an employee might interact with Fidelity purely as the administrator of their workplace retirement account without ever opening an individual brokerage account, while another investor might use Fidelity for personal trading, retirement savings, and access to Fidelity-branded mutual funds all within one relationship. Financial advisors and institutions also use Fidelity's custodial and clearing services to hold and manage client assets, similar to how Schwab serves independent advisors. The trade-offs associated with Fidelity's scale mirror those of similarly large diversified providers: its breadth of products can be more complex to navigate than a narrowly focused trading app, and the fees on some actively managed funds remain higher than the lowest-cost index alternatives available elsewhere. Investors who want the absolute lowest-cost passive index exposure sometimes turn to Vanguard specifically for that reason, while those who want an integrated retirement, brokerage, and advisory relationship often find Fidelity's range of services convenient. Fidelity's dual role as both fund manufacturer and retirement plan administrator also means it can face conflict-of-interest questions when its own funds are offered as default options within plans it administers, a structural issue common across large vertically integrated financial services firms.
Key Features
- Proprietary mutual fund and index fund lineup
- Recordkeeping and administration for employer retirement plans
- Commission-free brokerage trading for stocks and funds
- Wealth management and financial planning advisory services
- Custodial and clearing services for independent financial advisors
- Cash management and banking-adjacent account features
- Research tools and market data for self-directed investors
- Retirement account options including IRAs and workplace plans
Use Cases
Alternatives
Frequently Asked Questions
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