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Fidelity’s 26 Million Retail Accounts in 2020, Up 17%

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Yours truly can attest to Fidelity’s banner year, as business is booming in my neck of the woods. Never before have I opened more accounts for existing and new customers. Who would have thought this would EVER happen in a pandemic year? I certainly did NOT. But as I’ve written to you before, when it comes to investing, you don’t want to be in the PREDICTION business. It never hurts to have a front-row seat, though.

“Fidelity’s Retail Investor Accounts Rise 17% to 26 million” reports the WSJ here:

Fidelity Investments capped 2020 with record annual operating profit, lifted by strong stock-market gains and an unexpected wave of new individual investors.

Fidelity parent FMR LLC said Tuesday operating income rose 4.6% to $7.2 billion last year. Revenue totaled $21 billion, little changed from a year earlier. Fidelity, a private company controlled by the Johnson family, didn’t list its net income in the annual report.

Fidelity had 26 million retail accounts in 2020, up 17% from a year earlier. Workplace retirement accounts, including those in 401(k) plans, rose 7.9% to 32.6 million. Daily trading volume doubled.

It was an unusual year for the money-management industry. The market panic over the pandemic’s effects on the global economy quickly gave way to a rally that lifted stocks to record highs. Individual investors’ interest in the market caught fire. Brokers dropped commissions to zero and let customers trade in fractions of popular stocks, fueling a record year for individual-trading volume. The industry added millions of new customers.

Low- or no-cost brokerage accounts and investment funds have helped lure a generation of new investors to the wealth-management industry. While those products won’t help short-term profit margins, firms like Fidelity are hoping their new customers will eventually turn to them for more lucrative services, including financial advice.

Despite that growth, Fidelity’s annual revenue inched just $100 million higher than its 2019 total of $20.9 billion.

“It’s tough to find any silver linings from a pandemic year, but the increases in customer volumes pushed us to move faster in areas that were already long-term priorities,” Abigail Johnson, Fidelity’s chairman and chief executive, wrote in her annual letter.

Those long-term priorities include digitizing services, upgrading older systems and launching new products, she wrote.

Action Line: You can read about some history with Fidelity here. There’s plenty of it. Dick Young wrote recently of his over 50 years doing business with Fidelity “I started in the institutional research and trading investment business at Model Roland & Co. on Federal St. in Boston in August 1971. Just up the street from Model were Fidelity Investments, and Wellington Management, both of whom I called on from my very first hours on the job.”

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com