Opening a Roth IRA account at Fidelity – A walkthrough

In my previous post I went through the process of deciding on a Roth IRA broker. I chose Fidelity. In this post, I’ll describe how my account opening experience with Fidelity was. I’ve put up a nice slideshow of the process, so you’ll get a picture of what’s involved.

Browser

I used Google’s Chrome browser on a Mac and the site rendered fine. Works well with Firefox and Safari as well.

Review

The application process was fairly straightforward and well organized, not to mention quick. There were a few areas I needed clarification and I could instantly chat with a Fidelity rep to get those clarified as I was doing the application. I thought that was very nice rather than interrupt the process with either a phone or wait for an email response.

What you’ll need

  1. SSN
  2. Employer Info
  3. Beneficiary Info (optional, can be updated once the account’s been opened)
  4. Bank info or broker info if you intend an in-kind transfer (shares, mutual funds etc)
  5. Account minimum is $2500

Key account features

  • You have the option of holding any uninvested cash in either Fidelity’s money market account (FDRXX) or in a bank. The difference is, a money market yields a higher interest but this is not insured. A bank typically yields very low interest but your money is backed by the Federal Reserve as it is FDIC insured. Choosing either one is fine
  • You also have the option to apply for a Fidelity issued Amex card with a 2% reward on purchases. This is not instant approval
  • Option to receive statements electronically or via snail mail

Funding your account

    There are 4 ways to fund your account

  • Transfer money from your bank via ACH
  • Transfer assets from another brokerage
  • Via deposit slip
  • Via Direct Deposit

You should receive a confirmation email, and that’s pretty much it!

Some annoyances!

The account opening was pretty smooth. Fidelity gives you an account number and a lets you choose a login name. When you actually login to the site, you can login with your ssn or customer id. I tried with the account number, it didn’t recognize. I tried my ssn, it recognized it, but wanted me to call a customer service rep. Then I remembered the login name, tried that and it worked. Very confusing to say the least. Basically, it works only with the login name.

I did an ACH from my bank to fund the account. The money showed up promptly the next day. I logged in to Fidelity and I could see the money sitting there. No problems. I placed a trade which was well within the available limits. The trade didn’t go through. The message was something like the trade value exceeds cash available. Which wasn’t true and misleading. Since I was in a hurry, I shot an email to Fidelity support. I got a response from Fidelity at the end of the day. With my existing broker I usually get a response in a couple of hours. Fidelity took almost 9 hours to get back when contacted via email. Maybe this was a one time thing. I was pretty impressed with their chat reps, I was connected almost instantaneously. But with email, 9 hours seemed kinda long. Anyway, here’s why the trade did’t go through. Fidelity takes 5 days to process an ACH transfer. During that time, the account shows the cash and doesn’t say anything about being processed, but when you place a trade won’t allow you. According to Fidelity, you can place the trade via a broker during this collection period at no extra charge.

Why? Why 5 days? If I can place the order via a broker, why not online? I understand if this was a one time thing to establish trust, but according to Fidelity, if I don’t want to wait till the end of the collection period, broker assisted call is the only way to go.

I got about 6 or 7 separate snail mails from Fidelity. There was a mail about a mail I will be receiving! I can’t remember if I did opt for snail mail delivery, but either way, this is wasteful.

Again, these are not deal breakers, but mild annoyances I didn’t expect to encounter.

What I did like

After a few days of opening the account, a Fidelity rep called up to make sure I was doing. That was a nice touch. Fidelity emails you about any activity on your account. I think that is very important to avoid fraud and id thefts.

The Fidelity website organization is pretty straightforward and not confusing. There are some research tools available, but I usually use other free online resources, so I can’t really say much about Fidelity’s. They aren’t too shabby though. Quite basic. No flash or even ajax (if you are technically inclined).

Conclusion

Overall, I do like Fidelity. Once you know how things work and what to expect, it isn’t too bad.

Fidelity Account Opening Slideshow

Opening a Roth IRA at Fidelity
Opening a Roth IRA at Fidelity
Select IRA
Select IRA
Review prerequisites for opening an IRA
Review prerequisites for opening an IRA
Enter information about yourself
Enter information about yourself
Provide employment information
Provide employment information
Enter financial information
Enter financial information
Review account features
Review account features
Designate beneficiaries
Designate beneficiaries
Agree to Terms & Conditions
Agree to Terms & Conditions
Fund your account
Fund your account
Verify credentials
Verify credentials
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