All it took was a few bank failures and fears that other wealth management and financial firms might come undone to remind investors that the key to a good night's sleep is knowing their money is in good hands.
Flashbacks to the 2008 financial crisis this spring reinforced just how vital it is to do business with a trusted financial firm. One that guards other people's money as if it were their own.
When it comes to trust in the investment world, Fidelity Investments earns the highest marks in IBD's 2023 Most Trusted Financial Companies survey. The Boston-based firm scored a trust trifecta. It earned the No. 1 rating in all three investment categories: ETF/fund companies, online brokers and wealth management.
Fidelity also earned the No. 1 overall slot in Investor's Business Daily's fourth annual survey.
Rival Charles Schwab was No. 1 in the banking category and was also near the top in wealth management, online brokers, and ETF/fund companies.
Both Fidelity and Schwab ranked highly in IBD's 2022 survey as well.
IBD's list of the Most Trusted Financial Companies is based on a June/July survey in which 7,597 customers rated the financial firms they do business with. They rated them on seven trust attributes they deem important. Key attributes included a company's financial soundness, the quality of its products, commitment to protecting personal data and ethical practices. Others were customer service, fair prices and fees, and being sensitive to customer needs in periods of financial and economic volatility.
Read our overview story, IBD's Fourth Annual Survey Of The Most Trusted Financial Companies.
Our sister company, MarketWatch, is co-branding the report for a second year.
Nearly all (90.7%) survey respondents said trust was "very important" in their relationships with financial firms. The attribute with the highest weight (20.1%) in this year's survey was the company's financial soundness.
Fidelity Focuses On Lifelong Partnerships
Fidelity says it puts customers at the center of everything it does. The goal is to develop a lifelong partnership with every customer and to strengthen account holders' financial well-being by helping them achieve better investment outcomes.
Read Our Category Stories On The 2023 Most Trusted Financial Companies In Investing, Insurance, Credit Cards And Banking
This commitment includes providing portfolio guidance to account holders when markets turn rocky. Also important is offering a product lineup with plenty of choices and low fees. Fidelity strives to invest in cutting-edge technology to enhance customers' digital experience and trading activities, as well as protect their personal data.
"Customers benefit from Fidelity's decades of strength and stability," said Rich Compson, head of wealth at Fidelity Investments.
Fidelity has been in the wealth management business for more than 76 years. The firm is perhaps best known for its mutual fund business and stock-picking prowess. Today, Fidelity serves as a one-stop destination for retirement savers, active traders and do-it-yourselfers. Account holders can buy and sell stocks, funds and ETFs. They can trade on their smartphone app or laptop online and get advice from a robo-advisor or real-life expert. Additionally, they can take advantage of educational resources, such as online research, webinars, and fund screeners.
Chris Bergman, a 62-year-old semiretired media and marketing consultant, has been with Fidelity since 2017. Asked what makes him trust Fidelity and feel comfortable investing his money with them, he said: "Reputation and history. They've been doing this long enough that big warts would show."
Most Trusted ETF/Fund Companies
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | |
|---|---|---|---|---|---|---|---|---|---|
| Fidelity Investments | 87.3 | 92.6 | 87.1 | 89.2 | 87.5 | 87.3 | 81.6 | 81.4 | |
| Charles Schwab | 84.9 | 86.1 | 86.7 | 88 | 84.1 | 86.4 | 80 | 80.4 | |
| American Funds/Capital Group | 84.8 | 87.6 | 87 | 87.5 | 85.8 | 84 | 75.4 | 82.7 |
Out of eight companies that qualified for analysis, Fidelity earned the top ETF/fund company rating in IBD's 2023 Most Trusted Financial Companies survey with an 87.3 rating. That topped Schwab's No. 2 finish and 84.9 score. Fidelity earned top grades in six of the seven attributes customers care about most.
Greg Friedman, Fidelity's head of ETF management and strategy, says the company strives to provide investors with access to a diverse set of investment styles and low-cost investment vehicles.
Account holders at Fidelity can invest in more than 9,000 mutual funds (35% of which don't charge a transaction fee) and 2,500 commission-free exchange traded funds.
Friedman said that, like any customer-facing business, "We believe in developing investable strategies in different wrappers based on what clients want."
In response to customer demand, Fidelity has increased the number of actively managed ETFs run by its own stock pickers. That includes ones that invest in a singular investment theme. Earlier this year, Fidelity rolled out six new ETFs that focus on "innovative disruptive strategies." Its Disruptive Automation ETF, for example, invests in artificial intelligence, industrial robotics and autonomous driving.
Charles Schwab's mutual fund and ETF business also earns high trust marks from account holders who invest for wealth management, retirement and other financial goals using funds.
Schwab, of course, faced scrutiny during this spring's banking crisis. Many of its bank customers withdrew cash that wasn't earning much interest and moved it to accounts offering higher yields, raising fears of a bank run. The firm reassured investors in March, however, saying that its "long standing reputation as a safe port in a storm remains intact."
"We reiterated the soundness of our company," said Schwab President Rick Wurster. "In our business, trust is everything. We're holding our clients' life savings. And they need to know that we're going to take care of that money, we're going to have their best interests at heart, and that their assets are safe and secure."
American Funds/Capital Group rounded out the list of the three most trusted ETF/fund companies.
Most Trusted Online Brokers
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | |
|---|---|---|---|---|---|---|---|---|---|
| Fidelity | 87.8 | 92.5 | 88.8 | 89.2 | 86.2 | 86.5 | 84.3 | 82.7 | |
| Charles Schwab | 85.2 | 87.1 | 86.6 | 86.6 | 85.5 | 86 | 83.9 | 77.9 | |
| TD Ameritrade | 83.8 | 86.4 | 84.3 | 88.1 | 83.2 | 83.9 | 79 | 78 |
Investors' trust in Fidelity's online brokerage remains steadfast. Its brokerage trust rating was tops at 87.8. And it earned the No. 1 rating on six of seven key attributes.
Only in the area of prices did it nod to Vanguard Brokerage, which ranked highest in that attribute.
Fidelity's focus on innovation and its constant push to improve the online and digital trading experience continues to pay dividends. Earlier this year, for example, Fidelity made its new web-based Trading Dashboard (which doesn't require a software download) available to all customers.
"It drastically simplifies how clients monitor and manage their investment activity," a Fidelity spokesperson said.
The company also introduced Fidelity Solo FidFolios, which allow do-it-yourself investors to buy fractional shares that enable them to create their own custom stock index.
"With the rise in highly personalized experiences throughout our lives, investors are increasingly looking at a tailored experience with both their portfolios and online experience," said Fidelity's Compson.
In another move that builds trust, Fidelity is helping customers take advantage of higher interest rates by sweeping their idle cash into high-yielding money market accounts. Fidelity's brokerage also offers a deep lineup of CDs from hundreds of banks, some of which let account holders invest as little as $100.
The investor-friendly moves are attracting new investors, particularly younger, more-digitally savvy ones. In the second quarter, nearly half (43%) of Fidelity's 1.5 million new retail accounts were opened by customers between the age of 18 and 35.
Running a close second in the brokerage category was Charles Schwab with an 85.2 rating. Schwab, which is in the process of adding TD Ameritrade's robust Thinkorswim trading platform, has high standards when it comes to wealth management and customer service. The average caller gets a Schwab representative on the phone in 17 seconds, says Schwab President Wurster. And whoever picks up the phone is fluent in investing and all things Schwab.
"We're going to have someone who can answer your question in a knowledgeable way," said Wurster. "What we've observed is clients want to talk to someone. They might not want to take action, but they want to know someone's looking after their money."
TD Ameritrade, which Schwab acquired in 2020, was the third most-trusted online broker out of nine in the IBD survey. Schwab has been migrating TD Ameritrade accounts this year to Schwab accounts.
Most Trusted Wealth Management Companies
| Company | Overall rating | Soundness | Quality | Privacy | Ethics | Customer service | Prices | Sensitivity to customer needs | |
|---|---|---|---|---|---|---|---|---|---|
| Fidelity Wealth Management | 86.1 | 91.2 | 87.6 | 89.6 | 85.5 | 84.3 | 78.9 | 80.1 | |
| Schwab Private Client | 84.7 | 87.4 | 85.2 | 86.3 | 85.9 | 87.1 | 78.2 | 79.7 | |
| Vanguard | 82.3 | 90.3 | 81.8 | 86.9 | 78.8 | 77.8 | 83.1 | 70.7 |
The key to building wealth is having the right tools, investment expertise, and market intelligence to build a plan and getting professional help when you need it. Fidelity, via its FidelityGo digital advisory service and its real-people advisory services, offers both.
That's a big reason Fidelity earned the No. 1 spot and an 86.1 rating in the IBD 2023 Most Trusted Financial Companies survey's wealth management category.
"Our approach addresses the many nuances involved in helping families effectively manage their wealth across generations," said Compson.
Bergman, the Fidelity client, says a few years ago a Fidelity advisor helped him reinvest proceeds from IRAs he inherited from his parents. "I didn't want to be particularly aggressive with the windfall, so they helped me find some funds that were a good fit at the time," said Bergman. "They did a good job." Fidelity also advised Bergman on a strategy to manage his required minimum distributions on the IRAs, he says.
Charles Schwab also earned a high rating in the wealth management category with an 84.7 score. Schwab places a big emphasis on steering investors through volatile markets with help from its investment advisory team.
"There's a bull market for advice," said Wurster. "When a client walks through the door and says, 'I want help,' We want to bring all the capabilities Schwab has at its disposal to help the client."
Vanguard completed the list of the three most-trusted wealth management companies. The survey included 10 wealth management firms.
Read all our 2023 Most Trusted Financial Companies content.
