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Fidelity resets cyber fees
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June 11, 1998: 2:57 p.m. ET
Discount brokerage overhauls online prices in bid for loyal investors
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NEW YORK (CNNfn) - In a bid to lure steady customers, Fidelity Investments announced plans Thursday to lower commission fees for its online brokerage services to $14.95 a trade for high-volume clients, beef up its automated phone technology, and offer incentives on international air travel.
Fidelity latest enticement: any customer who makes a trade by Aug. 14 on its website or automated phone service will receive a voucher valid for two round trips to London, Mexico or Hawaii when the customer books a seven-night stay in a participating hotel.
The new pricing structure, effective July 17, aims to reward Fidelity's heaviest traders by charging them less than those who use the service less frequently.
Under the revised structure -- Fidelity's third bout with fee-tinkering in less than a year -- the Boston-based discount brokerage will raise its standard online commission for a single trade of 1,000 shares to $25 from $19.95, a 25.3 percent rise.
Meanwhile, the company will lower the threshold at which customers qualify for its lowest rate of $14.95 a trade, from 36 to12 trades.
In a departure from past practice, customers who hold $100,000 or more in mutual funds with the company will also be eligible for the $14.95 commission rate.
With 1.9 million accounts, Boston-based Fidelity is currently the nation's second-largest discount brokerage, behind Charles Schwab & Co.
Fidelity is second to none, however, in the mutual fund business, with 243 funds and $681.7 billion in managed assets.
Yet the pending changes in online pricing are aimed at boosting profits and market share in the mushrooming market for online discount brokerage trading.
The revision underscores the catch-as-catch-can scramble that has dominated the burgeoning business for such services in recent months.
Fidelity, accounts for 8 percent of the market for online discount brokerage services, making it the fourth largest trader in cyberspace.
But when the company cut its prices in 1997, the move prompted rivals to follow suit. At the same time, aggressive new brokers have cropped up online, offering deeply discounted commission rates as low as $8 a trade that undercut Fidelity and eat into its revenues, analysts say.
"By tailoring our pricing to correlate with each customer's relationship with us, we feel we'll be able to offer a higher level of personalized service and can cultivate even stronger relationships with our customers," said Stephen Cone, the president of customer marketing and development for Fidelity's Personal Investments and Brokerage Group.
The initiatives unveiled Thursday also include upgrades to Fidelity's automated phone trading service, featuring speech-recognition technology that allows customers to obtain real-time stock quotes by speaking into a phone.
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Fidelity Investments
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