Fidelity Investments hosted an hour-long Reddit discussion on Wednesday to engage with customers and answer live questions regarding retail trading.
The discussion was hosted via an r/IAmA board, which is a subreddit for question-and-answer interactive interviews termed “AMA” or “Ask me Anything.” Prominent figures like Bill Gates will host these discussions to directly engage with consumers.
That was Fidelity’s intent, too, said a Fidelity Investments spokeswoman. “Fidelity regularly engages with customers where they are to answer questions and gather feedback,” the spokeswoman said in an email. “This AMA is an example of that approach as interest in our platform continues to grow.”
Before the live AMA, Fidelity — under its username u/fidelityinvestments — posted a photo of host Gregg Murphy, Fidelity Investments senior vice president of brokerage products, holding a sign announcing the AMA. The photo was accompanied by links to Fidelity educational trading tips and tools. The links directed users to learn about stock trading, to get started trading with Fidelity, and to understand fractional shares.
More than 1,300 comments from Reddit users, known as Redditors, flooded the discussion after Fidelity initially announced the AMA Monday. Yet, trading education was largely outshined by comments comparing Fidelity’s mobile app interface to Robinhood's.
Questions about the GameStop Corp. stock surge and subsequent trading restrictions by multiple firms also dominated the conversation. The discussion concluded with more than 1,600 comments by Wednesday at 2 p.m. ET.
“The Reddit-fueled GameStop stock speculation is a wakeup call for retail brokers to better engage with this community of highly engaged and active traders,” said Sophie Schmitt, senior analyst with Aite Group, who did not participate in the AMA. “Don’t wait for them to come to your site, meet them where they are and provide much needed financial education on the risks involved with speculative strategies.”
Moreover, engaging with consumers directly is the best way for firms to try to prevent rumors and conspiracy theories from escalating, Schmitt said.
Fidelity’s mobile trading app was hit with Redditors asking when the user experience would modernize to operate in a simplified manner as Robinhood.
To be fair, Fidelity and Robinhood already have commonalities. Both trading platforms have zero account fees, no minimum balance, and $0 commissions for trading U.S. stocks, exchange-traded funds and options online. What’s notable is the way Reddit users expressed that Fidelity’s clunky user experience is the reason they opened Robinhood accounts.
For example, user dthompson1179 has a Fidelity account for long-term investments but opened up a Robinhood account because the Fidelity interface is “so cumbersome, it’s unusable for short term plays, options, daily monitoring, etc,” the user wrote.
Another Redditor commented that if Fidelity had a better interface it would “blow the competition away,” wrote hughheffres. “If they could get a ‘newer, updated’ looking trading app see: SoFi/Robinhood it would be huge for them.”
User isellusedcars compared the Fidelity app's user interface to an old arcade game versus Robinhood, which provides an experience more like modern social media apps. “The Robinhood app looks as if it was developed by the guys who made Snapchat and the Fidelity App was developed by the guys who made Pac-Man,” the user wrote.
Murphy’s responses to these comments, which are just a few examples among thousands, were that Fidelity’s need to provide a mobile user experience fit for 2021 came through “loud and clear.”
“We’ve mobilized quickly around this and we’re working on several improvements that have been raised by this community,” Murphy said. “More to come as the work continues.”
Murphy also directed commenters to look to Fidelity’s free app, Fidelity Spire, which launched in July, as a “good indication of how we’re trying to improve our UI (user interface) moving forward,” he wrote.
“Spire is designed for people just getting started in investing and budgeting, and we’re planning to add some basic trading capabilities soon,” he said. “And, as I said earlier, we are also taking your feedback on our overall mobile UI and we will be making improvements.”
Redditors engaging with Fidelity’s AMA did not forget that just two weeks ago online brokerages — including Robinhood, TD Ameritrade, Webull and Interactive Brokers Group — issued restrictions on GameStop, AMC Entertainment Holdings Inc. and other shorted stocks.
One user asked if Fidelity could promise retail users it won’t shut off trading to certain stocks because of market volatility. “How can the people trust you to work in our best interest as opposed to the interest of the big investors and government,” wrote user ThePensiveWok. “After the entire [R]obinhood debacle I think it’s fair to say that any investment firm is now suspect.”
While Fidelity was not among the trading platforms that restricted GameStop trades, Murphy responded that Fidelity will do what is necessary to manage risk for its customers and Fidelity.
“We believe in helping to keep and maintain open and fair market conditions whenever possible,” Murphy said. “Now, we can’t say ‘never’ if there are some unique market circumstances, but we will always work hard to be there for our customers.”
Murphy did, however, lend his expertise to answer questions about his overall perspective regarding the GameStop stock surge and how retail investors, especially newbies, should approach investing for the first time.
“As an investor, I think anyone who has participated in this trading or might plan to participate should really understand what they are getting into,” he said. “Some people are doing it because they believe they are participating in a worthwhile cause. However, they need to know that not everyone participating has that same intent.
The reality is that some people might make money off of these transactions and figured out when to get in and out of the security at the right times, but many others will end up getting hurt because they were just following the crowd and got in as the stock’s price spiked and got out after everyone else did,” Murphy said.
The Fidelity-hosted Reddit AMA is just the latest example of how social media has become part of the fabric of the investments decision-making process, said William Trout, Director of Wealth Management at Javelin Strategy & Research. “We’ve seen its amplifying — and polarizing — impact in the political sphere. Now it’s lighting up the self-directed investments space as well.”
Yet, it will be challenging for firms to keep up with user movement on social media as what platforms are hot in the moment can fizzle quickly, Trout said. “Social platforms come and go. ... Does anyone use Tumblr today, for example? The social media world is spinning fast, and tomorrow’s Reddit may turn out to be Clubhouse.”
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