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Orchidflower · 12-02-2009, 09:39 AM

Are Brokers at Fidelity paid commissions on sales or bonuses on how many accounts they bring in or what? I do know they get a salary, but there is some type of carrot and stick for salespeople in the forum of bonuses or commission on sales. Anyone know how the sales staff's pay is structured here?

I guess the same question would apply to Vanguard Brokers, also. What gains them extra pay?

FinanceDude · 12-02-2009, 10:33 AM

Quote:

Originally Posted by Orchidflower

Are Brokers at Fidelity paid commissions on sales or bonuses on how many accounts they bring in or what? I do know they get a salary, but there is some type of carrot and stick for salespeople in the forum of bonuses or commission on sales. Anyone know how the sales staff's pay is structured here?

I guess the same question would apply to Vanguard Brokers, also. What gains them extra pay?

They can get a bonus based on growth of AUM and suggesting other services the client takes advantage of.

rescueme · 12-02-2009, 11:55 AM

Quote:

Originally Posted by Orchidflower

Are Brokers at Fidelity paid commissions on sales or bonuses on how many accounts they bring in or what? I do know they get a salary, but there is some type of carrot and stick for salespeople in the forum of bonuses or commission on sales. Anyone know how the sales staff's pay is structured here?

I guess the same question would apply to Vanguard Brokers, also. What gains them extra pay?

While Fidelity's folks do get a bonus, it's hard to say a "hard and fast" rule.

Here our (my/DW's) situation:

I retired in early '07 and had (along with my wife - different companies) had roughly a 60/40 split between Fidelity and VG (60% Fidelity, based upon our respective company's 401k's).

We both went to the local Fidelity office to meet one on one with a representative, before I actually retired in 2007 (at the age of 59; my wife chooses to remain in the workforce, but that's another thread ).

At the time, I asked him how he was compensated. His comment was that he received a salary, and also a "bonus" based upon the additional "resources" he could bring under the "Fidelity Umbrella".

Just as an example, my wife/me were not eligible for VG's "Flagship Service" (e.g. assets at VG in excess of #1M), but we were initially accepted at Fidelity for "Private Client Group" services based upon our joint portfolio holdings (which were in the multi-M area).

My experiences during the first 1.5 years were not "something to write home about"....

After a year, I was "downgraded" to just "Premium Services Group" (e.g. 500K-1M) since I did not give them the "opportunity" to manage my non-Fidelity accounts.

BTW, I did purchase a SPIA from Fidelity (best return/rate at the time), but they "deducted" what I had "invested" for the SPIA from my account balance (regardless of the fact that they had management of my funds); thus reducing my "portfolio value under management".

Am I mad? Initially, yes (I wanted to be "valued" in some sense).

Today? Nope; it doesn’t matter. I found that I'm more aware of the marketplace, my goals, and my performance overall.

I'm responsible for "me"; my ratings (regardless of holdings and company) are of little consequence, in the long run, IMHO.

- Ron

FinanceDude · 12-02-2009, 02:18 PM

Quote:

Originally Posted by rescueme

My experiences during the first 1.5 years were not "something to write home about"....

Not surprising to me..........

Quote:

BTW, I did purchase a SPIA from Fidelity (best return/rate at the time), but they "deducted" what I had "invested" for the SPIA from my account balance (regardless of the fact that they had management of my funds); thus reducing my "portfolio value under management".

Nice trick that some companies do so they can charge you more fees or lower their service requirements.........

Dawg52 · 12-03-2009, 07:00 AM

They must have some gray line they use in cutting off the Private Client category as I'm slightly below it and it's been that way for quite sometime. They know I have a chunk with a regional firm and some with PenFed. But like you, it really wouldn't matter if I did get the downgrade. I get a call from my representative maybe twice a year and it really doesn't amount to much other than to say I'm here if you need me. And he has recommended a couple of things I've purchased when I inquired about something. I guess that's one thing I like about them, they respond when I ask them to. But no pressure calls.

Orchidflower · 12-03-2009, 07:12 AM

Why I asked initially is that when the Fidelity broker I was recommended to us--someone with a CFP and a MBA with 10+ years of experience--he wanted me to flip some of the more loser mutual funds to Fidelity bonds, which would tie me to Fidelity strictly. That made me really uncomfortable as I felt it was more to benefit Fidelity than Orchidflower.
Do I need to say that he won't call me now? I called Fidelity, they insisted I speak with a broker, the broker called and said he would call back and, of course, never did. This guy is on the ball, so I am aware he has shucked me for now. That's fine, but just wondering how they work really.

Dawg52 · 12-03-2009, 07:28 AM

Quote:

Originally Posted by Orchidflower

Why I asked initially is that when the Fidelity broker I was recommended to us--someone with a CFP and a MBA with 10+ years of experience--he wanted me to flip some of the more loser mutual funds to Fidelity bonds, which would tie me to Fidelity strictly. That made me really uncomfortable as I felt it was more to benefit Fidelity than Orchidflower.
Do I need to say that he won't call me now? I called Fidelity, they insisted I speak with a broker, the broker called and said he would call back and, of course, never did. This guy is on the ball, so I am aware he has shucked me for now. That's fine, but just wondering how they work really.

I would tell them they need to call you back if they want to keep your business. Plenty of other firms to do business with. I haven't had that kind of service though. As far as how they are paid, I'm sure they do get paid more to recommend Fidelity products. But I would imagine most all firms have certain products they get paid more to push.

FinanceDude · 12-03-2009, 08:24 AM

Quote:

Originally Posted by Orchidflower

Why I asked initially is that when the Fidelity broker I was recommended to us--someone with a CFP and a MBA with 10+ years of experience--he wanted me to flip some of the more loser mutual funds to Fidelity bonds, which would tie me to Fidelity strictly. That made me really uncomfortable as I felt it was more to benefit Fidelity than Orchidflower.
Do I need to say that he won't call me now? I called Fidelity, they insisted I speak with a broker, the broker called and said he would call back and, of course, never did. This guy is on the ball, so I am aware he has shucked me for now. That's fine, but just wondering how they work really.

What's a guy with a CFP and an MBA doing at Fidelity? he could make a lot more money getting a job in corporate finance. Fido and Vanguard are NOT known for paying decent wages........

Orchidflower · 12-03-2009, 09:14 AM

Good question then, FinanceDude. I have NO more knowledge of financial jobs than I do medical knowledge (can we say clueless?), so can you give your guess as to this? He's shooting for a top position? Lacking drive, which is hard to believe with that background or what? Hates corporate finance?
I didn't even know they called Fidelity by Fido. Help!

AND if Fidelity and Vanguard pay low wages..uh...that makes me even more leery about listening to their advice. You aren't getting but the newbies in the biz I would think.

FinanceDude · 12-03-2009, 10:03 AM

Quote:

Originally Posted by Orchidflower

Good question then, FinanceDude. I have NO more knowledge of financial jobs than I do medical knowledge (can we say clueless?), so can you give your guess as to this? He's shooting for a top position? Lacking drive, which is hard to believe with that background or what? Hates corporate finance?
I didn't even know they called Fidelity by Fido. Help!

AND if Fidelity and Vanguard pay low wages..uh...that makes me even more leery about listening to their advice. You aren't getting but the newbies in the biz I would think.

It's their business model. Vanguard and Fidelity are going to give you a book of business to work with, so no prospecting. However, the pay is capped severely. Anyone that can prospect at all will make 4-5 times what those reps do. However, it is a pretty low stress job. Sometimes reps who can't make it at an advisor go there so they can keep their Series 7 intact.

Fido and Vanguard are great companies for DIY. However, one should NOT expect the reps there to have all the answers or provide advice. Honestly, how much should those companies pay to have someone answer the phone and make a few outbound calls? Not 6 figures, that's for sure........

DW's 401K is with Fido, and I have called them a couple times with questions, and seems that noone knows anything. My experiences with Schwab have been lightyears better........

Orchidflower · 12-03-2009, 11:26 AM

Thanks for that answer, FinanceDude. I think I can figure it out then.
I will give Fidelity credit for a great website; and my experience has been if you need any sort of information they will bend over backwards to try and find it for you as I had to find out the cost basis for some really, really old stock my mother had (what was the cost the day she bought it). They try at least.
But I'm not counting on Fidelity to help much now. Better I take care of my own stuff anyway.

FinanceDude · 12-03-2009, 12:44 PM

Quote:

Originally Posted by Orchidflower

Thanks for that answer, FinanceDude. I think I can figure it out then.
I will give Fidelity credit for a great website; and my experience has been if you need any sort of information they will bend over backwards to try and find it for you as I had to find out the cost basis for some really, really old stock my mother had (what was the cost the day she bought it). They try at least.
But I'm not counting on Fidelity to help much now. Better I take care of my own stuff anyway.

That's a good plan..........

TooFrugal · 12-03-2009, 04:23 PM

We have our small business 401K plan with Fidelity as well as money in past employer 401K plans. For some reason the reps must get more money if we rollover the money on the former employer plans to an IRA.

Different reps have been very persistent over the years wanting us to rollover the money in the former employer 401K plans and move it to Fidelity IRAs. I've told them that we would lose the ERISA asset protection if we moved the 401K money to an IRA, and if we ever did close out the old 401K plans we'd just move it to our own business 401K plan anyway and not to an IRA. That is one nit I have about all of those investment places and not just Fidelity - they either don't know or aren't upfront with customers about any possible loss of asset protection from rolling a 401k plan to an IRA.

Otherwise, I actually really like the service reps at Fidelity and they've been very helpful with questions about our various accounts over the years. But you can tell they certainly push things the company makes more of a profit on, like IRAs over 401K and their index funds over buying individual TIPS.

Orchidflower · 12-03-2009, 04:29 PM

After sooooo many years in sales, sometimes I think I am just jaded; but then I get information from some of you and find out I'm not. It's them. Thanks, TooFrugal.

FinanceDude · 12-07-2009, 09:33 AM

Quote:

Originally Posted by TooFrugal

We have our small business 401K plan with Fidelity as well as money in past employer 401K plans. For some reason the reps must get more money if we rollover the money on the former employer plans to an IRA.

Different reps have been very persistent over the years wanting us to rollover the money in the former employer 401K plans and move it to Fidelity IRAs. I've told them that we would lose the ERISA asset protection if we moved the 401K money to an IRA, and if we ever did close out the old 401K plans we'd just move it to our own business 401K plan anyway and not to an IRA. That is one nit I have about all of those investment places and not just Fidelity - they either don't know or aren't upfront with customers about any possible loss of asset protection from rolling a 401k plan to an IRA.

In GENERAL, that is true. However, each state is allowed to set their own coverage for IRA plans. Some don't allow creditor protection, some only certain plans, etc. Bottom line, you have to check into what your state does.

ERISA coverage is important, but not the end all and be all. Some 401K plans have high expense funds and generally limit investment options. Some folks might be better served to do a rollover to an IRA and have more flexibility. Again, YMMV........

Quote:

Otherwise, I actually really like the service reps at Fidelity and they've been very helpful with questions about our various accounts over the years. But you can tell they certainly push things the company makes more of a profit on, like IRAs over 401K and their index funds over buying individual TIPS.

Every company does that, even Vanguard.........

TooFrugal · 12-07-2009, 04:56 PM

Yes, the ERISA protection depends on the state. But we live in a state with little protection and the all of the investment reps I've ever talked to either don't know anything about those laws at all or they actually say things that are untrue, usually substituting what little they know about federal bankruptcy law for state law.

This is good article on the topic:

IRAs Could Be Fair Game in Lawsuits -- latimes.com

TooFrugal · 12-07-2009, 06:19 PM

I just opened the mail today and there was a letter from Schwab wanting my husband to rollover an old 401K that is with them to one of their IRAs. So we have had call from Fidelity, a letter from Fidelity and a letter from Schwab both in the past week to rollover 401K money to an IRA. I'm guessing these guys have rollover quotas or need to show more assets under their personal advisement before year end.

They never call and say things like, "Let's discuss the merits of keeping your money where it is at, rolling it over to your current employer plan, or doing an IRA rollover." At least that would be slightly more subtle with some glimmer of hope on our part that they might really be doing what is best for us instead of simply what is best for them.

I think most, if not all, of our old 401K plans have brokerage account options that allow investments in most of what the firms have to offer - mutual funds, CDs, TIPS, bonds, etc. - so for us there isn't much to gain by doing the rollovers.

FinanceDude · 12-07-2009, 10:35 PM

Quote:

Originally Posted by TooFrugal

I just opened the mail today and there was a letter from Schwab wanting my husband to rollover an old 401K that is with them to one of their IRAs. So we have had call from Fidelity, a letter from Fidelity and a letter from Schwab both in the past week to rollover 401K money to an IRA. I'm guessing these guys have rollover quotas or need to show more assets under their personal advisement before year end.

They bought a list and your name was on it........

Quote:

They never call and say things like, "Let's discuss the merits of keeping your money where it is at, rolling it over to your current employer plan, or doing an IRA rollover." At least that would be slightly more subtle with some glimmer of hope on our part that they might really be doing what is best for us instead of simply what is best for them.

How are they going to make money if you leave it in the old 401K?

Quote:

I think most, if not all, of our old 401K plans have brokerage account options that allow investments in most of what the firms have to offer - mutual funds, CDs, TIPS, bonds, etc. - so for us there isn't much to gain by doing the rollovers.

Yes, and no. I have personally seen many horror stories of old 401k's that are left behind. One should keep in mind the following:

1)Most plan sponsors would LIKE to have non-employees out of the plan...notice I did NOT say CUSTODIANS, just plan sponsors.

2)If the company moves their 401K while you are unaware or out of the country or whatever, many SPDs are written so you are "cashed out" of your asset allocation, and put into the least volatile account, usually a money market. This happens more than you think........

3)401Ks are still limited to the choices made by the plan sponsors. A self-driected IRA account has virtually unlimited choices available to it. Although some 401K plans offer a lot, many are quite limited.......