Fidelity moves to the dark side?

[REWahoo]

I saw this post a few minutes ago:

... Fidelity has given their retail representatives "goals" that are not always consistent with client needs. For example, they now need to sell a certain amount of managed money, life insurance and annuities. They say their compensation is not affected, but in reality if they don't meet their sales goals, they are put on an "action plan" and will eventually be shown the door. Our fee-only firm recently hired one of these Fidelity reps b/c he could no longer work there in good conscience. Big win for us, big loss for them. I have money with Fidelity but I don't use them for advice.

If this is the case, it is truly sad news. It was always nice that folks had a couple of reliable alternatives for untainted investment advice.

Anyone else seeing this? Not that I doubt panacea for a second, but it is always good to get confirmation from multiple sources.

 

[teejayevans]

Merrill Lynch just announce they won't compensate their brokers for accounts less than 250K.
Looks like the big boys are getting greedy.
TJ

 

[W2R]

I saw this post a few minutes ago:

If this is the case, it is truly sad news. It was always nice that folks had a couple of reliable alternatives for untainted investment advice.

Anyone else seeing this? Not that I doubt panacea for a second, but it is always good to get confirmation from multiple sources.

This is indeed sad news.

But Vanguard isn't totally lily-white in this, either. I haven't asked for any investment advice from them, but from what I understand, they always recommend just Vanguard funds and you wouldn't expect them to recommend a Fido fund, for example. There must be some kind of pressure involved, or else why wouldn't they?

 

[Amethyst]

When I asked, the VG rep said it was because they truly believe their funds are the best possible choices for their clients VG also rendered their "free" financial planning service useless to us, since they would only consider our mutual funds (theirs and other companies') in their evaluation of our net worth. Other investments need not apply.

Amethyst

Tfrom what I understand, they always recommend just Vanguard funds

 

[REWahoo]

While I agree none of these companies are pure as virgin snow, I do see a distinction between recommending only in-house funds and setting "require or fire" goals for selling insurance and annuities. The former is understandable, the latter borders on sleazy.

 

[Huston55]

We have enough $$$ with Fidelity to get premium service. Our accounts aren't actively managed by them but, I am assigned a 'free' advisor who will answer my questions and provide advice when requested. We also get free portfolio analysis.

When I asked him how he was compensated, the answer was that he's straight salary, no commissions, and that he's evaluated on the quality of his advice and client feedback. Over the past several years, I've made moves to simplify our portfolio (read: converting individual stocks to MFs), making most of these changes in our Fidelity accounts. When I asked for recommendations, my FIDO advisor, of course, listed FIDO funds but, also freely listed non-FIDO funds as well.

REW- this doesn't really answer your specific question but, it's another data point.

 

[braumeister]

I think there is still a good measure of honesty with these folks.

My Fidelity guy contacts me two or three times a year to offer advice or see if I have questions. I always thank him but say I'm satisfied with my own management for now, and that ends it.

Last year I actually spent a bit of time talking with him at a local event they sponsored. He seemed to be acquainted with my portfolio, and asked if I had any interest in anything slightly more aggressive, and I said no. His response was "Well, that's a reasonable approach. You're mostly bonds and dividend payers, and there's absolutely nothing wrong with that. Just be aware that I'm always available to help if you want."

I have never felt even the slightest pressure from Fido, and I really love their website. So far, so good.

 

[james7]

We have enough $$$ with Fidelity to get premium service. Our accounts aren't actively managed by them but, I am assigned a 'free' advisor who will answer my questions and provide advice when requested. We also get free portfolio analysis.

When I asked him how he was compensated, the answer was that he's straight salary, no commissions, and that he's evaluated on the quality of his advice and client feedback. Over the past several years, I've made moves to simplify our portfolio (read: converting individual stocks to MFs), making most of these changes in our Fidelity accounts. When I asked for recommendations, my FIDO advisor, of course, listed FIDO funds but, also freely listed non-FIDO funds as well.

REW- this doesn't really answer your specific question but, it's another data point.

I have also received recommendations of both Fidelity and non-Fidelity funds from Fidelity phone reps and consider their advice valuable and untainted. A friend of mine who has been retired on disability for over twenty years has small accounts with Fidelity and Vanguard, but a large annuity with a major insurance company. About five years ago he spoke at length with a Fidelity rep about moving it to Fidelity because of the past performance of certain Fidelity funds. He left the meeting at a local Fidelity office with "I'll think about it". Not long afterward, he saw the same rep at a Fidelity investment seminar open to the public. I asked him later if he still intended to move the annuity to Fidelity. His answer was "never, not after he insulted me at the seminar". I asked how the man insulted him and he said that the rep said quite abruptly that if you don't move it right now, you are never going to move it. I was quite surprised that a Fidelity rep was that pushy and so was he.

Having worked for major insurance/investment companies, I cannot believe that the company exerts no pressure on their reps to bring in business or sell certain products. My guess is that their phone reps are on straight salary with no commission, but are given bonus points for bringing in big $ business or the sale of certain products. In these tough times, Fidelity is probably raising the number of bonus points a rep needs to be in good standing.

And by the way, I've been dealing with Fidelity since the late 1970's and my father before that, and I have NEVER seen or heard of a client feedback survey. On the other hand, every time I get off the phone or pay a bill online with Citibank, I get a customer satisfaction survey in my e-mail box, and have been picked randomly twice for Citibank telephone marketing surveys of more than 30 minutes in length.

 

[Dawg52]

I think there is still a good measure of honesty with these folks.

My Fidelity guy contacts me two or three times a year to offer advice or see if I have questions. I always thank him but say I'm satisfied with my own management for now, and that ends it.

Last year I actually spent a bit of time talking with him at a local event they sponsored. He seemed to be acquainted with my portfolio, and asked if I had any interest in anything slightly more aggressive, and I said no. His response was "Well, that's a reasonable approach. You're mostly bonds and dividend payers, and there's absolutely nothing wrong with that. Just be aware that I'm always available to help if you want."

I have never felt even the slightest pressure from Fido, and I really love their website. So far, so good.

Same experience here. No complaints.

 

[Animorph]

I did have my Fidelity rep recommend DREGX (non-Fidelity EM fund) to me out of the blue on one of his quarterly calls last year. I told him I already used FEMKX (Fidelity EM fund, though decidedly average), and I already had my eye on the other fund as well. Unless they were running a special on DREGX, that was a pretty unbiased recommendation. I never hear about annuities or other products so far.

 

[W2R]

While I agree none of these companies are pure as virgin snow, I do see a distinction between recommending only in-house funds and setting "require or fire" goals for selling insurance and annuities. The former is understandable, the latter borders on sleazy.

Good point and I think your assessment of the situation sounds right on the money.

 

[Htown Harry]

http://personal.fidelity.com/misc/gettingstarted/pdf/representative_compensation.pdf

Here you go, REWahoo - nearly 14 pages of fun...

"This disclosure document describes the compensation received by certain representatives of Fidelity Brokerage Services LLC (“FBS”)1, Portfolio Advisory Services (“PAS®”)2, and Fidelity Investments Life Insurance Company (“FILI”)3 (for purposes of this document and unless otherwise specifically noted, “Fidelity,” “we,” and “our” shall collectively refer to FBS, PAS and FILI)."

 

[REWahoo]

Where do I find the CliffsNotes?

 

[brewer12345]

If you are looking for a friend, adopt a dog.

None of these shops are charities. They all are out to make as much money as they can and that means selling at least some ofthe products with the biggest vig. Caveat emptor.

 

[REWahoo]

If you are looking for a friend, adopt a dog.

None of these shops are charities. They all are out to make as much money as they can and that means selling at least some ofthe products with the biggest vig. Caveat emptor.

Nice to see you've apparently recovered from your recent illness and are back to your old sunny self...

 

[jerome len]

I have also received recommendations of both Fidelity and non-Fidelity funds from Fidelity phone reps and consider their advice valuable and untainted. A friend of mine who has been retired on disability for over twenty years has small accounts with Fidelity and Vanguard, but a large annuity with a major insurance company. About five years ago he spoke at length with a Fidelity rep about moving it to Fidelity because of the past performance of certain Fidelity funds. He left the meeting at a local Fidelity office with "I'll think about it". Not long afterward, he saw the same rep at a Fidelity investment seminar open to the public. I asked him later if he still intended to move the annuity to Fidelity. His answer was "never, not after he insulted me at the seminar". I asked how the man insulted him and he said that the rep said quite abruptly that if you don't move it right now, you are never going to move it. I was quite surprised that a Fidelity rep was that pushy and so was he.

Having worked for major insurance/investment companies, I cannot believe that the company exerts no pressure on their reps to bring in business or sell certain products. My guess is that their phone reps are on straight salary with no commission, but are given bonus points for bringing in big $ business or the sale of certain products. In these tough times, Fidelity is probably raising the number of bonus points a rep needs to be in good standing.

And by the way, I've been dealing with Fidelity since the late 1970's and my father before that, and I have NEVER seen or heard of a client feedback survey. On the other hand, every time I get off the phone or pay a bill online with Citibank, I get a customer satisfaction survey in my e-mail box, and have been picked randomly twice for Citibank telephone marketing surveys of more than 30 minutes in length.

I get a Fidelity survey via the internet every few months.......more often then other companies I do business with. I've never received a survey from Vanguard, however, nor do I really want one.

 

[nwsteve]

We are also with Fido and have a CFA assigned to our account for "premium services"
She has never pushed products but has "tested" if we would consider annuities. I assured we had little interest until interest rates changed and she has not raised the issue since. She also advised she is comp based on client feedback and we get a survey from a third party survey provider about every 9 months that askes specific questions regarding her and her team performance.
She has been a valuable resource in learning to fully leverage the Fido Retirement Planner as well as some admin needs.
We are one level below premium at Vanguard and have been Flagship in the past. I have never received a level of service from VG anywheres close to what we get from Fido. In fact, I have had VG pension service create several headaches for me that took over two months to correct.
Nwsteve
Nwsteve

 

[Brat]

I got a call from my Fidelity guy last week. It turned out that I had a guest at the time and told him 'later'. I have a high % in short term $ and am considering how I might invest that smarter. We don't have all that much money (took a hit with the market) and a couple of my Fidelity funds have gotten stinky in their sector since purchase. I suspect we get more attention because they aggregate the assets of heirs for our accounts. Daughter doubtless has much more with them than we do so we are at a higher service level.

I do like Fidelity service but I may just increase my holdings in Oakmark Balanced (OAKBX) or pay a fee and buy Vanguard's Wellington or Wellesley Funds. At our age sector funds are more likely to do damage than profit.

 

[Dimsumkid]

My rep just retired about two months ago. We got an invite for a meet and greet with our new rep last month. She called us this past Thursday to see how we're doing and to invite us a pro basketball game in the luxury suite with free parking pass included and over nighted the tix to us too! We get invites like this 1-2 times per year. Her comment to me was "I want you to be happier with me than the person I replaced". If she keeps doing these invites to us, how can I not like her? This will be our first pro basketball game ever for the entire family. Apparently, the luxury suites get chef carving station dinner before the games too! In all this time, we've never felt pressured to move in new money or buy anything extra. At these outings, it's the opposite, just socializing, no business talk at all.

 

[Nords]

I saw this post a few minutes ago:
If this is the case, it is truly sad news. It was always nice that folks had a couple of reliable alternatives for untainted investment advice.
Anyone else seeing this? Not that I doubt panacea for a second, but it is always good to get confirmation from multiple sources.

... Fidelity has given their retail representatives "goals" that are not always consistent with client needs. For example, they now need to sell a certain amount of managed money, life insurance and annuities. They say their compensation is not affected, but in reality if they don't meet their sales goals, they are put on an "action plan" and will eventually be shown the door. Our fee-only firm recently hired one of these Fidelity reps b/c he could no longer work there in good conscience. Big win for us, big loss for them. I have money with Fidelity but I don't use them for advice.

Call me cynical, but I'd hope to get more data than self-reporting.

What was the rep supposed to say during the hiring interview: "My performance sucked and I argued with Fidelity about their compensation system, and they're a bunch of incompetent performance-chasing jerks!!"... ?

Maybe Panacea could give us updates at 1, 3, 5, and 10 years.

 

[tightasadrum]

Every person I've ever dealt with at FIDO has been very professional. Their customer service record, with me at least, has been excellent. DD had one unpleasant exchange, but, since I wasn't part of the conversation, I have no idea why it occurred.

I had a rep from VG once who did one of those "reviews" of my financial situation. She called me after finishing it and presented her findings and recommendations. She could have been reading it off the "new VG employee list of things to say" sheet. I only remember that I asked her a few specific technical questions that she was clearly unprepared to answer. I haven't been back for opinions or advise.

FIDO has answered questions for me that showed a depth of understanding of the financial markets. That said, I haven't always agreed with them. But at least they seemed to know their business. But caveat emptor. It's your money.

 

[FinanceDude]

When I asked, the VG rep said it was because they truly believe their funds are the best possible choices for their clients VG also rendered their "free" financial planning service useless to us, since they would only consider our mutual funds (theirs and other companies') in their evaluation of our net worth. Other investments need not apply.Amethyst

Well, at least he was quoting the company line.......

 

[FinanceDude]

When I asked him how he was compensated, the answer was that he's straight salary, no commissions, and that he's evaluated on the quality of his advice and client feedback. Over the past several years, I've made moves to simplify our portfolio (read: converting individual stocks to MFs), making most of these changes in our Fidelity accounts. When I asked for recommendations, my FIDO advisor, of course, listed FIDO funds but, also freely listed non-FIDO funds as well.

REW- this doesn't really answer your specific question but, it's another data point.

Actually, the rep was telling you a white lie. He/she is NOT compensated for the quailty of advice, that's not a metric you can really measure. There is a bonus paid to them based on retention and client feedback (quite small). If they want to make more money, they have to bring in new assets or steer current porfolios to higher income producing assets to Fido. So, they are not that much different from a lot of other advisors, except most of them make quite a bit less, so I guess that's a plus..........

 

[Lsbcal]

If you are looking for a friend, adopt a dog.

None of these shops are charities. They all are out to make as much money as they can and that means selling at least some ofthe products with the biggest vig. Caveat emptor.

Brewer, good points. Most investors would do well to view investing completely dispassionately. I don't want even a subtle hint of control or self interest from my broker (Vanguard). Some of the Vanguard analysis functions (free and automated) are probably all I could stomach. Don't want to have to justify myself to anyone but DW and D-Dog. Unfortunately D-Dog is gone now but he approved of all my investment moves.

Some need a helping hand. That's OK but they might have their hand a bit in your pocket too.

 

[friar1610]

I saw this post a few minutes ago:

If this is the case, it is truly sad news. It was always nice that folks had a couple of reliable alternatives for untainted investment advice.

Anyone else seeing this? Not that I doubt panacea for a second, but it is always good to get confirmation from multiple sources.

I had a situation with Fidelity years ago that left a bad taste in my mouth about them. (Sort of a long story.)

I had (foolishly) gotten involved with a "Financial Planner" from USPA/IRA, a company that targets military folks. (The company is now known as First Command.) I enrolled in a contractual, front-loaded mutual fund where I invested a set amount of money monthly for 15 years in Fidelity Destiny. This fund was only available through this particular company. The fund did reasonably well as it had one of Fidelity's stars (at that time) managing it although in retrospect I was paying way too much in loads and ER.

Fast forward to when I was retired from the service and working in the private sector. Between my Navy pension and my civilian salary I was making more money than I ever had before but I was eyeing ER and I wanted to invest as much as possible. I got hooked up with the Fidelity Investor Center in Towson, MD since, at that time, most of my funds were with Fido. One day they had a Fidelity Annuity rep there and I spent some time with him. He convinced me that the smart thing to do was to redeem my Destiny fund (which by now had completed the 15 years and was just generating dividends and capital gains every year) and put that in a Fidelity VA. (I fully acknowledge that I did this to myself by accepting his advice without more study.)

So, I got to pay tax on the CGs Destiny had generated over 15+ years (even though I didn't really need to break the money out of the fund at that time.) And I got into a VA.

Fortunately, if there are "good" VAs, Fidelity is one of them as their expenses are pretty low, it wasn't a commission-based product, etc. But as I became smarter about investing, I realized that it was really lousy advice for Fidelity to give me, especially when they already had the assets under their management and were presumably making money off of it.

I have since rolled the VA to Vanguard and between the funds within the VA both at Fido and Vanguard, I have had some nice growth. Since I don't really have any need to annuitize it for income, it will just sit there and, assuming I predecease my wife, she can annuitize it for income. (I have it in the Conservative Allocation Portfolio - 40% stocks/60% bonds).

So although I came out of it OK and although it was MY decision, not Fido's to buy the annuity, I still think it was ethically questionable to push this.