WSJ (not com, yet): Fidelity Has A Vanguard Problem

[ggbutcher]

Saw this article in today's paper WSJ. Looked all over wsj.com, not there yet.

As you would expect, Fidelity, while pulling good numbers, just can't seem to compete with the Vanguard juggernaut...

 

[2B]

There's a shortage of details here. I personally looked very closely at Fidelity before putting almost everything in Vanguard. IMHO picking Vanguard over Fidelity is a no-brainer. I do have a Fidelity Charitable Trust account because of the lower size of gifts allowed. Vanguard Charitable Trust has a $500 minimum versus Fidelity's $50. When we donate "in lieu of flowers," we don't want to start at $500.

 

[travelover]

I guess Bogle was the mouse that roared.

 

[2017ish]

This?

A record year for Fidelity investments wasn’t enough to solve Abigail “Abby” Johnson ’s Vanguard problem.

Even as the new chief executive of the second-largest mutual-fund firm in the U.S. reported all-time highs for revenue and operating income for 2014, clients pulled $16 billion from Fidelity’s stock funds, long the company’s bread and butter, according to an annual report Fidelity released Thursday. That was double the amount withdrawn from those funds in 2013.

...

Despite Managed-Fund Outflows, Fidelity Records Record Revenue - WSJ

 

[audreyh1]

It depends on what Fidelity's bread and butter is. If they are seeing record revenues in spite of fund outflows, that indicates they are making lots of money on the financial services side. They have partnered with Blackrock to offer the iShares ETFs at no commission/free trading, so "losing flows to Blackrock" ETFs is part of their strategy against Vanguard.

It will be interesting to see where they go. They already have some low-cost index funds, and have started to offer some ETFs, and I wouldn't be surprised to see more. But for me they are mainly my fund/ETF supermarket and brokerage. We have some Fidelity funds, but we have funds from other companies as well. Fidelity makes it easy to manage them all as a whole.

 

[GrayHare]

In my experience Fidelity does not particularly encourage investment into their funds. When I wanted to sell out of some non-Fido funds into Fido equivalents, the rep refused to help me find the similar Fidelity offerings. I figured perhaps it was just a lazy rep, so later I requested my account be handled by a different rep, but Fidelity refused to permit such a switch. At least Fido's site works better than Vanguard's.

 

[Helen]

In my experience Fidelity does not particularly encourage investment into their funds. When I wanted to sell out of some non-Fido funds into Fido equivalents, the rep refused to help me find the similar Fidelity offerings. I figured perhaps it was just a lazy rep, so later I requested my account be handled by a different rep, but Fidelity refused to permit such a switch. At least Fido's site works better than Vanguard's.

Any idea why they refused to help you switch to similar Fidelity funds?

 

[ggbutcher]

There's a shortage of details here.

I know; I read the article in today's print edition, but I couldn't find it on the website. Essentially, it said that, while Fidelity's performance good, they can't seem to make ground on Vanguard. Go figure...

 

[mathjak107]

vanguard has done a hell of a marketing job getting the investing world to drink the koolaid..

you could have thrown a dart at fidelity's large cap funds and would be hard pressed to hit one that didn't out perform the last few years with 2014 being the exception to anything that wasn't the s&p .

" The price tag for playing it safe becomes clearer when you drill deeper into the numbers: The average actively managed stock fund at Fidelity has outperformed its benchmark by 1.33 percentage points, net of fees, each year since 2008. That has resulted in $35 billion worth of added value, or outperformance, for Fidelity's investors, "

Fidelity beat benchmarks by $35 billion, but does anyone care? | Reuters

 

[JoeWras]

vanguard has done a hell of a marketing job getting the investing world to drink the koolaid..
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Maybe it is those ads that someone else is complaining about in a different thread that take over their browser.

 

[eta2020]

Fidelity does not care about their customers IMO. They find it too difficult to enable Hardware Token protection on 401k accounts.

Protect Your Investment Accounts With A Security Token: Fidelity, Schwab, E*Trade, Vanguard

And their index funds charge higher fees than Vanguard or Schwab.

Hence I would not open brokerage account with them and I would not invest in their Index Funds. Managed funds that do well one year do not interest me.

 

[mathjak107]

i see an expense comparison on index funds is a mixed bag

at vanguard

vtsax .05 vtsmx .17

at fidelity

fstvx .07

fstmx .10

 

[mathjak107]

Fidelity does not care about their customers IMO. They find it too difficult to enable Hardware Token protection on 401k accounts.

Protect Your Investment Accounts With A Security Token: Fidelity, Schwab, E*Trade, Vanguard

And their index funds charge higher fees than Vanguard or Schwab.

Hence I would not open brokerage account with them and I would not invest in their Index Funds. Managed funds that do well one year do not interest me.

i would never own the funds at the top of the heap as odds are they are the same funds at the bottom down the road.

but the good long term performers in the middle of the pack tend to do very well year after year long term.

to me it is a rediculious comparison anyway since any returns posted are strawman returns no one actually gets.

unless you bought in at the exact point of the index or funds tracking , never added money , never dollar cost averaged , never rebalanced , all your own personal intervention makes your personal return very different than what is posted.

paying a slightly higher fee and better rebalancing execution or picking a better time to add money offsets the fact you may pay a slight bit more.

in my opinion to much time is spent fighting over which is better over returns no one really gets and even if you do get exactly that return a better tax strategy can offset any difference again.

 

[eta2020]

I just buy Equity Index ETFs and forever hold it enjoying dividend yield. (Never rebalance but maybe add)

So for me lowest cost Schwab and Vanguard makes most sense.

 

[JPatrick]

Any idea why they refused to help you switch to similar Fidelity funds?

That is a bit puzzling..

 

[eta2020]

paying a slightly higher fee and better rebalancing execution or picking a better time to add money offsets the fact you may pay a slight bit more.

in my opinion to much time is spent fighting over which is better over returns no one really gets and even if you do get exactly that return a better tax strategy can offset any difference again.

People like you and me don't know when to buy and they also do not know when to sell
So I just except that fact.

 

[MRG]

Fidelity does not care about their customers IMO. They find it too difficult to enable Hardware Token protection on 401k accounts.

Protect Your Investment Accounts With A Security Token: Fidelity, Schwab, E*Trade, Vanguard

And their index funds charge higher fees than Vanguard or Schwab.

Hence I would not open brokerage account with them and I would not invest in their Index Funds. Managed funds that do well one year do not interest me.

No argument but I really don't understand your link. Seems like Fidelity has the same two factor ids as VGI or Schwab, perhaps the opening of the processing id different? I don't find a .01-.02% on some index funds too much of a difference. Could you explain your opinion to a dummy like me. Thanks.

 

[mathjak107]

there really is no difference at that level and so many other factors as i mentioned above would cover up and change the outcome of 10x that difference.

 

[mathjak107]

People like you and me don't know when to buy and they also do not know when to sell
So I just except that fact.

which is just why i think arguing about indexing vs managed or vangurad expenses vs fidelity is a silly comparison. it all boils down to your own personal return and you cannot compare that to anything else. that will involve your timing of buys and sells or lack of timing , your rebalancing ,your allocations , your dollar cost averaging time frame and your tax structure.

at the end of the day looking at expenses or index vs managed is only a small part of what is going to determine your outcome and it may be the wrong part..

 

[eta2020]

No argument but I really don't understand your link. Seems like Fidelity has the same two factor ids as VGI or Schwab, perhaps the opening of the processing id different? I don't find a .01-.02% on some index funds too much of a difference. Could you explain your opinion to a dummy like me. Thanks.

Good question. Yes fidelity protects brokerage account but if you have 401k managed by Fidelity accessible via 401k.com that site is not protected by hardware key. (Even if you own Fidelity Brokerage Account with Hardware protection).

 

[mathjak107]

personally in 25 years and most of it on line i never had any reason to be concerned.

 

[bUU]

Fidelity does not care about their customers IMO. They find it too difficult to enable Hardware Token protection on 401k accounts.

That is a bit like saying that parents do not care about their children because they don't protect them from everything that could harm them when they're off on their own. They provide less security that many of us customers would prefer, but that doesn't translate into a categorical "not caring" about their customers.

And their index funds charge higher fees than Vanguard or Schwab.

I've compared Fidelity to Schwab. The difference is marginal. Vanguard is supposed to have lower fees than both Fidelity and Schwab - they don't offer their customers local investor centers - does that mean that Vanguard doesn't care about their customers?

 

[mathjak107]

good point . we go to the local seminars here and they are excellent. i hope to go much more often once we finally retire in july.

we have accounts at both vanguard and fidelity but 90% of our money is now with fidelity.

 

[samclem]

in my opinion to much time is spent fighting over which is better over returns no one really gets and even if you do get exactly that return a better tax strategy can offset any difference again.

If an investor pays higher costs/fees, his return will be lower than it would otherwise be. We can adopt better or more "lazy" tax strategies, rebalancing, try to time the market, etc, etc, but the expenses paid will always diminish the bottom line.

 

[Chuckanut]

IMHO, Vanguard's real competition is Schwab. Some of their ETF's are almost free. And they have local offices one can visit if one needs help filling out the form to transfer funds from a high fee institution.