Can We Trust Fidelity?

[OldShooter]

Like many of you, I'm sure, I get into investing discussions with people that occasionally included discussing brokerage houses. I have always felt like Fidelity, Schwab, and Vanguard are the big white hats of the industry. I will also occasionally warn against the many black hats, like "Fast Eddie" Jones. I am also teaching an adult ed class for the local school system, so the topics obviously come up there as well.

I am starting to wonder about Fideltiy.

1. For background for the class, I visited the local Fido branch last summer and spent some time with the branch manager. I was quite impressed with everything except their corporate position on passive/index investing. He gave me a handout piece that could most generously be described as disingenuous and possibly accurately described as dishonest.

2. In March Reuters published a special report ("Fidelity puts 6 million savers on risky path to retirement") detailing how Fido had surreptitiously adopted some very risky strategies in an attempt to juice up their underperforming target date funds. (https://www.reuters.com/article/us-...ers-on-risky-path-to-retirement-idUSKBN1GH1SI)

3. Now this morniing I see @DFW_M5's thread on Fidelity's "RMD" funds, which appear to be huge ripoffs targeting unsophisticated customers. (http://www.early-retirement.org/forums/f28/fidelity-rmd-funds-91799.html). Frankly, it looks to me like any FA who put a client into these would be in breach of fiduciary duty.
​

I was actually going to title this thread "Can We Still Trust Fidelity?" but maybe I have been wrong from the git-go, not just recently.

What do you think?

 

[Jerry1]

I’m with Fidelity, but I don’t feel that I can trust them or any of the financial firms. Talk about a buyer beware industry. Unfortunately, the industry can also be very complex and therefore a bad situation for anyone who needs to blindly trust them.

My Fido rep definitely pushed the managed funds and could not give a good reason to use them over index, low cost funds. We have a pretty frank relationship and the best she could come up with is that they would keep me from hurting myself. Knowing some of my past moves into and out of the market, I did not take offense to this, but I can also be more structured to a goal for the kind of money their fees would total out to.

 

[braumeister]

I am starting to wonder about Fidelity.?

I began to wonder about them a few years ago when a WSJ piece about Abigail Johnson said

Despite the numbers, Ms. Johnson believes investors’ push into passive funds is a temporary trend and will reverse when performance improves, according to executives who are familiar with her thinking. “She believes it’s cyclical,” said Brian Hogan, president of Fidelity’s equity division.

I still have most of my modest stash there, but I'm watching what they do. That item posted by DFW_M5 was troubling IMHO.

 

[MRG]

I'm not happy with Fidelity at all anymore. Why? A hard sell on an annuity from a new Private Client rep(I started a thread last year but can't find the search). Anyway I told Fidelity I didn't want to hear from him again. Told the 800 number and the branch manager. That was 3 months ago and his assistant just called me last week. I told him I had fired the guy in January.

So I had another call with the branch manager. He's useless! After 3 months his solution was to tell me about their website! Really?

 

[Dtail]

I have been with Fidelity for 30+ years. Some thoughts.
Customer Service - it has been really great. When setting up my parents trust, I had tons of questions which they explained thoroughly. Always professional treatment.
Anytime I have a general investment query, I receive quick responses from any of their generic reps (don't have to go to MY specific rep) with almost no phone wait time.

Specific Rep - when I moved to Tampa and met my new rep, he was very gracious and saw that I am a detailed low cost index person, as I brought in 6 different spreadsheets to review with him. He did not push a single managed fund product. Just advised to get a little more Int'l Bond exposure.

Products/Fees - although it doesn't appear to me that they have as many low cost managed funds as Vanguard, their index fees are similar.

So overall, my experiences have been very good.

 

[MichaelB]

I'm not happy with Fidelity at all anymore. Why? A hard sell on an annuity from a new Private Client rep(I started a thread last year but can't find the search). Anyway I told Fidelity I didn't want to hear from him again. Told the 800 number and the branch manager. That was 3 months ago and his assistant just called me last week. I told him I had fired the guy in January.

So I had another call with the branch manager. He's useless! After 3 months his solution was to tell me about their website! Really?

Is this is? http://www.early-retirement.org/forums/f44/fidelity-wealth-advisor-solutions-89912.html

 

[OldShooter]

... So overall, my experiences have been very good.

Yes. As I said I was impressed with the branch manager I interviewed. I'm sure there are a lot of nice and competent people that work there.

My concern is really about corporate integrity. People might differ on my and @braumeister's issues with their position on passive investing but the Reuters report and now this RMD thing really scream out to me that this is a company that shouldn't be trusted.

I'm kind of a "one strike and you're out" guy on integrity.

 

[MRG]

Is this is? http://www.early-retirement.org/forums/f44/fidelity-wealth-advisor-solutions-89912.html

Yes thank you.

 

[TimeMeasure]

In addition to all the anecdotes about Fidelity’s dubious investment advice, the customer service model has some bearing.

Although there have been threads about Vanguard’s customer service not measuring up to Fidelity’s, the experience here has been opposite. Maybe just luck, but perhaps also a function of the service model itself:

At Vanguard, the dedicated Flagship representative has always been an efficient, friendly, knowledgeable single point of contact. Any question, he either knows the answer or follows up and gets it.

At Fidelity, the dedicated representative (forget their name for it, believe it’s Private Client Group advisor) is actually not an account advisor in the same sense as at Vanguard, but rather, someone who is there to “help with financial planning,” not answer account-related questions.

Last year, had to pose the same question to both Vanguard and Fidelity. The Vanguard Flagship rep nailed it immediately. The Fidelity Private Client Group rep indicated that he wasn’t really there to answer account-related questions, but rather, to help with financial planning, and had to turn me over to someone else... who in turn had to refer me to someone else.

The difference in service level was stark, but aside from that, it makes one question - why would a firm position someone as a dedicated rep, and not have them knowledgeable on how to service the accounts, but instead only on financial planning - unless part of the intent is to steer the account-holder toward investments which benefit the firm, rather than efficiently service the account-holder? Perhaps that’s too cynical, but there wasn’t another reason for the difference in service model that was immediately obvious.

 

[Bestwifeever]

I thought you meant, can we trust Fidelity with our money? Hope it's safe there!

Virtually all of our $ is IRAd at Vanguard, with $60K after tax at (eek) Edward Jones in DH's small hometown branch that he kept there after an inheritance so, his choice, but the funds are set and not churned. I have been thinking about RMDs that start next year (DH turns 70 in December 2018). DH loves face to face interaction, so we might move the RMDs as they occur to Fidelity, which has an office within five miles of our house, so he can annoy the Fidelity rep, who will soon learn not to contact DH with suggestions. Sounds like we need to be strong in insisting on index funds.

 

[Freedom56]

Like many of you, I'm sure, I get into investing discussions with people that occasionally included discussing brokerage houses. I have always felt like Fidelity, Schwab, and Vanguard are the big white hats of the industry. I will also occasionally warn against the many black hats, like "Fast Eddie" Jones. I am also teaching an adult ed class for the local school system, so the topics obviously come up there as well.

I am starting to wonder about Fideltiy.

1. For background for the class, I visited the local Fido branch last summer and spent some time with the branch manager. I was quite impressed with everything except their corporate position on passive/index investing. He gave me a handout piece that could most generously be described as disingenuous and possibly accurately described as dishonest.

2. In March Reuters published a special report ("Fidelity puts 6 million savers on risky path to retirement") detailing how Fido had surreptitiously adopted some very risky strategies in an attempt to juice up their underperforming target date funds. (https://www.reuters.com/article/us-...ers-on-risky-path-to-retirement-idUSKBN1GH1SI)

3. Now this morniing I see @DFW_M5's thread on Fidelity's "RMD" funds, which appear to be huge ripoffs targeting unsophisticated customers. (http://www.early-retirement.org/forums/f28/fidelity-rmd-funds-91799.html). Frankly, it looks to me like any FA who put a client into these would be in breach of fiduciary duty.
​

I was actually going to title this thread "Can We Still Trust Fidelity?" but maybe I have been wrong from the git-go, not just recently.

What do you think?

I have accounts at Fidelity, Schwab, and TD Ameritrade with substantial holdings at all three firms. Fidelity and Schwab are okay for fixed income trading. Fidelity managed funds are generally poor performers and people should avoid them. I am contacted regularly by the wealth management arm of all three firms, but I will never use their private wealth management services. But I don't refuse the free gifts they send me regularly (concert tickets, bottles of wine, watches, tablets, gift cards). They send my wife (the joint tenant in my accounts) flowers several times per year. It's funny how then send free stuff to people who need it the least. Most investment advisers are sales people trying to sell products for their benefit. The vast majority of them live paycheck to paycheck. Why would you trust them for financial advice? The bottom line is, learn to manage your investments on your own and you will stay out of trouble. Only invest in things you understand.

 

[candrew]

My Fido rep definitely pushed the managed funds and could not give a good reason to use them over index, low cost funds. We have a pretty frank relationship and the best she could come up with is that they would keep me from hurting myself.

This mirrors our experience with the local Fido office. Their rep cautioned us - with a very serious expression on his face - that by using low cost index funds and self-managing, we'd have to take the responsibility upon ourselves for rebalancing. Fortunately, we have lots of experience with calculators and basic arithmetic.

 

[hesperus]

Yes. As I said I was impressed with the branch manager I interviewed. I'm sure there are a lot of nice and competent people that work there.

My concern is really about corporate integrity. People might differ on my and @braumeister's issues with their position on passive investing but the Reuters report and now this RMD thing really scream out to me that this is a company that shouldn't be trusted.

I'm kind of a "one strike and you're out" guy on integrity.

You're overreacting IMO.
Just don't use fido for their products, and/or put your money somewhere else... Your posting history has shown you are a rather difficult person to please anyway

 

[eytonxav]

Fidelity is one of the best places to house your investments considering the breadth of offerings (including low costs), their investment tools and online site and a store front if you choose to use it.

As to the post I made on the Fidelity RMD offering, that was not pushed on me, I came across that on my own, and despite the naysayers it might be a viable option for certain situations. That said, I do not allow any investment advisors to dictate what I will or won't do, but getting inputs from various sources is never a bad idea, but after that I make my own decisions.

 

[Cobra9777]

I trust Fidelity to house our money.

I have zero interest in their actively managed mutual funds or target date funds, zero interest in their branch manager's opinion about passive vs active investing, zero interest in their RMD funds (whatever that is), zero interest in talking with my PCG rep unless I need help with something, zero interest in all the other products and services they offer to make money, and zero interest in quotes in the press from their senior executives.

I hold all my Vanguard and iShares ETFs at Fidelity. I'm a DIY, buy-and-hold, low-cost index investor. And Fidelity's platform suits my needs perfectly. Great website and online tools; and great service when I need it. All our accounts are there except some cash reserves at Ally. We use their cash-back CCs and CMA for all banking activity. I ended up with this arrangement after a lot of research 6 years ago into Fidelity, Vanguard, and Schwab.

 

[Dawg52]

I have the opposite experience with Fidelity. I talked to my PC rep for the first time in over two years just last week. He never tries to pressure me into buying anything. Made a couple of suggestions on my overall AA and said he was there for any questions I have in the future but that's it. I told him I would call if needed. Doubt I will be hearing anything from him for another couple of years which is fine with me......

 

[marko]

Ok, but let's remember that the folks here are a unique group with generally a higher level of investment sophistication. Some people really do need a push into managed funds, annuities or what we here might call "dubious investment advice".

I have a small-ish amount in Fido with the balance at TR Price but I pretty much choose my own funds.

I once had a TRP advisor suggest changing my AA but before I did I found that he was talking about a change of 2% here, 1% there and 2% somewhere else...certainly not worth the time or effort for me, but someone else might need such guidance.

Overall, I find Fido, TRP, Vanguard to be white hat guys.

 

[Corporateburnout]

I have the opposite experience with Fidelity. I talked to my PC rep for the first time in over two years just last week. He never tries to pressure me into buying anything. Made a couple of suggestions on my overall AA and said he was there for any questions I have in the future but that's it. I told him I would call if needed. Doubt I will be hearing anything from him for another couple of years which is fine with me......

+1.

Have been with Fido for 30 years and I'm very pleased with their tools, customer service and website. Last time I met with my private client rep was 2 years ago. He never sells me anything and knows that I'm a DIY and that I would call him if I need help.

 

[mamadogmamacat]

I have had only one interaction with a Fidelity rep. Everything else has just been on-line or automated phone system. The one interaction was simply in regards to some difficulties in setting up a transfer with my CU. It took a while, maybe 15 min. on the phone to resolve the problem, and we chatted a bit so there were opportunities, actually a bit deliberate on my part, to see if I would be steered into any investments beyond my current Fidelity holdings, which have been in the same two index funds for the past 25 yrs. There was no attempt whatsoever. This conversation occurred only last month. So, perhaps its just a matter of the individual rep? Or maybe, with my history, he just assumed there was little likelihood would be open to change? And that last would be correct.

 

[Closet_Gamer]

As indexing and the trade price wars continue to eat the profits of even the white hat Schwab, Fido and Vanguards of the world, I do fear that the nature of these firms will change as they try to drive profits.

In particular, I wonder about them creeping expense ratios back up on their index funds. Would be super easy to do and price signal between them. For those of us with large capital gains sitting in ETFs, it would likely be irrational to sell and move to another provider.

The market will provide some discipline as all companies are seeking new money into these funds, but we shouldn’t be surprised to see the companies get more aggressive in certain ways.

Even white hats have shareholders to please.

 

[Another Reader]

I don't like the expense ratios in accounts that you are de facto required to use, such as the settlement accounts. 0.42 percent expenses on federal and treasury money market accounts is steep, especially compared to Vanguard. I'm also unimpressed with the cash management account, on which you earn almost nothing. My cash is apparently held at Discover, where you can earn 1.5 percent on a savings account. I'm thinking of closing the cash management account because of this, as I can get the same benefits elsewhere.

 

[Gumby]

Even white hats have shareholders to please.

Vanguard has no shareholders as commonly understood. It is owned by the people who invest in its mutual funds - i.e. its customers.

 

[nwsteve]

I trust Fidelity to house our money.

I have zero interest in their actively managed mutual funds or target date funds, zero interest in their branch manager's opinion about passive vs active investing, zero interest in their RMD funds (whatever that is), zero interest in talking with my PCG rep unless I need help with something, zero interest in all the other products and services they offer to make money, and zero interest in quotes in the press from their senior executives.

I hold all my Vanguard and iShares ETFs at Fidelity. I'm a DIY, buy-and-hold, low-cost index investor. And Fidelity's platform suits my needs perfectly. Great website and online tools; and great service when I need it. All our accounts are there except some cash reserves at Ally. We use their cash-back CCs and CMA for all banking activity. I ended up with this arrangement after a lot of research 6 years ago into Fidelity, Vanguard, and Schwab.

+1 Pretty much mirrors our approach. With one exception and she did not last long (Fido moved her), I have had Private Client reps who have always been professional and helpful. On occasion, they might suggest a product or an approach that was not to be my taste, but they always dropped it when I declined any interest.

 

[Closet_Gamer]

Vanguard has no shareholders as commonly understood. It is owned by the people who invest in its mutual funds - i.e. its customers.

I didn't know that. Very cool.

Thanks.

 

[audreyh1]

Even white hats have shareholders to please.

Fidelity Investments is privately owned, and the shareholders are mostly the Johnson family. So yes, there are shareholders but it is a little different from a publicly traded company.