Fidelity: Anyone here ever let them manage your money?

[Orchidflower]

I am wondering if anyone here has ever just turned over their account to Fidelity to manage (stocks, bonds)? And did you make any profit doing this or did you just break even at the end of the year after your account paid all their expenses?

Some years ago a friend of mine had a broker manage her account for a year or two and found she just broke even. Not sure who she used, tho, but just remember the story. (She buckled down and did it herself after that.)

But two things: I am in the beginner stage in my mind and will be taking a number of overseas trips and can't watch the stocks, so it is a consideration for a couple years.

Anyone here actually give it all to Fidelity to manage is the question, tho?? Worth it or not?

 

[LOL!]

I do not have Fidelity manage my money, but I have seen portfolios put together by Fidelity. Rather than simple 3-6 index funds, they tend to have 20 or more overlapping actively-managed funds. I will try to find some links where folks posted their Fidelity portfolios, but you can get an idea of what happens by looking at the funds inside a Fidelity Freedom fund and contrast that with funds inside Vanguard Target Retirement fund.

I have a 401(k) from Fidelity. I use only 3 Spartan index funds and a bond index fund. I like those funds because they have ultra-low expenses. I would not use any of the Fidelity actively-managed funds.

If you are considering letting Fidelity manage your assets, then you should also consider letting Vanguard do it. There are also low-cost outfits that use DFA funds that I think would be better than Fidelity.

Here's a link with more links on the subject: http://www.bogleheads.org/forum/viewtopic.php?p=685960

 

[REWahoo]

I...will be taking a number of overseas trips and can't watch the stocks...

You say that like it's a bad thing. Actually, those of us who aren't active traders should probably do much less "stock watching" and get on with enjoying life.

I second the suggestion you consider Vanguard. If you want to spend the money to have someone else manage your portfolio*, I'm guessing they would be the lowest cost alternative.


* I cringed when typing this. In my admittedly biased opinion, you'd be much better off with a simple, low-cost DIY mix of Wellesley, Wellington and cash. Have the dividends from W&W fund your cash account and look at it once a year to rebalance.

 

[dex]

You say that like it's a bad thing. Actually, those of us who aren't active traders should probably do much less "stock watching" and get on with enjoying life.

Very true. If your stocks are influencing your enjoyment of life you should consider another method. I don't buy individual stocks any more.

You could consider using a stop loss order on the stocks until you make the change.

 

[Jake46]

I second REWahoo. Since moving to a simple portfolio (total stock market, total international stock market, total bond market & TIPS fund) I just don't lose sleep worrying about my investments.

 

[travelover]

.................* I cringed when typing this. In my admittedly biased opinion, you'd be much better off with a simple, low-cost DIY mix of Wellesley, Wellington and cash. Have the dividends from W&W fund your cash account and look at it once a year to rebalance.

My thoughts exactly. I don't believe that you need any one to manage your portfolio day in and day out.

I have half my stash at Fido, but like others I'm in their Spartan funds and Ishares for TIPs

 

[Animorph]

Yep, buy funds yourself and don't worry about them.

If someone is managing your portfolio, I think they should be buying stocks for you, not funds that also charge a management fee. Too many fees otherwise.

If you really don't want to bother with it, then look at all your options, not just Fidelity. I may very well go with Fidelity as well if managing my portfolio becaomes too much for me or my DW has to take over. But I'll delay the expense as long as I can.

 

[ziggy29]

In my admittedly biased opinion, you'd be much better off with a simple, low-cost DIY mix of Wellesley, Wellington and cash. Have the dividends from W&W fund your cash account and look at it once a year to rebalance.

This is pretty close to what I have my mom's Vanguard IRA in these days -- also with a slug of their TIPS fund bought near the lows in late 2008.

 

[Orchidflower]

My thought was to allow them to manage the account for a very short term until I can get more up to snuff with information on investing. A short term 6 months or so. Does that sound unreasonable?
The money is making zip in what it had been in, and I am overwhelmed for the next two months with other things, so my thought was having them move the stock/bonds I had into better things for me during this time. I can drop them then and do it myself.
My one consolation is that Fidelity is no Madoff fund anyway, so I feel secure it won't be blatantly ripped off. But, right now, I have no time to fiddle with it at all and it really had tons of loser stocks in it (long story as to why).
Fidelity charges a percentage of your total account to do this, but I was told you could drop them whenever...and whenever would come sooner rather than later with me.

 

[Gotadimple]

What you're looking for is a plan for your investments.

Why not consult with a (gasp!) financial advisor -- even at Fidelity for a model portfolio that meets your needs. Then set up the portfolio, and walk away, except for annual reviews. It might be less than turning over assets for any period of time, assuming a fee of 1.5% of assets. That's all the FA would do, unless you are giving them full control to trade on your behalf.

Rita

 

[Orchidflower]

We got the model portfolio done, so I have that in my hot little hands now. Their fee is a sliding scale and goes down the more you put in FYI.
I think the smart thing for me to do is leave my Fidelity bonds and one stock at Fidelity, and move all else to Vanguard then for the lower fees. I'm learning...

 

[wolf]

OP:

Strange. I think your orginal question was, Has anyone allowed Fidelity to manage all of their funds.

No one answered yes.

This site has some pretty good investors. Maybe, the "silence", means NO!

 

[LOL!]

Let me discuss what I think "managing assets" entails. It is not rocket science. Also I am not sure whether the advisory services of Vanguard or Fidelity would be up to snuff. Here's the gist of it:

1. Set up an "Investment Policy Statement" and an asset allocation for your portfolio and then invest into that asset allocation. This is relatively easy to do and the bogleheads can help with that. You would end up with a plan like this (example only!):
50% equities, 50% bonds. Of the 50% equities, half in US, half in foreign; so that's 25% in US funds and 25% in foreign funds. Of the equities half in total market or large cap and half in small cap. So the 25% in US stock funds would break down into 12.5% Total Stock Market index fund (VTSMX or FSTMX) or in the ETF equivalents and 12.5% would go into Small cap index or Small cap value index. Same with foreign.

So you might end up with 4 equity funds and a total bond market index fund. That's just 5 index funds, but you would have to figure out percentages based on your situation. You could have a few more index funds if you wanted (REITs & TIPS come to mind).

Then you would have to decide which accounts they would fit in with an eye on tax efficiency. You might have to have the same fund in more than one account (his & her Roths, for example).

2. Now the next part is the actual management of the portfolio. Would the advisor or service do all the tax-loss harvesting in taxable accounts for you? When would they rebalance? Would they collect all the dividends and use them in ongoing rebalancing transactions? I'm not sure they would. They might look only once a year or twice a year and send you e-mail on what they think you should do.

3. What about decumulation or withdrawals? Are the managers going to suggest the most tax efficient method? Are they going to suggest conversions to Roths while keeping an eye on your tax bracket?

I think the reality is that both Fidelity and Vanguard are not going to really "manage" much of anything for you. The good news is that you don't really need to do these things unless you want to eek out another 0.5% to 1% return per year and save money on your taxes. You could easily do it all yourself with about an hour's work every year once you were all set up and confident about it. The problem is getting all set up and confident.

Basically, I've described buy-and-hold with ongoing tax-loss harvesting and rebalancing. There's not much else to it.

 

[audreyh1]

I don't own stocks so that I don't have to watch them. I just own a set of mutual funds. I don't watch them either - no watching necessary.

I wouldn't use a fund company like Fidelity or Vanguard to manage my money - certainly not individual stocks and bonds. That's what mutual funds are for. I would just pick a mutual fund and put all my money there.

If I really wanted to set it and forget it, I would probably put all my money in Vanguard Wellesley, live off the distributions, and not worry.

Audrey

 

[kumquat]

My thought was to allow them to manage the account for a very short term until I can get more up to snuff with information on investing. A short term 6 months or so. Does that sound unreasonable?

In the very short term, leaving it "where it is" may well be cheaper than 2 moves. Then in 6 months or so when you are up to snuff on investing, you can handle it. If we have a boom, FIDO won't predict it. If we have a bust, FIDO won't predict it. Most here are saying pick an AA (or strategy) for the "long term".

As others have said: make a plan and follow it. Paying FIDO (or anyone else) is not a plan. Make that "not necessarily a good plan".

OTOH, be glad you have enough to have this problem.

 

[scrabbler1]

I began meeting with one of Fidelity's advisors back in 2008 when I was planning my ER for later that year. I just wanted to have someone else look at my overall plan to see that I had not overlooked anything big and wasn't planning some pie-in-the-sky thing.

That advisor (actually, her successor; she left Fido that summer) also handled my somewhat complicated setup of my rollover IRA and big bond fund account that November after I left my company. He also showed me some more tips as to how to manage things using their website I had not known. He gave me some general advice in response to my questions. All of this was done at no cost.

I still meet with Fido reps every year or so although the last one I met with I did not like and asked to be switched to another one. I can manage my portfolio just fine.

As another poster mentioned, an index fund is a good way to reduce one's expenses. I have had one in my IRA (and its 401(k) predecessor) for more than 20 years. Compounded over 35+ years, an extra 1% return from a lower expense ratio will give me a lot more in the account.

 

[Orchidflower]

The firm (a name brand) we were with had a rep who was leaving and set us up with high front end loads and dog stocks. He knew neither one of us was in a position to know what he was doing and took advantage. He made his profit, is off to another company and I am hoping he gets it back in this life. Karma can be a mother. (It's a long story as to how we got into this and why we stayed, so why bore you.)

So, here we are today:

The Fidelity rep hammered me yesterday about giving them all the investments and money from the bank to invest for me = nice profits for them. It was an interesting experience having been in sales/sales management for almost 35 years sitting there and listening to the hard sales pitch for their investment services...and I do mean hard. It sure wiped out my afternoon as I came home with a major headache from this little meeting. Hello, Excedrin!

Needless to say, it would be wonderful for someone to manage the investments so I wouldn't have to dig in and learn all these things when I have other things I'd rather do. Unfortunately, that isn't the best plan.

I posted this question to see if anyone ever has had Fidelity or another manage their money. I hear about people doing it all the time (i.e., Madoff's victims), but only know one person right now personally who did it and, as I said, just broke even. Even...well, heck, I can do that one all by myself...ha!

I considered having Fidelity manage for a short while, but that would be another 3-6 months with no or little profit. I've been there, done that the last five years. I just wanted confirmation on what I thought. So, I came to the board and asked all you knowledgeable folks your opinion and got it: seems nobody likes the idea. I got that loud and clear.

By asking you knowledgeable folks--who have no vested interest in my investments--I get the objective opinions I wanted to hear. Thanks all for that.

By the way, my personal investing course Professor used Kiplingers for all his investment advice. He was loaded with money by doing that. Guess there are many different ways to do it.

 

[perrytime]

Yes, I was in the "professionally managed" fund at Fidelity. it cost 1% of the value of the fund, per year. ONe of the pitches was they could get into funds I could not. when the market was going up, they made money and I was happy. I was in growth model, it held dozens of things, did trades regualarly. But in 2008, when the market crashed. They stuck to their stupid model, buy and hold, they didn't move $ to safe haven, compared to the peak value, they lost 50% of my money. Un acceptable. So being layed off, and having the time, I took on the task of managing my own. It is impossible for me to say if I have done better or worse than if I had left my $ with them. I am up almost 40% percent, from 11/08 to now. I would not suggest newbie take on managing his own stock potfolio. I suggest buying into a few big funds, like FNMIX, TEGBX, look at growth charts of funds you are thinking of, not just price charts. and use simple moving average technical indicator to tell you when to get in or out of the market. And stay away from stocks. Until you become better trained.

 

[crispus]

I also used the Fido management group for a short time. I am 56 years old and they had me in a 70/30 split equity to income. Fortunately I did well as the market was going mostly up in the 6 months that I was with them. However fees were at .75%. I looked into the funds that they put me into and the funds all had large fee structures already built into them. They even used funds of funds. I noticed that on the weeks that the market went down the results were large drops in asset value. I decided to take my money out and move it into index funds. My Fido rep then started calling me with the hard sell to stay with them. They offered to lower my fee to .58% and told me that I would be sorry and that I was making a stupid decision as they had 90 person advisory staff constantly evaluating my investments to get maximum returns.

I still use a fee only financial advisor. They invest in 50/50 ratio of index funds. I have about 7 funds. We use Bill Schultheis writer of the Coffeehouse Investor. I have been very happy with this approach. I know that I could do it on my own, but for the .5 percent we get a lot of great advice on all future financial concerns. I like the hand holding and sleep well now.

 

[audreyh1]

My thought was to allow them to manage the account for a very short term until I can get more up to snuff with information on investing. A short term 6 months or so. Does that sound unreasonable?

Yes, that is unreasonable. Because when you decide to change things, there are probably tax consequences. It does not make sense to invest one way for 6 months, and then completely change things.

It's better to wait the 6 months in cash while you figure out what you want your long term investment plan to be.

And there is nothing wrong with keeping things as simple as possible and investing in a low-cost, conservative balanced fund like Vanguard Wellesley.

Audrey

 

[brewer12345]

Funny, a colleague who has an MBA, does a finance-related job and worked for an accounting firm just asked me the other day if I could recommend a financial advisor. My first thought was, weren't you paying attention the last decade of work and school? But my blunt answer was the best person to manage your money is you. If you can manage 6th grade math and reading comprehension, you can figure this stuff out. Believe me, if the average fido/amerisprise/whatever rep can do it, you definately can.

As for time commitment, it can be very small. You will have some upfront investment in time to educate yourself. After that, 15 minutes a year can do it if you choose a simple, diversified portfolio. I manage 4 portfolios in addition to my own. One is managed similarly to my portfolio: aggressive, focused on individual securities, and high tolerance for risk. This requires time and a lot of effort, but I am a securities analyst by training and profession, so no biggie for me. A second account is invested as a diversifier to the person's equity-heavy main account, in both traditional mutual funds and closed end funds. I might spend a half dozen hours a year on this account, mostly making tactical adjustments when the oddball stuff in that account gets really cheap or really expensive. The last two I literally spend under an hour a year on. They are simple, diversified index portfolios the just need to be rebalanced once a year.

 

[FUEGO]

I would not let Fidelity manage my funds. I'm not biased, since I invest with Fidelity and love their brokerage service. Free trades on a lot of ETFs from ishares IIRC. $8 for all the rest (not sure if that is dependent on assets invested. Good trading tools and good web interface (blows Vanguard out of the water IMHO).

But all I have heard from those who have their assets managed by fidelity is that they stick them in a bunch of actively managed Fidelity funds that charge 4-5x what comparable index funds charge for the same asset classes. And charge them a fee based on assets under management for this "privilege". If you don't mind cutting your SWR in half or by a third, then go right ahead and have Fidelity actively manage your money. I would trust them a lot more than an Edward Jones/Northwestern Mutual type of investment manager.

 

[rescueme]

DW/me have our combined portfolios split 60/40 FIDO/VG.

We met with FIDO at their local office twice before I retired to go over our plans and how they fit with our total portfolio.

When I actually retired in 2007 (DW still is hesitant to take the plunge, even though she could), Fidelity moved us to their "Private Client Group" (similar to VG's Flagship) since my FIDO 401(k) was rolled into a FIDO commercial account, along with the proceeds of my retirement cash balance plan.

I investigated their Fidelity Private Portfolio Service option, since we did not need their trust services (we had our own and they have it as part of their FIDO Personal Trust option).

After calculating their annual fee structure for our combined portfolio, I decided to continue to manage our investments on our own. The way I looked at it was that I was being "paid a salary" (at their management rates) to manage our portfolios, and while I'm not saying we won't have them (or anybody else) in the future for fee based services, I'm just not ready for this time of my life. Even though our fee would be slightly less than 1%, I look at that 1% as a "load" and 25% of a 4% portfolio draw target, in addition to the costs involved for the underlying assets.

DW has their information and has it as an option, assuming I pass first and she feels uncomfortable with the plans I've already put in place. Since I've covered her expenses for 1-2 years after my passing via term life, she won't have the pressure to do something immediately related to portfolio withdrawls, and can review the options available to her with our elder law attorney. Additionally, the insurance provides income while she makes the decisions realated to SS and our household expenses (I'm delaying SS for her benefit, and I currently cover most/all household expenses out of "my" budget).

BTW, here's their current fee structure:

Fidelity Investments: Fidelity Private Portfolio Service Cost

 

[FinanceDude]

But all I have heard from those who have their assets managed by fidelity is that they stick them in a bunch of actively managed Fidelity funds that charge 4-5x what comparable index funds charge for the same asset classes. And charge them a fee based on assets under management for this "privilege". If you don't mind cutting your SWR in half or by a third, then go right ahead and have Fidelity actively manage your money. I would trust them a lot more than an Edward Jones/Northwestern Mutual type of investment manager.

Fido is a two-edged sword, they run a no-load house and a load house side by side. of course, the reps at Fido are "encouraged" to use the Fidelity Advisor Funds (loaded)for client portfolios because the company makes more if they do.

Wrap accounts were big in the 90's, now firms like Fido are recycling them under an asset allocation/Ibbotson mantra. Same stuff, different decade. Do you really think an Ed Jones or NML rep can't use Fido? Because that is simply not true........

 

[FUEGO]

Wrap accounts were big in the 90's, now firms like Fido are recycling them under an asset allocation/Ibbotson mantra. Same stuff, different decade. Do you really think an Ed Jones or NML rep can't use Fido? Because that is simply not true........

I assume Edward Jones and Northwestern Mutual reps get more kick backs from other fund companies besides Fidelity. And there is the "keeping up appearances" of (a) not selling fidelity funds, because then clients may wonder why not just go to directly to fidelity for money management and (b) why is my adviser sticking me in more expensive Fidelity Adviser funds with loads instead of the equivalent Fidelity counterparts without loads.