Fidelity moves to the dark side?

[FinanceDude]

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.

Fido has been operating in a never-ending circle of confusion since they support and run two different business models. One is their direct business, much like Vanguard's models. The other is Fidelity Advisor, pretty much the same Fidelity funds but with added expenses to pay 12B-1 fees and front or deferred load share classes. All the TV ads are for the direct business AFAIK. Then they call me several times a year and ask why I don't use their advisor class funds..................

 

[james7]

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.

A very interesting post considering that the Fidelity annuity pushers that pursued my friend (described in my previous post in this thread) were also out of the Towson, MD Fidelity office.

 

[clifp]

Schwab adviser are also compensate to a modest extent by their ability to push client into higher margin products. The top choice is to hand over the money to financial adviser who invest the money for <1% fee, or use Windhaven portfolio with a similar fee. They get a modest bonus if you invest in Schwab funds, (and probably ETFs).

Thankfully, they have not yet pitched either annuities or life insurance.

 

[dessert]

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.

So what company is she with? Nice perks for you!

 

[panacea]

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.

I have to tell you, I hadn't personally experienced this at all at Fidelity so what I'm saying is strictly second hand. No one has ever called me from Fido trying to sell me an annuity. However, I believe our new hire to be of very high caliber and he had worked with Fidelity for about 10 years. From what I understand, many of these new goals stemmed from the crash in 2008. As investors began to pull money out of accounts, Fido began looking for alternative ways to generate additional income. It sounds like the goals given to the Fido reps were intially more like "targets" designed to help the representatives cover all the issues with their clients. Maybe?? Don't know. But apparently, the targets kept increasing to the point where "I'd have to try to pitch an annuity to every person that sat in front of me to hit my goal" in the words of our new hire. I think at the time he left, his annuity goal was $4 million. As far as annuities go, Fido's are some of the better ones, but that doesn't mean they are right for everyone. Here was another problem- he was strongly encouraged by Fido to obtain his CFP, but then was given goals that were inconsistent with what was in the best interest of the client. This doesn't work for the CFP.

I can also tell you there has been a considerable amount of turnover at the retail Fido office in our area- particularly with the reps that work with higher net worth clients and many of them CFPs from what I understand. Many of the advisors that have been there for the longest time (15-20 years) have left or are looking for a place to work like the old pre-2008 Fidelity. Not easy, since most places push product. It's very disappointing what's going there.

I wish I could provide you with something more concrete but I just thought I'd share what I know about the situation. I suppose I could give you a 1 year update- he's actually been with us for almost 2 years and has proven to be a valuable addition to our team. We don't have production goals in our small shop but we've experienced dramatic growth and without pushing inappropriate products.

As I think I've said, I really like Fidelity and plan to stay as a retail client but like most everyone on this forum I'm self-directed so I don't plan to ever sit down with a Fido rep to discuss my goals and dreams.

 

[panacea]

Here's a link that maybe better describes some of the issues at Fidelity that I was discussing in my last post:

Questionable Sales Practices Haunt Fidelity :: Investment Fraud Lawyer Blog

 

[Nords]

Here's a link that maybe better describes some of the issues at Fidelity that I was discussing in my last post:
Questionable Sales Practices Haunt Fidelity :: Investment Fraud Lawyer Blog

Cool, thanks.

I read somewhere a few months back of rumors that Fidelity was quietly scrambling to make up for losing cashflow during the recession and not gaining it back with the markets. I guess this is why they're going in so heavily for 401(k) custody business.

 

[Dimsumkid]

So what company is she with? Nice perks for you!

Fidelity...we just went to the game last night...a truly amazing experience. They were the most expensive seats in the stadium. Only 4 seats to the entire suite, a separate dining room table w/white linens reserved just for the suite too. Chefs served prime rib and turkey at the carving station, unlimited food table, dessert table and drinks. This was our first ever pro basketball game for the family. I would never in my dreams pay this kind of money for a game. Now I know how the other half live it up! DW looked it up, it includes hockey also at 90k/yr for the entire suite. I was told they get one (two if really lucky) shot per year to use this suite between all the branch reps in the area to invite clients.

 

[Free To Canoe]

My Fido Story

I also have "Premium Services" with Fidelity.
What could it hurt to talk with them and learn something?
1. David
I had questions about the Fido GNMA fund that I was in at the time. Why 540% turnover? What is their "adjusted duration"? He could not answer these questions. I am not sure that he understood how the GNMA bond fund works (I have learned the answers on my own since then). He wanted to transfer me to other bond funds. I asked him about possible replacements for Fido Contra fund during another conversation. He told me to use the fund searcher on their web site. Not what I was looking for. Never asked me why I want to replace it. He emphasized his many years of experience but I never learned anything from him.

2. Ruby
My portfolio is overweighted in equities and I should make an adjustment. I asked her what should I sell first. During this conversation she mentioned that I was overweight in financials and that I should sell the Reits because they are financials.

3. Manny
The account has been transferred from David and Ruby to Manny. Instead of buying bonds, Manny wanted me to look at three different funds that I might like. Permenant Portfolio, a Junk bond fund and a conservative allocation fund in leiu of bonds.
Now I really got the idea that they wanted me to buy SOMETHING.

4. Angela
No more Manny, now it is Angela.

They still call but now I am not seeing the value of their services.

 

[Dawg52]

Just got off the phone with Fido. They have me set up on an every 4 month call. Really not much to it, the guy was nice and asked if I needed anything from them or if I had any changes in my life that might require a tweak in my portfolio. I told them that I was still leading a boring life that didn't require any adjustments with my portfolio.

Now, time for a med as I await my next review.

 

[scrabbler1]

I have been with Fido since 1990 but have had an personal "Account Executive" for about the last 4 years. However, my AE has changed a few times in that time because of turnover at the local office.

The first AE was a woman off whom I bounced my early ER plan back in 2008. She left in the summer of 2008 so I was assigned to AE #2, man who helped me handle the set of large transactions I made after I ERed that November. These included my initial purchase of the big bond fund I am now in as well as the direct rollover from my 401(k) into a IRA.

AE #2 left in the middle of 2009 and I got reassigned to AE #3, and I did speak to him once a few months later. However, a few months later I got a call from someone else there who told me he was my "new" AE, #4. I found AE #4 a bit pushy but we eventually met in April, 2010. Sadly, he was just as pushy in person as he was over the phone, trying to get me to turn over control of my entire portfolio to him in return for a fee. I was not interested in his proposal nor was I interested in keeping him as my AE.

By the time the 2-hour meeting was over and I was heading to my car, I had already mentally written a letter to his boss complaiing about his style and asking to be transferred back to someone else. I soon wrote and sent that letter and the office manager called me back a week later to discuss it. The OM switched me back to AE #3 but was also perplexed as to why and how I had gotten switched to begin with, as the OM had no idea this had happened (sounds like #4 had "poached" me from #3).

I have been back with AE #3 since mid-2010 and only recently gone to him for some help with some late-year dividend information and he was eager and willing and able to help me out, as this info I will be requesting every year so I won't have to explain it to him (or a new phone rep) again. I have not met him yet but that is not necessary (and he has not been pushy to get us to meet, also good).

 

[Packman]

I also use FIDO and I am in their private client group (I have an account exec, but manage my own investments). After about 4 years, I have had only 2 AE's. The first one was a nice guy, but he looked like he was 12 and really never had advice for me, or answered much of my questions. The second AE has more knowledge and has been helpful a few times. I use them to bounce ideas off and then make my own decisions. Overall, I like the service.

I have received a survey from FIDO, and once I gave them average marks at best. The next day I got a call from the manager of that office and she sounded pissed that I didn't rate them a 10. She asked what the problem was, and I told her my questions didn't get answered. She promised to have someone call me back with the answers I needed. I never got a return call. I found this to be normal as they don't usually follow-up very well.

They have invited my DW and I (twice) to client appreciation dinners at high end steak houses. Very nice! No one ever 'pushed' FIDO products to me, though they do recommend mnay of their own mutual funds, but not always.

 

[Brat]

When I was managing my Mother's investments at Fidelity her advisor was VERY helpful. He, and one of their bond managers, strongly advised me to stay away from mortgage bonds & bond funds. It is hard for me to recall just when that happened .. 05 or 06, when realestate values were climbing.