Reasons not to like Fidelity

[audreyh1]

I think what's getting lost here is that some have issues with Fidelity managed funds, but many love Fidelity as a broker. No one is forcing you to put money into their funds. They offer the universe of investment options.

Agreed.

Although they offer very low cost index funds themselves.

Generally - convenience is the biggest selling point for me. And great customer service, great record keeping, and good prices when you look for the good deals.

We've had investments there for decades - primarily as our broker and mutual fund warehouse - and their mutual fund costs and trading costs keep dropping.

 

[nwsteve]

Agreed.

Although they offer very low cost index funds themselves.

Generally - convenience is the biggest selling point for me. And great customer service, great record keeping, and good prices when you look for the good deals.

We've had investments there for decades - primarily as our broker and mutual fund warehouse - and their mutual fund costs and trading costs keep dropping.

+1
Consolidated everything at Fido last year. While they, on occasion do stuff that agitates me (eg new RiP before last update), their administrative competency well exceeds what I ever got from Vanguard, despite being Flagship.
Nwsteve

 

[Cobra9777]

We keep all of our accounts at Fidelity, but we have no interest in their actively-managed mutual funds. So the Reuters story is of no concern to us.

Our holdings are a mix of iShares and Vanguard index ETFs with very low ERs. The only fee we pay Fidelity is the rare $7.95 commission to trade a Vanguard ETF.

For my DIY style of money management and retirement planning, I've been quite happy with Fidelity... great website, knowledgeable reps, quick transactions, useful online tools, full-service CMA, cash-back CCs, free ATM use, hardware-based 2FA, brick & mortar when needed, etc.

 

[Huston55]

i can see why you're upset. The[y] give me 0 atm fees worldwide. 0 commission etf's, free checks, $7.95 stock trades, a .25% annuity fee, a non commission advisor, some of the best retirement planning tools in the industry and lots of other stuff [including industry leading customer service]. I feel fleeced.

+1 [My Edits]

we keep all of our accounts at fidelity, but we have no interest in their actively-managed mutual funds. So the reuters story is of no concern to us.

+2

 

[retirementguy1]

I'm not saying that Fidelity is the equal to Bernie Madoff. If you invest with them and you are happy then keep doing it. Just pointing out that this article has some pretty clear conflicts of interest where the Johnson family gets the pick of the litter while they claim to put the interests of investors before their own. It's more of a warning about their corporate culture that I don't like.

Also, in 2014 they were sued by employees over their own 401k plan. They offered many high expense funds when they were offering low cost funds to the public. Just saying I'm not a fan.

Also it has been mentioned that competition from Vanguard is really the impetus for fidelity to offer low cost funds.

Expense ratios being equal or even close I simply choose not to do business with the Johnson family.

 

[REWahoo]

...this article has some pretty clear conflicts of interest where the Johnson family gets the pick of the litter while they claim to put the interests of investors before their own. It's more of a warning about their corporate culture...

+1

 

[audreyh1]

Of course competition from Vanguard has been the impetus for offering low cost funds. Just like the competition from on-line brokerages got them to lower trading costs by over a favor of 10 from 2000 to 2010.

 

[retirementguy1]

Of course competition from Vanguard has been the impetus for offering low cost funds. Just like the competition from on-line brokerages got them to lower trading costs by over a favor of 10 from 2000 to 2010.

The point of the thread is that the Johnson family has their own interests at heart and that is a conflict of interest and they shouldn't be able to do that.

 

[RobbieB]

By all means, lobby Congress to write some new laws.

 

[ERD50]

The point of the thread is that the Johnson family has their own interests at heart and that is a conflict of interest and they shouldn't be able to do that.

Life's not fair, get over it.

All we can do, as little people, is make the best choices that are available to us. If you stick with index type funds, none of this matters, I am very grateful that we have such low cost, diversified funds available. I'm no Pollyanna, but look at the bright side. We have outstanding choices available to us at very low costs.

That said, I do have a certain loyalty to Vanguard, as they are the ones who started down this path, and Fidelity has had to move towards it to compete. We all benefit.

-ERD50

 

[retirementguy1]

By all means, lobby Congress to write some new laws.

Congress approved Glass-Steigal- they then repealed that which lead to the 2009 financial collapse. Do a little more a little research yourself.

 

[retirementguy1]

Life's not fair, get over it.

All we can do, as little people, is make the best choices that are available to us. If you stick with index type funds, none of this matters, I am very grateful that we have such low cost, diversified funds available. I'm no Pollyanna, but look at the bright side. We have outstanding choices available to us at very low costs.

That said, I do have a certain loyalty to Vanguard, as they are the ones who started down this path, and Fidelity has had to move towards it to compete. We all benefit.

-ERD50

So thanks to Vanguard you invest with Vanguard and you don't invest with Fidelity because of Vanguard.

 

[MooreBonds]

I'm not saying that Fidelity is the equal to Bernie Madoff. If you invest with them and you are happy then keep doing it. Just pointing out that this article has some pretty clear conflicts of interest where the Johnson family gets the pick of the litter while they claim to put the interests of investors before their own. It's more of a warning about their corporate culture that I don't like.

So the Johnson family hit it big with a few biotech start-ups. You know, you or I could also invest in them, too. Of course, many biotech (and various other venture capital investments) also fail miserably and become worthless. And I'm sure the Johnson's have listed their share of "Sales price = $0.00" on form 4797 for investments that flop. Are you expecting a mutual fund to make private capital investments? Or are you just upset that a mutual fund doesn't purchase shares in an IPO?

Oh, speaking which, are you aware that some mutual funds' by-laws specifically prevent them from purchasing shares in an IPO, and require the stock to be listed for, say, 6 months first?

 

[retirementguy1]

So the Johnson family hit it big with a few biotech start-ups. You know, you or I could also invest in them, too. Of course, many biotech (and various other venture capital investments) also fail miserably and become worthless. And I'm sure the Johnson's have listed their share of "Sales price = $0.00" on form 4797 for investments that flop. Are you expecting a mutual fund to make private capital investments? Or are you just upset that a mutual fund doesn't purchase shares in an IPO?

Oh, speaking which, are you aware that some mutual funds' by-laws specifically prevent them from purchasing shares in an IPO, and require the stock to be listed for, say, 6 months first?

One issue is that the Johnson family purchased them and that actively managed funds offered by fidelity could not because of the family fund purchase. Fidelity funds later purchased them at much higher prices when the Johnson fund sold them.

 

[ERD50]

So thanks to Vanguard you invest with Vanguard and you don't invest with Fidelity because of Vanguard.

No, that's not true.

I do feel some loyalty and appreciation to Vanguard. But I have investments with Fidelity, and I directed my in-laws to Fidelity, because they have a B&M presence and it made a lot of things they needed to do when FIL passed far easier.

I use both.

The issue is that the Johnson family purchased them and that actively managed funds offered by fidelity could not. Fidelity later purchased them at much higher prices when the Johnson fund sold them.

And I imagine that the funds also purchased some of those IPOs at much lower prices when the Johnson fund sold them. Or passed on them because they fell flat, as many IPOs do.

-ERD50

 

[retirementguy1]

The Johnson's investments in the article are Private Venture and Pre IPO meaning the average investor doesn't have access but the Fidelity public funds couldn't have access because the company umbrella already owned them.

"If F-Prime (Johnson) controls 5 percent or more of a private company’s voting stock, then that ownership prevents the Fidelity mutual funds from buying the same security before or during an IPO, according to the Investment Company Act of 1940. Fidelity told Reuters that it concurs with that reading of the law, which is enforced by the Securities and Exchange Commission."

 

[MRG]

Life's not fair, get over it.

All we can do, as little people, is make the best choices that are available to us. If you stick with index type funds, none of this matters, I am very grateful that we have such low cost, diversified funds available. I'm no Pollyanna, but look at the bright side. We have outstanding choices available to us at very low costs.

That said, I do have a certain loyalty to Vanguard, as they are the ones who started down this path, and Fidelity has had to move towards it to compete. We all benefit.

-ERD50

+1

I w*rked around the fund industry for most of my career. What Fidelity supposedly did is much less egregious than many things I've personally witnessed.

If your costs of doing business reduces by an order of magnitude and you choose to charge the same; keeping the excessive profits for your Megacorp insurance company parent that's a first class problem. Sometimes companies pay hundreds of millions in fines, sometimes they pay zero.

Vanguard started competition and the rest of the industry had to follow. Technology did play a big part of the ability to reduce fees(images of documents are cheaper than handling paper), the net changed how fund companies interact with consumers. Bottom line competition is good expecially when most of the industry is still running on a good Ole boy mentally.

 

[RobbieB]

I have an account with Fidelity and I like the Co., not planning any changes.

I don't care how rich the Johnson's are and hope they get even richer.

If they have done something illegal, by all means they should be prosecuted.

You lead the posse, I'm too old.

 

[retirementguy1]

I have an account with Fidelity and I like the Co., not planning any changes.

I don't care how rich the Johnson's are and hope they get even richer.

If they have done something illegal, by all means they should be prosecuted.

You lead the posse, I'm too old.

If you have any managed funds then they may be getting rich at your expense. Whether you care about that is up to you.

 

[Dawg52]

I've never been a fan of Fidelity and here is another reason.

Just curious, what other Fidelity thorns are in your behind?

 

[retirementguy1]

Just curious, what other Fidelity thorns are in your behind?

lol, none other than I've listed. Conflict of interest and being sued by their own employees. That's enough for me.

 

[meierlde]

lol, none other than I've listed. Conflict of interest and being sued by their own employees. That's enough for me.

Of course then all traditional brokerages are full of conflicts of interest also, see the CDOs and the like they managed to push onto unsuspecting clients. And in many cases the financial advisors cared more about their personal pocketbooks than the clients. In particular the whole way the IPO market is structured is IMHO stupid and very old fashioned. Rather have a dutch auction where folks can bid what they like for shares (with perhaps a reserve price) and when the time comes go down an ordered list of bids until the stock is sold with the price being the bid for the final shares that filled the quota.

 

[retirementguy1]

Of course then all traditional brokerages are full of conflicts of interest also, see the CDOs and the like they managed to push onto unsuspecting clients. And in many cases the financial advisors cared more about their personal pocketbooks than the clients. In particular the whole way the IPO market is structured is IMHO stupid and very old fashioned. Rather have a dutch auction where folks can bid what they like for shares (with perhaps a reserve price) and when the time comes go down an ordered list of bids until the stock is sold with the price being the bid for the final shares that filled the quota.

Yeah, I don't do business with those people either.

 

[CRLLS]

If you have any managed funds then they may be getting rich at your expense. Whether you care about that is up to you.

I have but one simple question. What managed fund isn't getting rich at their investor's expense? I mean, I think they (Fidelity, Vanguard, Schwab,.....etc) all are in it for the money, not for some altruistic reasons. If they didn't make money at my expense, then I don't think they would be around too much longer.

Using a single lawsuit and/or single conflict as a
reason to not use any given investment company, pretty soon, I'd have no place to invest. It is sad, but very true.

In full disclosure, I do have investments at Fidelity. Even considering the reported conflict of interest, it sure beats putting my money in the local bank savings accounts. If I thought I'd get a better treatment, better service or a better return somewhere else, I'd go there. YMMV.

 

[REWahoo]

I have but one simple question. What managed fund isn't getting rich at their investor's expense? I mean, I think they (Fidelity, Vanguard, Schwab,.....etc) all are in it for the money, not for some altruistic reasons. If they didn't make money at my expense, then I don't think they would be around too much longer.

Not that they are perfect - far from it, but read up on Vanguard and how they differ from other investment companies:

Founder John C. Bogle structured Vanguard as a client-owned* mutual fund company with no outside owners seeking profits.

This framework has enabled our leadership team and crew to put our clients first in all of our decisions and to continually lower investment costs. Our low costs have been an important factor in the consistently strong performance of our funds over time.

Vanguard’s structure remains unique in the industry. Today, we are widely recognized as a leader in low-cost investing and a steadfast advocate for the interests of all investors.

https://about.vanguard.com/what-sets-vanguard-apart/why-ownership-matters/