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

[mathjak107]

you have the option of selecting the old fidelity classic screen if you do not like the cluttered new layout , which i don't.

[BellBarbara]

Fidelity tries to sell too many funds and annuities to generate income. DH worked there - saw this. When he joined them (in technology side) we had to move all of our money into FIDO - they proposed 34 funds, all with the largest fees (no index or FIDO funds at all). They also recommended we buy annuities then - their proposal was a joke. They are all on commission. Yes, you can ignore all of this noise when they try to sell you this stuff, but many people do not know better. Increasing revenues? Sure, getting more money out of people in fees.

[mathjak107]

i can say even at our yearly consultation which i get as a private access customer i have never been lured to try to buy any product ever.

[bUU]

Ditto. And I'm just a regular everyday investor with them - I still get a free consultation each year - which has been very helpful in the past - and there was no pressure whatsoever.

[eytonxav]

I believe Fidelity's brokers are all on salary, not commission, and personally, they have never pushed high priced funds at me.

[mathjak107]

they are not on commission . they get salary and goal bonuses.

[H2ODude]

Fido fan here. Unless there was a substantial cost difference I wouldn't give up the service and the local center 4 miles from house. Have done two private client conferences at my request, like that they don't bug me for repeat visit unless I ask. I like being left alone! Now get off my lawn!

[BellBarbara]

Why do you think they presented us the proposal? I am really interested in your thoughts. Even BIL who was in financial services for a diff company was pretty shocked at the proposal. Even after DH retired, and we left our money there for a couple years trying to decide, they pitched him on annuities. Do you think they handle employees differently than external customers? These were two different agents. I think we got a new one because we moved (or maybe the other guy left, not sure)

[BellBarbara]

No axe to grind - they were a great employer, DH did great there. He worked on a lot of these systems you guys mention. We would probably not have been able to retire so early if not for their 401k bonus'. He was able to put so much away with maxing out his contributions, their match, and the 401k bonus. HUGE.

[BellBarbara]

DH says he worked on a huge system that paid commissions......maybe not all employees? Or has it changed recently? He left about 4 years ago.

Just found this. Maybe the correct word is not commissions but if 69% of an account's rep is variable based on variable pay - hmmmm.

https://www.fidelity.com/bin-public/...mpensation.pdf

> Conflicts of Interest
While Fidelity strives to design representative compensation plans that align the interests
of our clients with those of the representative in identifying appropriate products and
services, certain representatives have financial incentives to sell Fidelity proprietary
products, including but not limited to Rollover IRAs, products managed by Strategic
Advisors, and insurance products. Certain representatives also receive differing
compensation for different product types, for example, managed account and insurance
product sales, which require more in-depth engagement with clients, provide more
compensation than products such as money market funds. Importantly, representatives
do not have a financial incentive to promote Fidelity mutual funds over non-Fidelity
mutual funds. It is also important to note that in this area of compensation, as in all
others, Fidelity considers whether representatives are providing guidance about
appropriate products and services based upon customer needs. We take this approach to
client relationships very seriously, and review representative interactions in order to help
ensure this standard.

[MRG]

Quote:

Originally Posted by mathjak107 i can say even at our yearly consultation which i get as a private access customer i have never been lured to try to buy any product ever.

+1
No products were ever pushed or suggested to me. In fact I was going to rollover a 401K to Fidelity when my representative told me to check out the rule of 55. He gave me his best advice, leaving that mid 6 figure number out of Fidelity for the next four years.

[misanman]

Fidelity has never pushed, or even suggested, any specific investments to us. Are there two different companies called Fidelity?

Sent from my HTC6500LVW using Early Retirement Forum mobile app

[TimSF]

Quote:

Originally Posted by BellBarbara Fidelity tries to sell too many funds and annuities to generate income. DH worked there - saw this. When he joined them (in technology side) we had to move all of our money into FIDO - they proposed 34 funds, all with the largest fees (no index or FIDO funds at all). They also recommended we buy annuities then - their proposal was a joke. They are all on commission. Yes, you can ignore all of this noise when they try to sell you this stuff, but many people do not know better. Increasing revenues? Sure, getting more money out of people in fees.

+1. A Fidelity rep once tried to sell me on a variable deferred annuity, and I have been skeptical of Fidelity advisers ever since. Still use Fido's DIY brokerage services though.

I should add that I also appreciate many features of the Fido website, such as the fullview that gives me an uptodate look at total assets in many Fido and non-Fido accounts. But no more sit-downs with a Fido rep for me ...

[BellBarbara]

OK it wasn't just us. I remembered posting about the proposal before and someone said they got a similar proposal. Maybe there is a diff in having an existing account and not getting pitched on something, vs wen we had to move all of our assets (except my 401k) and they gave us a proposal.

Anyway, its a good company, just doesn't meet our needs.

[audreyh1]

Fidelity never pushed anything on us for a long time. Then they learned we were retiring early as we has divested quite a bit of company stock. So around that time they strongly suggested their new "low cost" variable annuities as a method for tax-deferred growth of our windfall. And they were low cost, but still. Never pushed it again although our account manager would occasionally suggest some obscure mutual fund out of left field. Never was a Fidelity fund though and usually not cheap either. But never push them, just mention them.

So glad we ignored the variable annuities as people who bought them in 1999 and 2000 really regretted it later.

As a DIY investor I am very happy with their internet platform and customer service. I maybe shoot the breeze with the account manager every 2 years.

[bUU]

Quote:

Originally Posted by misanman Are there two different companies called Fidelity?

Incidentally, there are. With our move to Georgia, we were looking for a local bank. I was surprised and rather pleased to "learn" that there was a Fidelity Bank. Later, I discovered that Fidelity Bank has no relationship to Fidelity Investments.

[eta2020]

https://www.fidelity.com/about-fidel...ate-statistics
Customers vote with their feet.

Fidelity may be great but somehow Total Managed Assets remains same from 2013 to 2014 while market goes up 11%.

That means customers are pulling money out of Fidelity.

http://biz.yahoo.com/e/141106/schw10-q.html
Compare that to increase at for example Schwab.

[eta2020]

Fidelity posts record revenue and profit for 2014 - Business - The Boston Globe

I correct myself. Above table for Fidelity is from Sep 2104. They did increase AUM by 4% for a year 2014 mostly thanks to managing lot of 401ks.

But the above Schwab's results are also from Sep 2014. So while Schwab increased assets by 12% in 9 months Fidelity increased it by 1% in same 9 months.

Customers vote with their feet It is not just Vanguard problem that Fidelity has.

[MBSC]

Quote:

Originally Posted by misanman Fidelity has never pushed, or even suggested, any specific investments to us. Are there two different companies called Fidelity?

My experience is of two divisions of Fidelity who can't see each other. Every six months I get a call and letter from Fidelity Retirement Services in Merrimack, NH regarding the 401K at my former employer. They always ask if I want to make it a roll-over IRA or change my investments. They can't see my non-retirement account at Fidelity Investments.

The CSRs at Fidelity Investments never suggest a product, don't know about an office in Merrimack and have no record of anyone calling me.

[eta2020]

Their problem is that they have completion.
If I have 1 million with E*Trade and I call them they will tap dance for me on a table.
I learned not to expect that from Fidelity.

Hence as a customer I will take my money to for example E*Trade.