Here's what my 1% fee Fidelity Portfolio Advisors have me in

[Kabekew]

I put in $800K with them last October after the crash, dollar cost averaging over the past three months.

Here's what their "experts" put it in, and the gains since then. They also sold some and realized a $35K capital gains loss for me on top of those results.

Hope it'll be worth their 1% fee on top of all those mutual fund fees:

http://i42.tinypic.com/2n835s.jpg

 

[Grep]

I can't say I knew what to expect, but my reaction was "Holy Cow, what a load of funds!" Can there be any real focus or strategy in all that? Do you have any idea what the costs (loads, management fees, etc.) for all those individual funds are? Well, it's at least nice to see all those green arrows.

I wouldn't tell you to change anything, but money that I put in a few Vanguard funds since October is up ~18%, and my average expense ratio is something like 0.11%.

 

[Kabekew]

The strategy is supposed to be 60/40 allocation which is "tax aware," which I guess explains the Maryland tax-exempt muni funds (I live in Maryland). They claim it's "personalized" service, but I suspect they just manage a handful of investment profiles and match new customers to the closest one.

So far though they're outperforming my own $100K "play" fund I set up for comparison, which is down 5% over the same period (my own mix of blue chip and index funds, bought mostly on popular website and TV blowhard recommendations).

 

[haha]

I put in $800K with them last October after the crash, dollar cost averaging over the past three months.

Here's what their "experts" put it in, and the gains since then. They also sold some and realized a $35K capital gains loss for me on top of those results.

Hope it'll be worth their 1% fee on top of all those mutual fund fees:

http://i42.tinypic.com/2n835s.jpg

With that many funds you have pretty well duplicated an index fund, paid higher fund fees, and picked up a 1% poke in the eye.

Most everything likely will go up for a while, but this is an expensive way to do it. Furthermore, if you decide to ditch Fido, you will have a real pita dealing with all those funds.

I am kind of surprised that they would do this to you.

Ha

 

[clifp]

Wow that looks like my brokerage statement but instead of a smorgsborg of random mutual funds, I have individual stocks..

I am sorry but I think is stupid boarding on fiscally irresponsible to stick somebody in more than 40 mutual funds. It is way to much work for me to do this, but I would ask the Fido advisors to give you a morningstar Xray report on your almost million portfolio.

Eventhough you don't own an index fund per se, I bet you own every Dow stock, and the more popular ones like GE, Exxon, and Microsoft you probably own in 3 or more mutual funds.

Save yourself 8K and fire the advisors and cut the number of funds to max 10.
If you need help I've never subscribed but the M* mutual fund newsletter and $100 is heck of a lot cheaper.

 

[FinanceDude]

Looks like a wrap account, rarely a good idea. I thought Fido was low cost, guess i was wrong.........

 

[freebird5825]

Holy cannoli - 42 funds. I just got one-upped.
When I was a beginner, I eventually owned 33 funds between LH and I. It was all self-inflicted.
After reading some smart investing books and after some great sessions with a fee only CFP, I started trimming that Chinese menu order down. The stock intersection between funds was unbelievable and the high expense ratio drain was going to sap any kind of long term growth.
I agree with doing a M* portfolio modeling exercise. You can do it yourself as an education and getting your "talking points in order" exercise.
You can register at M* for free. It will take some typing on your part, but it will be time well spent. Then call FIDO and say, you gotta be kidding me.
Would everyone here agree that some fund inventory trimming is in order? Will the OP get clobbered with short term cap gains or would this be better as a long term exercise to trim down that fund inventory? It has taken me 4+ years to undo the damage I did to myself by chasing performance and going crazy with too many funds. Comments?

 

[dex]

I have to agree with what most have said - 42 funds, why?
Can you ask them their strategy?

I don't see a high yield corp fund in the mix; is there? If not, why not.

 

[mf15]

They did diversify for manager risk.
But can't believe all the front end loaded, high ER none FIDO funds.
At least you can sell them without a transaction fee,unless there is a redemption
fee on the fund.
Old Mike

 

[FinanceDude]

I have to agree with what most have said - 42 funds, why?
Can you ask them their strategy?

I don't see a high yield corp fund in the mix; is there? If not, why not.

Wonder what an overlap analysis would show?

 

[Bestwifeever]

I read your intro post--were your investments made using "new money" from the sale of your business or was that $$ invested elsewhere before you moved it to Fido?

Obviously we are a bunch of DIYers here but at least your advisor seems to have put you in things that made money for you.

 

[OAG]

Well at least there should be little tax implications ($46K Gain, $35K CG Loss and $8K in Management Fees).

 

[73ss454]

I guess if they just put you in a target retirement fund it wouldn't have looked like they were earning their money.

 

[FinanceDude]

I guess if they just put you in a target retirement fund it wouldn't have looked like they were earning there money.

Yeah, with 42 funds, whose going to ask questions?

 

[JPatrick]

I think you need to question two things.
As noted by others...too many funds. Duplication is costly and unnecessary.
Additionally, you should take a look at the performance of your funds within their respective categories. For example: Your FLCSX does pretty poor in its category going back 3 years. The Fido floating rate fund has a much better long term record than does EABLX. While it is fool hardy to chase performance, a fund that consistently lags in its category should be given the toss.

 

[FIREd]

I don't know if it's Fidelity's policy to ramp up the number of funds they recommend to investors, but look at their Fidelity Freedom funds. Their 2030 offering is an amalgam of 24 funds while Vanguard's equivalent offering has only 5. And it shows in their ER too, 0.71% for Fidelity, 0.21% for Vanguard. And despite a lower equity allocation for Fidelity's fund, they still managed to trail the performance of the Vanguard's fund in the past year.

You also have a lot of expensive funds in that lineup. The Marsico growth fund for example, ER 1.24%. Not only is that very high for a large cap fund but it only adds insult to injury when you consider the fund's poor recent performance relative to its peers. I don't know what your overall expense ratio is, but I wouldn't be surprised if it was close to 1%. So, on a $800K portfolio, you give $8,000 to Fidelity each year to "manage" your money, plus probably another $8000 a year in various fund expenses (including the cost of having many fund managers since most of your funds seem to be managed funds). Do you feel you are getting $16,000 a year worth of professional advice? It's half a new car, or a couple of very, very nice vacations... Or you could do it yourself for 1/10th of the price and have $14,000 a year more to spend on something that really makes you happy.

 

[freebird5825]

I am learning an awful lot from this thread. I had marginally entertained the idea of looking at a few Fidelity funds for some fresh investments for 2009. <buzzer> Pass! I'll stick with VG.

 

[travelover]

I just use Fido for their Spartan funds, which I think must be a loss leader of sorts. When I was doing a roll over from my 401(k), which they administered, to an IRA, they were really helpful at a local brick and mortar store to help me sort out my pre and post tax holdings.

 

[freebird5825]

I just use Fido for their Spartan funds, which I think must be a loss leader of sorts. When I was doing a roll over from my 401(k), which they administered, to an IRA, they were really helpful at a local brick and mortar store to help me sort out my pre and post tax holdings.

um...were you doing tax planning or building an outdoor barbeque pit?

 

[JPatrick]

I am learning an awful lot from this thread. I had marginally entertained the idea of looking at a few Fidelity funds for some fresh investments for 2009. <buzzer> Pass! I'll stick with VG.

FIDO has some very good funds, but I'd pass on the advisory part.

 

[clifp]

Will the OP get clobbered with short term cap gains or would this be better as a long term exercise to trim down that fund inventory? It has taken me 4+ years to undo the damage I did to myself by chasing performance and going crazy with too many funds. Comments?

One of the few silver linings about this horrible bear market is that it is relatively painless from a tax consequence to get rid of doggy funds and simplify.

 

[FinanceDude]

One of the few silver linings about this horrible bear market is that it is relatively painless from a tax consequence to get rid of doggy funds and simplify.

Last year, almost all funds looked "doggy".........

 

[jazz4cash]

The strategy is supposed to be 60/40 allocation which is "tax aware," which I guess explains the Maryland tax-exempt muni funds (I live in Maryland). They claim it's "personalized" service, but I suspect they just manage a handful of investment profiles and match new customers to the closest one.

.

Not sure if this was mentioned, but since you are in MD and they claim to be offering "personalized" service, have you visited one of Fido's investment centers? They have offices in Bethesda, Baltimore and maybe other locations in the area and it could be beneficial to have a face-to-face meeting.

 

[FinanceDude]

Not sure if this was mentioned, but since you are in MD and they claim to be offering "personalized" service, have you visited one of Fido's investment centers? They have offices in Bethesda, Baltimore and maybe other locations in the area and it could be beneficial to have a face-to-face meeting.

For 1%, they should come and cut your lawn too.........

 

[samclem]

I second what FIREDreamer said. You can do much better on your own, while saving probably 1.5%-3% a year in fees/expenses/taxes.

I can only think advisors assemble these huge asset lists for their clients for three reasons:
1) To present a highly complex list of holdings that implies some very detailed planning went into choosing them, justifying the 1% fee.
2) To allow some high fee funds to be hidden among the others.
3) To dissuade the client from managing their own investments. The list makes it look like a very complex undertaking, and at a minimum if a client decides to DIY, he has to decode the byzantine structure that has been built, figure out what to sell and when to sell it. The hassle probably encourages some folks to stay aboard for a few years extra. Cha-ching!

I'm surprised that Fidelity would do this to someone. Vanguard has nothing to fear in this area.