Fidelity Portfolio Advisory service?

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ljr
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Fidelity Portfolio Advisory service?

Post by ljr » Thu Nov 23, 2017 11:55 am

My husband and I consolidated our investment accounts and IRAs at Fidelity a few years ago, meeting with an advisor there to plot out any changes, etc. Now my IRAs have grown enough that the advisor is pressing me to go into the managed Portfolio Advisory Service account. When I ask about higher fees, he says that there are special funds with exceptionally low fees only available to me if I go into the managed account, and that these will at least partially offset the extra cost for the managed account. The sales pitch is basically, yes you pay a little more--not as much as you think because of these special low-cost funds--but look what you get: experts to manage and re-balance your investments, etc. Of course, this only applies to the IRAs--not the other investments, which would have to be cashed in at a high cost in taxes if we were to want him to manage all our accounts. So this strikes me as not worth it.

However, he is now unwilling to advise us about anything, it seems, since we have rebuffed the offer of the Portfolio Advisory Service (which he first made months ago). He called us to a "check-in" and when we got there (we never call him and have only met once a year) and started asking questions, he basically said, "Well you are the ones in charge of your accounts here--so what do you think?" I was annoyed, but my husband thought it was fair enough: after all, we are not paying him. We have been through the mill with advisors over the years. We used to have an independent advisor, whom we paid the 1%, who housed our accounts with Schwab.

A few recessions back we decided it didn't make sense to keep paying for this, so we stopped. And since then, have gotten burned twice by advisors who gave uninformed or worthless yet costly advice aimed at making more money for them, not us. First we switched everything over to accounts at Chase with one advisor, then when that went south, we moved everything to Fidelity.

We are nearing retirement. I've started reading this forum, trying to educate myself more, but honestly, I don't understand a lot of what I read here. I just tried to read a thread about variable annuities, which one of the advisors sold us, but was totally lost. I'm still working in a demanding job at age 66, have other important time-consuming commitments, and I don't know that I have the time or the particular mental acuity to handle this myself. Same for my husband, who is a bit younger but has health issues that impact his energy. I am not a numbers person--I still count on my fingers. I'm willing to pay for good advice--but is there such a thing as good, non-biased advice? Or should I just take the DIY path of splitting everything into three Vanguard Index Funds that cover the market and be done with it?
Last edited by ljr on Thu Nov 23, 2017 1:29 pm, edited 1 time in total.

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Re: Fidelity Portfolio Advisory service?

Post by LadyGeek » Thu Nov 23, 2017 12:18 pm

Welcome! May I suggested you edit your post to break it into separate paragraphs? Otherwise, it's very difficult to read.

You can edit your post using the "pencil" icon in the top-right corner of the post.
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Re: Fidelity Portfolio Advisory service?

Post by Rob5TCP » Thu Nov 23, 2017 12:39 pm

Most folks here are DIY advocates. If you do want an advisor, Vanguard has a low cost advisory service (I believe .3%). They will basically advise you to go into their set of index funds, similar to what you would find here.

You might find more useful advise listing here what you have (in percentages not in dollars if that is more comfortable to you). You need to have a handle on your risk level. If you have 100,000 (or 10 million) what amount could you handle losing in the next downturn. That should give you an idea of your maximum percentage in equities vs. Bonds/CD's etc.

There are lots of good people here. The more info; the more they can help.
As for Fidelity Adv. Services; I went to a meeting almost 15 years ago (before I switched most to Vanguard). He proposed (back then) only fairly expensive actively managed funds. while he didn't directly charge me; the funds all had at least a 1% expense ratio. I switched to Vanguard before I followed up on his suggestions and haven't looked back.

If you want to do it yourself - this place is a great resource. If you want someone to handle it for you - Vanguard advisory is about the least expensive out there.

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dwickenh
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Re: Fidelity Portfolio Advisory service?

Post by dwickenh » Thu Nov 23, 2017 1:25 pm

Vanguard Advisory(PAS) would my choice if my significant other did not want to handle the investments in my absence. It is inexpensive, filled with inexpensive index funds, and they will not try to up sell you to expensive management/funds. .30 expense is much less that most actively managed funds from the other guys.

Best wishes for your investments,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

rgs92
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Re: Fidelity Portfolio Advisory service?

Post by rgs92 » Thu Nov 23, 2017 1:47 pm

The Fidelity service is high priced (about 7/8ths of 1% AUM a year). Plus, they put you in managed funds with expense ratios of about .5 to .7 %.
I would avoid it and just use the premium index funds for a standard 2 or 3 fund portfolio. Their advice is not worth it and is probably a negative.

If you really want a set and forget scenario, I actually like the Fidelity Balanced fund at about .6% ER a year. Still too high for me, but it seems to have a good long term history. As actively managed funds go, it seems pretty good to me.

There is also 4-in-1 index, but its asset allocation is too high in stocks (85%) for retirement to put all your money. You might consider putting 60% of your money in 4-in-1 and the rest in the Premium Bond Index fund. This results roughly an allocation of about 50/50, which is good.
Last edited by rgs92 on Thu Nov 23, 2017 1:58 pm, edited 5 times in total.

livesoft
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Re: Fidelity Portfolio Advisory service?

Post by livesoft » Thu Nov 23, 2017 1:53 pm

ljr wrote:
Thu Nov 23, 2017 11:55 am
I'm willing to pay for good advice--but is there such a thing as good, non-biased advice? Or should I just take the DIY path of splitting everything into three Vanguard Index Funds that cover the market and be done with it?
Good, non-biased advice is rare to find and harder to pay for. It is easier to get it for free at bogleheads.org.

The DIY path can be done at Fidelity with Fidelity Index funds that cover the market, so you don't need to use Vanguard Index funds. See, for example, https://www.bogleheads.org/wiki/Fidelity As soon as you start paying for advice at Fidelity, you will suffer.
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nedsaid
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Re: Fidelity Portfolio Advisory service?

Post by nedsaid » Thu Nov 23, 2017 2:16 pm

ljr wrote:
Thu Nov 23, 2017 11:55 am
My husband and I consolidated our investment accounts and IRAs at Fidelity a few years ago, meeting with an advisor there to plot out any changes, etc. Now my IRAs have grown enough that the advisor is pressing me to go into the managed Portfolio Advisory Service account. When I ask about higher fees, he says that there are special funds with exceptionally low fees only available to me if I go into the managed account, and that these will at least partially offset the extra cost for the managed account. The sales pitch is basically, yes you pay a little more--not as much as you think because of these special low-cost funds--but look what you get: experts to manage and re-balance your investments, etc. Of course, this only applies to the IRAs--not the other investments, which would have to be cashed in at a high cost in taxes if we were to want him to manage all our accounts. So this strikes me as not worth it.

Nedsaid: Fortunately, Fidelity has the Freedom and the Fidelity Freedom Index Funds. I own the Fidelity Freedom 2025 fund in a workplace retirement account, when my pension was frozen, the contributions that once went into the pension then went into this fund. The Freedom Funds use active funds but there are also lower cost Freedom Index Funds. The active version and the indexed version of the Freedom 2025 funds have performed about the same.

What I would do is if you wanted professional portfolio management, just pick the Freedom or Freedom Index fund that corresponds with your projected retirement date. Most here would pick the Freedom Index fund over the active version. Whichever you pick, the total fees would be lower than for an advisory service, and probably much lower.


However, he is now unwilling to advise us about anything, it seems, since we have rebuffed the offer of the Portfolio Advisory Service (which he first made months ago). He called us to a "check-in" and when we got there (we never call him and have only met once a year) and started asking questions, he basically said, "Well you are the ones in charge of your accounts here--so what do you think?" I was annoyed, but my husband thought it was fair enough: after all, we are not paying him. We have been through the mill with advisors over the years. We used to have an independent advisor, whom we paid the 1%, who housed our accounts with Schwab.

Nedsaid: Fidelity is a business and their goal is to make money. Obviously they want you to use their more expensive active funds and to use their advisory service. From what I have read and experienced myself, Fidelity is low key with sales. Normally they will make a pitch and back off. I am surprised you are getting continued static.

Another alternative would be Fidelity Go, which is run by robots. A bit more expensive than Fidelity Freedom Index funds but you would get portfolio management. My suspicion is that your investment results with Fidelity Go and Freedom Index funds would be about the same.


A few recessions back we decided it didn't make sense to keep paying for this, so we stopped. And since then, have gotten burned twice by advisors who gave uninformed or worthless yet costly advice aimed at making more money for them, not us. First we switched everything over to accounts at Chase with one advisor, then when that went south, we moved everything to Fidelity.

Nedsaid: So really, you have three lower cost options for portfolio management: the best would be Fidelity Freedom Index, second would be Fidelity Go, and the third would be Fidelity Freedom which uses active funds. All three would be acceptable and cheaper than the advisory service. My first choice would be Fidelity Freedom Index.

We are nearing retirement. I've started reading this forum, trying to educate myself more, but honestly, I don't understand a lot of what I read here. I just tried to read a thread about variable annuities, which one of the advisors sold us, but was totally lost. I'm still working in a demanding job at age 66, have other important time-consuming commitments, and I don't know that I have the time or the particular mental acuity to handle this myself. Same for my husband, who is a bit younger but has health issues that impact his energy. I am not a numbers person--I still count on my fingers. I'm willing to pay for good advice--but is there such a thing as good, non-biased advice? Or should I just take the DIY path of splitting everything into three Vanguard Index Funds that cover the market and be done with it?
A fool and his money are good for business.

scrabbler1
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Re: Fidelity Portfolio Advisory service?

Post by scrabbler1 » Thu Nov 23, 2017 2:37 pm

I have had an unpaid Account Executive at Fidelity for the last 9 years. He has helped me with Fidelity's retirement program and I have bounced some ideas off him over the years. Back in 2008-2010 there was some turnover with AEs and someone there tried to "poach" me from another AE and sell me on the PAS. He was rather pushy and I had no interest in paying out any share of my growing portfolio on this wasteful expense. I actually reported his pushiness to the office manager who then switched me to another (unpaid) AE, the one I have had ever since.

You can get lots of good, free advice here and save the 1% of AUM and watch it get added to your portfolio.

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patrick013
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Re: Fidelity Portfolio Advisory service?

Post by patrick013 » Thu Nov 23, 2017 10:34 pm

Fidelity Go — Professional Money Management

This is their least expensive program. They even help you choose your asset
allocation. At least they look like all investment grade products. But DIY
can do that.
age in bonds, buy-and-hold, 10 year business cycle

LeeMKE
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Re: Fidelity Portfolio Advisory service?

Post by LeeMKE » Thu Nov 23, 2017 10:37 pm

Another echo here.

I'm with Fidelity, and have had one young ambitious advisor try a sales pitch on me for annuities. But I've worked with about 6 others over the years, none of whom were the least bit pushy about advisor services or managed funds. They ask, I decline, we move on. No static.

I've referred others to Fidelity. One was coming out of big life changes and decided to put most everything under their PAS, managed services. But once things settled down, they decided to take over managing their funds again. The PAS advisor had them in 9 or 10 funds, which is more complicated than necessary or advisable.

The simplest way to manage your investments is to do it yourself, stick to 3 index funds, and avoid getting "help" that just adds to the burden of trying to figure out what the heck they are doing, and whether it is helping you more than the fees they charge.

This isn't rocket science, even though you''d think it is, from all the chatter on this forum.

P.S. No one will look after you better than you.
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KESP
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Re: Fidelity Portfolio Advisory service?

Post by KESP » Thu Nov 23, 2017 10:52 pm

In reading your post, it seems like you don’t feel you can handle this yourself and have a lot of things going on in your life. Here is a link to info on a 3 fund portfolio with Fidelity funds so you wouldn’t have to totally switch companies. You would have to decide on what percentage of stocks to bonds you want. https://www.bogleheads.org/wiki/Three-fund_portfolio. Scroll a bit to get to the section on Fidelity funds.
Here is a link that would help you decide the percentage of stocks to bonds.
https://investor.vanguard.com/mutual-funds/help-advice

However, you don’t seem very enthusiastic about doing it yourself :wink: I get that. My husband has zero interest in finances or learning about them. Perhaps Vanguard Personal Advisory Service (PAS) might be the way to go for you. I don’t know what other accounts you have that are taxable, but if you can post some info here, maybe people can advise you. Vanguard may help you too if you are going to possibly move those funds there too. A CPA could help answer some questions about the impact of selling or moving your taxable accounts.
BTW, even my crappy AXA account offered free rebalancing of my accounts, so that’s certainly not a reason to have an advisor. Vanguard would not steer you into variable annuities or other costly funds. I would not expect a lot of hand holding, but it may still be your best option.

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Re: Fidelity Portfolio Advisory service?

Post by Jack FFR1846 » Thu Nov 23, 2017 11:17 pm

You mention that you "only" meet with your Fidelity adviser once a year. I have 2 commas worth at Fidelity and have for years and have a Private Client Manager who I met once when we had given up on another house's 19 page form to roll $3500 into my wife's IRA. He immediately knew me as "the index guy". He didn't try to sell me on anything. We just introduced and talked about nothing and that was it. Our form had already been completed by the random guy at the counter.

Ned has great advice with doing a target date index fund and just forget it. I'd recommend that route for you. Management is a huge waste of YOUR money. Abigale is doing just fine without your donations.
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ljr
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Re: Fidelity Portfolio Advisory service?

Post by ljr » Thu Nov 23, 2017 11:50 pm

Okay, here's what we have:
$120,000 in an old 401k invested in Fidelity Freedom 2020
$170,00 in an IRA containing Fidelity International Index Premium, Artisan International Investor Class, Brown Advisory Small Cap Fundamental Value INVS, Fidelity Total Bond, Blackrock High Yield Bond Class A, Doubleline Total RT Bond Fund Class N, TCW Total Return Bond Class N, Ishares S&P 500 Value ETF
$70,000 in a taxable account containing First Eagle Global Class A, Schwab 1000 Index Fund, Ishares S&P 500 Value ETF
$40,000 in a taxable account containing Fidelity Contra bought a long time ago, so lots of capital gains, and I think another index or ET fund, don't have it in front of me
$40,000ish in an IRA of my husband's, which I think is mostly in cash right now--he got scared about the market and decided to keep it in cash
$7000 in two Vanguard Index funds in my current 401K, can't recall which ones at the moment and don't want to open a new window to look up because I keep losing my post when I do that
$455,000 in a deferred variable annuity that was at Metlife but is now Brighthouse--the surrender period is over with in March, so we could cash it out if we wanted to; otherwise, we can take a certain amount out every year, it has a guaranteed step up, death benefits, etc. We have no pensions only social security, so the idea was to create our own pension.
Yeah--we have a lot of funds, don't we? Your thoughts are appreciated!

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Re: Fidelity Portfolio Advisory service?

Post by nedsaid » Fri Nov 24, 2017 12:41 am

ljr wrote:
Thu Nov 23, 2017 11:50 pm
Okay, here's what we have:
$120,000 in an old 401k invested in Fidelity Freedom 2020
$170,00 in an IRA containing Fidelity International Index Premium, Artisan International Investor Class, Brown Advisory Small Cap Fundamental Value INVS, Fidelity Total Bond, Blackrock High Yield Bond Class A, Doubleline Total RT Bond Fund Class N, TCW Total Return Bond Class N, Ishares S&P 500 Value ETF
$70,000 in a taxable account containing First Eagle Global Class A, Schwab 1000 Index Fund, Ishares S&P 500 Value ETF
$40,000 in a taxable account containing Fidelity Contra bought a long time ago, so lots of capital gains, and I think another index or ET fund, don't have it in front of me
$40,000ish in an IRA of my husband's, which I think is mostly in cash right now--he got scared about the market and decided to keep it in cash
$7000 in two Vanguard Index funds in my current 401K, can't recall which ones at the moment and don't want to open a new window to look up because I keep losing my post when I do that
$455,000 in a deferred variable annuity that was at Metlife but is now Brighthouse--the surrender period is over with in March, so we could cash it out if we wanted to; otherwise, we can take a certain amount out every year, it has a guaranteed step up, death benefits, etc. We have no pensions only social security, so the idea was to create our own pension.
Yeah--we have a lot of funds, don't we? Your thoughts are appreciated!
First of all, your financial life is not a disaster. I have counted $902,000 in investment accounts and that is hardly life in hell. You both have done a lot of things right, I see some good stuff in there.

What I want you to do, is list the reason that you purchased each of your investments. You did a good job explaining why you bought the annuity, essentially you wanted a pension. Do that for each of the other investments that you own.

Then ask yourself, what am I trying to accomplish with the portfolio as a whole?

I see some good stuff there that you bought. You haven't gone batspit crazy. What is missing is that you have not looked at this as a big picture. You have made some pretty good piecemeal decisions but you need to see how it all fits together. What is it that you want to accomplish with your money? Once that is decided, you need to decide upon the best strategy to accomplish your goals.

What I am saying is get a plan, Stan.

I often talk about the Investment Policy Statement. You might think of it as your investing constitution. Just as our Founding fathers met in Philadelphia and wrote the U.S. Constitution, you and your spouse need to figure out what you want in life. Then figure out how you want to use your money to get what you want. Your wants probably exceed your means, so this means doing some prioritizing. Then you need to come up with a realistic plan to balance your needs, wants, and means with investments that are most likely to accomplish your goals.

The wiki has a good article on the Investment Policy Statement. Morningstar has a good worksheet in .pdf form that will help get you thinking.

The biggest decision you need to make is how much risk do you want to take and how much risk do you need to take? So you need to know how much money you will get from Social Security when you retire and how much money you need to draw from your portfolio each year to meet your living expenses. Once we know those things, the rest will come easier.

As far as your portfolio, is boils down to this: what percentage in stocks and what percentage in bonds? But we need answers to other questions before we can get into detail.
A fool and his money are good for business.

retiredjg
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Re: Fidelity Portfolio Advisory service?

Post by retiredjg » Fri Nov 24, 2017 7:14 am

ljr wrote:
Thu Nov 23, 2017 11:50 pm
and don't want to open a new window to look up because I keep losing my post when I do that
Under the white box that you type in there are 3 buttons. If you click the "preview" button before wandering to the internet, you can come back to what you were typing without losing anything. You must do it every time. Otherwise, you will lose what you have typed since the last preview.

retiredjg
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Re: Fidelity Portfolio Advisory service?

Post by retiredjg » Fri Nov 24, 2017 8:14 am

Here is your information posted in a format that makes it easier to understand. With more information, people here can help you understand what you have and make some decisions about whether you want to have this money managed or rebuild it into a portfolio that can be easily managed by you.


Taxable $110,000
First Eagle Global Class A
Schwab 1000 Index Fund
Ishares S&P 500 Value ETF
Fidelity Contra ($40,000)
another index or ET fund

Current 401k $7000
two Vanguard Index funds

Old 401k $120,000
Fidelity Freedom 2020

Unknown person's IRA $170,00
Fidelity International Index Premium
Artisan International Investor Class
Brown Advisory Small Cap Fundamental Value INVS
Fidelity Total Bond
Blackrock High Yield Bond Class A
Doubleline Total RT Bond Fund Class N
TCW Total Return Bond Class N
Ishares S&P 500 Value ETF

His IRA $40,000ish
cash

deferred variable annuity $455,000
unknown investments


I don't believe it would be too difficult to "whip this portfolio into shape" and manage it yourself. I also feel you might be a good candidate for Vanguard's Portfolio Advisor Service (PAS). The service costs only .3% and they would put you in only low cost funds. After some time if you felt confident, you could simply take over the management with no changes needed in the portfolio.

This is in stark contrast to Fidelity's service. First they are more costly and that small amount does add up to a lot over time. But also, those "special funds" can't be taken anywhere and I'm not sure you even get to keep what you have if you decide to stop paying for their management service. So my suggestion if you want to stay with Fidelity is to manage it yourself using Target Funds or find another advisor - one who will not push you into their managed service.

retiredjg
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Re: Fidelity Portfolio Advisory service?

Post by retiredjg » Fri Nov 24, 2017 8:24 am

Here are some quick and dirty suggestions to consider when/if you decide to improve this portfolio.

Taxable $110,000
First Eagle Global Class A <--dump this, high expense ratio, actively managed and not tax efficient
Schwab 1000 Index Fund
Ishares S&P 500 Value ETF
Fidelity Contra ($40,000) <--keep for now, but don't buy more; turn off reinvestment of the dividends
another index or ET fund

Current 401k $7000
two Vanguard Index funds

Old 401k $120,000 <--roll this into an IRA; combine with another account?
Fidelity Freedom 2020

Unknown person's IRA $170,00 <--this can be reduced to 1 or 2 funds; maybe combine with another account
Fidelity International Index Premium
Artisan International Investor Class
Brown Advisory Small Cap Fundamental Value INVS
Fidelity Total Bond
Blackrock High Yield Bond Class A
Doubleline Total RT Bond Fund Class N
TCW Total Return Bond Class N
Ishares S&P 500 Value ETF

His IRA $40,000ish <--combine with another account? get this money invested
cash

deferred variable annuity $455,000 <--I'm not sure what you can do with this when it matures. Do you know?
unknown investments


As you are comtemplating what nedsaid had to say, keep in mind that this is not that difficult. Yes, you have to learn a little, but investing can be very simple. If you have not found it already, here is a good place to start. Be sure you watch the videos. https://www.bogleheads.org/wiki/Getting_started

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AstroJohn
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Re: Fidelity Portfolio Advisory service?

Post by AstroJohn » Fri Nov 24, 2017 9:16 am

Another happy indexer at Fidelity. My current Private Client Manager has never called. Previous one checked in once a year. They know I am an indexer and just take care of any questions I may have, which is rare.

We did have one pushy person many years ago. Shortly after our one and only visit with him, we savaged him on the evaluation form we were asked to fill out. It took just a few days before the office manager called, gave us a new manager, and advised us that the previous one was no longer with Fidelity.

Study the info available here, simplify things as has been suggested, and sit back and watch your assets grow.

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ps56k
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Re: Fidelity Portfolio Advisory service?

Post by ps56k » Fri Nov 24, 2017 9:39 am

interesting following along....

If I have a Traditional IRA at Fidelity - and a couple of different Fidelity funds in that IRA -
What are the implications, record keeping, reporting, etc - of selling one fund to consolidate into fewer Fidelity IRA funds ?

ljr
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Re: Fidelity Portfolio Advisory service?

Post by ljr » Fri Nov 24, 2017 10:27 am

Thanks I will read and watch the suggested material. It's hard to figure out where to look here--there is so much information.

Regarding the previous suggestion to dump First Eagle in our taxable account--I think we have left it there because it would trigger capital gains. How do you judge when doing that would be worth it? I know you can balance it with losses--but I don't know that we have any to balance it with. This is where it gets tricky, doesn't it? And this is where, years ago, we used to pay someone for advice, who would send us a quarterly report with suggestions.

I'm getting the impression that the Fidelity advisor service is not popular here, but the Vanguard version seems possibly helpful for some people, costs less, and could be worth it. I did call Vanguard awhile ago, but I never followed up. I was thinking of putting my $120,000 old 401k there to try it out before deciding whether to switch everything over. And of course, I will have to get my husband to agree on any changes. He is tired of all the switching. I have to get him to either delve into helping figure it out ourselves (which he is actually better at than I am, he just has other things he spends his time on) or agree to possibly consider the Vanguard PAS.

I will work on answering the larger questions posed above as well. Appreciate the help very much.

retiredjg
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Re: Fidelity Portfolio Advisory service?

Post by retiredjg » Fri Nov 24, 2017 11:05 am

ljr wrote:
Fri Nov 24, 2017 10:27 am
How do you judge when doing that would be worth it? I know you can balance it with losses--but I don't know that we have any to balance it with. This is where it gets tricky, doesn't it? And this is where, years ago, we used to pay someone for advice, who would send us a quarterly report with suggestions.
Here is a link in the Wiki that deals with that particular question. Well, I can't find it. Maybe someone else can.

Part of this decision starts with your tax bracket. If you are in a very low tax bracket, you can sell some shares with capital gains and pay no tax. If you are in a higher bracket, the tax on the gains will only be 15%. If you are in the highest bracket....it is 20% and AMT is involved as well.

If you can lower your expense ratio (annual operating cost of a fund) and become more tax-efficient (not have unnecessary taxable income from your funds), you will make up that 15% in taxes over time.

That First Eagle fund has an expense ratio of 1.1%. If you sold it and replaced it with a fund with an expense ratio (ER) of .1%, you would save 1% a year - $100 a year on each $10k you have invested in that fund. You would also eliminate the unnecessary gains and/or dividends you pay tax on each year.

The same is true of Contrafund, but you mentioned the gains on that fund were particularly large. Save that for another time.

If you don't know your tax bracket, you can learn it by comparing your taxable income (line 41 on Form 1040) to this chart. This is a number that everyone should have a handle on.

http://www.moneychimp.com/features/tax_brackets.htm

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nedsaid
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Re: Fidelity Portfolio Advisory service?

Post by nedsaid » Fri Nov 24, 2017 11:11 am

ljr wrote:
Fri Nov 24, 2017 10:27 am
Thanks I will read and watch the suggested material. It's hard to figure out where to look here--there is so much information.

Nedsaid: Remember the big picture, look at your investments as a whole. Yes, there is a lot of information. Retiredjg is one of our best contributors, I have participated in these type of threads with her in the past, you are in good hands. You will get a lot of solid and detailed advice.

Regarding the previous suggestion to dump First Eagle in our taxable account--I think we have left it there because it would trigger capital gains. How do you judge when doing that would be worth it? I know you can balance it with losses--but I don't know that we have any to balance it with. This is where it gets tricky, doesn't it? And this is where, years ago, we used to pay someone for advice, who would send us a quarterly report with suggestions.

Nedsaid: Remember that you pay tax on reinvested capital gains and dividends on mutual funds in a taxable account. Thus, these reinvested distributions are added to your cost in the investment or tax basis. You may owe less on First Eagle and Contrafund than you think. Good recordkeeping is the key here as you don't want to pay taxes twice on the same money.

I'm getting the impression that the Fidelity advisor service is not popular here, but the Vanguard version seems possibly helpful for some people, costs less, and could be worth it. I did call Vanguard awhile ago, but I never followed up. I was thinking of putting my $120,000 old 401k there to try it out before deciding whether to switch everything over. And of course, I will have to get my husband to agree on any changes. He is tired of all the switching. I have to get him to either delve into helping figure it out ourselves (which he is actually better at than I am, he just has other things he spends his time on) or agree to possibly consider the Vanguard PAS.

Nedsaid: I am a Fidelity customer but have never used their advisory service. From my understanding, you pay an advisory fee plus the expense ratio of the underlying funds. They tend to put you into the more expensive managed funds, they list expenses from 0.60% to 1.70%. The thing is, the Fidelity Freedom 2020 fund which uses active funds has an expense ratio of 0.62%. These funds are best used in tax deferred retirement accounts. The Fidelity Freedom Index 2020 has an expense ratio of 0.15%.

Keep in mind, there is also the Fidelity Go service, which uses low cost index funds and is mostly run by robots. The costs here are similar to Vanguard Advisory Service. Less human contact than with Fidelity Advisory Service but the fees are much less too. My guess is that Fidelity Go would give you similar results to a Fidelity Freedom Index fund. Check out Fidelity Go and see what you think.

People here tend to be negative on Fidelity advisory service because of the higher fees and expenses and you get much the same thing in the Freedom Funds.


I will work on answering the larger questions posed above as well. Appreciate the help very much.
A fool and his money are good for business.

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nedsaid
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Re: Fidelity Portfolio Advisory service?

Post by nedsaid » Fri Nov 24, 2017 11:27 am

ljr, it would be helpful if you would tell us more about your annuity. Is this held within an IRA or did you buy it with after-tax funds? Please give us the name of the issuing company and the name of the annuity. For example, (I am making up the name) New York Life Variable Retirement Accumulator Z. If we have the name, we can look at the prospectus on-line and see what your fees are.

If the annuity is within an IRA, you could just roll the proceeds over to an investment company of your choice after the early withdrawal penalties expire in March.

If the annuity was purchased with after-tax funds, you have three options:
1) Keep the money where it is.
2) Do a 1035 exchange for a lower cost annuity at Vanguard or Fidelity.
3) Simply pensionize or annuitize your account to start taking the lifetime monthly payments.
4) Cash in the annuity and pay the tax on your gains.

If you wanted to take a pension, we could give you an idea of how much income you could purchase with that money. You can get quotes at www.immediateannuities.com. Just give your age, age of your spouse, the dollar amount, and your state of residence and this will give you an idea of whether your income options on your current annuity is competitive or not. Keep in mind, the quoted monthly income amounts are not inflation adjusted.
A fool and his money are good for business.

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