Finally get it, Step 2 - Get rid of FA at Fidelity?

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RetireSoon90
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Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by RetireSoon90 » Sat Mar 03, 2018 8:21 am

Thanks to everyone I finally got rid of my FA at Morgan Stanley and moved my husbands retirement money over to Vanguard under a the management of a PAS at the cost of .3%. In time I hope to be comfortable enough to manage the money on our own but this was good first step to help save on fees. We moved over about a million in tax-deferred IRA.

I have $453,639 in a tax-deferred IRA at Fidelity managed by a FA who charges a 1%, I listed all the investments below. Sooo it is the same concept, I am paying too many fees at Fidelity too. Finally getting it, not sure what took so long. I was hoping the folks on this board could weigh in on what would be best. Fidelity does not have a similar inexpensive PAS so would it be better to move this money over to Vanguard or leave at Fidelity. If I leave at Fidelity what funds? I would like a 70/30 stock/bond allocation. There is a piece of me that likes having the diversity of money at both Fidelity and Vanguard but defer to the experts on this board.

We are 56/57 years old and would like to retire in the next couple of year. Total tax-deferred savings at $1,883,000. Doing all we can to get there. Thanks to everyone's help!

Symbol Description Current Value ER
MASNX LITMAN GREGORY MSTRS ALT STRATEGIES INVST $40,012.11 1.72
SVFAX SMEAD VALUE FUND CL A $34,895.02 1.16
OEF ISHARES S&P 100 ETF $33,095.96 0.2
IWB ISHARES RUSSELL 1000 ETF $32,958.20 0.15
BEXFX BARON EMERGING MARKETS FUND RETAIL $31,804.54 1.38
OAKLX OAKMARK SELECT INVESTOR CL $29,412.66 1.03
VVPLX VULCAN VALUE PARTNERS FUND $29,367.09 1.07
PONDX PIMCO INCOME FUND CL D $28,915.47 0.79
ETGLX EVENTIDE GILEAD FUND CLASS N $22,188.86 1.41
TIP ISHARES TIPS BOND ETF $21,536.64 0.2
HDPSX HODGES SMALL CAP FUND RETAIL $19,254.51 1.28
IXUS ISHARES TR CORE MSCI TOTAL $18,397.47 0.11
LISOX LAZARD INTL STRAT EQUITY PORT OPEN CL $18,030.06 1.07
FFRHX FIDELITY FLOATING RATE HIGH INCOME $16,216.98 0.7
LSBRX LOOMIS SAYLES BOND RETAIL SHARES $16,075.85 0.91
DLTNX DOUBLELINE TOTAL RT BOND FD CL N $14,980.11 0.73
PFF ISHARES TR S&P US PFD STK $13,827.17 0.47
AMLP ALPS ETF TR ALERIAN MLP ETF $11,784.15 1.42

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badbreath
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by badbreath » Sat Mar 03, 2018 8:35 am

Having funds in Fidelity is fine as long as they are index funds (which none of yours are).

look at the wiki link for Vanguard/Fidelity equivalent funds


https://www.bogleheads.org/wiki/Fidelity
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

TwstdSista
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by TwstdSista » Sat Mar 03, 2018 8:45 am

Yes, get rid of the Fidelity FA. The three funds you want are:

Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
Fidelity Total International Market Index Fund Premium Class (FTIPX) ER 0.10%
Fidelity Total Bond Market Index Fund Premium Class (FSITX) ER 0.045%

btenny
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by btenny » Sat Mar 03, 2018 9:13 am

If this is what the Fidelity adviser put you into, he/she has created a real mess. Why so many funds? Plus many of them are really expensive and you are paying them a 1% fee to sell you this mess. Shame on them. I agree with Twisted. You should sell all your funds and go to a simple 3 fund portfolio immediately. You said all this money is in a IRA so set down with them and change it next week. Make sure they do not charge you extra to do the changes. Then after the changes are complete, say in 2 weeks. Fire the adviser. You can keep the money at Fidelity and manage it yourself if you simplify.

Good Luck.

RetireSoon90
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by RetireSoon90 » Sat Mar 03, 2018 9:40 am

Thanks everyone for confirming what I was thinking. I just don't get it, how do these FA's sleep at night? I find it very upsetting now that I finally understanding it at a very high level.

Yes that is what the FA put me in, I had not idea what to do with the money so I deferred to him. I am trying to learn but find investing complex but by using the "simple" 3 or 4 index fund philosophy with proper allocation it makes sense to me.

Khanmots
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Khanmots » Sat Mar 03, 2018 10:25 am

RetireSoon90 wrote:
Sat Mar 03, 2018 9:40 am
Thanks everyone for confirming what I was thinking. I just don't get it, how do these FA's sleep at night? I find it very upsetting now that I finally understanding it at a very high level.
I've got a friend who used to be a youth pastor but is now starting off as a FA at one of these firms. Had quite a few discussions with him along this transition and what I learned is that he honestly believes that he's helping and doing good things.

Problem is that all of his training/schooling has been by the firm. He didn't go get a degree then apply, they spent a lot of time training him (months!) with only what they want him to know. They hide the way that commissions work from him so he's not aware just how much he's siphoning off (and from his description it's obvious that a bunch of the commissions aren't going to him as well).

It's a thoroughly depressing situation, and I'm worried for him if/when he discovers just how he's been duped. I suspect that there's a lot of other FAs in his shoes; they think they're helping, they don't know just how much they're holding their clients back, and they don't know there's a better way. I suspect there's also a bunch of completely amoral FAs that are out to sucker as much out of people as possible.

Point is, don't necessarily blame the FA, he might well really think he's helping. Blame the organization that puts him in that position.

Also, we've all been there. I got sucked into Ameriprise and a bunch of funds with loads and paying high fees. Lots of others here have similar experiences.

retiredjg
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by retiredjg » Sat Mar 03, 2018 10:38 am

RetireSoon90 wrote:
Sat Mar 03, 2018 9:40 am
Thanks everyone for confirming what I was thinking. I just don't get it, how do these FA's sleep at night? I find it very upsetting now that I finally understanding it at a very high level.
I agree with Khanmots. Some don't see an issue - they are putting kids through college too and it is simply an income to them. But I think many do think they are helping people invest their money in a good and profitable way.

There is no reason to leave Fidelity if you want to keep some money there. Just put the money into the 3 fund portfolio already listed by TwstedSista and rebalance it once a year or two. Once you see how that works, you may decide you don't need the PAS anymore. Or maybe you will feel they have some benefit for you. Point is, you'll know.

RetireSoon90
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by RetireSoon90 » Sat Mar 03, 2018 10:48 am

Thank! The only part I don't get is do I tell the FA to move the money into the 3 funds and remove him as my adviser after that is done or the other way around. I was going to call Fidelity on Monday to have them help me out but hoping this group can give some background on that process.

Helo80
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Helo80 » Sat Mar 03, 2018 10:51 am

RetireSoon90 wrote:
Sat Mar 03, 2018 10:48 am
Thank! The only part I don't get is do I tell the FA to move the money into the 3 funds and remove him as my adviser after that is done or the other way around. I was going to call Fidelity on Monday to have them help me out but hoping this group can give some background on that process.

I'm not sure if there is a "correct" process, but I'd call Fidelity and take back control of the account and fire said FA. Then, I'd consolidate all of those funds into the 3-fund portfolio you seek. 1. You don't want the FA to mess this up, 2. You don't want the FA to charge some hidden fee for rebalancing your account.

You should also brace for uneasiness from your FA if you ever have to deal with him/her again. Most of them are not fans of index funds as it leaves no margin for their services.
Last edited by Helo80 on Sat Mar 03, 2018 10:55 am, edited 1 time in total.

Helo80
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Helo80 » Sat Mar 03, 2018 10:53 am

RetireSoon90 wrote:
Sat Mar 03, 2018 9:40 am
Thanks everyone for confirming what I was thinking. I just don't get it, how do these FA's sleep at night? I find it very upsetting now that I finally understanding it at a very high level.

Most of them are honestly trying to help, and a certain segment of the population is scared to death of the stock market and "gambling" in said market.... so they use FAs as said FAs are supposed experts in this sort of stuff. But, FAs and the way they earn money starts looking more and more like a pyramid scheme or organized crime racket. Money just rolls up the chain of command.... Look at the Johnsons (right?) in charge of Fidelity --- multi-billionaires.

anoop
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by anoop » Sat Mar 03, 2018 11:06 am

This is very sad. It has changed my impression of Fidelity. I used to think FAs at Fidelity would use low cost Fidelity funds (maybe not necessarily index funds) since they are already charging a hefty fee. This is daylight robbery, except that it's happening during the day and night every single day.

Todasi
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Todasi » Sat Mar 03, 2018 11:13 am

It's crazy how your Fidelity Advisor only holds one Fidelity Fund in your portfolio, and a not so good one at that. Personally I would call and do the move myself and when everything is complete, relieve your Advisor of their duty.

retiredjg
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by retiredjg » Sat Mar 03, 2018 11:18 am

We've seen this from "Fidelity financial advisors" before - some even worse than above. But it is very infrequent (maybe 1 per year?)

I'm yet to figure out where people are finding these few really bad advisors - are they in Fidelity's satellite offices? In the home office? Are they actually independent advisors who are selling Fidelity products? Or independent advisors who are holding their clients' money at Fidelity (if that is even possible)?

I've not figured it out, but hope I will someday because I'd like to be able to recommend Fidelity advisors without having to add a warning each time.

TheDDC
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by TheDDC » Sat Mar 03, 2018 11:58 am

Congrats on taking the first steps! I did the same thing in the last few months and I feel great about my decision. For me it was moving my wife's IRA as well as my VA held in a 403(b) out of Ameriprise. We moved to VG and Fidelity. For a 403(b) I actually like Fidelity a little better. My 403(b) is composed entirely FSTVX. My international holdings are in my Vanguard portfolio since I can't buy FTIPX though my employer plan.

There are two basic ways to make a trade: by yourself or via broker assisted. When my wife had her IRA with Ameriprise, if we went to my FA and he did the transaction for her, it counted as a broker-assisted buy. For a broker assisted buy on a front loaded mutual fund it added another few points to the buy. I'm thinking most of those funds carry loads, possibly back end loads, so doing the rebalancing yourself has the potential to save a lot here.

I'm assuming if you called up the brokerage directly (I would NOT recommend talking to the FA about this) it would also be broker-assisted. I would do it all online.

Good luck and report back!

-TheDDC

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BL
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by BL » Sat Mar 03, 2018 12:10 pm

If you need advice in investing, go to Vanguard. If you can buy and stick with recommended index funds, most brokerages with low-ER index funds will work.

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goingup
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by goingup » Sat Mar 03, 2018 12:18 pm

That's pretty egregious. Who can afford to pay 2% (advisor fee + fund ERs) to have their portfolio managed when a safe withdrawal rate is 4%?

I'm not a Fidelity customer, but I'd have the FA sell all those funds for you and go to cash. You would explain that you plan to "self-direct" or "self-manage" your portfolio. I'd have the FA do the selling because otherwise you might have to pay fees to sell each fund.

When that settles you purchase either a 3 fund portfolio or maybe a Fidelity Freedom Index Target Date fund like this: https://fundresearch.fidelity.com/mutua ... /315793505

It's a great thing to move away from the FA, and it's becoming quite common as more people realize the service isn't worth the expense.

mhalley
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by mhalley » Sat Mar 03, 2018 12:26 pm

You mention being uncomfortable managing funds on your own so you went with pas. While not exactly the same, fidelity has a robot advisor product called fidelity go that might be a stop gap until you become totally comfortable investing on your own. Price a little cheaper than pas, .35% all in.

https://dpcs.fidelity.com/prgw/dpcs/dma/

xerxes101
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by xerxes101 » Sat Mar 03, 2018 12:29 pm

RetireSoon90 wrote:
Sat Mar 03, 2018 9:40 am
Thanks everyone for confirming what I was thinking. I just don't get it, how do these FA's sleep at night? I find it very upsetting now that I finally understanding it at a very high level.

Yes that is what the FA put me in, I had not idea what to do with the money so I deferred to him. I am trying to learn but find investing complex but by using the "simple" 3 or 4 index fund philosophy with proper allocation it makes sense to me.
OK, what about this? Move all the money from Fidelity to Vanguard and mirror your husband's portfolio for now. :sharebeer ..best of both worlds and you will save lots of money because you are in cheaper funds and you don't have to pay the FA for your portfolio :moneybag ... I also think it will be easier for you guys to manage the money if it is in a single brokerage like Vanguard. As you learn even more about the Vanguard funds and ETFs you could start managing the portfolios yourself, do without FA altogether for your husband portion as well to save even more money, and maybe adjust each portfolio based on your individual risk tolerance levels. But, overall, the BH philosophy of keeping it simple is the key I think, i.e., three fund portfolio.

Good luck

prairieman
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by prairieman » Sat Mar 03, 2018 12:36 pm

I learned lesson 1 about expenses back when I was 30 and signed up to pay an FA 1% to manage my account. After transferring my assets over he sent me recommendations and I almost green-lighted him immediately. I was so busy with job and family, he was nice, and he was the professional. Thankfully, I decided, for once, not to act on impulse. Instead, I got a printout and showed the recommendations to a savvy coworker the next day. He told me to fire the guy immediately and, in so doing, saved me a lifetime of financial drag. In addition to the 1% management fee, there were additional fees on every asset and none of the investments were highly rated anyway. This began my journey to asset allocation with indexing funds. It was not a direct route, however. I also later accepted bad advice from another coworker to buy gold and from my brother who gave me a scary book by Harry Dent. I am so much better off ignoring the day-to-day stock movements, investing in low-cost assets, and just staying close to a personally adjusted AA.

btenny
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by btenny » Sat Mar 03, 2018 12:38 pm

Well way back in 1980ish I went to Fidelity and got the same treatment as above for my "new IRA " . Their FA gave me terrible advice even though they had some really great mutual fund products at that time. I made a little money and they made a lot on what they sold me. Thankfully I wised up around 1989ish and started learning. I kept asking for another helper or FA or some different advice but was stonewalled until about 1999 when I fired Fidelity. Thankfully I did not put a lot of my money at Fidelity so I did OK.

I have hated Fidelity ever since.

Good Luck.

Alchemist
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Alchemist » Sat Mar 03, 2018 12:43 pm

RetireSoon90 wrote:
Sat Mar 03, 2018 8:21 am
I have $453,639 in a tax-deferred IRA at Fidelity managed by a FA who charges a 1%, I listed all the investments below. Sooo it is the same concept, I am paying too many fees at Fidelity too. Finally getting it, not sure what took so long. I was hoping the folks on this board could weigh in on what would be best. Fidelity does not have a similar inexpensive PAS so would it be better to move this money over to Vanguard or leave at Fidelity. If I leave at Fidelity what funds? I would like a 70/30 stock/bond allocation. There is a piece of me that likes having the diversity of money at both Fidelity and Vanguard but defer to the experts on this board.
Just wanted to offer another option. Fidelity actually does have an inexpensive version of Vanguard PAS, it is called FidelityGo

From Fidelity:
https://www.fidelity.com/managed-accoun ... o/overview

Boglehead's thread from 2016 when it launched, there are other threads around discussing it as well:
viewtopic.php?t=196241


Definitely dump your FA. Moving all to Vanguard or keeping this account at Fidelity but in a 3 fund/FidelityGo are both perfectly reasonable options.

SDLinguist
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by SDLinguist » Sat Mar 03, 2018 12:48 pm

I personally don't blame the FAs. Sure some can go overboard but some do try hard to make money for their clients and themselves.

If it weren't for most FAs, a large number of people would probably be saving for retirement in a savings account. So sure, taking 2% is a lot but if you average 6% growth that's still better then having people shove money under a mattress.

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Atomic
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Atomic » Sat Mar 03, 2018 1:54 pm

retiredjg wrote:
Sat Mar 03, 2018 11:18 am
We've seen this from "Fidelity financial advisors" before - some even worse than above. But it is very infrequent (maybe 1 per year?)

I'm yet to figure out where people are finding these few really bad advisors - are they in Fidelity's satellite offices? In the home office? Are they actually independent advisors who are selling Fidelity products? Or independent advisors who are holding their clients' money at Fidelity (if that is even possible)?

I've not figured it out, but hope I will someday because I'd like to be able to recommend Fidelity advisors without having to add a warning each time.
I think it varies by degrees. My mother worked with a Fidelity advisor at retirement and tripled her fees. She went from a 4 fund mix to around 15 to 20 funds. It was still a majority index mix, but the advisors incentive is to generate revenue or comissions.

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BL
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by BL » Sat Mar 03, 2018 2:05 pm

If you want an index target date fund at Fidelity (they won't tell you about them), here is TFB's (a poster here) older blog page with a link to them at Fidelity:
https://thefinancebuff.com/fidelity-fre ... funds.html

Low cost, 0.15 - 0.21% ER, unlike their regular freedom funds.

dave1054
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by dave1054 » Sat Mar 03, 2018 2:13 pm

Let’s keep it simple.

Your investments with Fidelity are absolutely insane. Realize your limitations and have Vanguard PAS manage it much cheaper plus no conflicts of interest since they do not work on commissions.

Second, I moved all my remaining assets from Morgan Stanley to Vanguard a few years Ago. Vanguard has a so called corcierge service that will do everything. It will ease you of burden of making uncomfortable calls. They can transfer funds and then decide which to sell to avoid surrender fees. If no fees, I would have them sell it all.

Third, I would suggest putting it all in Vanguard Wellington which is 65% stocks 35% bonds. It is actively managed value fund with very low expenses and been in businesss since 1929.
If you want to go passive route, put all in Vanguard Life Strategy Moderate Growth which is 60/40 stocks, bonds. Expenses of 0.13%.

Stop thinking you are so smart. Keep it real simple and have the time to enjoy the finer things in life.

tibbitts
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by tibbitts » Sat Mar 03, 2018 2:19 pm

Well I'm going to go against the general theme and admit that I have some pricey funds at Fidelity, for example floating rate high income and emerging market bonds. Those funds have done well for me so far compared to any easily (by my standards) accessible alternatives up to this point. And I think there is some value to having money at another provider, although you have to balance that: less odds of losing all your money due to fraud etc., but twice the odds of losing half your money.

However you have a lot of funds that you probably don't have any strong conviction about and those you should get rid of. You could manage the money yourself at Fidelity.

Also you might post a more complete financial picture. This is usually the point where the OP says "incidentally I'll also have pension and social security and taxable investment income of $500k/year in retirement." At some point paying an extra 1.x% on $400k doesn't' matter in a practical sense, but does serve to annoy Bogleheads, so might have some amusement value.

mancich
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by mancich » Sat Mar 03, 2018 2:19 pm

This looks like something Ameriprise would come up with. Or Edward Jones, Or Morgan Stanley. Or...

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Oak&Elm
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Oak&Elm » Sat Mar 03, 2018 3:04 pm

OP,
The guy who sets next to me at work must have the same FA at Fidelity. I have been telling him for years he doesn’t need a FA but for some unknown reason he doesn’t seem to mind giving up 1% aum plus paying higher expense ratios. My son recently left the wealth management profession and cited his reason for leaving that he felt it was a dying industry. BTW this was one of the major brokerages. Regardless, I recently consolidated all my accounts at Vanguard, reason being, I don’t think they would do something like this to me or my wife if I tip over first. Just saying

boglesmind
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by boglesmind » Sat Mar 03, 2018 4:14 pm

Alchemist wrote:
Sat Mar 03, 2018 12:43 pm
RetireSoon90 wrote:
Sat Mar 03, 2018 8:21 am
I have $453,639 in a tax-deferred IRA at Fidelity managed by a FA who charges a 1%, I listed all the investments below. Sooo it is the same concept, I am paying too many fees at Fidelity too. Finally getting it, not sure what took so long. I was hoping the folks on this board could weigh in on what would be best. Fidelity does not have a similar inexpensive PAS so would it be better to move this money over to Vanguard or leave at Fidelity. If I leave at Fidelity what funds? I would like a 70/30 stock/bond allocation. There is a piece of me that likes having the diversity of money at both Fidelity and Vanguard but defer to the experts on this board.
Just wanted to offer another option. Fidelity actually does have an inexpensive version of Vanguard PAS, it is called FidelityGo

From Fidelity:
https://www.fidelity.com/managed-accoun ... o/overview

Boglehead's thread from 2016 when it launched, there are other threads around discussing it as well:
viewtopic.php?t=196241


Definitely dump your FA. Moving all to Vanguard or keeping this account at Fidelity but in a 3 fund/FidelityGo are both perfectly reasonable options.
A lot of folks on Bogleheads forums recommend Fidelity over Vanguard for the supposedly better online access, IT services, tax forms processing time etc etc.

The only reason mutual fund industry has started offering low cost index funds is due to the pioneering and untiring work by Vanguard. This is meat and potatoes. Better IT services etc is *just* dessert and if we don't have meat and potatoes, what use is the dessert?

The only way Fidelity and other fund companies will reform their Financial Advisory (FA) service is if we as customers move our investments out of not just the FA's reach buy out of the fund companies themselves. When they start losing more and more customers, they will have to reform their advisory services and act as fiduciaries and not as leaches as they do at present.

So, fire your Fidelity FA, sell the funds, and move the money to Vanguard IRA account and either use Vanguard Personal Advisory Service (PAS). If Fidelity wants to keep you, ask them to refund the 1% fees for the last many years of mis-management and also tell them you are talking to Bloomberg/Fortune columnists about how poor Fidelity's FA service is. I'd do so in a heartbeat.

Boglesmind.

GibsonL6s
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by GibsonL6s » Sat Mar 03, 2018 5:11 pm

A couple of weeks ago I shared a story where a relative's fiduciary hired Fidelity and they ended up with 33 funds and ETFs which when I backtested them, the portfolio lost to a three fund with the same AA. Not a good story

anoop
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by anoop » Sat Mar 03, 2018 5:27 pm

mhalley wrote:
Sat Mar 03, 2018 12:26 pm
You mention being uncomfortable managing funds on your own so you went with pas. While not exactly the same, fidelity has a robot advisor product called fidelity go that might be a stop gap until you become totally comfortable investing on your own. Price a little cheaper than pas, .35% all in.

https://dpcs.fidelity.com/prgw/dpcs/dma/
Unless they are committed to using index funds (which does not appear to be the case), I'm not sure how this helps. They might very well end up with the same set of funds except that the customer pays 0.35% instead of 1% on top of fund ER. Or the funds may be worse (even higher ER) to make up for the difference!
Last edited by anoop on Sat Mar 03, 2018 5:34 pm, edited 2 times in total.

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BL
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by BL » Sat Mar 03, 2018 5:31 pm

Boglesmind

Thank you for saying something that needs to be said. When a brokerage's FA does such a bad job for a patron who pays them good money, that company no longer deserves to have access to that money any longer. Vanguard has shown that they provide responsible fiduciary advice and offer mainly low cost products, which is in the customer's best interest. They also don't charge to close an account which most brokerages do.

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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by sport » Sat Mar 03, 2018 6:24 pm

There are a number of Bogleheads that have nothing but good things to say about Fidelity and seem to feel that it is highly preferable to Vanguard. Personally, I would not want to do any business with a company that will treat its clients in such a shabby fashion as the Fidelity behavior shown in this thread. It seems clear that they have no scruples and will take advantage of any client given the opportunity. This type of problem will not occur at Vanguard.

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Leif
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Leif » Sat Mar 03, 2018 7:53 pm

sport wrote:
Sat Mar 03, 2018 6:24 pm
This type of problem will not occur at Vanguard.
Not to start a Fidelity vs Vanguard food fight. I have both. But I will say this type of problem did happen to me at Vanguard.

JBTX
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by JBTX » Sat Mar 03, 2018 8:07 pm

boglesmind wrote:
Sat Mar 03, 2018 4:14 pm
Alchemist wrote:
Sat Mar 03, 2018 12:43 pm
RetireSoon90 wrote:
Sat Mar 03, 2018 8:21 am
I have $453,639 in a tax-deferred IRA at Fidelity managed by a FA who charges a 1%, I listed all the investments below. Sooo it is the same concept, I am paying too many fees at Fidelity too. Finally getting it, not sure what took so long. I was hoping the folks on this board could weigh in on what would be best. Fidelity does not have a similar inexpensive PAS so would it be better to move this money over to Vanguard or leave at Fidelity. If I leave at Fidelity what funds? I would like a 70/30 stock/bond allocation. There is a piece of me that likes having the diversity of money at both Fidelity and Vanguard but defer to the experts on this board.
Just wanted to offer another option. Fidelity actually does have an inexpensive version of Vanguard PAS, it is called FidelityGo

From Fidelity:
https://www.fidelity.com/managed-accoun ... o/overview

Boglehead's thread from 2016 when it launched, there are other threads around discussing it as well:
viewtopic.php?t=196241


Definitely dump your FA. Moving all to Vanguard or keeping this account at Fidelity but in a 3 fund/FidelityGo are both perfectly reasonable options.
A lot of folks on Bogleheads forums recommend Fidelity over Vanguard for the supposedly better online access, IT services, tax forms processing time etc etc.

The only reason mutual fund industry has started offering low cost index funds is due to the pioneering and untiring work by Vanguard. This is meat and potatoes. Better IT services etc is *just* dessert and if we don't have meat and potatoes, what use is the dessert?

The only way Fidelity and other fund companies will reform their Financial Advisory (FA) service is if we as customers move our investments out of not just the FA's reach buy out of the fund companies themselves. When they start losing more and more customers, they will have to reform their advisory services and act as fiduciaries and not as leaches as they do at present.

So, fire your Fidelity FA, sell the funds, and move the money to Vanguard IRA account and either use Vanguard Personal Advisory Service (PAS). If Fidelity wants to keep you, ask them to refund the 1% fees for the last many years of mis-management and also tell them you are talking to Bloomberg/Fortune columnists about how poor Fidelity's FA service is. I'd do so in a heartbeat.

Boglesmind.
I’ve been with fidelity 25-30 years and never had a financial advisor (I do have some actively managed funds). By your logic we should all abandon credit cards and their rewards and bonuses because they exploit some cardholders with interest and fees. This stuff exists because there is a demand for it.

PhilosophyAndrew
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by PhilosophyAndrew » Sat Mar 03, 2018 8:28 pm

I’ve never used a FA, but, after having been a mutual fund customer at both Vanguard and Fidelity for decades, I moved all to Fidelity because their service and website had become far superior — the final straw, after slower and slower service from Vanguard was a cost basis errror that took many months and many phone calls and messages to clear up. (My sense then was that Vanguard had grown so much that it was unable to provide proper service; hopefully they are doing better now.)

OP, I agree with the advice to replace the FA’s portfolio in your tax deferred account with a simpler 3-fund portfolio or target-date index fund. Where you house your portfolio is a personal preference; I explained why I prefer Fidelity, but if you are satisfied with the service Vanguard provides to your husband that might be a good reason to move your assets there.

MrPotatoHead
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by MrPotatoHead » Sat Mar 03, 2018 10:00 pm

One way to get management inexpensively in to take a look at Fidelity's Four-In-One fund, that will instantly get you to a 85-15 portfolio that is roughly 60 Equities, 25% intentional and 15% Bond with only a .11% ER. The benefit is the rebalance etc will be handled for you at an overall nominal cost. It is a trivall thing to then add in another bond component to get you to your desired allocation. You could save money by picking the portfolio yourself,in which case I would use Ishares commission free etfs from FIDO with their minuscule ERs.

However there is another option that is very simple and may give you what you really want, management with a very lowcost.

Step 1) Write an IPS for yourself. Likely forum members here will help you do this. It should indicate your desired asset allocation, specify low cost index funds or etfs, it could even list ER ranges that are acceptable or even the funds or etfs to be chose from.

Step 2) bump up your assets at FIDO to 500K if they are no there already (hard to tell by the way you wrote the post)

Step 3) call Fidelity and get a personal advisor assigned for free to handle your account.

Step 4) Most Fidelity offices have a staff person that is a notary, if not there likely is one in the area of one of their offices. Meet with your new FIDO advisor, hand him your IPS, have him get a notarized statement he has read the IPS, then ask him to design your portfolio and transfer your assets. Tell him/her you want a quarterly or semi-annual, or annual review of your porffolio.

Bingo, instant free advice administered in a way that binds them to your best interest. I know this will work because I helped set this up for an old girlfriend's daughter. Her father had died and left his age of majority daughter with the proceeds from a life insurance company.

FYI, last year Fidelity restructured internally and their free personal advisors now get dinged if they lose assets, so they have an incentive to keep you happy.

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GerryL
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by GerryL » Sat Mar 03, 2018 10:26 pm

Helo80 wrote:
Sat Mar 03, 2018 10:51 am
RetireSoon90 wrote:
Sat Mar 03, 2018 10:48 am
Thank! The only part I don't get is do I tell the FA to move the money into the 3 funds and remove him as my adviser after that is done or the other way around. I was going to call Fidelity on Monday to have them help me out but hoping this group can give some background on that process.

I'm not sure if there is a "correct" process, but I'd call Fidelity and take back control of the account and fire said FA. Then, I'd consolidate all of those funds into the 3-fund portfolio you seek. 1. You don't want the FA to mess this up, 2. You don't want the FA to charge some hidden fee for rebalancing your account.

You should also brace for uneasiness from your FA if you ever have to deal with him/her again. Most of them are not fans of index funds as it leaves no margin for their services.
OP,
If Fidelity tries to put roadblocks in the way to a simple 3-fund portfolio or tries to discourage you from dropping your FA, let them know that if they are unable or unwilling to help you get your account into the investments you want you are prepared to transfer your account to Vanguard. You can say, "I'd like to continue working with Fidelity, but ...."

sport
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by sport » Sat Mar 03, 2018 11:54 pm

MrPotatoHead wrote:
Sat Mar 03, 2018 10:00 pm
One way to get management inexpensively in to take a look at Fidelity's Four-In-One fund, that will instantly get you to a 85-15 portfolio that is roughly 60 Equities, 25% intentional and 15% Bond with only a .11% ER.
Is that .11% the total ER or does that get added to the ER of the underlying funds?

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BL
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by BL » Sun Mar 04, 2018 1:08 am

sport wrote:
Sat Mar 03, 2018 11:54 pm
MrPotatoHead wrote:
Sat Mar 03, 2018 10:00 pm
One way to get management inexpensively in to take a look at Fidelity's Four-In-One fund, that will instantly get you to a 85-15 portfolio that is roughly 60 Equities, 25% intentional and 15% Bond with only a .11% ER.
Is that .11% the total ER or does that get added to the ER of the underlying funds?
It is 0.11% ER.
I understand it is an excellent fund if 15% bonds suits you.

boglesmind
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by boglesmind » Sun Mar 04, 2018 1:36 am

JBTX wrote:
Sat Mar 03, 2018 8:07 pm
boglesmind wrote:
Sat Mar 03, 2018 4:14 pm
Alchemist wrote:
Sat Mar 03, 2018 12:43 pm
RetireSoon90 wrote:
Sat Mar 03, 2018 8:21 am
I have $453,639 in a tax-deferred IRA at Fidelity managed by a FA who charges a 1%, I listed all the investments below. Sooo it is the same concept, I am paying too many fees at Fidelity too. Finally getting it, not sure what took so long. I was hoping the folks on this board could weigh in on what would be best. Fidelity does not have a similar inexpensive PAS so would it be better to move this money over to Vanguard or leave at Fidelity. If I leave at Fidelity what funds? I would like a 70/30 stock/bond allocation. There is a piece of me that likes having the diversity of money at both Fidelity and Vanguard but defer to the experts on this board.
Just wanted to offer another option. Fidelity actually does have an inexpensive version of Vanguard PAS, it is called FidelityGo

From Fidelity:
https://www.fidelity.com/managed-accoun ... o/overview

Boglehead's thread from 2016 when it launched, there are other threads around discussing it as well:
viewtopic.php?t=196241


Definitely dump your FA. Moving all to Vanguard or keeping this account at Fidelity but in a 3 fund/FidelityGo are both perfectly reasonable options.
A lot of folks on Bogleheads forums recommend Fidelity over Vanguard for the supposedly better online access, IT services, tax forms processing time etc etc.

The only reason mutual fund industry has started offering low cost index funds is due to the pioneering and untiring work by Vanguard. This is meat and potatoes. Better IT services etc is *just* dessert and if we don't have meat and potatoes, what use is the dessert?

The only way Fidelity and other fund companies will reform their Financial Advisory (FA) service is if we as customers move our investments out of not just the FA's reach buy out of the fund companies themselves. When they start losing more and more customers, they will have to reform their advisory services and act as fiduciaries and not as leaches as they do at present.

So, fire your Fidelity FA, sell the funds, and move the money to Vanguard IRA account and either use Vanguard Personal Advisory Service (PAS). If Fidelity wants to keep you, ask them to refund the 1% fees for the last many years of mis-management and also tell them you are talking to Bloomberg/Fortune columnists about how poor Fidelity's FA service is. I'd do so in a heartbeat.

Boglesmind.
I’ve been with fidelity 25-30 years and never had a financial advisor (I do have some actively managed funds). By your logic we should all abandon credit cards and their rewards and bonuses because they exploit some cardholders with interest and fees. This stuff exists because there is a demand for it.
Non-sequitur -- i.e your conclusion absolutely does not follow from my statements. Please read my message carefully again. Nowhere did I say that ALL customers of Fidelity should move their funds to Vanguard. It was specifically addressed to clients of Financial Advisers of Fidelity and such who rob their clients.

If the robbed-clients don't move the funds out of such firms or don't complain to the top boss (and may be SEC) asking for refunds of fees and lost opportunity cost or sue them or publicize their behavior and shame them, the mis-behavior will continue. In the absence of disincentives, there is no incentive to stop/reform the behavior of such FAs. Don't wait for or expect regulations.

OP, you have the power to reduce or stop this happening to others in the future. Move your IRA to Vanguard and write a letter to the Fidelity top honchos and as many financial journals you can. Or at least to NPR's business correspondent Paul Solomon so that he can do an expose. Jack Bogle did generations of investors a huge favor more than politician could or did. At least we can vote with our feet and follow in his path.

Boglesmind

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SpringMan
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Location: Michigan

Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by SpringMan » Sun Mar 04, 2018 5:00 am

Financial advisors paid according to assets under management, AUM, may not give objective advise. Bad advise may benefit them. Questions on taking a pension or a lump sum settlement when the lump sum goes to AUM. Similarly true for any lump sum windfall. If asked should I pay down a mortgage or invest when investing benefits the advisor's bottom line which option would they suggest?
Best Wishes, SpringMan

RetireSoon90
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by RetireSoon90 » Sun Mar 04, 2018 7:00 am

First let me think you for your time and effort in replying, I really like hearing everyone’s various opinions and am a strong believer in listening to all then weighing out.

“retiredjg” I believe you correctly categorized my FA as an “independent advisors who are holding their clients' money at Fidelity” I can log on to Fidelity and see my holdings but there it is a noted as a “Professionally Managed Account” I did not call Fidelity but rather my previous manager at work recommended him as a FA, he manages a number of teachers retirement money. When I look at my statements they state “FIDELITY MANAGEMENT TRUST CO – CUSTODIAN”

For years I could not understand why the money that I had managed a various institutions did not do well. I kept thinking it was the FA/institution so I kept moving it from FA to FA to find the right FA when it finally dawned on me after 20 years that I needed get away from ANY FA. I learned from reading the Bogle Head philosophy that no one can predict the market, the best way to invest is the index low cost funds across all companies, not specific companies and get away from fees.

The worst years was when I was with an advisor in 2014, the S&P 500 was up 13% and my investments made nothing. I think he had me oil investments: / If was to file a complaint it would be against him. The “Fidelity” advisor I was with last year was up 12% last year, if I was invested in the 3 fund portfolio last year it would have higher but 12% was not terrible. Not enough to file a complaint. I think Helo80 correctly described my husband and me - “there is a certain segment of the population that is scared to death of the stock market and "gambling" in said market.... so they use FAs as said FAs are supposed experts in this sort of stuff.” That is me to a tee – I keep looking and chasing the FA who knew it all but that person does not exist compounded with the fee’s we kept losing. I am glad I found the folks on this board to stop that vicious cycle. I will post our progress as we hopefully find our last and final approach to retirement investing. Sure do miss pensions.

For now I would like to keep my husband’s money at vanguard under a PAS and my money at Fidelity, I need to time to trust either institution. For some reason it makes me nervous to have all our money at one institution.

TwstdSista – thank you for providing the below, very similar to how the PAS at Vanguard is setting up my husband’s money except Vanguard also has a Total International Bond fund and Fidelity does not so I am allocating at Fidelity:

43 % - Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
27 % - Fidelity Total International Market Index Fund Premium Class (FTIPX) ER 0.10%
30 % - Fidelity Total Bond Market Index Fund Premium Class (FSITX) ER 0.045%

I am going to call Fidelity today and to understand the process on removing my FA and if I should first have him allocate my money or remove him and then buy into the index funds.

Thanks again to all! You help so many people, it is very kind of you :)

TwstdSista
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by TwstdSista » Sun Mar 04, 2018 7:18 am

RetireSoon90 wrote:
Sun Mar 04, 2018 7:00 am
....I am allocating at Fidelity:

43 % - Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
27 % - Fidelity Total International Market Index Fund Premium Class (FTIPX) ER 0.10%
30 % - Fidelity Total Bond Market Index Fund Premium Class (FSITX) ER 0.045%

I am going to call Fidelity today and to understand the process on removing my FA and if I should first have him allocate my money or remove him and then buy into the index funds.

Thanks again to all! You help so many people, it is very kind of you :)
I would fire him first and the get the funds under your control. Unless he can guarantee you that there will be no additional charges/fees for the fund transfer. (this is an IRA, so there will not be any tax consequences)

Are you sure you want an allocation of 70/30? -- for comparison, the husband and I are ten years younger than you and we are also 70/30. It's certainly okay if you are sure, just a double check!

I think you're doing great so far. And now it will be even greater!

retiredjg
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by retiredjg » Sun Mar 04, 2018 7:27 am

Retiresoon90, I think you are making a good decision.

I'm curious, if you don't mind sharing, how you came to the decision to use a 70% stock and 30% bond asset allocation.

RetireSoon90
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by RetireSoon90 » Sun Mar 04, 2018 7:33 am

Around the 70/30 split.... probably bad thinking but I feel like we are behind with so many bad years of investing that I need more risk improve increase our returns.

The PAS at vanguard will 60/40 stocks to bonds allocate.

I am very open to everyone thoughts and I understand they can be different but that is how we learn :)

retiredjg
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by retiredjg » Sun Mar 04, 2018 8:38 am

RetireSoon90 wrote:
Sun Mar 04, 2018 7:33 am
Around the 70/30 split.... probably bad thinking but I feel like we are behind with so many bad years of investing that I need more risk improve increase our returns.
In my opinion, this is good thinking if you are 10 or 15 years from retirement. With retirement "in the next couple of years", you need to think more about preserving what you have than growing it faster.

If you are "behind", the solution is to save more or save longer, not take more risk this near retirement.

Having said that, since the Vanguard million will be at 60/40, having your half million at 70/30 is probably just fine.

Dottie57
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by Dottie57 » Sun Mar 04, 2018 8:41 am

RetireSoon90 wrote:
Sun Mar 04, 2018 7:33 am
Around the 70/30 split.... probably bad thinking but I feel like we are behind with so many bad years of investing that I need more risk improve increase our returns.

The PAS at vanguard will 60/40 stocks to bonds allocate.

I am very open to everyone thoughts and I understand they can be different but that is how we learn :)

Most everything I have read says the rate and not the allocation is most imporatant in success. More risk carries possibility of great returns Or big losses. Don't be fooled by the returns of the last 10 years. The next 10 years could be awful.

70/30 Aa over a 60/40 aa be a bad choice. Make sure to protect yourself.

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midareff
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by midareff » Sun Mar 04, 2018 9:12 am

RetireSoon90 wrote:
Sun Mar 04, 2018 7:33 am
Around the 70/30 split.... probably bad thinking but I feel like we are behind with so many bad years of investing that I need more risk improve increase our returns.

The PAS at vanguard will 60/40 stocks to bonds allocate.

I am very open to everyone thoughts and I understand they can be different but that is how we learn :)
FWIW, I think looking for "more risk" at, or need at the end of the 2nd largest economic expansion in history may not be a terrific idea. More risk can get you more reward and it can also get you more loss. As your remaining work time and human capital diminish the risk of loss becomes significantly more important that the concept of additional gain, IMHO.

Noting carefully, "We are 56/57 years old and would like to retire in the next couple of year." $1,883,000 @ a 70/30 allocation with a market drop of 30% is an almost $400K drop in your assets. Sleep well at night? I think not. I lived the late 90's tech wreck and all others in more than 40 years of markets and learned the thrill of victory is no where near as traumatic as the agony of defeat.

While you were looking at specific investment advice I would also direct you to look at your expenses. A 3.5% withdrawal rate from a $1.883M portfolio is roughly $66K annually, pre-SS or any applicable pensions, and pre-tax. What are expenses? Look at the bigger puzzle.

I would not recommend 70/30 to anyone in your age and retirement aspiration group. Too much risk too late in the game IMHO, and I say that without any idea of your required expenses or other income sources. I'd be a more conservative 50/50.

RetireSoon90
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Re: Finally get it, Step 2 - Get rid of FA at Fidelity?

Post by RetireSoon90 » Sun Mar 04, 2018 10:02 am

Fair enough and good input :) Just got off the phone with Fidelity. As far as decoupling myself from this FA they said that I would need to open new accounts at Fidelity and transfer the money over. Wasn't sure if I should transfer in kind or not but she said I should just ask the FA to reallocate and and then do the transfer. Will ask for:

35 % - Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
25 % - Fidelity Total International Market Index Fund Premium Class (FTIPX) ER 0.10%
40 % - Fidelity Total Bond Market Index Fund Premium Class (FSITX) ER 0.045%

Thanks again!

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