My Fido retirement meeting pushing me to SMA

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Bronco Billy
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My Fido retirement meeting pushing me to SMA

Post by Bronco Billy »

I just retired and my company 401k is with Fido. I have other accounts at VG and EJ. Most of my fixed are in annuities, savings and CD. I have already ran off one FA. I don't mind playing in the market but maybe looking at consolidating my accounts to make it easier for my wife. I called and setup meeting at the local Fido office. It was a 1 hour meeting with a salesman who was not a CFP. He had been there about 5 years and came from EJ. He spent the first 30 minutes entering all my accounts.

He thought i had done fairly well and did recommend i bring my other accounts to Fido. We talked about using low cost index funds but he was pushing me to use SMA. He told me low cost funds were more for people with a lower amount of assets.

SMA are Fidelity Separately Managed Accounts. I had never heard about them. The way he explain it to me Fido would make fund accounts for me using stocks. Separately Managed Account (SMA) seeks to provide long-term growth and dividend income, with potentially less volatility than the U.S. stock market. These SMA funds cost about $200k to get into and have Gross annual advisory fee of 0.30%–0.90%** (varies based on total assets invested). I have attached the link below and maybe someone can give some input or their experience with them.

https://www.fidelity.com/managed-accoun ... s/overview

To be honest I was not too impressed with the overall meeting. I am not sure SMA are for me and have never really heard them discussed here at BH.
Last edited by Bronco Billy on Thu Jul 25, 2019 7:38 pm, edited 1 time in total.
KlangFool
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Re: My Fido retirement meeting

Post by KlangFool »

Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm I just retired and my company 401k is with Fido. I have other accounts at VG and EJ. Most of my fixed are in annuities, savings and CD. I have already ran off one FA. I don't mind playing in the market but maybe looking at consolidating my accounts to make it easier for my wife. I called and setup meeting at the local Fido office. It was a 1 hour meeting with a salesman who was not a CFP. He had been there about 5 years and came from EJ. He spent the first 30 minutes entering all my accounts.

He thought i had done fairly well and did recommend i bring my other accounts to Fido. We talked about using low cost index funds but he was pushing me to use SMA. He told me low cost funds were more for people with a lower amount of assets.

SMA are Fidelity Separately Managed Accounts. I had never heard about them. The way he explain it to me Fido would make fund accounts for me using stocks. Separately Managed Account (SMA) seeks to provide long-term growth and dividend income, with potentially less volatility than the U.S. stock market. These SMA funds cost about $200k to get into and have Gross annual advisory fee of 0.30%–0.90%** (varies based on total assets invested). I have attached the link below and maybe someone can give some input or their experience with them.

https://www.fidelity.com/managed-accoun ... s/overview

To be honest I was not too impressed with the overall meeting. I am not sure SMA are for me and have never really heard them discussed here at BH.
Bronco Billy,

Somebody wants to sell you something. He/she wants to manage your money by 0.30% to 0.90%. But, you have no idea what do you get for this management. So, why would you want to do it?

Why would you buy/pay for something when the seller cannot convince you that he/she provides enough benefits?

If you are not convinced, don't buy. If you cannot understand what it is, don't buy.

KlangFool
DesertDiva
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Re: My Fido retirement meeting pushing me to SMA

Post by DesertDiva »

Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm He told me low cost funds were more for people with a lower amount of assets.
Well that simply isn’t true!
RetiredAL
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Re: My Fido retirement meeting

Post by RetiredAL »

I had a similar meeting with a local Fidelity Rep when I retired. 2 meetings in fact. I was not impressed with the plan of how they could invest "to beat the market" using Stocks and what appeared to be higher ER Funds, for a mere .75% Mgmt Fee. I went with doing it myself. After I told him of my decision, no further push from him at all.

I sold the 401K Funds on day 1, as most were 401K only funds, had the dollars rolled on morning of day 2, and bought the equivalent funds before close of day 2 to match what had been in the 401K.

After that, I slowly migrated to mostly Index Funds/ETF's with lower ER's.
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CAsage
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Re: My Fido retirement meeting pushing me to SMA

Post by CAsage »

Yet another deceptive pitch for actively managing funds with unprovable claims. Many authoritative studies and books have debunked active management as not being predictable or overcoming the net drag.... Don't waste your money, or your time even thinking on it.
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Re: My Fido retirement meeting pushing me to SMA

Post by Dottie57 »

DesertDiva wrote: Thu Jul 25, 2019 7:50 pm
Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm He told me low cost funds were more for people with a lower amount of assets.
Well that simply isn’t true!
OP,


Sales guy sees you as a guy he can feed off of. Don’t be his next meal!
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Stinky
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Re: My Fido retirement meeting pushing me to SMA

Post by Stinky »

Bronco Billy,

I'm glad that you posted your questions. You're getting good advice from the members of the Forum.

I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
It's a GREAT day to be alive - Travis Tritt
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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

If you want a managed account, why not use the Fidelity Go service? The all-in costs are 0.35% a year and the robots manage the portfolio. I would probably not do the Separately Managed Account, you probably don't have enough assets to push your fees down to the lower end of the 0.30% to 0.90% range. Use the Go service or perhaps use a Fidelity Freedom Target Date Retirement Index fund.
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marcopolo
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Re: My Fido retirement meeting pushing me to SMA

Post by marcopolo »

Stinky wrote: Thu Jul 25, 2019 8:16 pm Bronco Billy,

I'm glad that you posted your questions. You're getting good advice from the members of the Forum.

I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
I am actually really glad Fidelity provides services like this. I am sure they make a lot of money of it. They appear to use some of that to improve their technology platform, customer service, etc. This helps all of us Fidelity customers, even those of us who stick to their low cost index funds and ETFs.
I suspect Vanguards exclusive focus on low-costs, and lack of a profit motive, is partly responsible for their somewhat clunky technology platform, and less than stellar customer service.
Once in a while you get shown the light, in the strangest of places if you look at it right.
TheEleven
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Re: My Fido retirement meeting pushing me to SMA

Post by TheEleven »

I had the same experience with my initial visit with a Fidelity advisor. She tried to get me to look at a similar managed account. ER is 0.90% if you're getting in at the minimum $200k, if I remember. It gets down to 0.3% I think maybe at the million dollar mark. The one I was shown is a fund where they play with different U.S. large cap types - core, value, growth, and blend. They supposedly try to weight towards what they think will be more successful in the near term, the idea being that a static large cap index won't have the benefit of clever guys molding the allocations as things change.
Anyhow, in my experience Fidelity will try to sell you this stuff occasionally, but I haven't been pushed hard. They've backed off when I simply state I'll be working with indexes on my own. Fidelity has a lot going for it so I don't begrudge them the occasional sales pitch. I ask a lot of questions and sometimes they answer with suggesting a particular managed fund. The customer service has otherwise been excellent, pretty much on a level that has really surprised me.
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Re: My Fido retirement meeting pushing me to SMA

Post by FIREchief »

Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm To be honest I was not too impressed with the overall meeting. I am not sure SMA are for me and have never really heard them discussed here at BH.
Is there a question (or "punch line") here? You've found the forum. If you use it wisely and learn from it, you will never need or benefit from such nonsense. There are sharks out there, and Boglehead knowledge is the best repellant! :beer
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noraz123
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Re: My Fido retirement meeting pushing me to SMA

Post by noraz123 »

DesertDiva wrote: Thu Jul 25, 2019 7:50 pm
Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm He told me low cost funds were more for people with a lower amount of assets.
Well that simply isn’t true!
DesertDiva is spot on. In fact, there is an argument that low costs funds are more for people with HIGHER amount of assets. What I mean by that, is that mutual funds often get cheaper when you have more assets. For example, Vanguard offers different share classes of the same funds - Investor, Admiral, and Institutional. These lowest costs funds are definitely for those with the most assets.

Stay away from the SMA!
usagi
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Re: My Fido retirement meeting pushing me to SMA

Post by usagi »

I am pro-Fido but this sickens me. I don't get it. My kids have gone there, my woman, my two brothers, friends and they all left with very low income funds and etfs, essentially 3 fund portfolios plus some CDs and Treasuries.

I am unpleasantly surprised to hear this from you. Did you go in there with an IPS and share it with him?
Johnfmh
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Re: My Fido retirement meeting pushing me to SMA

Post by Johnfmh »

I got suckered into a similar type of account years ago at Merrill Lynch when I was younger and dumber. Not only were the fees ridiculous but the account underperformed the S&P by huge margins and generated huge capital gains. My wife, an engineer and Bogglehead, eventually had a talk with me and convinced me to drop the account and ML and go with a Bogglehead approach. Also, be cautious when the rep tries to sell you a tax deferred annuity....
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Re: My Fido retirement meeting pushing me to SMA

Post by Grt2bOutdoors »

Your antenna should have been waving the red flags when he said “low cost funds are for those with low assets”. He’s basically saying because you have more money, you should pay more. If I were you I would RUN! SMA is a good way to separate you from your money.
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Re: My Fido retirement meeting pushing me to SMA

Post by Grt2bOutdoors »

Stinky wrote: Thu Jul 25, 2019 8:16 pm
I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
In all fairness to Fidelity, their strategy is not to be the lowest cost shop. You should know this going in to their office or when you speak on the phone with them. Instead, their strategy is to be a one stop shop marketplace that will match the competition but for a slightly lower price. Who is the competition? Schwab, TD Ameritrade, the wire houses - Morgan Stanley, Wells Fargo Advisors, Edward Jones, etc.
Here are a few examples - Mutual Fund Marketplace (you can buy/sell their funds and competitor funds), stock/bond/option trading, robust advice, robust trading tools, excellent customer service, easy to use software platform, when was the last time Fidelity’s website was down? Compare that to Vanguard or any of the other brokers.
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Re: My Fido retirement meeting pushing me to SMA

Post by edge »

Fidelity is owned by the Johnson family and it’s management team.
Stinky wrote: Thu Jul 25, 2019 8:16 pm Bronco Billy,

I'm glad that you posted your questions. You're getting good advice from the members of the Forum.

I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
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Re: My Fido retirement meeting pushing me to SMA

Post by Grt2bOutdoors »

edge wrote: Fri Jul 26, 2019 6:26 am Fidelity is owned by the Johnson family and it’s management team.
Stinky wrote: Thu Jul 25, 2019 8:16 pm Bronco Billy,

I'm glad that you posted your questions. You're getting good advice from the members of the Forum.

I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
That is the point Stinky was making; the shareholders are the Johnson family and the management team.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: My Fido retirement meeting pushing me to SMA

Post by Jack FFR1846 »

I have been with Fidelity for over 30 years. I have $2.5M invested, half of which is at Fidelity. I ONLY have low cost index funds. Heck....the total cost for that $2.5M in expense ratios is $427.59. I have met my Private Client Manager exactly once, when I needed help filling out a complicated form to roll an IRA for my wife over to Fidelity. I had the desk person help and then just asked to meet my manager. He immediately knew who I was and called me "the indexing guy".

I see no reason to sit down with any "advisor" of any kind. I'm sorry, but I have come to the conclusion that they are all dishonest snakes. The company they work for (Fidelity) offers great funds and great ways to manage your own stuff. If you don't want to manage stuff yourself, you should move everything to Vanguard and buy a target date fund and be done with it.
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Stinky
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Re: My Fido retirement meeting pushing me to SMA

Post by Stinky »

Grt2bOutdoors wrote: Fri Jul 26, 2019 8:26 am
edge wrote: Fri Jul 26, 2019 6:26 am Fidelity is owned by the Johnson family and it’s management team.
Stinky wrote: Thu Jul 25, 2019 8:16 pm Bronco Billy,

I'm glad that you posted your questions. You're getting good advice from the members of the Forum.

I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
That is the point Stinky was making; the shareholders are the Johnson family and the management team.
Yes, that is correct. The Johnson family has become fabulously wealthy from Fidelity. Abigail Johnson and her father are billionaires many times over.

On the other hand, Vanguard's owners - the millions of them that invest in its mutual funds - share in the profits of Vanguard.

I'm not begrudging the American system of capitalism, and it's great for the Johnson that they're producing a service that people are willing to pay money for. Just noting the different ownership structures of the two firms.
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TheJoelfather
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Re: My Fido retirement meeting pushing me to SMA

Post by TheJoelfather »

Stinky wrote: Thu Jul 25, 2019 8:16 pm I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
Vanguard offers a similar service, Personal Advisor Services, for a cost of 0.3% of assets.
02nz
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Re: My Fido retirement meeting pushing me to SMA

Post by 02nz »

There's a classic sales tactic at work here: Oh, you've done very well for yourself, for successful, well-heeled clients like you we have this service. Index funds? That's for poor folk!

OP, not to put too fine a point on it but the salesman is stroking your ego to make a sale. Let the math, not your ego, guide the decision.
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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

Grt2bOutdoors wrote: Fri Jul 26, 2019 4:11 am
Stinky wrote: Thu Jul 25, 2019 8:16 pm
I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
In all fairness to Fidelity, their strategy is not to be the lowest cost shop. You should know this going in to their office or when you speak on the phone with them. Instead, their strategy is to be a one stop shop marketplace that will match the competition but for a slightly lower price. Who is the competition? Schwab, TD Ameritrade, the wire houses - Morgan Stanley, Wells Fargo Advisors, Edward Jones, etc.
Here are a few examples - Mutual Fund Marketplace (you can buy/sell their funds and competitor funds), stock/bond/option trading, robust advice, robust trading tools, excellent customer service, easy to use software platform, when was the last time Fidelity’s website was down? Compare that to Vanguard or any of the other brokers.
This is what I try to tell people. Fidelity is not a charity, they are a profit driven organization. Don't be shocked when you gently get the upsell, that is the way business works. We don't post here what a bunch of crooks our favorite restaurant is because the pretty waitress brings by the dessert tray after the meal. Or we don't disparage the fast food place because we get asked at the drive through if we want fries with that? The way lots of folks here think, all restaurants are a ripoff because you can prepare meals much more cheaply at home.

It seems that folks here want unlimited choices, great customer service, and zero cost investments. There is a disconnect here, we want all the benefits but can't understand that people who serve us expect to be paid. We think Fidelity is the Little Sisters of the Poor where the employees have taken vows of poverty.

I got ridiculed for saying that Bogleheads ought to consider throwing a lower cost active fund into their mix of index funds at Fidelity so they can at least make a little money off of you. Man, I was the dumbest guy on the forum for saying that but then folks turn right around and complain about Vanguard's customer service. You can't get something for nothing.

On the other hand, we should be good consumers and not pay unnecessarily high fees. I wouldn't get into an Assets Under Management agreement with a company because I felt sorry for them. The key is that you want a good competitive rate but I am amazed at what folks will do around here to save the last buck. What I am seeing at Fidelity is investor's heaven compared to the full service and expensive brokerage houses. Free trades for certain ETFs. $4.95 for trades. A mutual fund marketplace with no transaction fees. The ability to invest at institutional rates. It is like I have died and gone to investment heaven. I get told no, that I am in investment hell. I just shake my head.

I can understand why people want seperately managed portfolios. Actually being able to have money managed for you at a range of 0.30% to 0.90% is not a horrible deal compared to the wrap accounts at full service brokerages which had all-in fees of over 2% a year. Remember also that the industry standard for Assets Under Management was 1% a year. Still, I believe people can do better than 0.90% a year. As I said, the robots at Fidelity Go will do this for 0.35% a year and that is very competitive with Vanguard Personal Advisor Service which charges 0.30% plus the embedded costs in the underlying funds. So if your fees were 0.30% to 0.40% a year for professional portfolio management, that is not bad. The Bogleheads say you can do even better than that. Target Date and Target Risk funds are another good and cheaper alternative. Do it yourself for a bit cheaper.

We demand the race to zero for investment costs and then get upset when we don't get the Red Carpet customer service treatment. When you have a race to zero, something has to give.
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Re: My Fido retirement meeting pushing me to SMA

Post by DesertDiva »

usagi wrote: Fri Jul 26, 2019 3:24 am I am pro-Fido but this sickens me. I don't get it. My kids have gone there, my woman, my two brothers, friends and they all left with very low income funds and etfs, essentially 3 fund portfolios plus some CDs and Treasuries.

I am unpleasantly surprised to hear this from you. Did you go in there with an IPS and share it with him?
That's a great idea. We had a meeting with a Fidelity rep a few months ago. While I didn't have my IPS with me, I made it clear that I'm a Boglehead. I believe that changed the trajectory of the conversation.
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Re: My Fido retirement meeting pushing me to SMA

Post by JW-Retired »

Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm I don't mind playing in the market but maybe looking at consolidating my accounts to make it easier for my wife. I called and setup meeting at the local Fido office. It was a 1 hour meeting with a salesman who was not a CFP. He had been there about 5 years and came from EJ. He spent the first 30 minutes entering all my accounts.
An "hour setup meeting with a salesman" is flatly asking for them to siphon off big fees from your account. It's just not necessary. I've had a pretty large but exceedingly low cost Fido account for 20+ years and have never talked to anyone like you did. Just open an account and pick a group of their low cost funds for the portfolio yourself. If you ask a salesmen what funds you should buy they sure won't offer you something they make very little on.

We have a similar Vanguard account but I have to say that Fido is usually a lot better in terms of answering questions on the phone. I also like the fact that I can go into the Fido office and have something notarized for free. Most recently it was for a Vanguard document! :twisted:
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Bronco Billy
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Re: My Fido retirement meeting pushing me to SMA

Post by Bronco Billy »

Thanks for all the responses. No I didn't take a IPS with me since i had to look up what it was. :happy The main reason i went to see them i wanted to know the benefit for leaving my funds in a 401k or making a IRA. I will be moving it to a IRA. He could not even tell me what kind of returns the SMA because they are all different.

I maybe should have searched SMA before this post. There has been some discussion about SMA a couple of years ago. I don't think i will using SMA.
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BL
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Re: My Fido retirement meeting pushing me to SMA

Post by BL »

Bronco Billy wrote: Fri Jul 26, 2019 1:44 pm Thanks for all the responses. No I didn't take a IPS with me since i had to look up what it was. :happy The main reason i went to see them i wanted to know the benefit for leaving my funds in a 401k or making a IRA. I will be moving it to a IRA. He could not even tell me what kind of returns the SMA because they are all different.

I maybe should have searched SMA before this post. There has been some discussion about SMA a couple of years ago. I don't think i will using SMA.
Some folks have 401k funds that are lower-ER than available in an IRA. Then there would be less reason to rollover to an IRA. Going to a high-cost place (advisor, high-ER) would be another reason to stay.

If 401k has extra costs once you are no longer employed there, it might mean you need to move on.

I expect asking this question on Bogleheads using Asking Portfolio Questions format would get you a number of suggestions just as good as the one you may have received from the F salesperson.

Glad to see you won't be moving it to EJ. Perhaps you will investigate that next.
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Re: My Fido retirement meeting pushing me to SMA

Post by Jack FFR1846 »

Bronco Billy wrote: Fri Jul 26, 2019 1:44 pm The main reason i went to see them i wanted to know the benefit for leaving my funds in a 401k or making a IRA. I will be moving it to a IRA.
So did he tell you that having the money in an IRA could screw things up in the future if you ever need to do a backdoor Roth?

Or that in many states, 401ks have more protections than IRAs do?

Or that you can leave former employer 401ks in place and if the fees are low, the funds could even be the same as what they'll be in an IRA?

I mean, sure. If your old 401k is in a high cost Mass Mutual account, then sure. It makes total sense to move it. But if it were a Fidelity 401k, it might be better where it is.
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NotWhoYouThink
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Re: My Fido retirement meeting pushing me to SMA

Post by NotWhoYouThink »

edit, double post.
Last edited by NotWhoYouThink on Fri Jul 26, 2019 2:23 pm, edited 1 time in total.
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Re: My Fido retirement meeting pushing me to SMA

Post by NotWhoYouThink »

He told me low cost funds were more for people with a lower amount of assets.
That is called flattery. Low cost funds are for the poors, not for high earning capable intelligent fellows such as yourself.


SMA are Fidelity Separately Managed Accounts. I had never heard about them. The way he explain it to me Fido would make fund accounts for me using stocks. Separately Managed Account (SMA) seeks to provide long-term growth and dividend income, with potentially less volatility than the U.S. stock market.
Ah, the magic "seeks to." I never see that outside of a prospectus. You'll notice it is not a guarantee.

The person you met with knew in advance that he was going to a sales presentation, and he prepared to present his sales pitch. You probably thought you were going to some different kind of meeting, but now you know better.

Fidelity has some great products, and people above in this thread claim they also have a great user interface and customer service. Cool. You can do very well with Fidelity products and your IPS. Some DIY required.
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FIREchief
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Re: My Fido retirement meeting pushing me to SMA

Post by FIREchief »

Bronco Billy wrote: Fri Jul 26, 2019 1:44 pm Thanks for all the responses. No I didn't take a IPS with me since i had to look up what it was. :happy
Don't feel bad. I didn't know what an "SMA" was until I read your OP, and I've been with Fidelity for close to thirty years. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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greg24
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Joined: Tue Feb 20, 2007 10:34 am

Re: My Fido retirement meeting pushing me to SMA

Post by greg24 »

Snake oil salesman.
Grt2bOutdoors
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Re: My Fido retirement meeting pushing me to SMA

Post by Grt2bOutdoors »

nedsaid wrote: Fri Jul 26, 2019 10:40 am
Grt2bOutdoors wrote: Fri Jul 26, 2019 4:11 am
Stinky wrote: Thu Jul 25, 2019 8:16 pm
I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
In all fairness to Fidelity, their strategy is not to be the lowest cost shop. You should know this going in to their office or when you speak on the phone with them. Instead, their strategy is to be a one stop shop marketplace that will match the competition but for a slightly lower price. Who is the competition? Schwab, TD Ameritrade, the wire houses - Morgan Stanley, Wells Fargo Advisors, Edward Jones, etc.
Here are a few examples - Mutual Fund Marketplace (you can buy/sell their funds and competitor funds), stock/bond/option trading, robust advice, robust trading tools, excellent customer service, easy to use software platform, when was the last time Fidelity’s website was down? Compare that to Vanguard or any of the other brokers.
This is what I try to tell people. Fidelity is not a charity, they are a profit driven organization. Don't be shocked when you gently get the upsell, that is the way business works. We don't post here what a bunch of crooks our favorite restaurant is because the pretty waitress brings by the dessert tray after the meal. Or we don't disparage the fast food place because we get asked at the drive through if we want fries with that? The way lots of folks here think, all restaurants are a ripoff because you can prepare meals much more cheaply at home.

It seems that folks here want unlimited choices, great customer service, and zero cost investments. There is a disconnect here, we want all the benefits but can't understand that people who serve us expect to be paid. We think Fidelity is the Little Sisters of the Poor where the employees have taken vows of poverty.

I got ridiculed for saying that Bogleheads ought to consider throwing a lower cost active fund into their mix of index funds at Fidelity so they can at least make a little money off of you. Man, I was the dumbest guy on the forum for saying that but then folks turn right around and complain about Vanguard's customer service. You can't get something for nothing.

On the other hand, we should be good consumers and not pay unnecessarily high fees. I wouldn't get into an Assets Under Management agreement with a company because I felt sorry for them. The key is that you want a good competitive rate but I am amazed at what folks will do around here to save the last buck. What I am seeing at Fidelity is investor's heaven compared to the full service and expensive brokerage houses. Free trades for certain ETFs. $4.95 for trades. A mutual fund marketplace with no transaction fees. The ability to invest at institutional rates. It is like I have died and gone to investment heaven. I get told no, that I am in investment hell. I just shake my head.

I can understand why people want seperately managed portfolios. Actually being able to have money managed for you at a range of 0.30% to 0.90% is not a horrible deal compared to the wrap accounts at full service brokerages which had all-in fees of over 2% a year. Remember also that the industry standard for Assets Under Management was 1% a year. Still, I believe people can do better than 0.90% a year. As I said, the robots at Fidelity Go will do this for 0.35% a year and that is very competitive with Vanguard Personal Advisor Service which charges 0.30% plus the embedded costs in the underlying funds. So if your fees were 0.30% to 0.40% a year for professional portfolio management, that is not bad. The Bogleheads say you can do even better than that. Target Date and Target Risk funds are another good and cheaper alternative. Do it yourself for a bit cheaper.

We demand the race to zero for investment costs and then get upset when we don't get the Red Carpet customer service treatment. When you have a race to zero, something has to give.
Talk about the gentle upsell, Vanguard has been spending quite a bit on postage stamps asking me to use their PAS service. Isn't it enough I see the ad every time I log into the front page of their platform? As for the race to zero, people will understand when it's their wallet that is affected - as in, their paycheck is dropping or they just lost their job because zealots are willing to accept an automated chat robot that will respond "I still don't understand what you are asking", "do you want to get today's closing fund prices" "No, what can I do for you today" - while the caller, just pounds their hands in frustration, wishing they had a live body who was competent to answer the phone. So one should understand what it is they really wish for, because when it's gone, it's gone!! When was the last time you talked to a person at Verizon? :P
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Location: New York

Re: My Fido retirement meeting pushing me to SMA

Post by Grt2bOutdoors »

greg24 wrote: Fri Jul 26, 2019 2:45 pm Snake oil salesman.
Well, he did disclose to the OP that he earned his spurs at EJ. That should have ended the conversation right there. :twisted:
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
cherijoh
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Location: Charlotte NC

Re: My Fido retirement meeting pushing me to SMA

Post by cherijoh »

usagi wrote: Fri Jul 26, 2019 3:24 am I am pro-Fido but this sickens me. I don't get it. My kids have gone there, my woman, my two brothers, friends and they all left with very low income funds and etfs, essentially 3 fund portfolios plus some CDs and Treasuries.

I am unpleasantly surprised to hear this from you. Did you go in there with an IPS and share it with him?
Someone rolling over a 401k is considered a "hot prospect". Fidelity has a foot in both camps - they successfully compete with VG on low-cost index funds and ETFs, but also have sales people who will try to steer you into higher-fee actively managed funds or expensive AUM arrangements. In contrast, VG's actively-managed funds are all reasonably priced (albeit more expensive than their index funds).
student
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Re: My Fido retirement meeting pushing me to SMA

Post by student »

Blah Blah Blah "Gross annual advisory fee of 0.30%–0.90%** (varies based on total assets invested)"

Pass. Not worth it to me.
yougotitdude
Posts: 96
Joined: Fri Sep 15, 2017 12:40 pm

Re: My Fido retirement meeting pushing me to SMA

Post by yougotitdude »

Reps are paid way, way more for SMAs than regular mutual funds. I want to say they earn about 3x from what a regular mutual trade would be but could be wrong on that. On top of this, they get a bonus if they get enough people in higher fee products over the course of the year. If they don't get a certain of dollars into the different buckets, they will get pressure from above.

Many times SMAs are simply more expensive version of funds. Like with this SMAs:

https://www.fidelity.com/managed-accoun ... y/overview

I believe the (cheaper) mutual fund version is FGRIX. Fruman manages both.


Over the past decade, Vanguard has been eating Fidelity's lunch. There is a lot of pressure to have reps sell the higher margin products since index funds have way less margin.
Grt2bOutdoors
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Re: My Fido retirement meeting pushing me to SMA

Post by Grt2bOutdoors »

cherijoh wrote: Fri Jul 26, 2019 2:57 pm
usagi wrote: Fri Jul 26, 2019 3:24 am I am pro-Fido but this sickens me. I don't get it. My kids have gone there, my woman, my two brothers, friends and they all left with very low income funds and etfs, essentially 3 fund portfolios plus some CDs and Treasuries.

I am unpleasantly surprised to hear this from you. Did you go in there with an IPS and share it with him?
Someone rolling over a 401k is considered a "hot prospect". Fidelity has a foot in both camps - they successfully compete with VG on low-cost index funds and ETFs, but also have sales people who will try to steer you into higher-fee actively managed funds or expensive AUM arrangements. In contrast, VG's actively-managed funds are all reasonably priced (albeit more expensive than their index funds).
To clarify, the reason why a 401K rollover is preferred to Fidelity, it's what's known as "sticky money". People who bring in retirement assets to an investment firm typically leave it there, they aren't constantly moving the account or taking large withdrawals (some might in nominal terms) but not large withdrawals in terms of percentage of account taken, rather they are following a traditional RMD thereby allowing a large portion of the assets to be invested. Those assets earn Fidelity alot of fees, multiply that by millions of accounts and now you're talking big money.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
retiredjg
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Re: My Fido retirement meeting pushing me to SMA

Post by retiredjg »

Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm To be honest I was not too impressed with the overall meeting. I am not sure SMA are for me and have never really heard them discussed here at BH.
You may not have heard it called "SMA"before, but this is exactly what people are constantly saying to stay away from...managed accounts where you pay someone an "assets under management fee" to manage your money.

Don't do it!

He told me low cost funds were more for people with a lower amount of assets.
What an incredibly ignorant thing to say. Manipulative as well. :x
TheEleven
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Re: My Fido retirement meeting pushing me to SMA

Post by TheEleven »

I feel like some people here are saying some pretty damning things about Fidelity who have never been a Fidelity customer. I went into the exact same kind of initial meeting as the OP did and it started the same way - a fair amount of time just entering things. I was initiating my relationship with them and had to do rollovers on multiple accounts, so time was spent on boring mechanics. Then the advisor asked me questions about my goals and risk preferences and such. Entered my numbers into their retirement readiness calculator thing and talked to me about it. And then came the pitch for the managed account, which I took a look at and took some offered printouts about. That was it, a soft sell. I pointed out the expense ratio on the fund and let her know I was not likely looking for that kind of thing and she didn't press. Other than that she did quite a lot of stuff for me to get started and the overall experience was very positive for me. It was an actual (very nice) person, face to face in a real office, of which there are not one but two near me, one near my home and one I drive by every day near work.
I also had to do several calls to customer support over the period of a couple weeks. On one of those I did get another soft sell, but I said I was an indexer and it was dropped. Every person I've had to talk to helped me get started and bent over backwards to help me - I was a beginner and needed a lot of TLC with all the rollovers and they were great about it. I've never waited more than a minute on customer service, you don't have to go through a horrible menu system. Best customer service I've ever experienced anywhere.
The website is robust as can be. There is every bell and whistle available to investors/traders, for dirt cheap, and it all seems to work flawlessly.

I know I'm sounding like Fidelity employee or at least a fan boy, but no. I have no doubt Vanguard is great and I may well have gone there but my former employer 401k's were in the Net Benefits side of Fidelity already so I randomly decided to just do the crossover there. So I'm not a fan boy, or maybe I am, whatever, but I consider myself fully a (beginner) Boglehead. I just want future readers here to see my direct experience with Fidelity as a response to people posting in some kind of hardcore Boglehead way to something they seem not to have direct experience with.

If the price to pay for Fido's superb customer service and platform is an occasional soft sell for a managed account ("no thanks, I'm a Boglehead") I consider it a great deal. If I could get my own children to invest, I'd get them with Fido in a hot minute. If they wanted to go with Vanguard I'd get them there in a hot minute also.
retiredjg
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Re: My Fido retirement meeting pushing me to SMA

Post by retiredjg »

Bronco Billy wrote: Fri Jul 26, 2019 1:44 pm I maybe should have searched SMA before this post. There has been some discussion about SMA a couple of years ago. I don't think i will using SMA.
The fine people here would be happy to help you set up your portfolio if you want some help. See the link at the bottom of this message for how to do that.
sport
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Re: My Fido retirement meeting pushing me to SMA

Post by sport »

nedsaid wrote: Fri Jul 26, 2019 10:40 am
Grt2bOutdoors wrote: Fri Jul 26, 2019 4:11 am
Stinky wrote: Thu Jul 25, 2019 8:16 pm
I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
In all fairness to Fidelity, their strategy is not to be the lowest cost shop. You should know this going in to their office or when you speak on the phone with them. Instead, their strategy is to be a one stop shop marketplace that will match the competition but for a slightly lower price. Who is the competition? Schwab, TD Ameritrade, the wire houses - Morgan Stanley, Wells Fargo Advisors, Edward Jones, etc.
Here are a few examples - Mutual Fund Marketplace (you can buy/sell their funds and competitor funds), stock/bond/option trading, robust advice, robust trading tools, excellent customer service, easy to use software platform, when was the last time Fidelity’s website was down? Compare that to Vanguard or any of the other brokers.
This is what I try to tell people. Fidelity is not a charity, they are a profit driven organization. Don't be shocked when you gently get the upsell, that is the way business works. We don't post here what a bunch of crooks our favorite restaurant is because the pretty waitress brings by the dessert tray after the meal. Or we don't disparage the fast food place because we get asked at the drive through if we want fries with that? The way lots of folks here think, all restaurants are a ripoff because you can prepare meals much more cheaply at home.

It seems that folks here want unlimited choices, great customer service, and zero cost investments. There is a disconnect here, we want all the benefits but can't understand that people who serve us expect to be paid. We think Fidelity is the Little Sisters of the Poor where the employees have taken vows of poverty.

I got ridiculed for saying that Bogleheads ought to consider throwing a lower cost active fund into their mix of index funds at Fidelity so they can at least make a little money off of you. Man, I was the dumbest guy on the forum for saying that but then folks turn right around and complain about Vanguard's customer service. You can't get something for nothing.

On the other hand, we should be good consumers and not pay unnecessarily high fees. I wouldn't get into an Assets Under Management agreement with a company because I felt sorry for them. The key is that you want a good competitive rate but I am amazed at what folks will do around here to save the last buck. What I am seeing at Fidelity is investor's heaven compared to the full service and expensive brokerage houses. Free trades for certain ETFs. $4.95 for trades. A mutual fund marketplace with no transaction fees. The ability to invest at institutional rates. It is like I have died and gone to investment heaven. I get told no, that I am in investment hell. I just shake my head.

I can understand why people want seperately managed portfolios. Actually being able to have money managed for you at a range of 0.30% to 0.90% is not a horrible deal compared to the wrap accounts at full service brokerages which had all-in fees of over 2% a year. Remember also that the industry standard for Assets Under Management was 1% a year. Still, I believe people can do better than 0.90% a year. As I said, the robots at Fidelity Go will do this for 0.35% a year and that is very competitive with Vanguard Personal Advisor Service which charges 0.30% plus the embedded costs in the underlying funds. So if your fees were 0.30% to 0.40% a year for professional portfolio management, that is not bad. The Bogleheads say you can do even better than that. Target Date and Target Risk funds are another good and cheaper alternative. Do it yourself for a bit cheaper.

We demand the race to zero for investment costs and then get upset when we don't get the Red Carpet customer service treatment. When you have a race to zero, something has to give.
nedsaid,
That is a very good description of the situation. However, there is one consideration you did not address. At this time, you know what you are doing, what Fidelity products to use, and which ones to avoid. However, there comes a time for most people when they are not the ones making these decisions. If they become infirm, their spouse, or children might be making those decisions. When the inevitable finally happens, then their heirs are "stuck" with the problem of managing these assets. If any of these successor managers of your finances encounters an "advisor" like the one the OP described, they may get sucked into something very undesirable. I am willing to put up with Vanguard's shortcomings to know this type of thing will be much less likely to occur.
retiredjg
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Re: My Fido retirement meeting pushing me to SMA

Post by retiredjg »

TheEleven wrote: Fri Jul 26, 2019 3:16 pm I feel like some people here are saying some pretty damning things about Fidelity who have never been a Fidelity customer.
Don't take it wrong. People here love Fidelity.

What can go very badly at Fido, just like any other place, is for a naive investor to get involved with an "advisor" who is looking to make money.

We've seen it hundreds of times. We've seen many of the portfolios these advisors produce. They are generally pretty bad (by Boglehead standards) and a few of them have even put the predatory portfolios from some other places to shame....meaning they were worse than the worst.

The good thing about Fido is they mostly use a soft sell rather than a hard sell. If you say that is not what you are interested in, it is generally reported here that they respect that. This is indeed an improvement over some other places.

And it was the experience you had....because you already knew you wanted a lower cost approach. Others have not been so fortunate because they just didn't have that knowledge when they walked in the door.

There is plenty of history here concerning bad portfolios that have come out of the managed accounts at Fido, just like some of the other places. The comments you have read here are not at all unsupported by facts or unfair.
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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

Grt2bOutdoors wrote: Fri Jul 26, 2019 2:45 pm
nedsaid wrote: Fri Jul 26, 2019 10:40 am
Grt2bOutdoors wrote: Fri Jul 26, 2019 4:11 am
Stinky wrote: Thu Jul 25, 2019 8:16 pm
I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
In all fairness to Fidelity, their strategy is not to be the lowest cost shop. You should know this going in to their office or when you speak on the phone with them. Instead, their strategy is to be a one stop shop marketplace that will match the competition but for a slightly lower price. Who is the competition? Schwab, TD Ameritrade, the wire houses - Morgan Stanley, Wells Fargo Advisors, Edward Jones, etc.
Here are a few examples - Mutual Fund Marketplace (you can buy/sell their funds and competitor funds), stock/bond/option trading, robust advice, robust trading tools, excellent customer service, easy to use software platform, when was the last time Fidelity’s website was down? Compare that to Vanguard or any of the other brokers.
This is what I try to tell people. Fidelity is not a charity, they are a profit driven organization. Don't be shocked when you gently get the upsell, that is the way business works. We don't post here what a bunch of crooks our favorite restaurant is because the pretty waitress brings by the dessert tray after the meal. Or we don't disparage the fast food place because we get asked at the drive through if we want fries with that? The way lots of folks here think, all restaurants are a ripoff because you can prepare meals much more cheaply at home.

It seems that folks here want unlimited choices, great customer service, and zero cost investments. There is a disconnect here, we want all the benefits but can't understand that people who serve us expect to be paid. We think Fidelity is the Little Sisters of the Poor where the employees have taken vows of poverty.

I got ridiculed for saying that Bogleheads ought to consider throwing a lower cost active fund into their mix of index funds at Fidelity so they can at least make a little money off of you. Man, I was the dumbest guy on the forum for saying that but then folks turn right around and complain about Vanguard's customer service. You can't get something for nothing.

On the other hand, we should be good consumers and not pay unnecessarily high fees. I wouldn't get into an Assets Under Management agreement with a company because I felt sorry for them. The key is that you want a good competitive rate but I am amazed at what folks will do around here to save the last buck. What I am seeing at Fidelity is investor's heaven compared to the full service and expensive brokerage houses. Free trades for certain ETFs. $4.95 for trades. A mutual fund marketplace with no transaction fees. The ability to invest at institutional rates. It is like I have died and gone to investment heaven. I get told no, that I am in investment hell. I just shake my head.

I can understand why people want seperately managed portfolios. Actually being able to have money managed for you at a range of 0.30% to 0.90% is not a horrible deal compared to the wrap accounts at full service brokerages which had all-in fees of over 2% a year. Remember also that the industry standard for Assets Under Management was 1% a year. Still, I believe people can do better than 0.90% a year. As I said, the robots at Fidelity Go will do this for 0.35% a year and that is very competitive with Vanguard Personal Advisor Service which charges 0.30% plus the embedded costs in the underlying funds. So if your fees were 0.30% to 0.40% a year for professional portfolio management, that is not bad. The Bogleheads say you can do even better than that. Target Date and Target Risk funds are another good and cheaper alternative. Do it yourself for a bit cheaper.

We demand the race to zero for investment costs and then get upset when we don't get the Red Carpet customer service treatment. When you have a race to zero, something has to give.
Talk about the gentle upsell, Vanguard has been spending quite a bit on postage stamps asking me to use their PAS service. Isn't it enough I see the ad every time I log into the front page of their platform? As for the race to zero, people will understand when it's their wallet that is affected - as in, their paycheck is dropping or they just lost their job because zealots are willing to accept an automated chat robot that will respond "I still don't understand what you are asking", "do you want to get today's closing fund prices" "No, what can I do for you today" - while the caller, just pounds their hands in frustration, wishing they had a live body who was competent to answer the phone. So one should understand what it is they really wish for, because when it's gone, it's gone!! When was the last time you talked to a person at Verizon? :P
Well, I have often said that people have literally shopped themselves out of their own jobs.
A fool and his money are good for business.
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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

sport wrote: Fri Jul 26, 2019 3:29 pm
nedsaid wrote: Fri Jul 26, 2019 10:40 am
Grt2bOutdoors wrote: Fri Jul 26, 2019 4:11 am
Stinky wrote: Thu Jul 25, 2019 8:16 pm
I had never seriously looked at Fidelity, and was unaware of this particular service. Frankly, I'm disappointed that Fidelity is doing something like this SMA stuff. I had thought of Vanguard and Fidelity as being basically the same, but this looks more like something that Edward Jones would do (albeit at a lower price).

Vanguard is owned by its customers, while Fidelity is owned by its shareholders. Maybe that's the reason for products like this from Fidelity?
In all fairness to Fidelity, their strategy is not to be the lowest cost shop. You should know this going in to their office or when you speak on the phone with them. Instead, their strategy is to be a one stop shop marketplace that will match the competition but for a slightly lower price. Who is the competition? Schwab, TD Ameritrade, the wire houses - Morgan Stanley, Wells Fargo Advisors, Edward Jones, etc.
Here are a few examples - Mutual Fund Marketplace (you can buy/sell their funds and competitor funds), stock/bond/option trading, robust advice, robust trading tools, excellent customer service, easy to use software platform, when was the last time Fidelity’s website was down? Compare that to Vanguard or any of the other brokers.
This is what I try to tell people. Fidelity is not a charity, they are a profit driven organization. Don't be shocked when you gently get the upsell, that is the way business works. We don't post here what a bunch of crooks our favorite restaurant is because the pretty waitress brings by the dessert tray after the meal. Or we don't disparage the fast food place because we get asked at the drive through if we want fries with that? The way lots of folks here think, all restaurants are a ripoff because you can prepare meals much more cheaply at home.

It seems that folks here want unlimited choices, great customer service, and zero cost investments. There is a disconnect here, we want all the benefits but can't understand that people who serve us expect to be paid. We think Fidelity is the Little Sisters of the Poor where the employees have taken vows of poverty.

I got ridiculed for saying that Bogleheads ought to consider throwing a lower cost active fund into their mix of index funds at Fidelity so they can at least make a little money off of you. Man, I was the dumbest guy on the forum for saying that but then folks turn right around and complain about Vanguard's customer service. You can't get something for nothing.

On the other hand, we should be good consumers and not pay unnecessarily high fees. I wouldn't get into an Assets Under Management agreement with a company because I felt sorry for them. The key is that you want a good competitive rate but I am amazed at what folks will do around here to save the last buck. What I am seeing at Fidelity is investor's heaven compared to the full service and expensive brokerage houses. Free trades for certain ETFs. $4.95 for trades. A mutual fund marketplace with no transaction fees. The ability to invest at institutional rates. It is like I have died and gone to investment heaven. I get told no, that I am in investment hell. I just shake my head.

I can understand why people want seperately managed portfolios. Actually being able to have money managed for you at a range of 0.30% to 0.90% is not a horrible deal compared to the wrap accounts at full service brokerages which had all-in fees of over 2% a year. Remember also that the industry standard for Assets Under Management was 1% a year. Still, I believe people can do better than 0.90% a year. As I said, the robots at Fidelity Go will do this for 0.35% a year and that is very competitive with Vanguard Personal Advisor Service which charges 0.30% plus the embedded costs in the underlying funds. So if your fees were 0.30% to 0.40% a year for professional portfolio management, that is not bad. The Bogleheads say you can do even better than that. Target Date and Target Risk funds are another good and cheaper alternative. Do it yourself for a bit cheaper.

We demand the race to zero for investment costs and then get upset when we don't get the Red Carpet customer service treatment. When you have a race to zero, something has to give.
nedsaid,
That is a very good description of the situation. However, there is one consideration you did not address. At this time, you know what you are doing, what Fidelity products to use, and which ones to avoid. However, there comes a time for most people when they are not the ones making these decisions. If they become infirm, their spouse, or children might be making those decisions. When the inevitable finally happens, then their heirs are "stuck" with the problem of managing these assets. If any of these successor managers of your finances encounters an "advisor" like the one the OP described, they may get sucked into something very undesirable. I am willing to put up with Vanguard's shortcomings to know this type of thing will be much less likely to occur.
Unfortunately, it is really hard to get around this problem. No one knows as much about the decedent's finances as the departed decedent. Even if the account is at Vanguard, the survivors may get the brainstorm to ask the Edward Jones guy at the friendly neighborhood office for help. There is just no foolproof way to get around this. We underestimate the utter cluelessness of the average American trying to deal with investments. They would be in better hands at Fidelity than at Edward Jones or Ameriprise. Unfortunately, a Fidelity Advisor would likely put a person in such a situation into more expensive products than the index funds that we all love.

This is why Edward Jones offices are all over the place and why Edward Jones advisors are members of all the service clubs. When people get confused and don't know what to do, they often will turn to a local person that is the money guy for help. Could also be a financial advisor at the local Bank or Credit Union.

How do you guard against the ignorance of your heirs? I suppose you can educate them the best you can while you are still around but likely much of it will fall on deaf ears. Folks are just not much interested.
A fool and his money are good for business.
sport
Posts: 9834
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: My Fido retirement meeting pushing me to SMA

Post by sport »

nedsaid wrote: Fri Jul 26, 2019 3:49 pm How do you guard against the ignorance of your heirs?
My heirs are my spouse and two adult children. I have told my spouse many times about the advantages of Vanguard. I opened UGTM accounts at Vanguard for my children when they were young and both have been Vanguard clients ever since. I am confident that all of them will continue to use Vanguard if I am incapacitated or deceased.
MidFlorida1214
Posts: 36
Joined: Fri Dec 12, 2014 10:05 pm

Re: My Fido retirement meeting pushing me to SMA

Post by MidFlorida1214 »

I have invested at both Vanguard and Fidelity since the early 90’s. Both are fine companies. My wife and I have most everything at Fidelity and use three fund portfolios for our accounts. In the past I have used Fidelity Portfolio Advisory Service. To be sure the portfolios were more complex than what we have now, but nothing that I would call bad. They were mostly slice and dice. Certainly not low cost funds, but generally pretty moderate. The fee ran about .9% at the time. Although returns did not perfectly match any index or index combination, my 60/40 portfolio - net of fees- was not that far off a measure of 60% of stock market movement and 40% of the bond market movement. It behave as I thought it should. The statements showed how much was spent on PAS fees. I did not see anything unexpected.

My wife and I meet with our rep a couple of times a year. He mentions products and sometimes argues in support of them. But, we’ve never felt what I would call a hard sell. I understand the drive for cost savings, but I don’t see anything particularly wrong with having someone manage your investments.
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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

The problem is how do you keep from being taken by a salesman? How do you keep from getting taken by a salesman at a time you are most emotionally vulnerable?

I remember going to a tire place to get my wheels realigned. The tech told me that my tie rods were bad, particularly in the front. The back tie rods were barely serviceable and the front ones needed replacing. I did some checking on the internet and watched YouTube videos. I went ahead and had the front tie rods replaced but I wondered if I was getting the upsell. I was unemployed at the time and starting a brand new job soon and didn't really have the money but I anted up. A $90 visit turned into $400. I later asked my mechanic to check the rear tie rods and they said the rear tie rods were fine.

Think of the upsell people get at the Funeral Home right at the time that they are in grief dealing with loss. Lots of stories about this.

In my own career, doing certain jobs, I was required to offer certain things to customers. Just part of the job.

What about when you visit your insurance agent? If you are buying Life Insurance, you will get the pitch for the very expensive Whole Life and will mention Term Life Insurance only if asked.
A fool and his money are good for business.
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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

The best defense from being taken is simply to be an informed consumer. We should be wary of pretty much everyone in business but on the other hand should not blindly assume that everybody is out to rip us off. Sometimes people really are trying to help you. Not everyone out there is a crook.

I have had free portfolio reviews done by my insurance company, my independent broker, American Century, and Fidelity. Even knowing that my interests and those of the advisor were not 100% aligned, I still learned something every time I had this done. I even employed Ameriprise for financial planning and portfolio reviews and I learned from them as well though I never invested there.

The thing that blew me away was that the insurance company did the best job. I thought I was going to get a big pitch for Whole Life Insurance and instead I got retirement projections and a very detailed portfolio review, I could not believe it. As a part of the review, I met with an Estate Planning Attorney employed by the Insurance Company. Pretty amazing.

The big no load fund companies like Vanguard, Fidelity, T. Rowe Price, and American Century will offer a certain amount of free advice. Doesn't hurt to take it and see what you can learn.
A fool and his money are good for business.
afan
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Re: My Fido retirement meeting pushing me to SMA

Post by afan »

I don't get the appeal of having physical offices nearby. I would far prefer to do everything online, after hours, from the comfort of my home. Anything I might do face to face at the office will then disappear into the bureaucracy, be handled by other nameless people I will never meet and move from computer to computer. All of that is fine. But why should I want to spend the time to go the the office? Skip work? Gake a day off to do something I should be able to do easily online?

The offices are useless to me. It would be nice if they kept lowering fees

I don't talk with salespeople about my finances. None of their business. Nice thing about Vanguard: in many years of investing with them, no one has ever called me up to pitch an investment or service. That is hardly the case for Fido. They eventually stopped after I told them I was going to write a letter of protest. If that did not work I told them I would pull my money. Eventually they stopped calling. They still spam me with daily useless emails.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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