My Fido retirement meeting pushing me to SMA

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nedsaid
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Re: My Fido retirement meeting pushing me to SMA

Post by nedsaid »

The internet and everything works great until you have a problem. Just something about face to face that the internet or even the phone can't produce. That being said, I visit my bank branch just a few times a year and I have only been to a Fidelity office once. I do most of my business by phone or internet. Perhaps I am old fashioned but I still like to have a physical place to go to.

Lots of concern here that visiting a Fidelity Advisor could take a more naïve investor somewhere they should not go. That is absolutely true. But I would not sign over authority to manage my investments without lots of research beforehand, I think the answer is to be as informed of a consumer as you can be. Unfortunately, we get the upsell everywhere: from our favorite restaurant, at the fast food drive through, at the Grocery store where you are offered free samples, and even at the Funeral Home. I can hardly be out in public without experiencing the upsell.

My point is that a visitor could be pleasantly surprised and actually learn something. If you don't want a Separately Managed Account, just say no. If you don't want an annuity, just say no. Pretty much, my visit was to go over the Retirement Calculator and for a quick portfolio review. He did suggest their portfolio management service but saw that I knew what I was doing and stopped there. We talked about annuities but I was interested. I left not buying anything. I just don't have the attitude that everyone out there is trying to rip me off. I do believe it is prudent to follow the saying, Let the buyer beware, and exercise some healthy skepticism.
A fool and his money are good for business.
mariezzz
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Re: My Fido retirement meeting pushing me to SMA

Post by mariezzz »

From BHs, I've learned that I never want to meet with anyone from Fidelity - or Vanguard - to discuss management of my profile.
vested1
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Re: My Fido retirement meeting pushing me to SMA

Post by vested1 »

I had a 401k that was managed by Fidelity when I was working. It seemed logical to me that when I retired I should leave the funds at Fidelity because I trusted them and had been doing business with them for so long. I didn't really understand the fees I was paying for the 401k, nor was I aware of the advantages and disadvantages of converting the 401k to an IRA. I trusted Fidelity to advise me, and transitioned easily to an IRA with them.

They took advantage of me by convincing me to go with their PAS service, apparently now called SMA, whereupon they put me in 20 constantly changing mutual funds with high ER's (average 1.7%) on top of their management fees. They also talked me into a 200k 5 year annuity, with severe penalties for early withdrawal, that paid 2.75% interest during a raging bull market where I could have made more like 50% during the term of the annuity if I had been invested as I currently am.

After doing some recommended reading I moved everything to Vanguard and went from paying about 20k a year in total fees at Fidelity to under 1k at Vanguard. After 5 years with Vanguard I looked into the possibility of converting to their PAS for .3% because of concerns about my wife being able to handle our investments should something happen to me. I didn't agree with VG's suggestions on increasing my international stock exposure or converting 50% of bonds to international and was told that if I used their service I would have no choice in the matter, so I decided to keep doing it myself for next to nothing in costs.

Fidelity uses a number of scare tactics to convince prospective clients to let them manage their accounts. I've had several friends who told me of their experiences, such as being told that using indexes was a bad idea because the funds were picked by robots, and like the OP, that only non-informed investors used index funds.

You would think, knowing all this, that I would avoid Fidelity like the plague, but business is business. I met last week with a Fidelity agent at my new location in a LCOL State where we just moved to, and let him know I didn't need their management services or their advice. I moved 1.5 million into several accounts with them, paying exactly what I had been with VG, using only 4 VG index ETF's in the IRA's and high interest MM's for the cash accounts. When asked, I laid out my plan and philosophy to my personally assigned agent, adding that I was currently delaying SS until age 70 under a restricted application at age 67, and what my anticipated income would be in the future and what I expected from Fidelity. This included help with RMD's for my wife should I pass, and no pressure from them to transition her to managed accounts.

The agent asked me several times if I had been in the finance industry, and I replied that I hadn't been, but that I adhered to the principles of John Bogle and that I was a member of the bogleheads community. He understood immediately upon hearing that, that there was no point in trying to sell me anything, and that we would only touch base occasionally and only at my discretion.

In the OP's position I would be highly skeptical about anything Fidelity told me, and would advise doing his/her own research/recommended reading before making any move in order to avoid the same mistakes I initially made.
vested1
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Re: My Fido retirement meeting pushing me to SMA

Post by vested1 »

afan wrote: Sat Jul 27, 2019 9:11 pm 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.
For me, transitioning back to Fidelity from VG made sense for two reasons:

1. My bank (Chase) has zero branches in the LCOL State where we just moved to, but has plans to open only 2 branches, both far from where we'll live. We are moving everything to Fidelity, including checking and cash savings, in order to use their Cash Management accounts with free checking, ATM's, and high interest MM's.

2. If something should happen to me my wife would be far more comfortable with a brick and mortar firm that houses all of our finances. She's not comfortable using online banking either, something we're working on.
sport
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Re: My Fido retirement meeting pushing me to SMA

Post by sport »

vested1 wrote: Mon Jul 29, 2019 2:40 am 2. If something should happen to me my wife would be far more comfortable with a brick and mortar firm that houses all of our finances. She's not comfortable using online banking either, something we're working on.
If this situation should arise, do you have confidence that Fidelity will not do the same thing to your wife that they did to you in the past?
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

vested1 wrote: Mon Jul 29, 2019 2:20 am ...

They took advantage of me by convincing me to go with their PAS service, apparently now called SMA,

...
PAS and SMA are two entirely different products offered by Fidelity.

Basically they have 3 levels of portfolio management:
  • Fidelity Go -- robo product available with no minimum
  • PAS (Portfolio Advisory Service) -- minimum $50,000 includes human advisor with limited options
  • SMA (Separately Managed Accounts) -- minimum $200,000 includes a human advisor and each asset class is a different managed account requiring it's own minimum be met
IMO, each of these products may be appropriate for some clients. As always, one should never invest in something they do not understand which includes all in costs.
retiredjg
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Re: My Fido retirement meeting pushing me to SMA

Post by retiredjg »

:|
SeekingAPlan wrote: Mon Jul 29, 2019 9:18 am PAS and SMA are two entirely different products offered by Fidelity.

Basically they have 3 levels of portfolio management:
  • Fidelity Go -- robo product available with no minimum
  • PAS (Portfolio Advisory Service) -- minimum $50,000 includes human advisor with limited options
  • SMA (Separately Managed Accounts) -- minimum $200,000 includes a human advisor and each asset class is a different managed account requiring it's own minimum be met
IMO, each of these products may be appropriate for some clients. As always, one should never invest in something they do not understand which includes all in costs.
This is good information to have. Do you just happen to know the cost of each? :|
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

retiredjg wrote: Mon Jul 29, 2019 9:33 am :|
SeekingAPlan wrote: Mon Jul 29, 2019 9:18 am PAS and SMA are two entirely different products offered by Fidelity.

Basically they have 3 levels of portfolio management:
  • Fidelity Go -- robo product available with no minimum
  • PAS (Portfolio Advisory Service) -- minimum $50,000 includes human advisor with limited options
  • SMA (Separately Managed Accounts) -- minimum $200,000 includes a human advisor and each asset class is a different managed account requiring it's own minimum be met
IMO, each of these products may be appropriate for some clients. As always, one should never invest in something they do not understand which includes all in costs.
This is good information to have. Do you just happen to know the cost of each? :|
GO --> .35% basic or .5 for human adviser (requires minimum of $25,000) -- I do not recall if fund ER's also apply.

PAS --> .5% to 1.5% depending on balance. I do not know the schedule for what investment level is required to drop the fee. I believe fund ER's & other costs are additional.

SMA --> .2 to .90% depending on invested balance and asset type. Varies by product equity, bond, etc. The ones presented to me had no ER's since they were not invested in funds.

I did not elect to purchase these products so I would definitely dig a bit deeper with Fidelity before considering the products.
retiredjg
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Re: My Fido retirement meeting pushing me to SMA

Post by retiredjg »

Thanks. I think many of us didn't realize they had 2 programs, much less 3 programs. :happy
capjak
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Re: My Fido retirement meeting pushing me to SMA

Post by capjak »

I looked at a Fidelity SMA also.

The one I was somewhat interested in was a tax managed account that bought a group of stocks to match the S&P 500 and would do TLH and claimed as a result a small increase in return as compared to the comparable index fund. Cost was 50 basis points of AUM.

The SMA was similar to "direct indexing" S&P 500. Not terrible, but I did not do it due to what I considered a high fee.
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

capjak wrote: Mon Jul 29, 2019 10:02 am I looked at a Fidelity SMA also.

The one I was somewhat interested in was a tax managed account that bought a group of stocks to match the S&P 500 and would do TLH and claimed as a result a small increase in return as compared to the comparable index fund. Cost was 50 basis points of AUM.

The SMA was similar to "direct indexing" S&P 500. Not terrible, but I did not do it due to what I considered a high fee.
The range for the Tax Managed US Equity SMA is .2 to .65% depending on amount invested so minimum $200,000 account would have a .65% fee and it drops based on some schedule that is not published. I would like to see more transparency in the fee schedule.
Ruger
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Re: My Fido retirement meeting pushing me to SMA

Post by Ruger »

I got an email from my Fido guy last month wanting to do an annual review of my accounts. So I go in, and he doesn't know why I am there. I remind him he emailed me to review things. Of course he mentioned the SMA and how great it was. Has sent me a couple of emails, which I ignored. I'll make sure to ignore any future emails about "account reviews" too....nothing more than a sales pitch.
CedarWaxWing
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Re: My Fido retirement meeting pushing me to SMA

Post by CedarWaxWing »

vested1 wrote: Mon Jul 29, 2019 2:20 am

After doing some recommended reading I moved everything to Vanguard and went from paying about 20k a year in total fees at Fidelity to under 1k at Vanguard. After 5 years with Vanguard I looked into the possibility of converting to their PAS for .3% because of concerns about my wife being able to handle our investments should something happen to me. I didn't agree with VG's suggestions on increasing my international stock exposure or converting 50% of bonds to international and was told that if I used their service I would have no choice in the matter, so I decided to keep doing it myself for next to nothing in costs.

One person at VG told you that incorrectly... I have a relative who is signed up with VG PAS... and that relative questioned some of the suggestions of the PAS representative... who was willing to take her concerns and act on them, as long as there was an appropriate discussion about that.
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beyou
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Re: My Fido retirement meeting pushing me to SMA

Post by beyou »

afan wrote: Sat Jul 27, 2019 9:11 pm 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.
+1

There is an Etrade VERY close to my place of employment and another near my home.
Despite having an account, I have only one visited a branch for help. They told me to call the home office. Useless.
I also told Citibank and Etrade to stop calling me everytime I make a deposit a I will not be buying any other high priced services,
explaining I find the data pulls/calls an invasion of privacy and may close my account if they keep reviewing my account.

Vanguard NEVER calls me to sell me anything, and I can delete their emails about PAS.
vested1
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Re: My Fido retirement meeting pushing me to SMA

Post by vested1 »

sport wrote: Mon Jul 29, 2019 8:48 am
vested1 wrote: Mon Jul 29, 2019 2:40 am 2. If something should happen to me my wife would be far more comfortable with a brick and mortar firm that houses all of our finances. She's not comfortable using online banking either, something we're working on.
If this situation should arise, do you have confidence that Fidelity will not do the same thing to your wife that they did to you in the past?
I've left specific and detailed advice on what she should do if I die. If Fidelity tries to take advantage of her I have a brother and a friend who I have taken into confidence and whom she can go to in order to avoid falling into their trap. I'll be dead so will be beyond caring at that point.
vested1
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Re: My Fido retirement meeting pushing me to SMA

Post by vested1 »

SeekingAPlan wrote: Mon Jul 29, 2019 9:18 am
vested1 wrote: Mon Jul 29, 2019 2:20 am ...

They took advantage of me by convincing me to go with their PAS service, apparently now called SMA,

...
PAS and SMA are two entirely different products offered by Fidelity.

Basically they have 3 levels of portfolio management:
  • Fidelity Go -- robo product available with no minimum
  • PAS (Portfolio Advisory Service) -- minimum $50,000 includes human advisor with limited options
  • SMA (Separately Managed Accounts) -- minimum $200,000 includes a human advisor and each asset class is a different managed account requiring it's own minimum be met
IMO, each of these products may be appropriate for some clients. As always, one should never invest in something they do not understand which includes all in costs.
Perhaps it has changed, but I was in the SMA range but paying the PAS rate. I had two human advisers who met with me once a year for about an hour. Not a bad hourly labor rate if you ask me. They offered me a $1,200 bonus to stay, but when I mentioned that the bonus was a fraction of what they had been charging me they had nothing to say.
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

vested1 wrote: Mon Jul 29, 2019 6:35 pm
SeekingAPlan wrote: Mon Jul 29, 2019 9:18 am
vested1 wrote: Mon Jul 29, 2019 2:20 am ...

They took advantage of me by convincing me to go with their PAS service, apparently now called SMA,

...
PAS and SMA are two entirely different products offered by Fidelity.

Basically they have 3 levels of portfolio management:
  • Fidelity Go -- robo product available with no minimum
  • PAS (Portfolio Advisory Service) -- minimum $50,000 includes human advisor with limited options
  • SMA (Separately Managed Accounts) -- minimum $200,000 includes a human advisor and each asset class is a different managed account requiring it's own minimum be met
IMO, each of these products may be appropriate for some clients. As always, one should never invest in something they do not understand which includes all in costs.
Perhaps it has changed, but I was in the SMA range but paying the PAS rate. I had two human advisers who met with me once a year for about an hour. Not a bad hourly labor rate if you ask me. They offered me a $1,200 bonus to stay, but when I mentioned that the bonus was a fraction of what they had been charging me they had nothing to say.
These are distinct products. The $ amounts I mentioned are the minimum to invest in the given product. For example, PAS has a minimum requirement of $50,000 and goes up from there. You do not move to SMA when you hit $200,000. It is a completely different product. What does change as your balance goes up is that for higher amounts the fee paid goes down.
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Re: My Fido retirement meeting pushing me to SMA

Post by student »

retiredjg wrote: Mon Jul 29, 2019 9:57 am Thanks. I think many of us didn't realize they had 2 programs, much less 3 programs. :happy
I think fidelity lists four programs. (The last one for the 1%.)

https://www.fidelity.com/what-we-offer/ ... ity.com%2F
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

student wrote: Mon Jul 29, 2019 7:32 pm
retiredjg wrote: Mon Jul 29, 2019 9:57 am Thanks. I think many of us didn't realize they had 2 programs, much less 3 programs. :happy
I think fidelity lists four programs.

https://www.fidelity.com/what-we-offer/ ... ity.com%2F
Actually even more because your link does not include the SMAs and I did not include Wealth management and Private Wealth Management.
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Re: My Fido retirement meeting pushing me to SMA

Post by student »

SeekingAPlan wrote: Mon Jul 29, 2019 7:36 pm
student wrote: Mon Jul 29, 2019 7:32 pm
retiredjg wrote: Mon Jul 29, 2019 9:57 am Thanks. I think many of us didn't realize they had 2 programs, much less 3 programs. :happy
I think fidelity lists four programs.

https://www.fidelity.com/what-we-offer/ ... ity.com%2F
Actually even more because your link does not include the SMAs and I did not include Wealth management and Private Wealth Management.
This just shows how much I know (or more accurately don't know). I thought WM is just another name for SMA.
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

student wrote: Mon Jul 29, 2019 7:42 pm
SeekingAPlan wrote: Mon Jul 29, 2019 7:36 pm
student wrote: Mon Jul 29, 2019 7:32 pm
retiredjg wrote: Mon Jul 29, 2019 9:57 am Thanks. I think many of us didn't realize they had 2 programs, much less 3 programs. :happy
I think fidelity lists four programs.

https://www.fidelity.com/what-we-offer/ ... ity.com%2F
Actually even more because your link does not include the SMAs and I did not include Wealth management and Private Wealth Management.
This just shows how much I know (or more accurately don't know). I thought WM is just another name for SMA.
SMA is provided by Strategic Advisors while wealth management is via Fidelity Wealth Management I think.
student
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Re: My Fido retirement meeting pushing me to SMA

Post by student »

SeekingAPlan wrote: Mon Jul 29, 2019 7:48 pm
student wrote: Mon Jul 29, 2019 7:42 pm
SeekingAPlan wrote: Mon Jul 29, 2019 7:36 pm
student wrote: Mon Jul 29, 2019 7:32 pm
retiredjg wrote: Mon Jul 29, 2019 9:57 am Thanks. I think many of us didn't realize they had 2 programs, much less 3 programs. :happy
I think fidelity lists four programs.

https://www.fidelity.com/what-we-offer/ ... ity.com%2F
Actually even more because your link does not include the SMAs and I did not include Wealth management and Private Wealth Management.
This just shows how much I know (or more accurately don't know). I thought WM is just another name for SMA.
SMA is provided by Strategic Advisors while wealth management is via Fidelity Wealth Management I think.
Thanks for the info. I found its page. https://www.fidelity.com/managed-accounts/overview
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Re: My Fido retirement meeting pushing me to SMA

Post by Strayshot »

The most concerning element of this thread is that OP stated he or she has an account at Edward Jones.

OP, you need to worry a lot less about a sales pitch from Fidelity and a lot more about what the criminals at EJ are already stealing from you.........
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Bronco Billy
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Re: My Fido retirement meeting pushing me to SMA

Post by Bronco Billy »

Strayshot wrote: Mon Jul 29, 2019 8:42 pm OP, you need to worry a lot less about a sales pitch from Fidelity and a lot more about what the criminals at EJ are already stealing from you.........
and Stayshot i buy annuities also. Here are my last 4 years at EJ. 2016 6.73% 2017 24.32% 2018 -6.51% YTD 2019 18.82%. *It started out at 155k and is at 185k now and i have taken 4 RMD out of it for a total of 31k. I am not a greedy person.
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Re: My Fido retirement meeting pushing me to SMA

Post by edge »

‘Shareholders’ is a highly awkward term to describe the fidelity ownership structure.
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.
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Re: My Fido retirement meeting pushing me to SMA

Post by Sandtrap »

Welcome.
This is not a complex decision.

You do not need all of that if you do this:

Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212

j
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Re: My Fido retirement meeting pushing me to SMA

Post by Stinky »

edge wrote: Mon Aug 05, 2019 11:15 am ‘Shareholders’ is a highly awkward term to describe the fidelity ownership structure.
Grt2bOutdoors wrote: Fri Jul 26, 2019 8:26 am
That is the point Stinky was making; the shareholders are the Johnson family and the management team.
How would you describe the Fidelity ownership structure?

The whole point was to note that Vanguard is owned by its customers; benefits of ownership inure to the customers. Fidelity is not owned by its customers; benefits of ownership inure to the owners, not the customers.
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Re: My Fido retirement meeting pushing me to SMA

Post by edge »

Family owned and controlled business.
Stinky wrote: Mon Aug 05, 2019 1:43 pm
edge wrote: Mon Aug 05, 2019 11:15 am ‘Shareholders’ is a highly awkward term to describe the fidelity ownership structure.
Grt2bOutdoors wrote: Fri Jul 26, 2019 8:26 am
That is the point Stinky was making; the shareholders are the Johnson family and the management team.
How would you describe the Fidelity ownership structure?

The whole point was to note that Vanguard is owned by its customers; benefits of ownership inure to the customers. Fidelity is not owned by its customers; benefits of ownership inure to the owners, not the customers.
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Re: My Fido retirement meeting pushing me to SMA

Post by bengal22 »

Stinky wrote: Fri Jul 26, 2019 8:46 am
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.
I own both Fidelity and Vanguard funds. I also am a part owner of GM. But I know that the MGMT structure has nothing to do with how the two funds treat me. They are both motivated to make massive amount of money for their leadership. I own a tiny bit of GM but I have little say over strategy. I also have zero influence over Vanguard and Fido. I know that. I invest in their index funds based on ER.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley
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LilyFleur
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Re: My Fido retirement meeting pushing me to SMA

Post by LilyFleur »

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!
ohmygoodness. Low cost funds help increase your assets by lowering your costs!!!! That is true no matter what your net worth. Run.

My Schwab guy is a fiduciary and a CFP. I meet with him once or twice a year for NO additional cost, and he does a thorough job of a financial plan for me. He has never once tried to steer me to funds with a high expense ratio or an annuity.

I personally would not go to a meeting with a planner who was not a fiduciary and a CFP.
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Re: My Fido retirement meeting pushing me to SMA

Post by Dottie57 »

DesertDiva wrote: Fri Jul 26, 2019 10:51 am
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.
My experience too.
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Re: My Fido retirement meeting pushing me to SMA

Post by itsf8 »

I, too, recently met with my two Fido reps to see about readjusting my portfolio for tax efficiency and to address duplication. I expect to retire in a year (no pension but 403B and a comfortable inherited IRA so I don't need to have dividends for expenses.) With the market unstable, I currently have a lot in the Treasury MM (FDLXX) and their NY muni income fund (FTFMX). While not a market-timer, I figured to buy total stock index at a more appropriate time. They know I seek simplicity and want to move towards a boglehead-like portfolio like I have for my VG brokerage acct. Like others here, they suggested moving the cask/munis to the Breckenridge or Fido tax efficient bond SMA (500K minimum!), stating the tax efficiency functions, tax loss harvesting (not my strength on the bond side) and that the .40 fee is actually less than the NY Muni Income Fund. To make this change, they suggested selling FTFMX which has a large cap gain & a few smaller holdings, and to offset the gain by selling stocks (inherited) with a loss. I typically sell a portion of the loss each year to offset div/cap gains. Lastly, I have space in my IRAs, 403 and Roth to hold bonds and I''m in the 24% tax bracket but in high tax NY.

I see from below the consensus is to stay clear of the SMA. I'm also hesitant to commit such a huge amount and also don't see too much info online or on the Fido site. It also seems another layer of complexity. If, indeed, the mgmt fee is less than FTFMX, does it make sense? Also that I'm getting older and may need assistance w/my portfolio as the brain power diminishes.

I appreciate the community thoughts.
SeekingAPlan
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Re: My Fido retirement meeting pushing me to SMA

Post by SeekingAPlan »

itsf8 wrote: Tue Aug 20, 2019 1:58 pm I, too, recently met with my two Fido reps to see about readjusting my portfolio for tax efficiency and to address duplication. I expect to retire in a year (no pension but 403B and a comfortable inherited IRA so I don't need to have dividends for expenses.) With the market unstable, I currently have a lot in the Treasury MM (FDLXX) and their NY muni income fund (FTFMX). While not a market-timer, I figured to buy total stock index at a more appropriate time. They know I seek simplicity and want to move towards a boglehead-like portfolio like I have for my VG brokerage acct. Like others here, they suggested moving the cask/munis to the Breckenridge or Fido tax efficient bond SMA (500K minimum!), stating the tax efficiency functions, tax loss harvesting (not my strength on the bond side) and that the .40 fee is actually less than the NY Muni Income Fund. To make this change, they suggested selling FTFMX which has a large cap gain & a few smaller holdings, and to offset the gain by selling stocks (inherited) with a loss. I typically sell a portion of the loss each year to offset div/cap gains. Lastly, I have space in my IRAs, 403 and Roth to hold bonds and I''m in the 24% tax bracket but in high tax NY.

I see from below the consensus is to stay clear of the SMA. I'm also hesitant to commit such a huge amount and also don't see too much info online or on the Fido site. It also seems another layer of complexity. If, indeed, the mgmt fee is less than FTFMX, does it make sense? Also that I'm getting older and may need assistance w/my portfolio as the brain power diminishes.

I appreciate the community thoughts.
When you retire, will you still want to hold $500k plus in munis?

At the time they pitched it to me I had told them that my work situation was uncertain. The company I worked for was for sale and my job was likely to end. If that happened, I was likely to retire & not need munis anymore. It did not make sense to me to jump so heavily into individual muni bonds given that situtation so I stuck with Vanguard Intermediate Tax Exempt. Since I am now retired I am very happy I made that choice.

Since that time, they have pitched the tax managed equity SMA and PAS. Among the advantages is that a $500k investment would get me a change in consultant. My new consultant would be the only CFP in the branch. In addition I would get access to eMoney reports and some other services. I elected to stick with my easy self managed index fund portfolio and skip the high fees of the Fidelity managed accounts and the difficulty unwinding those managed products if one wanted out at a future date.

Although the Fidelity consultants are not on commission, they do benefit from signing people up for the managed products and locking your money to Fidelity. The meetings and reviews are a soft sell. The only follow up was an email with an attachment describing the products which did not give anywhere near enough detail to persuade me to invest.
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bengal22
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Re: My Fido retirement meeting pushing me to SMA

Post by bengal22 »

marcopolo wrote: Thu Jul 25, 2019 10:58 pm
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.
I have invested in both Vanguard and Fidelity. I like their funds. I could care less about their ownership structures. Both companies try to sell me stuff that I don't want or need. Both companies have leadership that is driven by self interest to increase revenue and net income. I know all that. And I can live with that because business is business.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley
PhilosophyAndrew
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Re: My Fido retirement meeting pushing me to SMA

Post by PhilosophyAndrew »

OP, “No, thank you.” Is a surprisingly effective response against sales pitches like the one you describe.

My own Fidelity Rep listens well and he and his staff are helpful with paperwork and other account administrivia. When I met him, I handed him a copy of my BH-compatible investment plan, which gave him a good idea of what I needed — and what I didn’t need — from him.

Nobody at a Fidelity has ever tried to sell me anything during my 20+ years as a client.

Andy.
marcopolo
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Re: My Fido retirement meeting pushing me to SMA

Post by marcopolo »

bengal22 wrote: Wed Aug 21, 2019 11:11 am
marcopolo wrote: Thu Jul 25, 2019 10:58 pm
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.
I have invested in both Vanguard and Fidelity. I like their funds. I could care less about their ownership structures. Both companies try to sell me stuff that I don't want or need. Both companies have leadership that is driven by self interest to increase revenue and net income. I know all that. And I can live with that because business is business.
I have had accounts at both. I eventually migrated to Fidelity for two reasons, significantly better customer service, and they have never made mistakes/lost my cost basis info. It occurred on a couple of occasions with Vanguard. The second is probably less critical going forward for people that only owned covered shares, but i still own a lot of uncovered shares. Perhaps I am mistaken, but i suspect that some of that is due to less of a focus on driving profits.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Monster99
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Re: My Fido retirement meeting pushing me to SMA

Post by Monster99 »

I am thinking of a change - Vanguard has messed up my cost basis twice in the last two years and I have delayed moving my 401k form my former employer (I am retired) due to tbeir tech issues. They seem unconcerned about the ongoing issues.
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celia
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Re: My Fido retirement meeting pushing me to SMA

Post by celia »

Grt2bOutdoors wrote: Fri Jul 26, 2019 3:58 am 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.
Bronco Billy wrote: Thu Jul 25, 2019 7:29 pm 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.
Here's the problem. The mention of "Edward Jones" would have sent my head to red alert. He thinks he's still working for Edward Jones. I'm surprised Fidelity lets him get away with this.
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bengal22
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Re: My Fido retirement meeting pushing me to SMA

Post by bengal22 »

mariezzz wrote: Sun Jul 28, 2019 5:08 pm From BHs, I've learned that I never want to meet with anyone from Fidelity - or Vanguard - to discuss management of my profile.
Before I retired I had a couple of face to face meetings with my Fidelity rep. They were useful meetings and gave me a chance to assess my retirement plan. But I do not have the fear of being talked into doing something I don't want to do.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley
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dogagility
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Re: My Fido retirement meeting pushing me to SMA

Post by dogagility »

bengal22 wrote: Wed Aug 21, 2019 2:42 pm
mariezzz wrote: Sun Jul 28, 2019 5:08 pm From BHs, I've learned that I never want to meet with anyone from Fidelity - or Vanguard - to discuss management of my profile.
Before I retired I had a couple of face to face meetings with my Fidelity rep. They were useful meetings and gave me a chance to assess my retirement plan. But I do not have the fear of being talked into doing something I don't want to do.
Agree. I've gone to Fidelity offices a few times each year for various small items. I never ask to "discuss my portfolio" and have never been asked by a rep to discuss my portfolio.
It should be easy putting a stop to a portfolio discussion with a rep. Just say no thank you.
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itsf8
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Re: My Fido retirement meeting pushing me to SMA

Post by itsf8 »

Thanks All. SeekingaPlan, for tax purposes, even in retirement, I will keep munis, including NY munis. To be honest, I haven't considered the total but 500K in munis seems high. I spoke to the rep about this but, in view of my inheritance, personal smaller IRA and 403 accounts, when reaching 70 in six years (or 72 if the law changes), I will have fairly substantial required distructions plus a more modest SS. I do want to increase my bond allocation but thought to do so within the IRA or, ultimately, 403B to IRA transfer. On the non-stock side, I currently have a substantial amount in cash/cash equivalent including about 17% of my total portfolio in my TIAA Traditional plus 180K in Ibonds and about $150K in individual treasuries which come due early 2020. As the rep pointed out, the munis are more tax-efficient than the treasuries from a Federal basis. All this said, I am disinclined to complicate my portfolio and, as others have pointed out, it becomes complicated disengaging from the SMA should I so choose. For now, I emailed the rep I'm not inclined to consider the SMA. What's interesting, I've been awaiting from them a recommended portfolio to address duplication and, after two meetings, have not received this as, they said, they wanted to first address the brokerage tax-efficiency question.
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Re: My Fido retirement meeting pushing me to SMA

Post by MikeG62 »

capjak wrote: Mon Jul 29, 2019 10:02 am I looked at a Fidelity SMA also.

The one I was somewhat interested in was a tax managed account that bought a group of stocks to match the S&P 500 and would do TLH and claimed as a result a small increase in return as compared to the comparable index fund. Cost was 50 basis points of AUM.

The SMA was similar to "direct indexing" S&P 500. Not terrible, but I did not do it due to what I considered a high fee.
This is the product I was pitched yesterday - SMA that would seek to deliver index-like pre-tax returns, but would use tax loss harvesting strategy to boost after-tax returns.

While there is some benefit to the tax loss harvesting strategy, I do not believe it offsets the annual cost of the SMA (which starts at I believe 0.95bps per year at minimum investment level of $200,000 and drops to around 0.20bps for large accounts - I think at least $1.0 million if I recall correctly).

Also, it seems to me that if the investments within the SMA do well over time, it would be quite hard to ever extract oneself from the account due to the large imbedded capital gains (capital gains that would be larger than one would have in a similar index fund/ETF due to the capital loss harvesting over the years). If I'm going to be locked into a portfolio of investments, I think I'd rather it be an ultra low cost broadly diversified passively-managed index fund/ETF than a collection of stocks that either ties me to Fidelity for life or results in a collection of stocks I then have to manage on my own should I wish to end the SMA.

It is interesting that my PC advisor reached out to me as we have not talked in several years at least. He knows from past experience that I am a tough sell. At the end of the call he sounded dispirited and accepting of the fact that he just wasted 45 minutes of his time. Maybe there is some push within Fidelity's advisor group to nudge their private clients who are not generating much in the way of fees and see if anything comes of it? Part of his pitch was, "Mike, I've got lots of clients in these SMA's and they love them". What else would he say - they hate them? And most clients who are using the SMA's probably don't know enough to manage their money on their own so how informed is their view in the first place.

Anyone else been pitched this recently?
Last edited by MikeG62 on Sat Sep 26, 2020 10:41 am, edited 1 time in total.
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Dottie57
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Re: My Fido retirement meeting

Post by Dottie57 »

RetiredAL wrote: Thu Jul 25, 2019 7:59 pm 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.
This was close to my experience too. Two meetings with FA. At both active managed funds were pushed since with index funds you only get market returns. And a 7 year annuity was proposed to give me income in retirement. The interest was good . It was a,YGA like thing.

After that I haven’t had a meeting


Don’t go for the SMA . Save your money.
RVdreamin
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Re: My Fido retirement meeting pushing me to SMA

Post by RVdreamin »

I just had a Fido call today--SMA was pitched. I stated fees were probably way above my comfort level and I thought owning a portion of the S&P in individual stock probably increased my risk without increasing my potential return. He seemed to move away from SMAs at that point. He also suggested "50% protection" for my overall portfolio by moving out of total bond index and into a combination of CDs, MMs, and fixed annuities (he didn't provide details). Since only about 40% of my assets are at Fido he wasn't aware that a large portion of my fixed asset allocation is already in CDs and the TSP G-fund. I thought that advice was solid.

For me, the SMA discussion was interesting and worth thinking through--but as I told him, I learned the hard way that I don't have a clue what the market will do (and I don't think others do either) so I've focused on being average with broad index funds and lowering my expenses. In both cases, SMA would reverse that trend.

As always, I appreciate the fantastic advice/discussion on this thread!
yougotitdude
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Re: My Fido retirement meeting pushing me to SMA

Post by yougotitdude »

Fidelity reps are paid quite a bit more if you move to the managed accounts (including SMAs). With the elimination of commissions I'm sure they'd like to make up that revenue somewhere.
lws
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Re: My Fido retirement meeting pushing me to SMA

Post by lws »

Consider making your own investment decisions in retirement.
It may be to your advantage.
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beyou
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Re: My Fido retirement meeting pushing me to SMA

Post by beyou »

I pre-empted Fido sales pitches to my son.
He now has a Fido 401k but I had already gotten him to open a Roth IRA at Vanguard before his 1st FT employer got his foot in the door for Fido. I explained that he should pick the index funds at Fido and have it auto rebalance, and that he does not need their help to manage. Would have directed him to Target Date as he has in Vanguard, but Fido Target Date had higher fees and their 401k makes it easy to set AA and auto rebal, so who needs a balanced fund with higher fees ?

Note SMA is not a new thing, I recall this type of account a popular sales vehicle in the 1990s. Was a bad deal then and on a relative basis worse now (lots more good, cheap options that were not available years ago). Back when 1st created idea was to have a private fund where they better manage taxes than in an public active mutual fund. But since now you can get an index fund, with low taxes, why bother with the high fees ? And if it’s a retirement acct you really have zero benefit from SMA.
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