Why am I not at Fidelity?

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gr7070
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Why am I not at Fidelity?

Post by gr7070 »

I have my accounts for my wife and I at Vanguard. Why should I not be at Fidelity? I use a 3-fund portfolio.

0% fee for total stock and total international. Haven't checked a bond fund yet...

Feel like I'm giving away a ton of money.
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Re: Why am I not at Fidelity?

Post by mega317 »

You don't have to feel. You can calculate exactly how much you're paying in expense ratio. It might not be "a ton" depending on how you define that.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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watchnerd
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Re: Why am I not at Fidelity?

Post by watchnerd »

My 401k, ESPP, and RSU shares at at Fidelity.

My rollover IRAs and taxable accounts are at Vanguard.

There are things I like and dislike about both.

As for ERs -- once it gets low enough, minor differences in fund performance or which index they track can swamp the difference in ERs.

.01 vs .05 falls within the range of this, easily.
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Re: Why am I not at Fidelity?

Post by mhalley »

A few reasons
1. No track record to ensure they will actually be able to replicate the index performance
2. No guarantees they will not increase fees in the future
3. May have worse tax efficiency
4. Intl does not include small cap
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Re: Why am I not at Fidelity?

Post by nisiprius »

gr7070 wrote: Sun Mar 01, 2020 9:40 pm I have my accounts for my wife and I at Vanguard. Why should I not be at Fidelity?
There's no strong reason why you shouldn't be. If you feel like it, do it. Fidelity has been offering their own index funds since about 1988 and they've performed virtually identically to Vanguard's. If imitation is the sincerest form of flattery, Vanguard should feel flattered. There's also no strong reason why you should be.
0% fee for total stock and total international. Haven't checked a bond fund yet...
Nope, no bond funds in their ZERO series, at least not yet. 0.025% ER for Fidelity US Bond Index Fund, compared to 0.05% for Vanguard Total Bond Market Index Fund.
Feel like I'm giving away a ton of money.
Don't do it on the basis of "feeling," do it on the basis of math. Actually calculate the dollars. You're only giving away a few ounces of money.

In exchange for that, the comparisons between the ZERO funds and Vanguard's are complicated and debatable. The ZERO funds are not obviously all that much better... nor all that much worse. The most obvious issues are:

1) you can only hold the ZERO funds in a Fidelity account, they aren't "portable," you can't move them to another brokerage. So if, having left Vanguard, down the road you decide to leave Fidelity, dealing with that will be a minor nuisance;

2) the Fidelity ZERO funds only "sample" the index instead of "replicating" it--they don't hold all the stocks in the index. That's not a big deal. But an 0.04% difference in expense ratios isn't a big deal, either.

3) Moving from one brokerage to another, I've often encountered annoying glitches. I've found it to be a nuisance. Maybe half the time it has only taken a few days and goes smooth as silk. The other times there have been various snags. The ones that went smoothly were "ACAT transfers" of entire retirement accounts, by the way.
Last edited by nisiprius on Sun Mar 01, 2020 10:12 pm, edited 4 times in total.
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penumbra
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Re: Why am I not at Fidelity?

Post by penumbra »

What is the point of this thread? Is this a question for us or for you?
Do what makes you happy. 😉

Edit: I have accounts at both. Fidelity is so superior for my purposes I couldn’t recommend them more highly. 10/10.

Vanguard: 2/10.
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Re: Why am I not at Fidelity?

Post by Dominic »

Bear in mind that the Fidelity Zero funds are only a few basis points cheaper than Vanguard's funds. It's tens of dollars annually on a 6-figure portfolio.

I think the few basis points of ER for a Vanguard fund is worth it for what you get: better tracking of the asset class, better securities lending policy, mutual ownership, etc. Mind you, all the things I mentioned were marginal, but so is 0.05%.

On top of that, there's nothing stopping you from holding Vanguard ETFs at Fidelity now that trading is commission-free. I plan to do this.
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Re: Why am I not at Fidelity?

Post by Nate79 »

Do it. :beer
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Re: Why am I not at Fidelity?

Post by Ferdinand2014 »

I have had Fidelity for 23 years and have been very happy. I do not own any of their Zero funds. I own only 1 mutual fund - FXAIX (Fidelity 500 index fund) with an ER of 0.015. The rest of my investments are treasury bills purchased for free at Fidelity. The customer service and website are excellent.
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gr7070
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Re: Why am I not at Fidelity?

Post by gr7070 »

I guess I'm looking for justification to stay or justification to leave.

Depending upon one's balance I suppose it's a few hundred dollars or less difference. Which by comparison isn't truly a ton; the difference between zero or more than zero isn't really that much.
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Re: Why am I not at Fidelity?

Post by anoop »

Ferdinand2014 wrote: Sun Mar 01, 2020 11:03 pm I have had Fidelity for 23 years and have been very happy. I do not own any of their Zero funds. I own only 1 mutual fund - FXAIX (Fidelity 500 index fund) with an ER of 0.015. The rest of my investments are treasury bills purchased for free at Fidelity. The customer service and website are excellent.
To be a bit pedantic, the ER is 0.015% which is 0.00015, or $15 per $100,000.
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Re: Why am I not at Fidelity?

Post by 123 »

If there are any future innovations in investment products or services they are likely to arrive at Fidelity and Schwab before they arrive at Vanguard.
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Re: Why am I not at Fidelity?

Post by KeepingEyesOpen »

gr7070 wrote: Sun Mar 01, 2020 9:40 pm I have my accounts for my wife and I at Vanguard. Why should I not be at Fidelity? I use a 3-fund portfolio ...
To original poster - A simple 3-fund account would probably be fine at either Fidelity or Vanguard. You are smart to keep it simple.

Fidelity vs. Vanguard - my experience:

My experience with taxable (trust) and Rollover IRA accounts held Fidelity was mediocre. The total of the accounts was in the low 7 figures. The account reps changed relatively frequently, once every year or two. I held individual securities (a few stocks and muni bonds) and about 10 or 12 mutual funds, all no-load and low-expense-ratio funds. I had to be careful to avoid suggestions (or gentle “nudges”) for Fidelity funds with higher expense ratios when taking advantage of certain services - complimentary financial planning report, for example. The financial planning report suggested a “nuke and pave” approach - sell most holdings and invest in the suggested mutual funds. This was not optimal for my admittedly overly-complex accounts, some with large unrealized capital gains.

Fidelity’s online account access was OK, but I did not like the platform used to access and report non-Fidelity account information. Non-Fidelity manually-entered assets were not included in asset allocation calculations and reports. This was 7 years ago, this might be better now.

The immediate reason for leaving Fidelity in 2012 was dissatisfaction with a particular service. A new cash management-type account was offered with features including a cash rewards credit card. When calling to activate the card the automated activation procedure was interrupted by cross-sale pitches, one of which I had to decline more than once. I considered this to be an unwelcome and unprofessional level of service, so I requested a representative. After multiple requests, the rep informed me that the credit card was offered by FIA Card Services, an affiliate of Bank of America.

That was the last straw. I cancelled the activation procedure and demanded that my name and information be purged from FIA/Bank of America systems. As a victim of a prior identity theft, I am very cautious in my financial affairs and will deal only with institutions of the highest quality and reputation. That does not include Bank of America, for which I have first-hand knowledge of customer service problems.

A few weeks later all of my accounts and my wife’s accounts were consolidated at Vanguard.

Vanguard’s services are competent but lack a few “bells and whistles”. One example: At one point I considered separating my IRA account into four separate accounts to designate different beneficiaries for each account. Vanguard could not accommodate this, insisting on identical beneficiary designations for each account registration type (Rollover IRA, Roth IRA, Trust account, etc.). My initial plan for the separate beneficiaries was to allow for “stretch IRA” status for standalone IRA trusts for each of my children’s inherited IRAs. After much research I eventually rejected this plan as cumbersome and costly. Recent passage of the SECURE act made this plan untenable, anyway. Maybe Vanguard's simplistic approach is not so bad ...

Vanguard’s online access is quite good, in my opinion. Vanguard’s “All Accounts” reports include Vanguard accounts, non-Vanguard accounts that are accessed automatically, and other assets typed in manually, such as outside bank CDs, Treasury Direct accounts, iBonds, etc. These are included correctly in asset allocation reports, superior to the reports generated by Fidelity’s system (disclaimer - I last accessed Fidelity’s system over 7 years ago).

Vanguard can be slow to offer certain new account types. One example is HSA accounts. Fidelity offers low-cost HSA accounts that are suitable for those who use HSA accounts as long-term investment accounts. Vanguard does not offer these, at least directly to individuals.

Overall, I am satisfied with my, and my wife's multiple accounts at Vanguard. Maybe I'll consider moving my HSA account, now held at a smaller institution, to Fidelity.
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Re: Why am I not at Fidelity?

Post by bayview »

gr7070 wrote: Sun Mar 01, 2020 11:55 pm I guess I'm looking for justification to stay or justification to leave.

Depending upon one's balance I suppose it's a few hundred dollars or less difference. Which by comparison isn't truly a ton; the difference between zero or more than zero isn't really that much.
Taxable investments *generally* have more favorable tax treatment with Vanguard funds/ETFs in terms of qualified dividends. If the majority of your investments are in taxable, you might want to run the numbers using your 2019 tax software in a “what-if” scenario to see which would have been better for you.
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Re: Why am I not at Fidelity?

Post by FIREchief »

I'm at Fidelity (as a brokerage) because they have a) top notch 24/7 customer service, b) an outstanding website and c) a local brick and mortar if I need to use it. I can buy any funds or ETF's I need at Fidelity (including VG funds or Fidelity ZERO funds if I so choose). I used VG in the past and found both their phone support and website unacceptable. Since that time, I've seen many complaints about their ongoing customer service deficiencies. Personally, I had problems with inconsistent phone guidance, basis problems, poor response to transaction requests and just generally unimpressive (i.e. crappy) service. Yeah, I know "it's only because they're so great and growing so much due to popular demand blah, blah, blah...…" Well, I've helped them out by no longer placing any demands upon their staff. :P
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Re: Why am I not at Fidelity?

Post by FIREchief »

KeepingEyesOpen wrote: Mon Mar 02, 2020 12:14 am One example: At one point I considered separating my IRA account into four separate accounts to designate different beneficiaries for each account. Vanguard could not accommodate this, insisting on identical beneficiary designations for each account registration type (Rollover IRA, Roth IRA, Trust account, etc.).
I had heard reports of this. If true, this was absolutely inexcusable. How long ago was this?
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Re: Why am I not at Fidelity?

Post by HomeStretch »

Either Vanguard or Fidelity is fine for a 3-fund portfolio. Avoid the Fidelity Zero funds in a Taxable account as they cannot be transferred to another broker and would have to be sold (likely incurring capital gains) if you move the account from Fidelity.
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Re: Why am I not at Fidelity?

Post by dcabler »

95% of my holdings are at Fidelity.
- My rollover IRA
- My taxable MF and Brokerage accounts

I have a couple of accounts at Vanguard
- My current employer's 401K.
- I hold 1 MF in a taxable account at Vanguard

The remainder is at HealthEquity in my HSA and at Prudential for a deferred comp account from a previous employer.

From a "user experience" 99.9% of the time it's a "don't care". I've never had issues with either Fidelity or Vanguard. But for those very rare occasions where I've had questions, it's nice that I can drive to the local Fidelity office and get answers. Very rare, though.

Regarding fund offerings, yeah, if I were a 3-funder, I'd definitely consider Fidelity's ZERO funds. Beyond that, since Fidelity has commission free trades, it's pretty easy to buy just about any ETF you might want from just about anybody. As another poster noted, you can't transfer ZERO funds to another brokerage house. For some people that's important, for some people not so much.
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Re: Why am I not at Fidelity?

Post by Jack FFR1846 »

Dominic wrote: Sun Mar 01, 2020 10:17 pm Bear in mind that the Fidelity Zero funds are only a few basis points cheaper than Vanguard's funds. It's tens of dollars annually on a 6-figure portfolio.

I think the few basis points of ER for a Vanguard fund is worth it for what you get: better tracking of the asset class, better securities lending policy, mutual ownership, etc. Mind you, all the things I mentioned were marginal, but so is 0.05%.

On top of that, there's nothing stopping you from holding Vanguard ETFs at Fidelity now that trading is commission-free. I plan to do this.
I can't find the citation right now, but remember seeing a listing of securities lending amounts and they were rated from the top, Schwab, Fidelity, Vanguard. That's how Fidelity can run a fund for zero ER.

As far as tracking.... unless you're tracking exactly the same index....who cares?
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Re: Why am I not at Fidelity?

Post by snowman »

FIREchief wrote: Mon Mar 02, 2020 1:34 am
KeepingEyesOpen wrote: Mon Mar 02, 2020 12:14 am One example: At one point I considered separating my IRA account into four separate accounts to designate different beneficiaries for each account. Vanguard could not accommodate this, insisting on identical beneficiary designations for each account registration type (Rollover IRA, Roth IRA, Trust account, etc.).
I had heard reports of this. If true, this was absolutely inexcusable. How long ago was this?
Still the case.
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Re: Why am I not at Fidelity?

Post by FIREchief »

snowman wrote: Mon Mar 02, 2020 1:00 pm
FIREchief wrote: Mon Mar 02, 2020 1:34 am
KeepingEyesOpen wrote: Mon Mar 02, 2020 12:14 am One example: At one point I considered separating my IRA account into four separate accounts to designate different beneficiaries for each account. Vanguard could not accommodate this, insisting on identical beneficiary designations for each account registration type (Rollover IRA, Roth IRA, Trust account, etc.).
I had heard reports of this. If true, this was absolutely inexcusable. How long ago was this?
Still the case.
Yikes!!!!!!!!!!!!! I can't believe we haven't seen more complaints here in the forum about this. Maybe I've just missed them?? This is even worse (much MUCH worse) than VG's refusal to allow beneficiaries on a JWROS account. :annoyed
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Re: Why am I not at Fidelity?

Post by nisiprius »

gr7070, if you do jump ship, please check in from time to time and let us know how it all goes.
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KeepingEyesOpen
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Re: Why am I not at Fidelity?

Post by KeepingEyesOpen »

FIREchief wrote: Mon Mar 02, 2020 2:12 pm
snowman wrote: Mon Mar 02, 2020 1:00 pm
FIREchief wrote: Mon Mar 02, 2020 1:34 am
KeepingEyesOpen wrote: Mon Mar 02, 2020 12:14 am One example: At one point I considered separating my IRA account into four separate accounts to designate different beneficiaries for each account. Vanguard could not accommodate this, insisting on identical beneficiary designations for each account registration type (Rollover IRA, Roth IRA, Trust account, etc.).
I had heard reports of this. If true, this was absolutely inexcusable. How long ago was this?
Still the case.
Yikes!!!!!!!!!!!!! I can't believe we haven't seen more complaints here in the forum about this. Maybe I've just missed them?? This is even worse (much MUCH worse) than VG's refusal to allow beneficiaries on a JWROS account. :annoyed
Probably 2017, give or take a year.

“Absolutely inexcusable” is pretty harsh. My reaction at the time was one of disappointment, not consternation. Vanguard’s policy (same beneficiary designations for each account type) was probably decided on the basis of administrative simplicity, not a deliberate move to annoy clients. It follows that this results in simplicity for the client as well.

All turned out well in the end. Vanguard’s characteristic default to “Simplicity” was good for me in this case. Here is the backstory: Our estate/trust attorney pitched establishment of 4 Standalone IRA Trusts as beneficiaries for my IRA. Extensive research by me (several months - reading articles by Natalie Choate and others), revealed that this plan would be complex, requiring precise execution and attention to detail. One requirement was for separate beneficiaries, each from a separate account, to qualify for “stretch” RMD treatment over each beneficiary’s lifetime. Another “benefit” for the Standalone IRA Trusts would be potential protection from creditors, divorced spouses, spendthrift beneficiaries, etc. While advantageous for some beneficiaries, this would be an expensive straightjacket for other beneficiaries.


Despite what others have claimed in this forum, trusteeship and administration of irrevocable trusts are not trivial tasks. While I might be comfortable with trusteeship or administration of an irrevocable trust, my adult children would not. It follows that professional trusteeship and investment management would probably be required. The cost and lack of control would not be welcome for my adult children, now ranging in age from 35 to 45. The recent passage of the SECURE act, limiting inherited IRA RMDs to 10 years, drove the nail in the coffin for the overly-complex idea of separate standalone IRA trusts.

Looking at the bigger picture after a multi-decade investment experience, I have decided that simplicity is a desirable feature for an investment portfolio and for an estate plan. There may be some theoretical benefit for a complex portfolio or estate plan, but that may not be compatible with self-management by a benefactor - and certainly not by beneficiaries who may not be “investment nerds” 😀

Another thought: My portfolio contains equity positions with large unrealized capital gains in taxable accounts. Beneficiaries of my taxable portfolio will inherit these (hopefully) with stepped-up cost basis. While I have not thoroughly fleshed this out, it appears that leaving inheritances to beneficiaries outright, rather than in trusts, would be beneficial from the viewpoint of capital gains treatment going forward (thinking of taxation of capital gains in trusts vs. individual owners). Maybe I should simply designate individuals outright rather than trusts as beneficiaries for taxable accounts. Again, simplicity has advantages in addition to disadvantages.

Even one more thought: equal treatment of sibling beneficiaries is important. I have seen firsthand the negative feelings that can result from perceived unequal treatment of inheritances. Simplicity, e.g. beneficiary designations with equal percentages from one account, can be a good thing.

Vanguard is not perfect, but it has served me well over the years. Based on others’ favorable comments with their Fidelity experiences, I will re-consider Fidelity to hold some of my portfolio. HSA accounts would be a good start. But I still want to keep things simple.
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Re: Why am I not at Fidelity?

Post by BolderBoy »

gr7070 wrote: Sun Mar 01, 2020 9:40 pm I have my accounts for my wife and I at Vanguard. Why should I not be at Fidelity? I use a 3-fund portfolio.

0% fee for total stock and total international. Haven't checked a bond fund yet...

Feel like I'm giving away a ton of money.
If your portfolio is in the high 100s of millions or billions of $$$, yes - you may be giving away a ton of money. Otherwise it may be a pittance.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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FIREchief
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Re: Why am I not at Fidelity?

Post by FIREchief »

KeepingEyesOpen wrote: Mon Mar 02, 2020 3:01 pm
FIREchief wrote: Mon Mar 02, 2020 2:12 pm
snowman wrote: Mon Mar 02, 2020 1:00 pm
FIREchief wrote: Mon Mar 02, 2020 1:34 am
KeepingEyesOpen wrote: Mon Mar 02, 2020 12:14 am One example: At one point I considered separating my IRA account into four separate accounts to designate different beneficiaries for each account. Vanguard could not accommodate this, insisting on identical beneficiary designations for each account registration type (Rollover IRA, Roth IRA, Trust account, etc.).
I had heard reports of this. If true, this was absolutely inexcusable. How long ago was this?
Still the case.
Yikes!!!!!!!!!!!!! I can't believe we haven't seen more complaints here in the forum about this. Maybe I've just missed them?? This is even worse (much MUCH worse) than VG's refusal to allow beneficiaries on a JWROS account. :annoyed
Probably 2017, give or take a year.

“Absolutely inexcusable” is pretty harsh.
That's my story and I'm sticking with it. Absolutely inexcusable is exactly what I meant.
Vanguard’s policy (same beneficiary designations for each account type) was probably decided on the basis of administrative simplicity, not a deliberate move to annoy clients.
Why should anybody use a brokerage that would set up such a policy for their own administration benefits?
It follows that this results in simplicity for the client as well
I'm not buying this. The client is the customer. He/she should be able to make it as simple or as complicated as their needs/desires dictate.
Our estate/trust attorney pitched establishment of 4 Standalone IRA Trusts as beneficiaries for my IRA. Extensive research by me (several months - reading articles by Natalie Choate and others), revealed that this plan would be complex, requiring precise execution and attention to detail. One requirement was for separate beneficiaries, each from a separate account, to qualify for “stretch” RMD treatment over each beneficiary’s lifetime. Another “benefit” for the Standalone IRA Trusts would be potential protection from creditors, divorced spouses, spendthrift beneficiaries, etc. While advantageous for some beneficiaries, this would be an expensive straightjacket for other beneficiaries
.
If you don't like your attorney's guidance, then maybe you need a different attorney. I'm glad you found Natalie Choate as a resource. Her book is the bible for leaving qualified assets in trust. "Expensive straightjacket" sounds a bit harsh. Every situation is different. While you don't like your attorney's guidance and have decided that "simple" is more valuable than asset protection, that is your choice and perhaps VG is a good fit for you. Many others value their attorney's inputs/guidance and sure don't want to try to implement only to find out that their brokerage has "done them a favor" and forced them to be more simplistic.
Despite what others have claimed in this forum, trusteeship and administration of irrevocable trusts are not trivial tasks. While I might be comfortable with trusteeship or administration of an irrevocable trust, my adult children would not. It follows that professional trusteeship and investment management would probably be required.

You're describing your own situation. It does not follow that all adult children would be uncomfortable serving as their own trustee (especially if they can preserve an additional 1% of the trust assets every year).
Another thought: My portfolio contains equity positions with large unrealized capital gains in taxable accounts. Beneficiaries of my taxable portfolio will inherit these (hopefully) with stepped-up cost basis. While I have not thoroughly fleshed this out, it appears that leaving inheritances to beneficiaries outright, rather than in trusts, would be beneficial from the viewpoint of capital gains treatment going forward (thinking of taxation of capital gains in trusts vs. individual owners).

I don't believe that this is correct. The trust could simply distribute all gains to the beneficiary each year to be taxed at the beneficiary's tax rates. OTOH, the trust would have the option of retaining gains if the beneficiary was in the midst of divorce or bankruptcy. Asset protection can be very valuable.
Even one more thought: equal treatment of sibling beneficiaries is important. I have seen firsthand the negative feelings that can result from perceived unequal treatment of inheritances. Simplicity, e.g. beneficiary designations with equal percentages from one account, can be a good thing.
This is an entirely different subject, and has nothing to do with VG's policy on this.
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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Re: Why am I not at Fidelity?

Post by JaneyLH »

FIREchief wrote: Mon Mar 02, 2020 1:32 am I'm at Fidelity (as a brokerage) because they have a) top notch 24/7 customer service, b) an outstanding website and c) a local brick and mortar if I need to use it.
This lesson learned recently as my DH and I were investigating options for obtaining a Gold Medallion signature guarantee. Some folks reported that Fidelity would provide this. I can't opine one way or another, but we ended up paying $239 x 2 to establish a POA authority to move an IRA rollover account for an incapacitated relative. If Vanguard would have provided the signature guarantee, DH would have had to fly to Phoenix. Same cost issues. I am now rethinking the value of having access to brick and mortar.
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