Fidelity advisory services

[savingsmom]

I have over $225k at Fidelity, mostly in cash (CDs) right now, but also have about $82k in retirement accounts. (I have most of my retirement savings in TSP, fwiw.)

I've been approached by my local Fidelity office about advisory services. Sounds like this would cost 1.1%, which seems steep to me, but some might think that is affordable, depending on how one looks at it. So far I've been doing DIY.

He told me that if I preferred to remain self-directed, I could still have him as a point of contact - it's really unclear to me what this would entail, but he basically described it as reactive instead of proactive.

Considerations:
-I really enjoy reading about investing and feel like I might now enough to do this myself.
- I also am humble enough to realize I might be missing some knowledge that would help me.
- Would prefer a model where I have a set amount I pay someone as a one-off to review my portfolio and make some suggestions.

I'd be grateful for thoughts and experiences with this, questions to ask, things to consider.

Thanks in advance for your thoughts...

[AllMostThere]

You're correct - 1.1% is steep and will cost you ~ $2,500 per year for your accounts and will only increase as the value increases. They will also put you in higher fee Fidelity products, so could easily be another $2,500 in hidden account fees. You are in the correct forum asking the right questions. BH forum is best for DIY and advice. You can do this yourself and save a ton of $$'s and sleep better at night. Keep reading here educating yourself and asking questions.

[JoMoney]

My thoughts are you should read one of the investing books by John C. Bogle.
"The LIttle Book of Common Sense Investing" would be a good choice for a quick easy read to get the gist of it.
Paying for investment advice, especially an ongoing assets under management % is hazardous to your wealth. The one thing a financial advisor might offer over a DIY "Three Fund Portfolio" is perhaps a good advisor might help you avoid behavioral problems if you fall into an indecisive trap or constantly trading things when you know that's counter to the idea of being a "passive investor."

[retiredjg]

I've been approached by my local Fidelity office about advisory services. Sounds like this would cost 1.1%, which seems steep to me, but some might think that is affordable, depending on how one looks at it. So far I've been doing DIY.

Costly for sure and there is no indication you actually need this "help".

He told me that if I preferred to remain self-directed, I could still have him as a point of contact - it's really unclear to me what this would entail, but he basically described it as reactive instead of proactive.

Sounds to me like he is offering to answer some questions here and there, but not perform any money management duties. Being helpful is either a personal offer or something included in his expected duties. Of course, if he is helpful and you develop a bit of a relationship, he is the person you would contact if you decide to use their advisor service in the future.

Would prefer a model where I have a set amount I pay someone as a one-off to review my portfolio and make some suggestions.

I don't think Fidelity offers this service. But this thread discusses people who do. viewtopic.php?t=360823

[NYCaviator]

He told me that if I preferred to remain self-directed, I could still have him as a point of contact - it's really unclear to me what this would entail, but he basically described it as reactive instead of proactive.

In my experience, this is not the case. I got a sales pitch from my local office when I transferred a taxable account over and politely declined. They told me the same thing as you, "no problem, but we're here to answer any questions, just reach out." I did reach out with a question related to some account features and it's been radio silence. Never even bothered to call/email back. So I wouldn't hold your breath that you'll get any help out of these local reps unless you are in the advisory program. It definitely left a sour taste in my mouth (at Schwab at least they'd contact you back).

Plenty of threads on this, but no, paying that kind of advisory fee doesn't make sense in your case. In my opinion, there are only a few situations where it makes sense: (1) if you don't have someone doing it for you, you won't invest, (2) behaviorally, you will make stupid mistakes like going all cash when there's a downturn (in which case the AUM fee is probably cheaper than the cost of the mistakes you will make), or (3) you have a large and complicated financial situation (think very HNW or UHNW) with potential tax issues, trusts, estate tax concerns. Otherwise, with a quarter million in CDs, you can easily manage that yourself.

[Wiggums]

1.1% annual cost is too high and is a drag on your portfolio. Why not consider something like the Fidelity Freedom Index fund. Fidelity will manage the fund and the cost will be significantly cheaper.

[bsteiner]

...
Plenty of threads on this, but no, paying that kind of advisory fee doesn't make sense in your case. In my opinion, there are only a few situations where it makes sense: ... you have a large and complicated financial situation (think very HNW or UHNW) with potential tax issues, trusts, estate tax concerns. ...

The lawyer can deal with the trusts and the estate tax issues for much less than 1% (or 0.5% for UHNW) of your assets annually. Depending on the tax issue, the accountant (or enrolled agent) or the lawyer can likewise deal with any tax issues for much less than 1% (or 0.5% for UHNW) of your assets annually. Even at $30 million, which some people think is the beginning of UHNW, 0.5% is $150,000. Even for clients well over $30 million, it would be hard to spend $150,000 a year on trusts and tax and estate planning.

[HeavyChevy]

He told me that if I preferred to remain self-directed, I could still have him as a point of contact - it's really unclear to me what this would entail, but he basically described it as reactive instead of proactive.

In my experience, this is not the case. I got a sales pitch from my local office when I transferred a taxable account over and politely declined. They told me the same thing as you, "no problem, but we're here to answer any questions, just reach out." I did reach out with a question related to some account features and it's been radio silence. Never even bothered to call/email back. So I wouldn't hold your breath that you'll get any help out of these local reps unless you are in the advisory program. It definitely left a sour taste in my mouth (at Schwab at least they'd contact you back).

Plenty of threads on this, but no, paying that kind of advisory fee doesn't make sense in your case. In my opinion, there are only a few situations where it makes sense: (1) if you don't have someone doing it for you, you won't invest, (2) behaviorally, you will make stupid mistakes like going all cash when there's a downturn (in which case the AUM fee is probably cheaper than the cost of the mistakes you will make), or (3) you have a large and complicated financial situation (think very HNW or UHNW) with potential tax issues, trusts, estate tax concerns. Otherwise, with a quarter million in CDs, you can easily manage that yourself.

This must vary with office and rep.

In my experience the original quote was and is exactly the case. I am self directed at Fidelity (and Vanguard). I have someone assigned to me and the only time I see his name is if he suggests via email some kind of webinar. I contact him 1-2 times a year, usually to assist a Roth conversion and he is attentive and polite. Almost apologetically reminds me that he is reactive rather than proactive with me (must be the company line).

[HeavyChevy]

Fidelity is quite transparent with their pay structure.

https://www.fidelity.com/bin-public/060 ... sation.pdf

For this (me) self-directed investor, my rep gets paid ~$111 a year for my assets remaining with Fido. From the company, no direct expense to me. You can see from the schedules ( pg 12) that he would get a much higher multiple (~6.7X) if I had them managing my assets. (Along with substantial direct expense to me, of course).

[conservativeX2]

I have retirement and non retirement accounts with Fidelity. I have an assigned account representative and I don't pay a fee, however his picture is on my login page to make me feel safe! He has suggested several investment options, but never pressured me. He has also been quick to respond to my emails. I have had a couple phone conversations where he suggested Fidelity managed accounts, but I politely declined.

Why not do as Buffet: 90% S&P, 10% short term treasuries (VTI & VGSH). Depending on your age/risk tolerance you can adjust the percentages. I am overly conservative and have been hiding in money markets the last 12 months, but recently got back into BND. I have read many investment books and have yet to read a chapter, paragraph or even a sentence advocating paid investment services. My mother pays a guy but that is more of her age and generational beliefs (81 years old). Lord knows I have tried many, many times to convince her otherwise.

Best wishes and trust yourself for making the right decision to come to this forum.

[nedsaid]

If you need Advisory services from Fidelity, you can use Fidelity Go. All in costs are 0.35%, Fidelity uses zero expense ratio mutual funds for this service. No need to pay the 1.1% Advisory fee. Or do-it-yourself and save even more.

[nonnie]

I have retirement and non retirement accounts with Fidelity. I have an assigned account representative and I don't pay a fee, however his picture is on my login page to make me feel safe! He has suggested several investment options, but never pressured me. He has also been quick to respond to my emails. I have had a couple phone conversations where he suggested Fidelity managed accounts, but I politely declined.

Why not do as Buffet: 90% S&P, 10% short term treasuries (VTI & VGSH). Depending on your age/risk tolerance you can adjust the percentages. I am overly conservative and have been hiding in money markets the last 12 months, but recently got back into BND. I have read many investment books and have yet to read a chapter, paragraph or even a sentence advocating paid investment services. My mother pays a guy but that is more of her age and generational beliefs (81 years old). Lord knows I have tried many, many times to convince her otherwise.

Best wishes and trust yourself for making the right decision to come to this forum.

We have high six figures at Fidelity and also have an assigned representative. When we switched over last year to Fidelity they did make the pitch for paid advisory services and we politely declined. We then asked for a meeting with their fixed income specialist and that was quickly granted, representative also attended the meeting.
Recently received a call to schedule a meeting/Check up with our assigned representative and again politely declined but mentioned scheduling a meeting with regional fixed income specialist. Were contacted almost immediately to set up the meeting. We found that useful last year as we were new to Treasury investing and so we'll schedule a meeting this year.

Pretty sure we will be able to get complete rundown of debt ceiling, absolute info on interest rates for the next 6 months to 2 years and crystal ball fee will be minimum... (This is said in jest, sarcastically in case it's not clear but can't hurt to have a 15 minute meeting for free, advice is probably worth what I pay for it) Overall we are very pleased with Fidelity and help we receive when we have questions.

[Trance]

I have over $225k at Fidelity, mostly in cash (CDs) right now, but also have about $82k in retirement accounts. (I have most of my retirement savings in TSP, fwiw.)

I've been approached by my local Fidelity office about advisory services. Sounds like this would cost 1.1%, which seems steep to me, but some might think that is affordable, depending on how one looks at it. So far I've been doing DIY.

He told me that if I preferred to remain self-directed, I could still have him as a point of contact - it's really unclear to me what this would entail, but he basically described it as reactive instead of proactive.

Considerations:
-I really enjoy reading about investing and feel like I might now enough to do this myself.
- I also am humble enough to realize I might be missing some knowledge that would help me.
- Would prefer a model where I have a set amount I pay someone as a one-off to review my portfolio and make some suggestions.

I'd be grateful for thoughts and experiences with this, questions to ask, things to consider.

Thanks in advance for your thoughts...

Could always post here if you have any idea and want people to give some insight! A really simple place to start is to simply buy everything. For mutual funds at Fidelity that's 60% FSKAX and 40% FTIHX. Then of course you can go from there and decide to maybe do more american, or more small caps, or maybe bonds.

The important thing is that each time you have a question "well why this?" its a chance to learn by each category.