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Fidelity reps have been calling me and urging me to have my portfolio (either the IRA components or both the IRA and the brokerage components) managed by Fidelity. (I'm just learning about the details so I may be creating this thread a little too early.) The fees are around 0.7% to 1.2% annually. What I understand is Fidelity will utilize all sorts of mutual funds (including non Fidelity funds - you'd think Fidelity with all its funds, wouldn't have to use other firms' funds??) to get the most return for my portfolio. I went for a pre-interview and they concluded my risk level and personal situation would create a portfolio of about 70% stock funds and the rest bond funds (and maybe something else). I'm 48, confortable with growth but not aggressive growth anymore. Retirement is probably pushing 70 (though I have four daughters under 11 so I may retire closer to 97 years old....)
I am not sure how "cookie cutter" their management approach is. Is it simply a computer taking five or ten inputs and spitting out an asset mix? Is there human "work" being performed? I think the larger the portfolio, the more likely a real person will spend time on it. Fidelity keeps referring to the management as a team. Is the team simply a computer?
I have not managed my portfolio, I don't plan to.
For the most part I have created diversity in my IRAs and stuck almost entirely with S&P index funds in my taxable brokerage accounts. All of my funds have been Fidelity no load funds.
I did do a little reading on some investment forums and there were comments about Fidelity using loaded funds, thus creating additional fees on top of the management fees mentioned above. Some of those posters may be experienced fund investors and would naturally be against having someone manage their portfolio. I am not one of those guys.
I haven't found any metrics or gauges or benchmarks to determine if a Fidelity Managed Portfolio is worth it. How would I figure this out as everyone's portfolio would be sort of different? What are the consequences for Fidelity if they don't do a good job (don't at least beat the S&P for example on a all stock fund portfolio)? Since my portfolio would be a mix of stock funds and bond funds, there doesn't seem to be one benchmark to compare to???
Fidelity tells me this is not commissioned based - they are salaried.
I can understand Fidelity "pressuring" me, but I'll admit, my novice investing approach is unlikely to beat their experts even with the fees (management and potentially loaded fund fees). It's very tempting but I'm always skeptical of sales pressure.
This thread is more philosophical and not specific to Fidelity as probably other brokerages have these management services.
You'd have to ask them what their guarantees are, and what happens if they fail (I'd bet nothing). And also you'd have to check to see if the fees they charge are over and above the fees for the funds they chose.
Frankly, I'm not comfortable with other people managing my money. My tolerance for risk is higher, and I have to time to do the research myself, and make sure that my funds don't overlap much.
If you want a low fee non-managed portfolio of mutual funds go with no load Vanguard index funds -- best of the best, and index funds typically carry very low fees. Then all you'll have to do is rebalance yearly, lest one side or the other become too top heavy.
You'd have to ask them what their guarantees are, and what happens if they fail (I'd bet nothing). And also you'd have to check to see if the fees they charge are over and above the fees for the funds they chose.
Frankly, I'm not comfortable with other people managing my money. My tolerance for risk is higher, and I have to time to do the research myself, and make sure that my funds don't overlap much.
If you want a low fee non-managed portfolio of mutual funds go with no load Vanguard index funds -- best of the best, and index funds typically carry very low fees. Then all you'll have to do is rebalance yearly, lest one side or the other become too top heavy.
Become a Boglehead....
Yes, I have a lot in index funds - in my taxable accounts, but just about all are S&P 500.
The comments I mentioned above I think were from Boglehead. Thought I'd post on City-Data since I'm a member and subscribe to the Personal Finance forum. But I will check it out some more.
Wouldn't the pros have a reasonable likelihood to beat index funds?
You'd think so, but in a lot of cases, it's doesn't seem to be true. And one of the big reasons is fees. Actively managed funds churn a lot of stocks in and out. More fees, higher cost to the owner. And they'd have to beat the index by a lot to make up for those fees.
Tons of googled info using index funds vs managed funds.
But the most important thing in my opinion is to find an investment strategy you feel good about and stick to it. It's the flip flopping around different strategies that strangle investment growth, because you are churning your and incurring fees....
Fidelity reps have been calling me and urging me to have my portfolio (either the IRA components or both the IRA and the brokerage components) managed by Fidelity. (I'm just learning about the details so I may be creating this thread a little too early.) The fees are around 0.7% to 1.2% annually. What I understand is Fidelity will utilize all sorts of mutual funds (including non Fidelity funds - you'd think Fidelity with all its funds, wouldn't have to use other firms' funds??) to get the most return for my portfolio. I went for a pre-interview and they concluded my risk level and personal situation would create a portfolio of about 70% stock funds and the rest bond funds (and maybe something else). I'm 48, confortable with growth but not aggressive growth anymore. Retirement is probably pushing 70 (though I have four daughters under 11 so I may retire closer to 97 years old....)
I am not sure how "cookie cutter" their management approach is. Is it simply a computer taking five or ten inputs and spitting out an asset mix? Is there human "work" being performed? I think the larger the portfolio, the more likely a real person will spend time on it. Fidelity keeps referring to the management as a team. Is the team simply a computer?
I have not managed my portfolio, I don't plan to.
For the most part I have created diversity in my IRAs and stuck almost entirely with S&P index funds in my taxable brokerage accounts. All of my funds have been Fidelity no load funds.
I did do a little reading on some investment forums and there were comments about Fidelity using loaded funds, thus creating additional fees on top of the management fees mentioned above. Some of those posters may be experienced fund investors and would naturally be against having someone manage their portfolio. I am not one of those guys.
I haven't found any metrics or gauges or benchmarks to determine if a Fidelity Managed Portfolio is worth it. How would I figure this out as everyone's portfolio would be sort of different? What are the consequences for Fidelity if they don't do a good job (don't at least beat the S&P for example on a all stock fund portfolio)? Since my portfolio would be a mix of stock funds and bond funds, there doesn't seem to be one benchmark to compare to???
Fidelity tells me this is not commissioned based - they are salaried.
I can understand Fidelity "pressuring" me, but I'll admit, my novice investing approach is unlikely to beat their experts even with the fees (management and potentially loaded fund fees). It's very tempting but I'm always skeptical of sales pressure.
This thread is more philosophical and not specific to Fidelity as probably other brokerages have these management services.
Yep, they keep calling me and part of me wants to sign up with them. I'll admit, I spend no more than a couple hours a year on my investments. When I get a lump sum I usually just add it to existing funds (in my retirement accounts). In my brokerage (taxable) I pretty much stick to index funds. If I did go with the managed portfolio, I'd only have them work on my IRAs.
I haven't read too much about this on City Data but I'll keep working the internet for other opinions.
do yourself a favor for not much money subscribe to fidelity insight newsletter and you will do fine..i have been a subscriber since 1987 and have seen a 1200% gain... they update you with info or changes every friday and have different model portfolios you can use...
its so nice even as a seasoned investor as i am to have someone to hold your hand and keep you from doing the wrong thing like bailing and heading for the exits sometimes....
do yourself a favor for not much money subscribe to fidelity insight newsletter and you will do fine..i have been a subscriber since 1987 and have seen a 1200% gain... they update you with info or changes every friday and have different model portfolios you can use...
I'm sure there are lots of things I can do myself to manage my portfolio - but they all seem to require a lot of time - something I don't have. That's why the PAS is attractive. My other idea (even for my tax deferred accounts) is to just stick everything in the S&P500 index funds like my taxable accounts and forget about it.
I've never looked at the managed funds, but i'm sure it computer allocated cookie cutter. The question is will the index fund (with its fee thats low) do better then there managed funds (with there compounded fees' 1 for the fund(s) that they put you in, and the mgmt fee) that could eat 3-4% a year of your returns. Since you seem to be a invest it and forget it. you can do index funds, or Age Target fund that change the risk factors so as you get close to the date you risk drops. Most age funds are High in stock in early years and move to bonds as you get close to the target date,
I'm sure there are lots of things I can do myself to manage my portfolio - but they all seem to require a lot of time - something I don't have. That's why the PAS is attractive. My other idea (even for my tax deferred accounts) is to just stick everything in the S&P500 index funds like my taxable accounts and forget about it.
Glad to see this resurrected.
I recently attended a workshop by Fidelity and I was very impressed by my advisor, who tends to treat me like a fee-only CFP as opposed to a salesman. He discussed the Fidelity Freedom Funds and while they sounded okay to me, I chose to stay with my mix which consists of a balanced portfolio of small and mid cap funds, an international fund, bonds and the large portion of it in an S&P 500 index fund. I have done well with this mix that I started about 10 years ago, even in light of the recession.
I pay so little in terms of management fees in my 401(k) that it doesn't make sense for me to venture into the realm of a self-directed account, either. What's the point of paying higher management fees and loads only to have more options? It's paralysis by analysis for me. I don't know jack about these fund managers or their ability to beat a particular benchmark, even after reading a prospectus. Sure, there are some attractive funds out there (index funds that track the small cap, mid cap and international funds) and I will consider bringing some of them into my Roth IRA.
Right now, my plan is to simply rebalance quarterly while sticking with a plan that stresses long-term asset allocation, which is where I expect most of my gains to come from. I think very little gain comes from picking a "winning" fund over another. Fund managers have their run in the sun. Another thing we will never know is if the fund manager is delegating decisions to staff that may want to change up the fund's strategy (because we know how fun it is to read prospecti every time we get one. Mine end up in the circular file more often than not.) So I am keeping with my long term plan and chosing index funds when possible. I have a good 35 years before I retire. I'm not totally hands on and believe in efficient markets which is why index funds still make sense to me.
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