May 8, 2016
After reading this Moringstar article,
Can't We All Just Find Out What We're Paying?
Please make this into a madatory requirement especially for so called "Professionaly" managed accounts and especially Fidelity Investments where their managed accounts are rarely any better than index funds, and certainly not any better than Vanguard Funds. All I know from my Fidelity Blackrock managed account is a lot of activity and the management fee is 1% which does not show anything on any statement and of the total account value. So,a $500,000 account cost an alarming $5,000 in annual costs for something that is only producing about 4.5% minus 1% in reality my money is only earning 3.5% annually. No wonder Fidelity advisory services are rarely recommended and they have a strong dislike for Vanguard. Also, it gets worse to make it more confusing is the managed fee in addition to the individual "expense" fee of each ETF which they constantly trade on a regular basis according to market conditions and Blackrock ETFs have expense fees that are typically higher than Vanguard and others. In addition, Blackrock ETFs with the exception of a few are rarely top performers. If they are making money using my money, I demand to have the right to know what it is costing me and make the decision for myself whether to use their "advisory" services are worth it as they always can use the statement that their is no guarantee of the performance too which is also unsettling. Please make this a mandatory requirement. I already clearly stated to Fidelity that I would give them a 6 month trial period and if they underperform what they state their target is, I'll switch to someone else or manage the account myself. Fidelity was also forced a while ago to lower their regular expense fees on their mutual funds and they did on some particularly the index funds to compete with Vanguard(still not enough compared to Vanguard). I have an account with Fidelity but the part that I manage is made up of Vanguard ETFs except for a few Fidelity funds one is an index, the rest is individual high quality dividend stocks and other ETFs. Fidelity is trying desperately to compete in the ETF segment which is why they teamed up with Blackrock and launched the new advisor service using Blacrock exclusively. But for a $500,000 account a cost of $5,000 per year in addition to the ETF expense fees? I am paying twice for management, one for the ETF expense management and the again for the advisor management. It should be one or the other, not both. If the average of all the ETF expenses are 1% and the advisor fee is 1% then I am paying at least 2% in fees. So a 4.5% annualy yield is really 2.5%. However, they do list the gains and it is easy enough to see the percent gain that excludes all expenses ut would be better if the management fees were less. Thats a lot of expenses for just a 2.5% growth. Granted I like Fidelity for their other services and they do have real CFPs and must adhere to Fidelity fidusiary standards which is a big plus with real brick and morter finance locations but low cost fees and a statement listing the acual cost and return needs to be listed in the statments. Mutual funds especially managed accounts should be required list separately all expenses just like anything else which is typically a total cost of the service provided and ranked accordingly. Just like cost basis, this should be the responsiblity of all investment companies so people can see what it is costing for someone the "manage" their money.