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July 27, 2016 at 10:32 AM
Fidelity Investments announced Wednesday the launch of its retail robo-advice offering Fidelity Go, which the Boston-based firm says was developed in collaboration with younger, digitally savvy investors.
Fidelity Go, which was in a pilot phase since late last year, offers a combination of a professionally managed portfolio, a digital dashboard, integration with Fidelity’s broader investment tools and services, as well as “an all-in cost” that Fidelity argues is “among the lowest in the industry.”
Rich Compson, head of managed accounts at Fidelity, said in announcing the launch that Fidelity Go “makes professionally managed portfolios broadly accessible by helping people move from saving to investing quickly and efficiently, with costs starting at approximately $20 a year.” Fidelity’s “goal is to help people meet their lifetime financial needs, and Fidelity Go is a new way for Fidelity to help digital-first investors and those just getting started.”
Fidelity Clearing & Custody told its RIA clients last November that it would wind down its relationship with Betterment by the end of 2015 and set up its own robo-type platform for advisors. The two entities now compete for advisors’ business.
A Fidelity spokesman told ThinkAdvisor on Wednesday that details about the robo-service Fidelity is developing for financial advisors will be available by year-end. “The goal is to offer an advisor-centric solution that is integrated into Fidelity’s technology platform for registered investment advisors, broker-dealers and banks.”
Fidelity Go touts features such as portfolios constructed, monitored and rebalanced over time by investment professionals — not simply by an automated “robo” algorithm — available at a minimum investment of $5,000.
Investors get a “transparent advisory fee” and underlying investment portfolios that include Fidelity Index Funds Premium Class and Institutional Class — which Fidelity argues are “some of the lowest cost funds” in the industry — as well as Blackrock iShares ETFs and muni bond funds for taxable accounts.
Current all-in costs, including the advisory fee and underlying fund fees, range from 0.35% to 0.40%, which Fidelity says “may vary over time” depending on the account type and portfolio chosen.
Kyle Ramsay, head of investing and retirement at NerdWallet, said that “with its all-in pricing around 0.35% – 0.40%, Fidelity Go is in line with the pricing of competitors.”
Here’s a sample page we generated for a taxable account to be opened with $50,000; the investor plans to add $250 a month and retire in five years. The Fidelity Go fee on the account, which could change if the investing strategy does, is $1.77 a month, or 4 basis points annually. Fund fees are extra.
While competitors like Betterment and Wealthfront “may have a lower sticker price, … that does not include the underlying fund expenses, which could be between 0.05% to 0.25%+, which make them almost equivalent” to Fidelity Go, says Ramsay.
