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Fidelity Plan to Combine Robos Makes a Lot of Sense, Tech Experts Say

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What You Need to Know

  • Fidelity confirmed Monday it plans to merge its automated Fidelity Go and hybrid Personalized Planning & Advice businesses, effective Nov. 1.
  • The firm will offer Fidelity Go with no advisory fee for accounts under $25,000.
  • Accounts over $25,000 will be charged 35 basis points annually.

After Fidelity Investments on Monday confirmed it will merge its automated Fidelity Go and hybrid Personalized Planning & Advice robo-advisor businesses in a move that will become effective Nov. 1, tech experts weighed in, calling it a sensible move.

“We are always evolving our offerings to meet customer needs,” a Fidelity spokesperson told ThinkAdvisor on Monday.

“With this change, we will extend the benefits of Fidelity Go for younger and emerging investors through no advisory fee for accounts under $25K, and provide the coaching and planning of Personalized Planning & Advice at a new lower price for investors with accounts over $25K,” the spokesperson added.

Accounts over $25,000 will be charged 35 basis points annually, the spokesperson confirmed.

Fidelity Go currently costs $3 a month on accounts with balances under $50,000 and 35 basis points on accounts with more than $50,000. Planning & Advice, meanwhile, charges 50 basis points.

Because clients with $25,000 to $50,000 will be charged more under the new fee structure for the merged platforms, Fidelity is waiving fees for them for the first six months, the firm’s spokesperson confirmed.

Barron’s and Financial Advisor IQ/Ignites reported Friday that Fidelity intended to merge the two robo-advisor offerings, citing regulatory filings.

“I think this move makes a lot of sense now that the industry has years of experience with this advice-driven technology,” Timothy Welsh, president and founder of consulting firm Nexus Strategy, told ThinkAdvisor.

“Stand-alone robot solutions confuse your message by having multiple names, brands, and distribution strategies, when it is really just a subset of financial advice and consumer preferences in how they want to interact with you,” he said. “It’s a marketing principle that the more unified and simplified your brand messaging is, the better outcomes you will achieve.  Definitely one of those ‘less is more’ strategic approaches.”

Agreeing, Joel Bruckenstein, Technology Tools for Today (T3) head, told ThinkAdvisor: “It sounds like a sensible plan. The technology world is evolving rapidly, and it sounds like Fidelity is evolving as well. I have long believed that just providing investment advice is not sufficient for the next generation of investors. Financial advice is key. Your investments must be aligned with your financial goals.”

Pointing to Fidelity’s plan in a tweet on Monday morning, Michael Kitces, head of planning strategy at Buckingham Wealth Partners, noted that Fidelity was “actually ending pure robo, & rolling into their human advisor offering “Fidelity Personalized Planning & Advice.”

Vanguard has a similar offering, he pointed out.

Planning & Advice now requires clients to have an account balance of at least $25,000, while Fidelity Go has no minimum.

The merged platform will also offer clients nondiscretionary financial planning services, a new option targeted at those who are retired or near retirement, to those with at least $25,000 in a Fidelity Go account, the reports had said.

Fidelity launched Fidelity Go in July 2016. The robo-advisor platform was developed in collaboration with younger, digitally savvy investors, the Boston-based firm said at the time.

In late 2021, the research firm Backend Benchmarking reported that Fidelity Go had been one of the best performing robo-advisors over the past five years, with average annual portfolio returns of 9.67%.

In July 2018, Fidelity launched Fidelity Personalized Planning & Advice, an enhanced workplace advice and managed account offering designed to help individuals create, implement and track a holistic financial plan. Available through a workplace savings plan, that solution combines a personalized digital experience, discretionary investment management, ongoing support and access to a team of professional planning consultants to help ensure participants stay on track with their financial goals, even as their situations evolve.

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