Fidelity's Self-Directed Investing: Exploring The Pros And Cons

Fidelity offers a range of investment options, including the opportunity to have a robo advisor handle your investments for you. With Fidelity Go, you can get started with no minimum account balance and no advisory fee for balances under $25,000. After answering a few questions about your financial goals, the robo advisor will suggest an investment strategy and then manage your money in accordance with your goals. You can also access 1-on-1 financial coaching once your account reaches $25,000.

Fidelity Go: a robo advisor that makes investing quick, easy, and affordable

Fidelity Go: a robo-advisor that makes investing quick, easy, and affordable

Fidelity Go is a robo-advisor that provides a digital financial service to make investing quick, easy, and affordable.

Fidelity Go starts by asking you a few questions about yourself and your financial goals. Based on this information, it suggests an investment strategy for your account. You can then add money to your account, and Fidelity Go will manage your money in accordance with your goals, helping you track your progress.

Investment strategy

Fidelity Go will monitor and adjust your investment strategy over time based on the updates you make to your information and other relevant details. The service also includes personal financial coaching, where trained advisors can guide you through your options and help you stay in control of your finances.

Costs

Fidelity Go offers tiered pricing based on your account balance. There is no advisory fee for balances under $25,000, and a 0.35% advisory fee for balances of $25,000 or more. There is no minimum amount required to open a Fidelity Go account, but you need at least $10 in your account to start investing.

Benefits

Fidelity Go was awarded Best Robo out of ten online brokers in 2023, demonstrating its effectiveness as a robo-advisor. The service provides professional management of your money, monitoring the markets, and automatically rebalancing your portfolio to keep you on track. It also offers integration with other Fidelity accounts and human oversight of portfolio allocations.

Limitations

While Fidelity Go is a strong choice for investors seeking an all-digital robo-advisor, it does have some limitations. The company does not offer tax-loss harvesting, and there are no speciality portfolio or socially responsible investment options available.

Fidelity Managed FidFolios: professionally managed stock portfolios with a $5,000 minimum investment

Fidelity Managed FidFolios is a professionally managed stock portfolio service. It offers personalized portfolios of individual stocks with a $5,000 minimum investment. Portfolios are managed by a team of professionals, with tax-smart strategies built-in.

Fidelity Managed FidFolios is a good option for those who want to collaborate directly with an advisor. The service is also suitable for those who want to invest digitally and have access to online planning resources to get clear next steps and track their progress.

Fidelity Managed FidFolios is part of a range of options offered by Fidelity to help make investing clear and straightforward to help customers reach their goals. The company offers digital investment management and advice, digital investing plus access to coaching, and the opportunity to work with a Fidelity advisor.

Fidelity Go, for example, is a robo advisor that builds a strategy to meet your needs. There is no minimum to open an account, and once your account reaches $25,000, you'll have access to 1-on-1 financial coaching.

Fidelity also offers Portfolio Advisory Services accounts, which are personalized multi-asset class portfolios. These provide exposure to a mix of stocks and bonds based on your time horizon, comfort with risk, and investment preferences, with tax-smart strategies built-in.

Additionally, Fidelity offers separately managed accounts, which are targeted single-asset class portfolios. These professionally managed portfolios generally consist of individual stocks or bonds and are designed to meet specific investment objectives, with built-in tax-smart investing strategies for stock portfolios.

Work with a dedicated advisor: a customised plan to help grow and protect your wealth

Working with a dedicated advisor means you'll have a personalised plan to help grow and protect your wealth. Your advisor will get to know you and what's important to you, and together, you'll create a plan that's tailored to your needs. This includes comprehensive planning, covering topics like retirement, taxes, healthcare, and estate planning.

Fidelity Wealth Management offers access to a dedicated Fidelity advisor who will work with you to create a plan for your full financial picture. They will collaborate with you on changes as your needs evolve, helping your wealth reach its full potential.

Comprehensive Planning

A dedicated advisor will help you build a personalised plan that takes into account your full financial picture. This includes topics such as retirement planning, tax strategies, healthcare, and estate planning. By understanding your goals and priorities, your advisor can offer customised investment advice and strategies.

Personalised Investment Management

Your advisor will manage your investment portfolio, taking into account your preferences and feelings towards risk. They will actively monitor and rebalance your portfolio to help grow and protect your wealth. This means they will buy and sell investments to maintain your chosen investment strategy.

Tax-Smart Strategies

If you're concerned about the impact of taxes on your investments, Fidelity advisors can apply tax-smart investment techniques to help you keep more of what you earn. This includes tax-loss harvesting and other strategies designed to minimise taxes on your investments.

Access to Specialised Offerings

Fidelity advisors can connect you with third-party investment advisors who offer specialised services. These include integrated tax planning, fully customisable investment solutions, and strategies for concentrated positions. They can also provide trust solutions for inheritance and estate planning, acting as trustees or co-trustees.

Fixed Income and Bond Investing

Fidelity advisors can help you integrate bonds and CDs into your investment approach. They will work with you to develop a bond strategy that aligns with your financial goals and alert you to new bond issues that meet your unique needs. With access to a wide range of individual taxable and municipal bonds, CDs, and online analytical tools, they can help you construct a tailored portfolio.

Regular Check-Ins and Adjustments

Your advisor will regularly check in with you to see if anything major has changed in your life. If your needs or goals evolve, they will adjust your investment strategy accordingly. This ensures that your financial plan remains aligned with your current situation and priorities.

Portfolio Advisory Services accounts: a comprehensive, multi-asset class approach that provides exposure to a mix of stocks and bonds

Portfolio Advisory Services accounts are a type of investment account that offers a comprehensive, multi-asset class approach to investing. This means that your money will be invested in a diverse range of assets, including stocks, bonds, and other investment options, to help you reach your financial goals while minimising risk. Here's a more detailed overview of what this type of account entails:

Understanding the Basics

Portfolio Advisory Services accounts are designed to provide a comprehensive investment strategy that takes into account your financial goals, risk tolerance, and time horizon. By diversifying your investments across multiple asset classes, these accounts aim to balance risk and return, so you can feel confident that your investments are working hard for you without taking on unnecessary risks.

The Benefits of Diversification

By investing in a mix of stocks and bonds, Portfolio Advisory Services accounts offer several benefits. Firstly, they provide exposure to different types of assets, each with its own unique characteristics and potential returns. Stocks, for example, have historically offered higher returns but come with more volatility, while bonds offer more modest returns with lower risk. By combining these asset classes, you can strike a balance between risk and reward.

Additionally, diversification helps to reduce the impact of market fluctuations. When one asset class performs poorly, having investments in other areas can help offset those losses and provide a more stable overall return. This is a key advantage of Portfolio Advisory Services accounts, as it allows you to capture gains in some areas while limiting potential losses in others.

Active vs. Passive Management

It's important to understand the difference between active and passive portfolio management. Active management involves strategically buying and selling stocks and other assets to try to outperform the broader market. This approach can be more costly and may not always deliver better returns. On the other hand, passive management aims to match the market's returns by replicating a specific market index or benchmark. This set-it-and-forget-it strategy often involves investing in index funds and is typically associated with lower management fees.

Customisation and Flexibility

Portfolio Advisory Services accounts can be customised to meet your specific needs and goals. You can adjust the mix of stocks and bonds based on your risk tolerance and financial objectives. Additionally, these accounts offer flexibility, allowing you to make changes to your investment strategy as your circumstances evolve. This adaptability ensures that your portfolio remains aligned with your short-term and long-term goals.

Professional Guidance

When you open a Portfolio Advisory Services account, you'll have access to professional guidance from licensed portfolio managers. These experts will work on your behalf, using their knowledge and experience to make investment decisions that align with your goals and risk tolerance. They will monitor market trends, economic shifts, and other factors to inform their investment choices. This level of expertise can be especially valuable for those who don't have the time or expertise to manage their investments independently.

Suitability and Considerations

While Portfolio Advisory Services accounts offer a comprehensive approach to investing, it's important to consider your unique circumstances and goals before opening an account. These accounts are typically well-suited to long-term investors who want a hands-off approach to investing and are comfortable with a certain level of risk. However, it's crucial to assess your own risk tolerance and financial situation before making any investment decisions.

Separately managed accounts: targeted single-asset class portfolios, generally consisting of individual stocks or bonds

Fidelity's Separately Managed Accounts (SMAs) are professionally managed portfolios generally consisting of individual stocks or bonds. They are designed to meet a specific investment objective and can be personalised to your preferences and tax situation.

SMAs are a great alternative to mutual funds if you can afford them. They offer more customisation in investment strategy, approach, and management style than mutual funds. They also offer direct ownership of securities and tax advantages over mutual funds.

SMAs are unique to a single account, meaning that each portfolio is unique to a single account holder. This means that the investment decisions made for your account may differ from those made for other accounts.

SMAs are targeted towards wealthy (but not ultra-wealthy) retail investors, with at least six figures to invest. The price of entry starts at $100,000, with account minimum balances between $100,000 and $5 million.

Fidelity offers a wide range of SMAs focused on either stocks or bonds. You can work with a Fidelity advisor to determine which strategy is best suited to your needs.

Frequently asked questions