The company’s retirement portfolios cost 0.35% of your portfolio balance per year. Its taxable accounts are slightly more, at 0.40%. Fidelity Go uses index funds, primarily its own, to build portfolios that a human investment management team monitors and rebalances. The advisor has a $5,000 minimum.
Jan. 1, 2017
- Management fee: 0.35% to 0.40%, includes investment expenses.
- Account minimum: $5,000.
Fidelity Go is best for:
- Current Fidelity customers.
- Hands-off investors.
- Low-cost investment management.
- Human oversight.
Fidelity Go at a glance
|Account management fee||0.35% for retirement accounts; up to 0.40% for taxable accounts. Includes investment expense ratios|
|Investment expense ratios||Included in all-in fee|
|Portfolio||Retirement portfolios include up to seven Fidelity index funds; taxable portfolios add BlackRock iShares ETFs|
|Account fees (annual, transfer, closing)||None|
|Accounts supported||• Individual and joint non-retirement accounts
• Roth, traditional and rollover IRAs
• No 401(k) management
|Tax strategy||Not offered|
|Automatic rebalancing||Free on all accounts; rebalancing is done by investment managers rather than automatically|
|Customer support options||Phone support 24/7; live chat Monday - Friday 8 a.m. to 8 p.m. Eastern
Where Fidelity Go shines
Low cost: A Fidelity Go account will cost 0.35% for retirement accounts and up to 0.40% for taxable accounts, which incorporate BlackRock iShares exchange traded funds in addition to Fidelity index funds. The company returns all of its revenue from the Fidelity funds used and a large portion of its revenue from the BlackRock funds back to the customer in the form of a variable fee credit to achieve that all-in cost, inclusive of investment expenses.
Fidelity is one of the first online advisors to offer its service for an all-in fee. You know exactly what you’re paying when you sign up for this service. (It’s fair to assume many people sign up for a robo-advisor not realizing they’ll be paying investment expenses in addition to the advertised management fees.)
Fidelity integration: Fidelity’s existing retail managed accounts business has more than 500,000 clients. The company as a whole holds more than $2.1 trillion in managed assets. Customers who already have an IRA or taxable account with Fidelity can easily take advantage of this new offering. Fidelity Go is not available for 401(k)s held at the company, though you can roll over your old 401(k) into a Fidelity Go account.
Online advisory clients also get access to Fidelity’s financial planning tools and apps, as well as the company’s customer support and educational resources, both of which are strong. And investors can fund their accounts with the 2% cash-back rewards earned from the Fidelity Rewards Visa Signature card.
Human management: It’s common among this new crop of broker-launched online advisors to pair computer algorithms with dedicated financial advisors. Fidelity Go takes a different approach: The portfolios are built and monitored by a team of humans from Geode Capital Management, an institutional investment advisor. (Geode also serves as the sub-advisor on many of Fidelity’s funds.) The advisors also rebalance portfolios as needed.
That oversight makes Fidelity Go a good choice for those who are reluctant to hand off all of the control to a robot — though it’s worth noting that those advisors aren’t there to answer your phone calls. Fidelity Go has phone support staffed by customer service representatives 24/7.
Like other advisors, it uses a questionnaire, designed to gauge risk tolerance, goals and financial standing, and computer algorithms to match investors to a portfolio. Before signing up, users get a portfolio recommendation and an estimated future value of that portfolio, based on information about planned monthly contributions submitted in the questionnaire.
Account minimum: Among Fidelity’s broker peers, a $5,000 minimum on a robo-advisor offering is competitive, even low: Vanguard Personal Advisor Services requires $50,000 and E-Trade Adaptive Portfolio requires $10,000, in part because the service incorporates actively managed mutual funds into some portfolios. Schwab Intelligent Portfolios, the robo-advisor from Charles Schwab, also has a $5,000 minimum.
There is, however, a shift when you compare the minimum to independent advisors: Betterment and WiseBanyan require no initial investment; Wealthfront has a $500 minimum.
Where Fidelity Go falls short
Tax strategy: There isn’t one, essentially. The company doesn’t offer tax-loss harvesting, one of the features that makes robo-advisors stand out for taxable accounts. Fidelity does use BlackRock iShares ETFs and tax-advantaged municipal bond funds in taxable accounts, which can help minimize your taxes.
Cash funding only: The company doesn’t allow transfers of securities in kind, even by existing Fidelity customers who already hold the funds used in Fidelity Go’s portfolios. You must sell all securities before enrolling in the service.
Is Fidelity Go right for you?
If you’ve been wanting to test the robo-advisor waters but you feel more comfortable with an established broker, Fidelity Go has a lot to offer. The fees are competitive, and the portfolios are well-diversified and closely monitored by real live humans. There’s also a low account minimum to help you get in the door, especially compared with other broker-owned online advisors.
Investors with taxable accounts, however, will miss the tax-loss harvesting offered by other robo-advisors. Also, we wish Fidelity Go would make it easier to transfer securities — or at least facilitate the sale of them before transfer, as E-Trade Adaptive Portfolio does — especially from existing Fidelity accounts.
Updated Jan. 3, 2017.