Financial experts - fees for Fidelity accounts?

[luvavacation]

DH inherited an account with Fidelity a few months ago. It is called an "Advisor Managed Brokerage". It isn't a million dollar account, but it is 3X our yearly income, so that makes retirement a little less scary!

Last week, I was looking at the account online, and noticed a fee of almost $1,000 for a quarterly "Advisor Fee". I have a call in to the advisor right now to explain what this entails, but he is on vacation. Of course he is, when I have a question!

Anyway, is this normal? Knowing we will be paying almost $4,000 per year for someone to have their name on our account as an advisor, even though we will not do anything with the account, just doesn't make sense.

We have always been frugal, and for us, that $4,000 is a lot of money! DH and I have never had investment accounts, our home has always been our big investment. This is all new to us. Hopefully someone here has some experience and can answer a question we have regarding this account. If this is just how it is when you have investment accounts, then so be it, but I still won't like it!

 

[java]

Yes that is what you are paying for- you can switch to general fidelity funds (mutual funds) that won't have a personal advisor and will charge lighter fees if any- we don't pay as our account has been there for a long time. No transaction fees either. Check out what your holdings are. I am assuming they are individual stock holdings- thus the advisor. (think Stock Broker)

Oh and by the way call the guy you are paying to watch the account and ask him to change it! LOL!

 

[crjack]

Hi luvavacation,

Even though your advisor is on vacation, you should still be able to get the information you need from Fidelity.

This account is most likely is being "managed" by the advisor and the fee is based on a % of the account value. (Again, confirm all details with Fidelity and I find their service to be excellent)

The higher the value of the portfolio, the higher the fee. The person who established the account would have worked with the advisor to discuss overall goals, growth, risk tolerance, etc.

The advisor uses those guidelines to make adjustments constantly based on market conditions.

You typically have the option to do it yourself but you have to feel comfortable doing that. Yes the fees see high but you have to consider what the value of the account would be without the work of the advisor.

Now that the account belongs to you and your Dh it is something for you to decide for yourselves and of course discuss all options with the advisor. Your age, other assets and retirement goals should all be considered.

 

[RitaE]

just to note - you can put it in a regular Brokerage Account that holds mutual funds, stocks, bonds and other items and not pay a management fee.

A standard brokerage account isn't limited to just mutual funds.

I think my the question is, did the advisor earn that $1000 fee? What moves did he make, were they solid moves, and would you have been able to equal his results on your own without the advice.

If you decide to stay with him you also need to be clear what restrictions are on his actions without your consent? Is he required to EVER notify you and get agreement before he starts buying and selling and moving money?

 

[luvavacation]

Thanks for the information. I like being a bit informed before I start talking to the broker!

DH's dad had a seat on the Chicago Board of Trade and did very well in the market, but DH never had any interest in it. My parents never were in a position to know or do anything with the market, so this is certainly all new to us. I certainly don't want to come off as an idiot when speaking to whomever I need to speak with, hence why I have been trying to learn as much as I can on my own. I am sure I don't have the knowledge nor capability to make any type of decision regarding what should and should not be done with sums of money, but I am cheap enough that I don't want to pay someone unless I know exactly what they are doing and feel they are worth it!

Personally, I just want to go and buy a new house and put the rest in the bank, because hey, I may not make much of anything in the bank, but I also won't lose anything! And this is why I am not a stock broker/financial advisor!

 

[java]

Sorry yes I should have said it could be a regular brokerage account without an advisor-I prefer the mutual fund option because I am not paying for trades and I get a variety in my portfolio and someone is overseeing the fund- so I am getting the benefit of the manager in a way. JMHO.

 

[Sossy]

I have a managed brokerage account too that I inherited and recently went in to talk about the managers of my account. Your advisor may be out of the office, but someone else there should give you details on the fee rates. If not, consider finding a new office! The manager does buy/sell for you based on the risk and goals set for the account.
I would suggest you make an appointment to go in and talk through what you have and what they are doing with it. It is obviously enough money that you should know what is happening! Any good advisor can explain the basics of what happens and help you change the risk levels etc if you need to. Remember that you are paying them for a service and you deserve to understand and get what is right for you.
By the way, a managed account with a decent amount in it turns out to be much like a mutual fund in practice. You pay a set % fee on the value of the portfolio and someone or a team is buying and selling. The difference is that for a fund you own shares in the fund and with a manager you actually own the stocks. If for some reason you wanted to buy or sell something you don't like this is much easier.

 

[Cheshire Figment]

Normally in a "managed account" the adviser will make trades and the firm does not charge any commissions on either sales or purchases.

It is to their advantage to make as much money as possible for you as their fee is based as a percentage of the market value of your investments at the end of each calendar quarter.

If you decide you want to manage the account yourself they will not chrge the quarterly fee but you will have to pay the trade commissions.