FSRankings had the opportunity to interview Arielle Schwartz, vice president of Managed Accounts for Emerging Investors. She spoke to us about Fidelity Go, the brokerage’s robo-advisory offering.
- We know Fidelity Go has an “all-in” fee. Do you show a consolidated view of expenses, from both the robo-advisor layer as well as the management fees of the underlying ETFs, so that consumers can understand the aggregate management fees they are paying?
Yes we show an estimate of the all-in fee with the breakdown of total estimated costs by net advisory fee, fund expenses and other (e.g. SEC) fees. This breakdown is on the Fidelity Go proposal page under “See the breakdown of your total estimated costs”. Clients tell us knowing what their total out-of-pocket expenses will be before they invest is very reassuring.
- What is Fidelity’s take on Fama-French / Smart Beta? Has your research uncovered any benefit to value, size, and momentum?
Fidelity Go is a simple, inexpensive and accessible solution designed for our younger and emerging investors. Fidelity Investments does offer Factor ETFs, and we are always reevaluating the portfolios in Fidelity Go, however our younger investors have told us that they have other key considerations that come before Factor Investing – such as help with setting budgets and establishing financial goals.
- Right now Fidelity Go doesn’t employ tax-loss harvesting, although there are tax-advantaged municipal bond funds. Are there any plans to change this, and what’s the strategy behind it?
While we do not currently offer tax-loss harvesting, we do offer tax advantaged municipal bond funds in our taxable portfolios because of the preferential tax treatment of their interest income. We do seek to offer our investors the best value and therefore are continually re-evaluating whether tax-loss harvesting may become a feature added in the future.
- How are most Fidelity funds distributed to retail investors (e.g. 401k plans, human RIAs, etc) and how does Fidelity Go affect those distribution channels? Have you had pushback from human RIAs?
Fidelity Go seeks to serve individual investors who come to us digitally for help with ongoing asset management. In addition to Fidelity Go, Fidelity Investments also offers an enormous spectrum of retail brokerage offerings directly to our customers. We do not see these offerings as competing directly with human RIAs or other institutional channels as they are typically meeting the needs of a different segment of investors.
- Some robo-advisors like Hedgeable have attempted to apply the latest exciting area – AI – towards portfolio management and security selection. What is your take on the role of AI in wealth management?
Fidelity is excited about the immense potential that advanced analytics and artificial intelligence offer to our industry and others. These capabilities will allow us to provide better value to our clients through not only wealth management but also in more intelligent and convenient servicing, engagement and value. That said, we know AI will never fully replace the human judgement and expertise of portfolio managers.
- Will Fidelity advisers proactively reach out to customers during times of market distress to coach its customers to stay in the market and/or disable access to client funds in times of financial distress?
Fidelity is always available to our clients during market volatility and we will always coach our clients on what is best for them in their unique situation. Market volatility is often the trigger for people to consider professional help with their investing, and Fidelity Go is an easy way for them to dip their toe in the water.
- The $5,000 account minimum is pretty low compared to most other brokers offering comparable services. What drove that decision?
For young and emerging investors, one of the most important factors in the consideration set for an account like this is the minimum to invest. They need to know that they can try the service without putting all of their savings into it. For that reason we are continually evaluating whether we should move the minimum investment amount for Fidelity Go to be even lower than it already is.