Fidelity Personalized Planning and Advice offers robo-investing plus unlimited financial planning and coaching.
In this article, I’ll explain why money expert Clark Howard prefers the hybrid options at Vanguard and Schwab to Fidelity’s offering and show you how small the differences are between the three.
- What Is Fidelity Personalized Planning and Advice?
- How Does Fidelity Personalized Planning and Advice Work?
- Where Fidelity’s Hybrid Shines
- Where Fidelity’s Hybrid Falls Short
- What Do I Get as a Fidelity Personalized Planning and Advice Customer?
- Is This a Robo-Advisor or a Financial Advisor?
- Other Financial Advisor Options at Fidelity
What Is Fidelity Personalized Planning and Advice?
| Advisory Fees | Weighted Average Expense Ratio | Minimum Deposit | 3-Year Annualized Return | Account Types |
|---|---|---|---|---|
| 0.50% | 0.00% | $25,000 | 3.09%* | Taxable, Retirement |
*Based on Backend Benchmarking’s Fourth Quarter 2022 Robo Report. Fidelity’s robo-advisor recommends different portfolios to different clients. Your actual results will vary based on the portfolio option you select as well as future market performance.
Founded in 1946, Fidelity Investments held $4.3 trillion in assets under management as of March 2022, making it one of the largest investment companies in the world.
Arguably the best all-around investment firm for the typical retail investor, Fidelity gives its customers strong financial advisor options.
Fidelity Personalized Planning and Advice is the most accessible of those. For an investment of only $25,000, customers get a customized financial roadmap, unlimited coaching from a team of financial advisors, digital financial planning tools and investing through Fidelity Go, the company’s robo-advisor.
Clients pay a 0.50% annual fee to Fidelity, which is an all-in cost.
Although that’s a good option, Clark prefers Vanguard’s Personal Advisor Services (PAS). Vanguard’s product requires a $50,000 minimum investment but charges 0.30% annually plus an average expense ratio of 0.07% for an all-in cost of only 0.37%.
Fidelity’s hybrid option has outperformed Vanguard’s by 0.33% on an annual basis in the last three years, according to Backend Benchmarking’s Fourth Quarter 2022 Robo Report. Vanguard’s financial planning services used to be more involved, but Vanguard moved some of its custom financial planning to a higher tier of minimum investment money.
Fidelity Go Earns Pair of Awards
Backend Benchmarking’s Fourth Quarter 2022 Robo Report awarded Fidelity Go, the underlying robo-advisor, with a pair of runner-up awards in these categories:
- Best robo for performance at low cost
- Best for first-time investors
Backend Benchmarking lauded Fidelity for a “top-quartile long-term performance thanks to a simple and elegant portfolio that tilts towards large-cap U.S. stocks, which have performed well on a relative basis.”
Fidelity boasts below-average allocations in international and small-cap stocks, which underperformed “significantly” in the last several years, and fixed income entirely allocated to municipal bonds, which were the top-performing fixed asset class in the last three years.
With zero-expense funds available, it’s also “especially attractive for those with small sums to get started” investing.
How Does Fidelity Personalized Planning and Advice Work?
The start of a relationship with a financial advisor can be an enjoyable time: It’s all about working to reach your goals and dreams.
To get started with the Fidelity process, you answer a series of questions about your finances. Fidelity’s robo-advisor then recommends an investment portfolio based on your answers.
You’ll be able to discuss your goals with a human financial advisor. Depending on whether you’re saving for retirement, trying to buy a house or something else, he or she will work with you on creating a budget and building a holistic financial strategy that will give you an even better chance of reaching your goals.
Fidelity will provide ongoing access to financial coaching around specific topics that interest you. An advisor also will review your progress periodically.
Where Fidelity Personalized Planning and Advice Shines
Fidelity Personalized Planning and Advice’s benefits include:
- Inexpensive access to financial advice. Given that the typical benchmark for financial advisors is 1% annually, Fidelity’s 0.50% fee is a good deal.
- No expense ratios. Fidelity may be the most fee-averse major investment company, which is terrific for its customers. That extends to its robo-advisor. Fidelity doesn’t charge any expense ratios. Its 0.50% annual fee is steeper than a few of its competitors, but some of them charge additional costs which can take some digging to ferret out. Doing away with expense ratios makes your all-in costs with Fidelity’s hybrid financial advisor less expensive.
- A focus on coaching. As you can tell from browsing Clark.com, personal finance is a large area of interest for us, and that includes a ton of subtopics. If you’re new to working with a financial advisor, pinpointing the areas with which you need advice can be overwhelming. Fidelity does a nice job of structuring its client resources around explicit, focused areas. You can schedule a time to speak with an advisor on a number of topics. Since Fidelity provides plenty of suggestions about those topics for you, it’s easy to decide where you need some coaching and when you’d like to get it.
- Strong planning tools. Fidelity Spire is a relatively new and well-received app. It’s the prized cog in Fidelity’s digital financial planning tools. I’ll go into more detail later.
Where Fidelity Personalized Planning and Advice Falls Short
Fidelity Personalized Planning and Advice’s downsides include:
- No Certified Financial Planners. Certified Financial Planners are required to meet rigorous requirements and get continuing education. The advisors you’ll get through Personalized Planning and Advice must be fiduciaries. But they aren’t required to have the same level of credentials as Fidelity’s biggest competitors in the hybrid space.
- No tax-loss harvesting. Many robo-advisors offer tax-loss harvesting to customers. Some require a minimum investment amount in order to access it. However, it’s not available at all through Fidelity’s product. Tax-loss harvesting helps lower the tax burden for clients.
- Can fund only with cash. In many cases, clients can meet investment minimums via a combination of assets and cash. That’s not true for Personalized Planning and Advice. Even if you hold assets within the Fidelity ecosystem, you can’t use any of it toward the $25,000 minimum requirement with one notable exception: Fidelity Flex funds. You’ll otherwise need to fund your account in cash.
What Do I Get as a Fidelity Personalized Planning and Advice Customer?
Fidelity Personalized Planning and Advice customers get three main benefits:
1. Guidance From a Human Financial Advisor
As I mentioned earlier, Fidelity focuses on coaching at this advisor tier. You can schedule unlimited one-on-one phone or video calls on these specific topics:
- Smart spending and saving habits
- Preparing for unexpected costs
- How much money you need to retire and ways to save
- Designing an investment plan to match goals and priorities
- Reducing debt
- Measuring progress
Fidelity’s website provides some examples of questions you can ask such as whether you’re financially ready to have kids and how much money you should save every month in your 401(k).
2. Robo-Investing
One of the things I love about Fidelity is that it cuts out more of the “hidden” fees than its competitors.
The differences in overall cost between hybrid advisors at Fidelity, Vanguard and Schwab are minimal. But Fidelity doesn’t charge expense ratios for its robo-advisor, so its annual fee is an all-in cost.
The Fidelity Go robo-advisor slants toward stock in large-cap United States companies, producing good returns in its relatively short history.
A team of humans also handles the day-to-day investment and trading decisions for Fidelity Go, so it isn’t an algorithm-only product.
3. Digital Planning Tools
Fidelity houses its digital planning tools within a mobile app called Fidelity Spire. It’s an education-focused app that dispenses ample content, so you’ll most likely find information that’s relevant to your goals.
Fidelity Spire also models your financial goals. That means it runs simulations based on your inputs to give you a percentage of probability that you’ll achieve your goal. You can change the inputs, such as timeline and monthly savings amount, to see how those changes impact your chances of success.
Spire also provides tracking for your spending and investments so you can monitor your overall finances in the same place that you’re tracking your goals.
Is Fidelity Personalized Planning and Advice a Robo-Advisor or a Financial Advisor?
Even if you’re immersed in the investing world, the jargon can induce headaches. So it’s understandable if you’re a little fuzzy on the concept of a hybrid financial advisor.
The foundation of Fidelity’s hybrid product that I’m reviewing here is Fidelity Go, the company’s entry-level robo-advisor.
Fidelity Go is an excellent option for people who are just interested in outsourcing their investing and don’t need help with any other areas of their finances. Answer a few questions and “Boom!” — Fidelity Go directs you to a pre-built investment portfolio that fits your needs.
However, if you can see retirement on the horizon or if you have enough assets to consider things like estate planning, you may benefit from hiring a human financial advisor.
Traditionally, this means face-to-face meetings with a financial expert who helps you with things beyond just investing. Think of this person as a financial coach who can help you optimize your money decisions.
Financial advisors typically charge about 1% annually, but that does not include the expense ratios for your portfolio. Hybrid advisors such as Personalized Planning and Advice handle your investing through a robo-advisor and give you to access a team of human advisors via video calls, phone calls or emails.
When you work with a company like Fidelity, Vanguard or Schwab, this type of setup is a way to get access to reliable financial advice plus investment help at relatively inexpensive prices.
Other Financial Advisor Options at Fidelity
Personalized Planning and Advice is the base tier of Fidelity’s financial advisor services. There are two other tiers:
| Name | Minimum Investment | Annual Fee |
|---|---|---|
| Personalized Planning & Advice | $25,000 | 0.50% |
| Wealth Management | $250,000 | 0.5%-1.5% |
| Private Wealth Management | $2 million via Fidelity, $10 million in total assets | 0.20%-1.04% |
Again, all of Fidelity’s financial advisors are fiduciaries, which Clark says is a must.
If you have enough investable money to access Fidelity’s higher-tier financial advisor options, you’ll earn perks like a credit card with 3% cash back and access to specialized Certified Financial Planners who focus on tax strategy and other more complex financial areas.
Private Wealth Management requires at least $2 million in assets under management with Fidelity but five times that in overall assets.
Final Thoughts
Fidelity’s hybrid financial advisor may be slightly more expensive than the options at Vanguard and Schwab.
And the advisors you can access through Personalized Planning and Advice aren’t Certified Financial Planners.
However, if you’re already a Fidelity customer and you want to use a hybrid financial advisor, the differences between Fidelity’s offering and its competitors are small enough that it’s probably a better option. That’s especially true if you’d need to sell assets to move to Vanguard or Schwab.
