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Fidelity Overhauls Wealth Management Fees

April 12, 2018

In a bid to simplify its wealth management fees, Fidelity Investments will start charging its clients based only on the amount of assets they have with the firm, the Wall Street Journal writes.

Currently Fidelity charges a variety of fees for wealth management services on an a la carte model, which varies depending on a customer’s amount of interaction with the company and their investment preferences as well as their assets, according to the paper.

When the changes go into effect in July some new clients will pay less as a result but others may pay more, according to regulatory filings cited by the Journal. Clients with less than $200,000 with Fidelity who agree to have their portfolios consist of Fidelity funds only will pay 1.5%, compared to 1.7% they pay today, while clients with $1 million invested in both Fidelity and non-Fidelity funds will pay 1.175%, compared to 1.05% they currently pay in a blended gross fee, the paper writes. But current Fidelity clients will pay the same or less thanks to waivers the company is offering existing customers, the paper writes.

Fidelity is making the change in response to customer demand, a spokesman for the firm tells the Journal. But other firms have overhauled their wealth management fees in recent years as well, in major part as a response to the Department of Labor’s fiduciary rule, according to the paper. The rule, which purports to require retirement account advisors to put clients’ interests first, went into partial effect last summer but has since been vacated in an appeals court.

The fee change is part of a broader revamp of Fidelity’s wealth management fees that include a reduction in the fee the firm charges for robo-advice on its Fidelity Go platform, according to the paper. This month the company is moving its robo clients into no-fee funds, which means they’ll pay a flat 0.35% annual fee instead of the management fees combined with fund fees they paid before, the Journal writes.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.