How Fidelity Go Differs From Other Robo-Advisors
Last week, financial services giant Fidelity Investments
announced the official launch of its long-awaited robo-advisor solution, Fidelity Go. In the fourth quarter of 2015, the company revealed that it was undergoing beta testing for the new online investing service. Similar to other robo-advisors like Betterment, WiseBanyan and Wealthfront, Fidelity Go allows virtually anyone to inexpensively open a managed investment account. It currently charges customers an annual advisory fee of 0.35%, and requires an opening balance of $5,000 or more. (See also: Fidelity Launches Retail Robo-Advisor Fidelity Go.)
A new member of the rapidly growing robo-advisor industry, Fidelity Go works as a hybrid between traditionally managed and algorithm-based investments accounts. As with any robo-advisor, Fidelity Go gives its customers an investor profile questionnaire to complete upon opening an account. This questionnaire helps Fidelity to understand an investor’s current financial condition, his or her tolerance for risk, and that investor’s overall goal for investing, whether it’s for retirement savings or a more short-term goal.
Unlike other robo-advising services that tend to use computer algorithms to allocate investments while using the least amount of human insight as possible, Fidelity Go has a team of professionals who make personalized investment suggestions to their customers based on the responses that they gave on their investor profile questionnaire. Customers would then have the option to either use the suggestion or not. (See also: Robo-Advisors Are A Better Alternative to Professionally Managed Funds.)
It’s likely that a significant amount of Fidelity Go portfolios will be comprised of holdings in various Fidelity funds. Fidelity has said that it will reduce the advisory fee it charges a customer whenever a portion of their portfolio is invested in one of its mutual funds. Through its family of many investment products Fidelity controls roughly $5.2 trillion of assets.