The New York Times, November 20, 2015 article and chart: "Fidelity Joins Growing Field of Automated Financial Advice" [Fund managers entering competition for automated technologies, with chart of current passive investment support products]

Source: The New York Times, November 20, 2015 article and chart

Fidelity Joins Growing Field of Automated Financial Advice

By RON LIEBER NOV. 20, 2015

Fidelity Investments is flirting with the investment robots.

Fidelity is testing its own automated investing platform, which it is calling Fidelity Go. The move puts the company into head-to-head competition with so-called robo-adviser start-ups like Betterment and Wealthfront, as well as traditional players like Vanguard and Schwab that recently began offering similar services.

The Fidelity details are listed in a Securities and Exchange Commission filing, and a company phone representative confirmed the existence of the new service, as did a Fidelity spokesman.

At the moment, Fidelity Go is available to only a few hundred of the company’s employees, though Fidelity plans to invite some customers to test it early next year and then do a public introduction after that.

Like the competing products, the company will ask customers to fill out online questionnaires about their investment goals and risk tolerance. Then, it will suggest a low-cost portfolio of investments. Fidelity’s filing said the program would be free for now, though it eventually expected to charge a fee. The phone representative said it would cost 0.1 percent to 0.2 percent annually, not including the costs of the mutual or exchange-traded funds in the portfolio. Robert Beauregard, a Fidelity spokesman, said the company was still deciding what fees to charge.

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Inexpensive Advice for Index and Exchange-Traded Fund Investments

These companies offer help picking and rebalancing index and exchange-traded funds or similar investments, and none charge more than about 0.5 percent of your assets each year for the privilege.

Investment costs are where the rubber often meets the road in investing success, and Fidelity, in its filing, promised that the portfolio costs would be “lower than average.” While a “significant” portion of the portfolios, which will invest in stocks, bonds and presumably safer short-term investments, will be in investments that track market indexes, some money will go into Fidelity’s own actively managed mutual funds. That provides an advantage to customers only when those mutual funds outperform the index fund in its market segment over time. Most actively managed funds don’t accomplish that. Mr. Beauregard said that Fidelity would refund a majority of fees it earned from its own funds to Fidelity Go customers who invested in them.

These services have proved attractive to investors who say they believe that trying to beat the market is foolish and do not want the hassle of finding the best index funds and remembering to buy and sell them at the right times to make sure their portfolios are not getting too risky or too safe.

Over the last several years, Betterment and Wealthfront have each gathered about $3 billion in assets. Schwab’s Intelligent Portfolios offering, which it introduced in March, had collected $4.1 billion as of Sept. 30.

Vanguard reports $26 billion in its service, $16 billion of which it says is new to the firm, with the rest coming from existing accounts. It offers financial planning with people, in addition to automated investment management, for its 0.3 percent annual fee.

A version of this article appears in print on November 21, 2015, on page B5 of the New York edition with the headline: Fidelity Plans Test of Advice by Robot.

Inexpensive Advice for Index and Exchange-Traded Fund Investments

These companies offer help picking and rebalancing index and exchange-traded funds or similar investments, and none charge more than about 0.5 percent of your assets each year for the privilege. Related Article

Company/Product	Costs	Minimum Balance Requirement	Comments
AssetBuilder	0.20 to 0.45 percent of assets, depending on balance, plus trading costs	$50,000	Uses investments from a company called Dimensional Fund Advisors, which creates funds that are similar to index funds but don’t mimic standard indexes precisely. Includes help from a human during account opening.
Betterment	0.15 to 0.35 percent of assets	None, but people with less than $10,000 must deposit $100 each month or pay a $3 monthly fee	One feature helps people determine a safe amount of money to withdraw for retirement each month. Betterment also offers tax-loss harvesting in taxable accounts and support for trust accounts.
Charles Schwab (Schwab Intelligent Portfolios)	Free (Schwab does make money when it uses its own funds in the portfolios)	$5,000	Schwab says it does not disqualify any funds that don't pay it fees to be considered; it does make money this way in other parts of its business.
Fidelity Go	No announcement yet, since it is still in beta	None yet	In an employee beta as of late 2015, set for invite-only beta in early 2016. Some portfolios may include a few actively managed Fidelity mutual funds.
Financial Guard	$15.95 per month or $149.95 annually, plus trading costs	None	Financial Guard gauges risk, examines all of a customer's investment accounts and suggests funds to buy and sell. Customers can request index or exchange-traded funds, which Financial Guard recommends.
Folio Investing (Unlimited Plan)	$29 per month or $290 annually	None	Folio Investing has a number of “Ready to Go” portfolios of exchange-traded funds that customers can buy in a single transaction.
FutureAdvisor	0.5 percent of assets	None	FutureAdvisor will advise on, watch and rebalance multiple Individual Retirement Accounts and taxable brokerage accounts at Fidelity or TD Ameritrade. Customers don't have to sell investments in taxable accounts and potentially pay capital gains taxes to use the FutureAdvisor service if they already have money at those firms.
Hedgeable (Basic Plan)	None	$5,000	Hedgeable also offers a Plus Plan with more active monitoring and charges 0.40 to 0.75 percent of assets.
Invessence	$250 per year for balances under $100,000, 0.25 percent of assets for balances over $100,000	$5,000	Only in Connecticut, Illinois, Michigan, New Jersey, New York, North Carolina, Pennsylvania, Texas and Virginia so far. Invessence does the trading and rebalancing.
Jemstep Portfolio Manager	Free for first $25,000; $17.99 to $69.99 per month after that, depending on balance, plus trading costs	None	Jemstep also evaluates the holdings in your 401(k) or other workplace retirement account, which other services may not do.
MarketRiders	$14.95 per month or $149.95 annually, plus trading costs	None	MarketRiders tells you which funds to buy and when to rebalance but doesn’t do it for you. The company’s owners started Rebalance IRA for people who want more help.
Motif Investing (Horizon Portfolios)	None	$250	There is a conservative, moderate and aggressive portfolio of exchange-traded funds that Motif has built. Motif does the rebalancing and is itself a brokerage firm.
Rebalance IRA	0.5 percent of assets, plus $250 start-up fee and trading costs	None, but there’s a $500 minimum annual fee	As the name suggests, Rebalance IRA specializes in retirement accounts; their service includes human contact with a dedicated adviser.
SigFig (Managed Account)	$10 per month	$2,000	SigFig manages money in your existing account if it's at Charles Schwab, Fidelity or TD Ameritrade. There are no trading costs, and the company trades for you.
Target-Date Mutual Funds (Various Companies)	Vanguard’s are inexpensive and made up of index funds with average costs of 0.17 percent	Generally very small, if any	Sometimes companies stuff target-date funds with their own actively managed mutual funds, which can raise costs. Funds from competing companies with the same target date may have very different ratios of stocks to bonds and other assets.
Vanguard (Personal Advisor Services)	0.3 percent of assets	$100,000	Vanguard is alone among this group in including full-service financial planning in the price. The company is hoping to lower the minimum balance to $50,000.
Wealthfront	Free for the first $10,000; 0.25 percent after that	$500	Wealthfront does tax-loss harvesting for all taxable accounts and helps Twitter and Facebook shareholders sell their stock and diversify in an efficient fashion.
WiseBanyan	None	None	WiseBanyan makes money by charging for various additional financial planning services.

Costs are annual unless otherwise noted. There are also underlying fees for the funds that every one of these services uses, though they tend to be low since they go into index or similar funds. Trading fees, commissions and related charges are included unless otherwise noted; some companies are able to absorb them. Companies that have a range of fees usually charge less as you give them more money to manage.

The New York Times and Corporate Insight