@David: Just call and tell them you want out. You won’t be able to keep any of their funds. You can reinvest in the ones that you can identify by yourself, but the strategic investment funds are named that to hide what they really investing in; like
the Fidelity recommended ones on their website.

I am an old Fidelity Employee, was there 13 years and have a ton of experience with closing out PAS accounts.

It is very easy to move out of PAS, just takes a phone call 800-544-3455 should work (keep in mind they may ask you why you are leaving, etc). The only thing you will need is a NON-PAS IRA/Brokerage account to move the assets to. If you don’t have one set up it can easily be done over the web or through the mail.

From a fee perspective they will charge you a prorated fee based on how long you were in the service for the quarter. More than likely just 3 weeks of January or there abouts. In my experience you can keep the funds they have you in, or request a full liquidation which ever you prefer.

I am an independent investment advisor, have my firm, essentially giving unbiased advice on investments and retirement. I work with clients directly through Fidelity creating customized portfolios that are cost effective and generally about half as much as PAS.

I would love to talk if if it makes sense. Feel free to email me at steve.daglio@essential-am.net

Kind Regards,

Steve Daglio

I worked at Fidelity for 13 years and had many a client that was invested in the PAS Program. It probably isn’t the worst thing in the world, however, you are correct the fees are pretty high usually 1.9% all in and the performance generally isn’t too exciting.

I now am an independent investment advisor (my own firm) offering unbiased advice to mostly clients that have accounts through Fidelity. Index ETFs can be a great core strategy and one that I use consistently with clients. This can be very effective, especially since in my opinion market returns could be smaller going forward, minimizing fees is very important.

Let me know if you need any help coming up with suitable investments or a strategy.

-Steve (steve.daglio@essential-am.net)

I echo the thoughts of SW as well. I worked at Fidelity for 11 years at an investor center assiting clients with wealth management and financial planning. PAS is very over priced, in most cases there are better options through an independent advisor.

If I can be of any help I would welcome a conversation. I work only with clients that have accounts at Fidelity giving them unbiased advice.

I hope to hear from you, good luck in your search.

-Steve 617-596-7873

The real “Fee” you are charged in reality, is that .88% PLUS, your fund expense ratios. Those right now in PAS (IRA’s) are averiging 1.1%. So your “ALL IN FEE” is 1.98% (which is pretty high for the industry if you ask me & others). You are truly “paying” 1.98% to have this managed account. What I am saying is not disputable by the way. I did this every day and know exactly how they charge. You are NOT being charged any 12B-1 fees or Loads or other Charges. some people have said they charge 12B1 fees & loads/charges….Not True. They can use A shares and institutional fund shares & not pay the loads. Any one in the industry knows this. Because they have so much money with for example, American Funds, they can own an American Funds fund in your PAS account & not charge you a load or a fee. So that person in this post was absolutely incorrect that said that. No loads on any of the funds. They also do not “charge” you to buy a fund or sell a fund. Any fees incurred by Fidelity for any of that, they eat, and that’s why they charge you the .88% management fee. It is true that they either use Fidelity Funds or other company funds, and they do have a revenue from both Fidelity funds that they use and from non-Fidelity funds they use. Overall, I can attest that PAS and PPS and their Trust Services, are all very much under-performers. They underperform their own benchmarks. Eric is pretty close on the 2.22%. I’d say you’re more than likely around 2.0% all in fees. PPS accounts are more expensive than IRA/PAS accounts. A $1M PPS account is going to be 1% fee + avg. fund expense ratios of 1.1%, and a $1M PAS/IRA account is going to be around .8% + avg. fund expense ratios of about 1.1%, for anywhere from a 1.9% to 2.2% all in fees either way you slice it. Not the highest fees in the industry, but by far not even close to the best fees or the best portfolio management in the industry. PAS will underperform the market in a bull market, and outperform the market in a bear market. They use too many funds, and their fees are too high. I sold $20M + of PAS/PPS per year for several years. It’s not for everyone, but better than what a lot of individual investors can do on their own.

I have been told that the institutional mutual funds that Fidelity PAS purchases have no sales-loads nor 12B-1 charges. However, no one escapes the mutual fund’s annual expense (which is clearly identified for each fund in your quarterly performance report).

My guess is that your overall fees on a $500K PAS Account are 2.22% (1.22% fee to Fidelity + 1% average expense to the funds).

I have a PPS Account and not a PAS Account though, and am not sure if I got all of the above exactly right.

Your main question “Can you get out of PPS without selling all your funds?” is answered as follows:

Fidelity Portfolio Advisory Accounts (PPA and PPS) allow for a client to remove themselves from the managed serviced program and keep/transfer their funds “in-kind” to a separate non-managed account within Fidelity (which could then be transferred in-kind to an account outside of Fidelity).

My personal situation is that I am a single 35-year old male with no debt and no mortgage. I have a steady job in sales at a company that I have been with for over 5-years. I have a non-tax deferred (personal account) PPS account with Fidelity. All capital gains and losses are subject to current tax regulations. My short-term gains are taxed as ordinary income (my tax bracket per year is currently either 28% or 33% depending on how well I perform at my sales job in a given year). My long-term capital gains are taxed under long-term capital gains rates (currently 15%).

Separately, I hold all of my tax-deferred accounts at TD Ameritrade and they are managed by a small firm that actively invests in ETF’s to an asset allocation that I am comfortable with. My tax-deferred account is not part of the discussion of this thread.

For my situation, I like the overall allocation that I mentioned in my original posting (60% domestic equity, 25% international equity, and 15% fixed-income). However, I will review the boglehead and marketwatch resources that you mentioned. As I migrate away from Fidelity’s managed services, I will evaluate each fund to see which ones I should sell and which ones I should keep (as you suggested) taking tax consequences into consideration.

Given all of the information above, does anyone have any comment on maintaining a portfolio of ETF’s similar to:
*60% SPDR Dow Jones Total Market ETF (TMW)
*25% Vanguard Europe Pacific ETF (VEA)
*9% Vanguard Total Bond Market ETF (BND)
*6% SPDR Barclays Capital High Yield Bond (JNK)

Happy 2011 and Happy Investing!

Regarding ‘liquidation’ of your account, you don’t give much information on the nature of these accounts but some things to consider:

* If these are tax deferred accounts (IRA, 401k…) you would roll them over (I hope) into another tax deferred account (at Vanguard or Schwab or other institution).

* For non-tax deferred accounts give some consideration to the cost of selling. You may not want to sell all the holdings. For example if you were to sell a Fido international fund, pay large taxes on gains, only to buy another similar international fund at a non-fido institution, I would recommend you just hang on to the fido fund (assuming the mgt fees are ok and the funds are holding about equivalent holdings). Getting out of PAS/PPS is one thing…getting out of a fund is another and they have different consequences.

Can you get out of PPS without selling all your funds?

* Figure out what asset allocation you want (bogleheads is a site totally devoted to an unending discussion on this subject!). You don’t say anything about your age or situation so it’s difficult to say anything about your proposed allocation.
* Figure out the consequences to get out of PPS if any (do you have to sell funds or just ‘loose’ their management over-site?)
* Figure out which of your funds you need to sell to achieve your asset allocation goals. As mentioned, maybe some of the funds you hold help meet goals and have reasonable fees.
* Don’t accidentally sell Tax-Deferred funds!
* Identify the funds that are low cost and meet allocation needs.
* Maybe keep some at fido and some elsewhere.
* Don’t generate too much taxable income to move from like fund to like fund. Example: Move from Fido International to Schwab International – on the sale of Fido you generate a $50,000 tax hit (unless in tax deferred); no point in paying taxes now. Hopefully when you retire your taxes will be less (but ya never know).

Some other resources for asset allocation besides bogleheads is: http://www.marketwatch.com/lazyportfolio

After reviewing the article and comments above, I took a hard look at the alternatives. I could adjust the Hypothetical Index Fund Portfolio listed above to meet the target allocation that I seek as follows:
*60% SPDR Dow Jones Total Market ETF (TMW)
*25% Vanguard Europe Pacific ETF (VEA)
*9% Vanguard Total Bond Market ETF (BND)
*6% SPDR Barclays Capital High Yield Bond (JNK)

However, after reviewing the Vanguard website it seemed like a better portfolio would be to swap out the TMW ETF mentioned above with the Vanguard Total Stock Market ETF (VTI) which has an expense ratio of 0.07% instead of SPDR’s 0.21%.

Does anyone have any comments on me liquidating my Fidelity Account and putting the money into the portfolio I list here in my comment? I appreciate all feedback, as this is my first posting and I am just now taking control of my investment decisions. Let me know if you have any additional questions and I will respond!

Thank you,
-Eric

There are many different investment methodologies. You have to pick one. Unless you are privy to discovering inefficiencies in the market, it has been shown asset allocation with low cost fees beats all with the lowest level of risk. So, it’s not about a particular stock or ETF. Nor is it about a maintenance fee (as long as they are low). What more info do you need? You’ve seen how people here are not recommending Fido and in fact there are silly Fido people posting how wonderful Fido is, not knowing that it’s easy to trace from where the post are coming. One easy answer for you might be to start with Vanguard as they are lower cost and do the allocation for you. However, you don’t say how much you have to invest.
If you really are interested and want to learn, continue to learn and converse with others, visit the bogglehead link above. About everything has already been discussed there. cheers and good luck.

Doubt about how well PAS can provide but also nervouse about my Stock holding about 80% in my IRA account managing by me.

I don’t like the idea of maintainance fee, if index fund is good, which index fund ya’ll recommend? What about ETF fund, shed me some light.