Author Topic: Fidelity sent me a letter..  (Read 3513 times)

Ftao93

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Fidelity sent me a letter..
« on: September 02, 2014, 10:38:29 PM »
So, I want to be skeptical and I am, but there's potentially good news from Fidelity.

If you have your workplace plan invested in plans that are more beneficial to them, they charge you less for administration.

The plans that benefit them the most are obviously ones where you invest for the long haul (like Fidelity Freedom 2040..).

The plan is to begin 2015 by charging you $13/quarter regardless of balance.  Depending on the place you have your investments, they take the balance X .20% and 'credit' that toward your quarterly fees.  According to the letter, if you have 25k for the year in there, they will add back in $50 of your fees.   it's nice of them, though that $50 could have spawned another couple of bucks if they just left it in there....

I haven't done the math yet, but it basically means once you get 6 figures in there, you'll pay little to nothing in fees.  I'm not quite there yet, but it's more incentive to get there.

Anyone else get/review the info?  What conclusion did you come to?


arebelspy

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Re: Fidelity sent me a letter..
« Reply #1 on: September 03, 2014, 12:04:14 AM »
The plan is to begin 2015 by charging you $13/quarter regardless of balance. Depending on the place you have your investments, they take the balance X .20% and 'credit' that toward your quarterly fees.  According to the letter, if you have 25k for the year in there, they will add back in $50 of your fees.   it's nice of them, though that $50 could have spawned another couple of bucks if they just left it in there....

I haven't done the math yet, but it basically means once you get 6 figures in there, you'll pay little to nothing in fees.  I'm not quite there yet, but it's more incentive to get there.

Why would it require 6 figures?  By their letter, they charge you 13 x 4 = 52/yr., and they credit you 50/yr if you have 25k... so why would you need 100k to pay little to nothing in fees?

Also do they credit you more than you paid in fees, or is it capped to a reimbursement of fees?

Sounds like a neat perk.
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Frankies Girl

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Re: Fidelity sent me a letter..
« Reply #2 on: September 03, 2014, 01:51:32 AM »
I just went through all my statements and emails from Fid and didn't get this info (I have everything set to online notifications). Hmmm.... I do think that I'm in the "little to nothing in fees" category other than the regular expense ratios, however, due to the amount invested.

wtjbatman

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Re: Fidelity sent me a letter..
« Reply #3 on: September 03, 2014, 05:38:05 AM »
My 401k at my new employer just sent me a letter saying they negotiated fees down and the 401k fees are going to be cut in half.

Coincidence? Probably. But it's nice to imagine a world where various 401k's start cutting their administration fees back.

eyePod

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Re: Fidelity sent me a letter..
« Reply #4 on: September 03, 2014, 02:07:09 PM »
My 401k at my new employer just sent me a letter saying they negotiated fees down and the 401k fees are going to be cut in half.

Coincidence? Probably. But it's nice to imagine a world where various 401k's start cutting their administration fees back.

We have fidelity for 401k too and I recently saw something saying "ERs are lowered!" This has no impact on how I'm investing as I already have the lowest possible in the fund types I'm investing in. Also, Vanguard's  529 fees have also recently been lowered for anyone interested.

skyrefuge

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Re: Fidelity sent me a letter..
« Reply #5 on: September 03, 2014, 02:18:34 PM »
Anyone else get/review the info?  What conclusion did you come to?

This sounds more like something to do with the specific 401(k) at your company (presumably administered by Fidelity) than something to do with Fidelity in general, or Fidelity mutual funds that are available in other 401(k) plans.

On top of that, it sounds like some unnecessary smoke-and-mirrors that just make the actual fees you pay even more confusing and opaque.

I have no idea what it means for certain funds to be "more beneficial" to Fidelity. Why do they make more money on a Freedom 2040 fund than anything else? And if they do, doesn't that mean you are losing that money?

We have fidelity for 401k too and I recently saw something saying "ERs are lowered!"

ERs are an after-the-fact calculation made by dividing the already-incurred expenses by the plan assets. So as plan assets grow over time, ERs should automatically go down. It doesn't mean that Fidelity actually did anything to reduce expenses, but I'm sure they're happy to make it seem like they did in their marketing materials! Vanguard publishes the newly-calculated ERs for its funds every month; sometimes they go up, sometimes they go down, sometimes they stay the same, but the overall trend is downward.
« Last Edit: September 03, 2014, 02:25:00 PM by skyrefuge »