Like the recently popular “Pokemon Go” video game, Fidelity Go is attempting to target Millennials with their new robo-advisor service. Though the similarity ends there. Instead of trying to collect virtual creatures, you are saving real money toward some future goal. Fidelity Investment’s robo-advisor is helping individuals who were previously savers transition into investing. Fidelity likes to call them Emerging Investors.
To the Millennial crowd, however, Fidelity is anything but hip. Fidelity is a very conservative company, a plus for a financial firm, but not typically thought of as a “go-to” company by people under 35 years old. Fidelity Go is trying to change this image.
As you can see from my Fidelity Investments review we recommend them as your one-stop-shopping investment firm. They offer not only traditional brokerage accounts, but also banking, credit cards and advisory services. In some respects, Fidelity is hoping you start with this product and grow into Fidelity’s other higher-end services.
Fidelity Go Features
|Account Fees||0.35% annually for retirement accounts; 0.40% annually for taxable accounts|
|Accounts Available||Traditional IRA, Roth IRA, Rollover IRA, Individual and Joint|
|Portfolio Rebalancing||Yes — Rebalancing is done by investment managers on a non-deterministic basis|
|Automatic Deposits||Yes — Monthly|
|Mobile App||Yes — Integrated into existing iOS and Android apps|
|Customer Service||Phone — M–F 24/7; Live Chat — M–F 8A–8P ET|
Depending on whether you set up a taxable or a tax-deferred account, the ETFs Fidelity Go recommends will be different. Below is the list of ETFs they will select from. Also depending upon how you answer their questionnaire, they will do asset allocation differently, with seven different possible asset allocations.
Taxable ETF Portfolio
- Black Rock iShares Core S&P 500 (IVV) — 0.07% Annual Fee
- Black Rock iShares Core S&P Mid Cap (IJH) — 0.12% Annual Fee
- Black Rock iShares Core S&P Small Cap (IJR) — 0.12% Annual Fee
- Fidelity Global ex U.S. Index Fund – Premium Class (FSGDX) — 0.11% Annual Fee
- Fidelity Municipal Income Fund (FHIGX) — 0.48% Annual Fee
- Fidelity Limited Term Municipal Income Fund (FSTFX) — 0.48% Annual Fee
- Fidelity Conservative Income Municipal Bond Fund – Institutional Class (FMNDX) — 0.25% Annual Fee
- Fidelity Government Cash Reserves (FDRXX) — 0.34% Annual Fee
Retirement ETF Portfolio
- Fidelity 500 Index Fund – Institutional Class (FXSIX) — 0.035% Annual Fee
- Fidelity Mid Cap Index Fund – Premium Class (FSCKX) — 0.07% Annual Fee
- Fidelity Small Cap Index Fund – Premium Class (FSSVX) — 0.07% Annual Fee
- Fidelity Global ex US Index Fund – Premium Class (FSGDX) — 0.11% Annual Fee
- Fidelity US Bond Index – Institutional Premium Class (FXNAX) — 0.03% Annual Fee
- Fidelity Conservative Income Bond Fund – Institutional Class (FCNVX) — 0.25% Annual Fee
- Fidelity Government Cash Reserves (FDRXX) — 0.34% Annual Fee
Note the use of BlackRock’s iShares and Fidelity’s own mutual funds. With the selection of an IRA account, you will have only Fidelity mutual funds. Nothing wrong with Fidelity’s mutual funds; in fact, they are quite a good selection of mutual funds and very low in annual fees.
Fidelity Go is very transparent with their fees, unlike some firms we’ve reviewed, Charles Schwab being the primary offender. They include not only the fees they charge annually for using Fidelity Go, but also the fees of the mutual funds selected. Besides telling you only a percentage, they also tell you in dollars the annual fee you will be paying for their service. I wish all services did this, as I wrote in my article “The True Costs of Robo-Advisors.”
Fidelity Go Questionnaire
The best way to think of Fidelity Go is as a wrapper of their brokerage service. Fidelity Go will recommend an allocation of mutual funds and ETFs based on a series of seven questions, similar to what other robo-advisors do. At the end of the questionnaire, out pops your recommended asset allocation. Unlike the other firms, however, the questionnaire also uses demographics (date of birth, income, etc.) to determine your risk profile. They do this because by default Go assumes you are planning for retirement.
If you are saving for other goals, don’t worry; Fidelity Go does have an advanced option to input more details to help them determine your asset allocation.
Fidelity’s questionnaire is available to anyone with no obligation and gives you the full details of recommended funds and percentage of allocation. If you want, you could take their asset allocation and implement it yourself via an existing Fidelity account you have with them, though that would defeat the ongoing adjustments in allocation.
The interesting aspect of their service is, unlike the other robo-advisors, Go will prevent you from going into assets that are too risky. The service will prevent you from manually adjusting the asset allocation to one it deems too risky, based upon your profile. For many with little to invest, this might be a good thing, but if you have money in other accounts, including Fidelity itself, Fidelity Go doesn’t take that into account. So for some wanting to, say, supplement an existing 401(k) plan with more savings via an IRA, Fidelity Go’s recommended asset allocation might be too conservative. This isn’t a defect of only this robo-advisor, and it may take some work to get an asset allocation you desire.
Fidelity Go’s Fees
Unlike other robo-advisors, Fidelity lays out the fees during the portfolio allocation process. You’ll get an estimate of how much Fidelity Go will cost. Keep in mind, though, they credit most of the ETF fees of BlackRock funds and all of their Fidelity funds. So the 0.35%–0.40% fee in reality is much lower.
- Fee Transparency — Fidelity Go details not only their annual fees and the fees charged by the ETFs used, but also the estimated dollars per year you'll pay.
- Low Annual Fees — With credits of ETF fees, Fidelity Go is one of the cheapest robo-advisor services overall.
- Existing Account Intergration — If you have existing Fidelity accounts you can see your Fidelity Go account with the rest of your accounts.
- Risky Asset Allocation Lockout — Depending upon how you answer the questionnaire, you can be locked out of possible manual asset allocation changes Fidelity deems too risky for your profile.
- No Tax-Loss Harvesting — While Fidelity Go does use a muni-bond ETF to minimize taxes, they do not perform tax-loss harvesting like Betterment, Charles Schwab and Wealthfront can.
- Lack of Planning Functionality — Unlike Betterment and Wealthfront, which have retirement planning options and help with goal attainment, Fidelity Go lacks this feature.
- Undetermined Rebalancing — Fidelity Go’s managers determine when to rebalance your portfolio; there's no set band ranges to trigger a rebalancing. So your account might experience a taxable event at an unexpected time.
- Cannot Transfer Existing Assets — The only way to set up a new account with Go is with cash. You cannot transfer existing assets, from either Fidelity or other firms.
Overall, the service is no-frills, and the front-end questionnaire is the bulk of Fidelity Go’s robo-advisor service. While we like the upfront transparency of fees, the selection of funds and the low annual fees, we feel it lacks some of the functionality the other robo-advisor services currently have. You’re not paying much for Fidelity Go, which is a good thing, but you’re also not getting much service in return.
I like Fidelity Go much better than traditional brokerage firm Charles Schwab, which also has a robo-advisor service, primarily because of Fidelity’s fee transparency and opportunity cost not lost through the large cash allocation Schwab forces you into for their “free” service.
Is Fidelity Go better than Betterment or Wealthfront? I would have to say no and rate Fidelity accordingly. Both competing robo-advisors have retirement planning and tax-loss harvesting, whereas Fidelity Go does not. Betterment has a superior goal-setting functionality and is the reason we recommend them as the best robo-advisor service.
However, since Betterment and Wealthfront are independent firms, they lack the “one-stop-shop” advantage Fidelity has to offer. While not perfect, if you have existing Fidelity accounts or just want low annual fees, Fidelity Go is a service you might want to consider.