Institutional diversification (Fidelity worries)

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Matthew19
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Institutional diversification (Fidelity worries)

Post by Matthew19 » Wed Apr 28, 2021 10:04 am

I just Inherited an IRA. Fidelity is where the transfer took place, and I’ve had 3 attempts at talking with someone in their ira tax department with no success. Wait times for anyone with knowledge are huge. My concern isn’t the customer service, but that it’s a symptom of poor health fir the company.

Are there any metrics you look at for determining the institute risks with fidelity / vanguard. I’m 50/50 with each right now.
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Re: Institutional diversification (Fidelity worries)

Post by mathjak107 » Wed Apr 28, 2021 1:21 pm

Every major brokerage is back logged right now .

The only way around seems to be if you have a large enough account so you are assigned a dedicated team and person ..

We call a private number at fidelity and get our team in seconds
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Re: Institutional diversification (Fidelity worries)

Post by Tortoise » Wed Apr 28, 2021 2:06 pm

Maybe this is the unfortunate flip side of the trend of ever-lower expenses and fees in the fund industry: Poorer customer service for the proles due to cost-cutting.

FWIW, almost every large company that I've called for customer service in my adult life -- whether in the financial industry or not -- has had a phone tree with a recorded message mentioning "unusually high call volume" as an explanation for long wait times. If it's been happening consistently for years, is there anything "unusual" about it?

It's kind of like how every mattress store that has ever existed has always had a giant "GOING OUT OF BUSINESS SALE! EVERYTHING MUST GO!" banner hanging on the outside of the building. I guess presenting the perpetual illusion of impending insolvency is just the mattress industry's weird business model.
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Re: Institutional diversification (Fidelity worries)

Post by EdwardjK » Wed Apr 28, 2021 2:20 pm

Matthew19,

If you think Fidelity has poor service, try Vanguard. Late last year I too inherited an IRA. I called Vanguard several times to make what I thought were simple inquiries about their transfer process, and each inquiry lasted at least one hour. Others in my family had the same experience.

I pulled the beneficiary IRA out of Vanguard as soon as I could.
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Wed Apr 28, 2021 4:03 pm

Matthew19 wrote:
Wed Apr 28, 2021 10:04 am

I just Inherited an IRA. Fidelity is where the transfer took place, and I’ve had 3 attempts at talking with someone in their ira tax department with no success. Wait times for anyone with knowledge are huge. My concern isn’t the customer service, but that it’s a symptom of poor health fir the company.

Are there any metrics you look at for determining the institute risks with fidelity / vanguard. I’m 50/50 with each right now.


This scares me because while I opened an account at Fidelity a few years ago, I still have nothing there. All is still at Vanguard. And, Vanguard's customer service as slipped considerably over the last few years.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Wed Apr 28, 2021 4:06 pm

mathjak107 wrote:
Wed Apr 28, 2021 1:21 pm

Every major brokerage is back logged right now .

The only way around seems to be if you have a large enough account so you are assigned a dedicated team and person ..

We call a private number at fidelity and get our team in seconds


For many years I had a dedicated person at Vanguard. Now I have even more money there yet that program seems to have disappeared. Supposedly I've been transferred to a team but the people I talk to seem to be the same people someone would talk to who has only $1,000 at Vanguard.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Wed Apr 28, 2021 4:08 pm

Tortoise wrote:
Wed Apr 28, 2021 2:06 pm

Maybe this is the unfortunate flip side of the trend of ever-lower expenses and fees in the fund industry: Poorer customer service for the proles due to cost-cutting.

FWIW, almost every large company that I've called for customer service in my adult life -- whether in the financial industry or not -- has had a phone tree with a recorded message mentioning "unusually high call volume" as an explanation for long wait times. If it's been happening consistently for years, is there anything "unusual" about it?

It's kind of like how every mattress store that has ever existed has always had a giant "GOING OUT OF BUSINESS SALE! EVERYTHING MUST GO!" banner hanging on the outside of the building. I guess presenting the perpetual illusion of impending insolvency is just the mattress industry's weird business model.


Thanks for describing this.

I seem to have experienced this far more often these days with Vanguard. And, at times when I don't think they should be having an "unusually high call volume". My mental response it that you need to hire enough people to handle the volumes that you receive.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by Kevin K. » Wed Apr 28, 2021 6:46 pm

Just adding my two cents here. No experience with Fidelity but decades with both Schwab and Vanguard.

One does have to bear in mind that it's tax season (delayed, obviously, this year thanks to the filing date being pushed back) so all brokerages are very busy.

In my view the main reason to have some level of diversification in where you hold assets is as a hedge against cyberattacks keeping you from accessing funds for a certain period of time. That's why I used to split things roughly equally between Schwab and Vanguard but I just moved everything but a couple of years worth of cash invested in MM funds at my local credit union paying .35% and iBonds held at Treasury Direct to Schwab.

Vanguard's customer service (phone especially but email too) has gotten abysmal in recent years and their website looks like it was designed by a couple of guys who got fired from Microsoft right after Windows was first introduced.

Here's a note about Vanguard I posted on the Bogleheads forum in a thread complaining about the stupid ads for their Personal Advisory Services that pop up everytime you log into your accounts:

"I got the same sort of canned response when I complained about this. It's tacky and annoying but it's the larger context that finally motivated me to move all of my accounts back to Schwab.

First of all, the very existence of PAS is arguably quintessentially anti-Vanguard inasmuch as VG is the pioneer in low fees and putting the interests of its mutual fund owners first. Paying a percentage of assets for some minor hand-holding while being put into the exact same 4 funds used in their LIfeStrategy and Target Retirement funds is ridiculous.

I've had to call VG a couple of times recently to change mutual fund shares to their ETF equivalents (something which of course one ought to be able to do online but can't) and had the dubious pleasure of listening to their self-congratulatory recorded spiel essentially blaming the long hold time (10-20 minutes, no call-back option offered) on their focus on low fees and reminding me that what I want to do could probably be done online.

Of course when you do get past the tacky pop ads for PAS and into the website you have the joy of dealing with a user interface and portfolio tools that are a decade or more behind what Schwab and FIDO offer. Considering that Vanguard has no physical offices to staff and at best extended banker's hours in which to enjoy their singularly awful customer service you'd think it would occur to them at some point that they have only one job (being an excellent online-only firm) and are doing a lousy job of it. But given the massive fund inflows I suppose one can't blame them for shrugging off complaints from long-time customers. Way back when AT&T was a dominant monopoly some of us entry-level employees had bumper stickers with their logo printed up that said "We Don't Care - We Don't Have To." That's Vanguard in 2021."

Things like Voyager or Flagship status are meaningless at Vanguard now. If you aren't willing to pay .3% of assets to be in their PAS program they don't want to hear from you.

Schwab has an excellent bank with a debit card that reimburses ATM fees worldwide, physical offices you (or a non-finance savvy spouse) can visit when need be and an excellent web site with good analytic tools. Phone wait times are typically a fraction of Vanguard's and they always thank you for your business and bend over backwards to address any problems. Of course everyone has to make money somehow and Schwab makes most of theirs by paying a pittance on cash and including way too much of it in their Roboadvisor portfolios.

From everything I hear Fidelity overall is right up there with Schwab in terms of customer service and products. I'd make a point of holding my Vanguard funds and ETFs at one of their competitors.
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Wed Apr 28, 2021 9:17 pm

Kevin K. wrote:
Wed Apr 28, 2021 6:46 pm

Just adding my two cents here. No experience with Fidelity but decades with both Schwab and Vanguard.

One does have to bear in mind that it's tax season (delayed, obviously, this year thanks to the filing date being pushed back) so all brokerages are very busy.

In my view the main reason to have some level of diversification in where you hold assets is as a hedge against cyberattacks keeping you from accessing funds for a certain period of time. That's why I used to split things roughly equally between Schwab and Vanguard but I just moved everything but a couple of years worth of cash invested in MM funds at my local credit union paying .35% and iBonds held at Treasury Direct to Schwab.

Vanguard's customer service (phone especially but email too) has gotten abysmal in recent years and their website looks like it was designed by a couple of guys who got fired from Microsoft right after Windows was first introduced.

Here's a note about Vanguard I posted on the Bogleheads forum in a thread complaining about the stupid ads for their Personal Advisory Services that pop up everytime you log into your accounts:

"I got the same sort of canned response when I complained about this. It's tacky and annoying but it's the larger context that finally motivated me to move all of my accounts back to Schwab.

First of all, the very existence of PAS is arguably quintessentially anti-Vanguard inasmuch as VG is the pioneer in low fees and putting the interests of its mutual fund owners first. Paying a percentage of assets for some minor hand-holding while being put into the exact same 4 funds used in their LIfeStrategy and Target Retirement funds is ridiculous.

I've had to call VG a couple of times recently to change mutual fund shares to their ETF equivalents (something which of course one ought to be able to do online but can't) and had the dubious pleasure of listening to their self-congratulatory recorded spiel essentially blaming the long hold time (10-20 minutes, no call-back option offered) on their focus on low fees and reminding me that what I want to do could probably be done online.

Of course when you do get past the tacky pop ads for PAS and into the website you have the joy of dealing with a user interface and portfolio tools that are a decade or more behind what Schwab and FIDO offer. Considering that Vanguard has no physical offices to staff and at best extended banker's hours in which to enjoy their singularly awful customer service you'd think it would occur to them at some point that they have only one job (being an excellent online-only firm) and are doing a lousy job of it. But given the massive fund inflows I suppose one can't blame them for shrugging off complaints from long-time customers. Way back when AT&T was a dominant monopoly some of us entry-level employees had bumper stickers with their logo printed up that said "We Don't Care - We Don't Have To." That's Vanguard in 2021."

Things like Voyager or Flagship status are meaningless at Vanguard now. If you aren't willing to pay .3% of assets to be in their PAS program they don't want to hear from you.

Schwab has an excellent bank with a debit card that reimburses ATM fees worldwide, physical offices you (or a non-finance savvy spouse) can visit when need be and an excellent web site with good analytic tools. Phone wait times are typically a fraction of Vanguard's and they always thank you for your business and bend over backwards to address any problems. Of course everyone has to make money somehow and Schwab makes most of theirs by paying a pittance on cash and including way too much of it in their Roboadvisor portfolios.

From everything I hear Fidelity overall is right up there with Schwab in terms of customer service and products. I'd make a point of holding my Vanguard funds and ETFs at one of their competitors.


Wow!

Extremely informative, Kevin. Thanks!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by Tyler » Wed Apr 28, 2021 9:55 pm

I've personally always had the bulk of my money at Fidelity and have had nothing but great experiences with them. To be fair, I've only needed to speak to someone maybe once or twice in the past 10 years. And while I had no wait, perhaps I was lucky or they've changed over time. But I will say that their online tools are terrific which keeps the need to talk to someone at a bare minimum. Their website is quite good.
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Re: Institutional diversification (Fidelity worries)

Post by jatwell » Wed Apr 28, 2021 10:07 pm

Tyler wrote:
Wed Apr 28, 2021 9:55 pm
I've personally always had the bulk of my money at Fidelity and have had nothing but great experiences with them. To be fair, I've only needed to speak to someone maybe once or twice in the past 10 years. And while I had no wait, perhaps I was lucky or they've changed over time. But I will say that their online tools are terrific which keeps the need to talk to someone at a bare minimum. Their website is quite good.
Agree, similar experience here with Fidelity for many accounts for both me and the wife.

The few times I've called are usually at night or even on the weekends. Even then, generally get right to somebody that can help and not have to transfer.
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Re: Institutional diversification (Fidelity worries)

Post by mathjak107 » Thu Apr 29, 2021 4:20 am

Vanguard was so poor in both policy and service I pulled whatever I had from them
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Re: Institutional diversification (Fidelity worries)

Post by I Shrugged » Thu Apr 29, 2021 8:17 am

So the question was about the institutional risk. I’m going to say that VG and Fido are too big to fail. If something takes one out, you will be relying on physical gold, silver, and crypto.
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Re: Institutional diversification (Fidelity worries)

Post by Kevin K. » Thu Apr 29, 2021 9:26 am

I Shrugged wrote:
Thu Apr 29, 2021 8:17 am
So the question was about the institutional risk. I’m going to say that VG and Fido are too big to fail. If something takes one out, you will be relying on physical gold, silver, and crypto.
I'd add Schwab to that list.

It is indeed pretty much down to these three giant brokerages at this point, and all of them are appropriately serious about online security. When I read "too big to fail" I think of over-leveraged banks during the GFC and that's something else entirely. "Big enough to be temporarily shut down in a major cyber-attack" seems to be the concern.

IMHO having local access to physical cash is a far more useful hedge than owning physical precious metals, let alone crypto. I keep a couple of years of cash in an NCUA-insured money market account in a local credit union I could walk to if I had to and I figure my iBonds at Treasury Direct are another "non-correlated location" asset. Nothing wrong with splitting investments between a couple of these brokerages either, as Mssrs. Rowland and Lawson recommended in the PP book.
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Re: Institutional diversification (Fidelity worries)

Post by sophie » Thu Apr 29, 2021 9:53 am

Long time Fidelity customer here.

You have to keep in mind that they are a discount brokerage. They provide excellent services, but their customer service at the individual level is meant to be used only minimally. I have had generally - but not universally - good experiences when calling them for assistance, and I would rate them highly compared to most other banks and discount brokerages. I would certainly not take it as a sign that they are in danger of going under. I agree that Fidelity going under would be a "too big to fail" scenario.

Also, I think you're seeing the effects of the COVID lockdowns and our new UBI (in the form of over-generous unemployment benefits). Low level jobs everywhere are going unfilled because the people who ordinarily do those jobs can "earn" more from unemployment than by working. Phone help line waits are high everywhere, it's not just Fidelity.

If it's a high level of service you're looking for, you will need to pay $$ for that. Either find and hire a financial advisor, or switch to a full service brokerage like Morgan Stanley where you're assigned someone you can communicate with quickly and easily and who can handle transactions for you - in return for paying high fees on transactions and for account maintenance. For me right now, that's not worth it, but for my 85 year old mom, it's completely worth it.
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Re: Institutional diversification (Fidelity worries)

Post by jswinner » Thu Apr 29, 2021 9:53 am

I Shrugged wrote:
Thu Apr 29, 2021 8:17 am
So the question was about the institutional risk. I’m going to say that VG and Fido are too big to fail. If something takes one out, you will be relying on physical gold, silver, and crypto.
Yes, there would be way more to worry about should either fail. I was split between Fidelity and ML, but I moved the majority to Fidelity recently as I found their level of service, and more importantly, communication when things were to going well on the platform, to be superior. Fidelity does have a few physical offices around too. They were helpful when setting up some family trust accounts.
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Thu Apr 29, 2021 7:29 pm

I Shrugged wrote:
Thu Apr 29, 2021 8:17 am

So the question was about the institutional risk. I’m going to say that VG and Fido are too big to fail. If something takes one out, you will be relying on physical gold, silver, and crypto.


Seems to be a reasonable, defensible declaration...
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Thu Apr 29, 2021 7:32 pm

MangoMan wrote:
Thu Apr 29, 2021 11:06 am

Kevin K. wrote:
Thu Apr 29, 2021 9:26 am

I Shrugged wrote:
Thu Apr 29, 2021 8:17 am

So the question was about the institutional risk. I’m going to say that VG and Fido are too big to fail. If something takes one out, you will be relying on physical gold, silver, and crypto.

I'd add Schwab to that list.

It is indeed pretty much down to these three giant brokerages at this point, and all of them are appropriately serious about online security. When I read "too big to fail" I think of over-leveraged banks during the GFC and that's something else entirely. "Big enough to be temporarily shut down in a major cyber-attack" seems to be the concern.

IMHO having local access to physical cash is a far more useful hedge than owning physical precious metals, let alone crypto. I keep a couple of years of cash in an NCUA-insured money market account in a local credit union I could walk to if I had to and I figure my iBonds at Treasury Direct are another "non-correlated location" asset. Nothing wrong with splitting investments between a couple of these brokerages either, as Mssrs. Rowland and Lawson recommended in the PP book.


The problem is that if there is an EMP or something else that shuts down the electrical grid or internet, you won't be able to access that cash.


So the solution to that is to have some real cash on hand? Question would be how much.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by jhogue » Fri Apr 30, 2021 7:08 am

I think safety comes in layers. I have a readily accessible emergency fund outside of my brokerage account (held at Fidelity and insured by Lloyds of London). I have a safe deposit box in a local bank. I know my local banker and he knows me. While my local bank account is FDIC-insured, it is just as important to me that the bank never shut down during the Great Depression, or the pandemic of ‘20-’21, or—more commonly-- various local power outages.

My safe deposit box contains a stash of greenbacks, some physical gold, and a stack of paper I-bonds. This diverse collection of “deep” assets is unaffected by EMP, an internet outage, or a black swan event in the financial markets.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Institutional diversification (Fidelity worries)

Post by vnatale » Fri Apr 30, 2021 8:05 am

jhogue wrote:
Fri Apr 30, 2021 7:08 am

I think safety comes in layers. I have a readily accessible emergency fund outside of my brokerage account (held at Fidelity and insured by Lloyds of London). I have a safe deposit box in a local bank. I know my local banker and he knows me. While my local bank account is FDIC-insured, it is just as important to me that the bank never shut down during the Great Depression, or the pandemic of ‘20-’21, or—more commonly-- various local power outages.

My safe deposit box contains a stash of greenbacks, some physical gold, and a stack of paper I-bonds. This diverse collection of “deep” assets is unaffected by EMP, an internet outage, or a black swan event in the financial markets.


Getting to your safety deposit box does not depend upon your bank having access to electricity?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Institutional diversification (Fidelity worries)

Post by jhogue » Fri Apr 30, 2021 11:45 am

Safety deposit box unlocks mechanically with two keys: the banker has one and I have the other.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Institutional diversification (Fidelity worries)

Post by jhogue » Fri Apr 30, 2021 12:04 pm

I am no prepper either, but a few years in the Boy Scouts taught me to "be prepared."

No plan can handle every possible contingency. I am suggesting an emergency fund with multiple layers and some diversification should see you through the most-- and the most likely-- emergencies.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Institutional diversification (Fidelity worries)

Post by Kevin K. » Thu May 06, 2021 9:00 am

There's nothing special about my local Tucson AZ credit union in terms of cash access. I could go in and get the daily ATM limit (2K?) every day if need be but considering that that's most of a month's living expenses for me as a frugal retiree it's plenty. You're talking about access to far larger amounts. I don't know of any bank that'll allow that on a regular basis, though I've gotten permission from Schwab Bank to take out as much as 5 to 10K with notice when I've paid cash for a used car in the past.

But I do like having some cash kept in a local institution with brick-and-mortar offices, and the .35% on MM funds, while not as good as the top online banks, beats the hell out of Vanguard's Treasury MM fund (VUSXX) paying exactly nothing.
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