Good news for current and upcoming users of Boston-based Fidelity Investments’ robo advisor, Fidelity Go. Known for managing $2.46 trillion worth of assets across retirement and brokerage services, its Fidelity Go will waive fees for accounts under $10,000, starting from August 1, 2020.
Fidelity Go Cuts Fees for Accounts Under $10,000
As FinTech competition heats up, constantly bringing in new inventions, from automated saving to automated investing, so does the running cost for the end-user keep going down. We have already reported on some robo advisors who cater to high-end clients, like Personal Capital with its average client holding $538,000 in assets. On the lower end of client wealth, you have Betterment which caters to clients with an average asset value of $34,000.
However, there is no intrinsic reason to have a model to cater to high-end clients only. A FinTech company may acquire that reputation eventually, and such branding may have a value of its own, but when you take an objective look at both, the differences winnow down considerably.
This is certainly the mindset behind the latest tweak to the Fidelity Go program. From the inception of the program in 2016, the Fidelity Go program had a flat fee for all accounts in the form of 35 basis points. This changes on August 1st:
- Fees will be rescinded for all accounts under $10,000.
- Medium-sized accounts between $10,000 and $49,999 will be charged a monthly fee of $3.
- High-end accounts will continue to pay the traditional Fidelity Go fee of 35 basis points.
Effectively, this new three-tier system from Fidelity Investments mirrors the trend you have already noticed. Robinhood brought a fee-less concept of trading and investing to the forefront. Because of it, Robinhood amassed incredible global popularity, user count, and impressive funding that bypasses economic downturns. Everyone else took notice.
Fidelity Go’s Goal and Supplementary Services
Fidelity Go’s first fee-less tier also has a specific goal – catering to younger clients – according to Fidelity’s spokesperson:
“Fidelity is constantly looking at ways to bring additional value to customers especially giving access to planning and advice for new and younger investors…”
Let’s face it. Outside of the coronavirus economic downfall, the middle class in America has been shrinking for a long time. There are more renters than ever, gig economy is supplanting long-term stable jobs, and the average age for a first-time home buyer shifted from 23 in 1960 to 32 in 2018. This is the perspective in which we must view the new world of Acorns micro-investing, Robinhood’s fee-less trading, and hybrid automated saving and investing like Save.
Besides having access to less wealth than previous generations, another critical factor that proliferates these platforms is – removal of the cognitive load. Older generations had no advantage of eToro’s CopyTrader where you can just copy trades of professional stock traders, let alone availing yourself to automated and insured investing. Prior to digital evolution, you had to develop your own knowledge and expertise in everything you do.
Lastly, Fidelity Investments is keeping its crypto cards open by insinuating it will implement Ethereum support alongside Bitcoin to expand its Fidelity Digital Assets portfolio.
With so many appealing and cost-free apps around, it will be difficult to review them. Which factors do you consider to be the most important for trading, saving, and investing platforms? Let us know in the comments below.