Does Fidelity Offer Robo Investing? Exploring the Benefits, Costs, and Strategies of Fidelity’s Automated Investment Service

Introduction

Robo investing is an automated form of investing that takes human emotion out of the equation. It uses algorithms and software programs to manage investments for individuals with minimal input from a financial advisor. In recent years, robo investing has become increasingly popular as a cost-effective way to access professional advice and invest with little effort on the part of the investor. One of the biggest players in the robo investing space is Fidelity, which offers a comprehensive robo investing platform.

Definition of Robo Investing

Robo investing, also known as robo advising, is an automated approach to managing investments. It involves using computer algorithms and software to manage investments based on predetermined criteria such as risk tolerance, time horizon, and goals. This eliminates the need for individual investors to make their own decisions about which stocks or funds to buy and when to sell them. Instead, robo investing relies on an algorithm to make all of these decisions for the investor.

Overview of Fidelity’s Robo Investing Platform

Fidelity’s robo investing platform, Fidelity Go, is designed to provide investors with a low-cost and easy-to-use automated investing solution. The platform offers a wide range of tools, resources, and services, including portfolio construction, goal setting, and investment advice. Fidelity Go combines the expertise of professional financial advisors with the convenience of automated investing to provide investors with a comprehensive and affordable robo investing solution.

Benefits of Fidelity’s Robo Investing

Fidelity’s robo investing platform offers a variety of benefits for investors, including:

Lower Costs

One of the main advantages of Fidelity’s robo investing platform is the lower costs associated with it. Fidelity Go charges a flat annual fee of 0.35% of assets under management, which is significantly lower than the fees charged by many traditional financial advisors. Additionally, Fidelity Go does not charge any commissions or transaction fees, making it even more cost-effective.

Access to Professional Advice

Another benefit of Fidelity’s robo investing platform is access to professional advice. Fidelity Go provides investors with access to a team of certified financial planners who can offer personalized advice and guidance. This means that investors can get the same level of advice they would receive from a traditional financial advisor without having to pay the higher fees associated with working with a human advisor.

Automated Investing

Finally, Fidelity’s robo investing platform offers the convenience of automated investing. Investors simply set up their account, select their desired investment strategy, and let the automated system take care of the rest. This eliminates the need for investors to manually monitor and rebalance their portfolios, saving them time and effort.

Getting Started with Fidelity’s Robo Investment Service

Getting started with Fidelity’s robo investing platform is easy. First, investors will need to open a Fidelity Go account. This can be done online or through the Fidelity mobile app. Once the account is opened, investors will need to select their desired investment strategy. Fidelity Go offers a range of options, from conservative to aggressive, so investors can choose the one that best fits their goals and risk tolerance.

Roboadvisors: An Overview of Fidelity’s Robo Investing

Roboadvisors are automated investment advisors that use algorithms to determine the best investments for an individual’s portfolio. Fidelity’s robo investing platform utilizes roboadvisors to provide investors with personalized advice and automated portfolio management.

Understanding the Different Types of Robo Advisors

There are two types of roboadvisors: passive and active. Passive roboadvisors provide simple, low-cost portfolio management solutions that track market indices. Active roboadvisors, on the other hand, use advanced algorithms to actively manage portfolios and make decisions based on the investor’s goals, risk tolerance, and time horizon.

How Robo Advisors Work

Robo advisors work by analyzing an investor’s financial situation and risk tolerance. They then recommend a portfolio of investments that align with the investor’s goals and risk tolerance. Robo advisors then continuously monitor the portfolio and make adjustments as needed to ensure that it is meeting the investor’s goals.

Fees and Costs Associated With Fidelity’s Robo Investing

When considering a robo investing platform, it is important to understand the fees and costs associated with it. Fidelity’s robo investing platform charges a flat annual fee of 0.35% of assets under management. Additionally, there are no commissions or transaction fees.

Commissions

Fidelity Go does not charge any commissions on trades. This is one of the major advantages of using a robo investing platform, as commission fees can add up quickly when trading frequently.

Management Fees

In addition to the annual fee, Fidelity Go also charges an ongoing management fee of 0.35% of assets under management. This fee is assessed quarterly and is used to cover the cost of managing the portfolio.

Other Fees

Fidelity Go does not charge any additional fees for things like account transfers or withdrawals. However, investors should be aware that some ETFs may have additional fees associated with them.

Comparing Fidelity’s Robo Investing to Other Automated Investment Services

When comparing automated investment services, it is important to consider the cost, investment strategies, and features offered by each platform. Here is a brief comparison of Fidelity’s robo investing platform with other popular robo advisors:

Cost Comparison

Fidelity Go’s annual fee of 0.35% of assets under management is competitive with other robo advisors. Many of the other popular robo advisors charge similar fees, although some may have slightly lower or higher fees depending on the platform.

Investment Strategies

When it comes to investment strategies, Fidelity Go offers a wide range of options, from conservative to aggressive. This allows investors to find a strategy that best suits their goals and risk tolerance. Other robo advisors may offer fewer investment options or focus on specific strategies.

Pros and Cons of Fidelity’s Robo Investing Platform

Fidelity’s robo investing platform offers a number of advantages for investors, but there are also some drawbacks to consider. Here are some of the pros and cons of Fidelity’s robo investing platform:

Pros

• Low cost – Fidelity Go’s annual fee of 0.35% of assets under management is significantly lower than the fees charged by many traditional financial advisors.
• Access to professional advice – Fidelity Go provides investors with access to a team of certified financial planners who can offer personalized advice and guidance.
• Automated investing – Fidelity Go’s automated investing system eliminates the need for investors to manually monitor and rebalance their portfolios.

Cons

• Limited investment options – Fidelity Go only offers a limited range of investment options, so investors may need to look elsewhere for more specialized investments.
• No tax loss harvesting – Fidelity Go does not offer tax loss harvesting, which could reduce an investor’s tax liability.
• No fractional shares – Fidelity Go does not allow investors to purchase fractional shares, which may limit their ability to diversify their portfolios.

Conclusion

Fidelity’s robo investing platform, Fidelity Go, is a comprehensive and affordable automated investment solution. It offers a low-cost option for investors who want access to professional advice and automated investing. While there are some drawbacks to Fidelity Go, such as limited investment options and no tax loss harvesting, overall it is an excellent choice for those looking for an automated investment solution.