Fidelity is Changing How it Charges for Financial Advice

Fidelity Investments is changing how it charges its clients for financial advice. The Wall Street Journal reports starting in July, clients will be charged based on how much they invest with Fidelity. This method replaces the current model, in which costs are based on a variety of factors, including a customer’s investment preferences, level of interaction with Fidelity and overall assets.

According to the WSJ, new customers will pay less or more than they would today, but current clients will pay the same or less because they will be granted waivers to keep their current fees from increasing.

A Fidelity spokesperson told the WSJ that the changes are being made due to customer demand. Recently, wealth managers have made changes to their fee models, after the Labor Department passed the Fiduciary rule, which required brokers to offer products based on their clients’ interests instead of based on commissions.

Fidelity’s move shows that despite an overturn of the rule by a U.S. District Circuit Court, major asset managers are still feeling the pressure brought about by that initial decision and are transitioning to flat-fee pricing models. Industry experts say they expect that same pressure to force the annuity, insurance and other financial industries to make the switch as well.

Posted on April 12, 2018 .