Fidelity just announced a new feature called Fidelity Solo FidFolios. You can make a custom index with up to 50 individual stocks, or a custom asset allocation portfolio using ETFs. You can then buy into your custom portfolio all a once using flat dollar amounts and Fidelity will juggle the fractional shares. For example, your $50 purchase could be split into 50 different individual companies.
“Now more than ever, investors want the peace of mind of trading, monitoring, and rebalancing custom stock portfolios in a simple way,” said Robert Mascialino, head of Fidelity’s retail brokerage business. “With the ability to align to a specific theme or individual values, Fidelity Solo FidFoliosSM helps leverage the power of direct indexing to build a customized portfolio while simplifying how investors manage what they own.”
Costs. Flat $4.99 per month, with a 90-day free trial. No stock commissions. Works within your usual Fidelity brokerage or IRA account. If you stop paying the fee, you just end up holding those individuals stocks and/or ETFs.
Note that this is different from their Fidelity Managed FidFolios, which is professionally managed by Fidelity and more about using tax-loss harvesting to gain a slight after-tax advantage. The cost for Managed Fidfolios is 0.40% annual management fee with a $5,000 initial minimum.
This may sound familiar, as it is pretty much what the start-up M1 Finance first introduced years ago, with the important distinction that M1 Finance is free (so far). Motif Investing also ran something similar before they shut down and their technology was acquired by Schwab.
I believe that a “custom robo-advisor” feature is going to be widespread in the future. Many DIY folks would like the ability to make your own customized all-in-one Target Retirement Fund. It’s really not that technically difficult to allow everyone to create their own custom glide path. I explored this with a small investment in M1, but in practice I have found it trickier to implement if you have to rebalance across various 401k plans, IRAs, and taxable brokerage accounts. Still, I’d rather use M1 Finance or this Solo Fidfolio over another robo-advisor that changes their model portfolios every few years to match up with whatever is currently trendy.
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They had me at “similar to M1 Finance” but lost me at $5/mo.
Granted, Acorns and Stash et al., charge $5/mo to do the same thing and Fidelity is unlikely to do the PFOF that M1 Finance does. Maybe if one of the ETFs in the portfolio is QYLD and you buy enough shares to get $5/mo in distributions to pay for the service?
M1 Finance has horrible execution. That $5 is a steal if the execution is good. Somehow M1 Finance buys at the highest point in the window and sells at the lowest.
Would this be for all your Fidelity accounts or is the fee per account (roth, ira, brokerage, etc.)? If it’s for all your accounts, $5 a month could be worth it for people. Easier to manage DIY portfolio, or mimic a target-date fund with ETFs for a lower fee (Vanguard).
This could also be a cheaper alternative to Fidelity Go. I use the Fidelity Credit card and have my cash back go into a Fidelity Go account monthly with a set and forget mentality. Auto payment, auto cashback, auto investment.
I spoke with a Fidelity rep on the phone and she said the $4.99 fee is for unlimited accounts.
This is great news!
I spent a week last year creating an excel sheet re-balancing my portfolio over multiple IRA and 401k accounts. I hope this will all be automated soon. This is definitely a step in the right direction.
401(k)s are ineligible according to ther FAQ. Bummer.
“.. trickier to implement if you have to rebalance across various 401k plans, IRAs, and taxable brokerage accounts”
FYI, Lakshmi (https://github.com/sarvjeets/lakshmi, open source and completely free) supports this among many other things. You can figure out which funds to add money to across accounts while keeping your overall asset allocation close to your target (https://sarvjeets.github.io/lakshmi/docs/lak.html#lak-analyze-allocate).
(Disclosure: I’m the author of the tool)
this Fidelity way to charge back Brokerage fees
they are closing Basket trade-free one same thing it do as Solo did not update for a long time ( manually rebuilding )
Very interesting, I’m surprised I had never heard of Fidelity’s basket trading service before. They did not do much to publicize it.
Thank you, Jonathan. Isn’t Schwab doing something similar?
Fidelity mentions that for their Solo FidFolios – it only supports Stocks and not ETFs. You referenced you can build a basket of ETFs – is that correct? Can you point out a reference? I’m only reading support for Stocks in their Solo FidFolios.
#1
https://www.fidelity.com/direct-indexing/customized-investing/overview
Allowable Fidelity Solo investments vary. High learning curve of lists, baskets, models, percentages, allocation–terminology is confusing. I tried setting up stocklists and ran into model failures for anything other than NYSE listed equities. Several candidates of them were arbitrarily the cause of problems including refusal of basket to load because of 1 “unsuitable” stock that had previously gone through smoothly. Reps. of little help. Have to keep trying variations yourself; write them down somewhere in order of procedures.
M1 isn’t terrible, but there’s room for improvement. Once Fidelity adds support for ETFS, I’ll try out the Solo folo.
Where can I find the list of stocks that can be selected for these Filios? (Before actually giving out my personal information.) Never did fully trust M1 as execution appeared buggy.