Fidelity Takes Automatic Steps to Save Me Money

I've already talked about how I switched from regular Vanguard shares to Admiral shares to try and save on some investing costs. I took those steps proactively -- I called them and made the switch. But one of their competitors made the switch for me -- without me even asking.

As I've recently reorganized all of my investments, I now have a high concentration of dollars in a few funds. I also made these changes in my Fidelity 401k, moving from a handful of funds to one fund that has all my company retirement money in one place (I have other retirement money in IRAs that I've rolled over from previous 401ks -- the money I'm talking about here is just for my current 401k.)

When I made the changes at Fidelity, I put all my money in Fidelity Spartan Total Market Index Investor Class (FSTMX) shares. In short, this is a total market index fund. Here's a description of it from Yahoo:

The investment seeks to match the total return of the Wilshire 5000 index. The fund normally invests at least 80% of assets in common stocks that are in the index. It includes all of the stocks in the S&P 500 index, excluding foreign securities. The advisor uses sampling techniques to replicate the returns of the index while investing in a smaller number of securities. To select stocks, the advisor takes into consideration capitalization, industry exposure, dividend yield, price/earnings ratio, price/book ratio, and earnings growth.

The expense ration from the fund is a very low 0.10%.

But my consolidation put me with over $100k in this fund. A week or so after I made all the transactions, I got a note from Fidelity telling me they were automatically converting me to Fidelity Spartan Total Market Index Advantage Class (FSTVX) shares. The assets are EXACTLY the same as with FSTMX. The only difference is that the new shares have an expense ratio of 0.07%. In other words, the old fund would run me $100 in expenses per year at $100k invested while the new one runs me $70. I'll take $30 per year for doing nothing different, thank you very much! Over 20 years, that's $600 at $100k, but since I'll be adding to the amount, my savings will be much greater over time.

Ok, it's not a fortune, but I was impressed that Fidelity took the steps on their own to make the change, save me some money, and take care of a customer. Kudos to them!

BTW, Vanguard may have done this as well -- I don't know. As soon as I transferred the money there I made the change myself. If anyone has had experience with them in this sort of change, please let me know.

Comments

[The Weakonomist]

Fidelity and vanguard never cease to amaze me with their fine customer service. I don't have as much exp with fidelity, but I hear great thing about them all the time. By the same token Vanguard has always provided quick (and American) customer service. Of course I would only consider them if thy offered low fees, which as we all know they do.

With options like these companies I find it hard to understand exactly why anyone would invest elsewhere.

[Neal Frankle]

As Ben Franklin said, "Watch the nickels and the dollars take care of themselves"

Nice.

[Paula]

I don't have much experience with Vanguard but I hear nice things about them. Fidelity has been amazingly patient with me every time I have called. As someone who was initial very nervous about dealing with this stuff, they have taken the time to educate and assist me.

[Rick]

The reason for investing elsewhere is that many workplaces offer 401(k)s through companies other than these two. Many people unfortunately don't have a choice.

[thomas]

I'll have to look into this one. Not too knowledgeable on the Wilshire though. .10% is great.

[Nick]

Have had great experiences with Fidelity as my employee stock purchase program affiliate. Have been considering moving all my taxable accounts over to them since things have been going so well.

[Karla (threadbndr)]

I have my RothIRA with Vanguard. Very good customer service so far. They treat even the smaller investors well.