How are “complaints” dealt with at
Fidelity Investments?

Complaints at Fidelity Investments (“Fidelity Brokerage Services”) were handled in a manner which was the impetus for this article. Investment risks with the Fidelity Premium Services “Account Executive” program is the focus of this blog entry. Topics discussed will be 1) “AE’s” omission of information about market risk, 2) Poorly executed assessment phase of client’s needs, 3) Ambiguous and unclear marketing brochure about Premium Services “AE” role, and 4) Fidelity Investments’ response to issues related to “AE’s” conduct. Since I am a Licensed Psychotherapist, this article may comment on the nuances of behavior I have observed.

Until recently, I had been a longtime satisfied customer of Fidelity Investments (“Fidelity Brokerage Services”). In the past, I encouraged friends to partake of their “Account Executive” program. However, I must change my recommendation, and warn people about Fidelity. The purpose of this article is to educate people that if you take part in their “Account Executive Program”, be wary of omissions of critical market information from your “trusted” Account Executive which could affect your portfolio. Be wary of failures of the “AE” to do a comprehensive evaluation of your needs, and act on them appropriately. Be prepared that the management at Fidelity Investments will likely not be responsive or supportive when your portfolio value goes down due to “AE” issues, as been my experience. In fact, Fidelity Investments’ Management may be downright hostile and attacking in response to issues and concerns, as happened to me.

Years ago, I had an Account Executive (“AE”) who provided superlative guidance/support, until he was promoted to another position. I was assigned to someone else, who I sadly learned, did not have his skill set.

On May 24th, this new “AE” recommended mutual funds with bond holdings. Unfortunately, he failed to inform me that the interest rate on the 10 year treasury had been moving upward. As interest rates rise, the value of bond funds go down. If he informed me of this upward trend, like my last “AE” would likely have done, my investment strategy would have been different in light of the interest rate volatility. For example, instead of investing money all at once, I would have spread out the investments over a few months. (A dollar cost average technique).

Based on my “AE’s” advice, including reassurance about these funds, I bought mutual funds with bonds on a Friday, and by the close of Monday, my positions had gone down. When I asked him to explain the downturn, he told me that the interest rate on the 10 year treasury had gone up, and therefore the value of my mutual funds had gone down.

When we talked about my upset over my financial losses, his solution was for me to buy more shares at a lower price. This advice was extremely inappropriate, as I told him just 3 days earlier the amount I wished to invest in these positions. I clearly would not wish to put more money in those positions, which were fully funded.

His job, according to the information from Fidelity Investments, was to assess my risk tolerance and amount I wanted to invest. Since I did tell him the dollar amount I wished to invest in these funds, his suggestion to buy more as the price went down was astounding to me, and further evidence of his incompetence, in my opinion.

He actually has the CFP designation (Certified Financial Planner), which made his conduct even more distressing to me. Was he not listening during our conversations?  Or did he hope that I would not remember how much I wanted to invest into those positions, so that his failure to inform me about market interest rate risk could be made less deplorable by my adding shares to the positions?

He never apologized for failing to inform me about the rising interest rate market risk. In fact, his manner on the phone seemed weirdly light-hearted  and cheerful, in light of my presenting concerns. When his solution was to invest more money into those positions that were fully funded, he seemed disengaged from the reality of our prior conversation about my risk tolerance and amount I wanted to invest. 

In presenting this history to the “higher-ups” at Fidelity, a second nightmare was about to begin. My concerns were met with hostility, defensiveness, resistance and complete denial that anything had been done wrong. When his manager asked me, in a nasty sort of way, if I sold the positions, being that I was so unhappy, I reminded her that  the funds that the “AE” suggested I go into had a 2 month hold, and he failed to inform me about that fact, as well.  

How do you think she responded to this information? She continued with a cold, detached, and more irritated manner, without empathy or apology.  She refused to take any responsibility for the omission of information by the Account Executive that caused my investments to go down, or the “AE’s” conduct with respect to suggesting I add money to a position that was fully funded in order to deal with this issue. 

Based on Fidelity’s marketing brochure on the Premium Services Account Executive program, which writes about “trust” and “confidence” related to the guidance by the “AE”, and given my history of a positive experience with my first “AE”, I assumed that the new “AE” would be equally proficient. That was not the case. Fidelity had no willingness to respond to these issues in a supportive manner.  Rather, they responded aggressively by removing me from the “AE” program, rather than respecting my request to assign me to a more qualified “AE” who could help me fix my portfolio. This felt like a double violation. I had been a longstanding customer (since the 1990’s) who gave them positive reviews and sent them many customers. I was astounded that they refused to address this problem in any constructive way, and actually blocked my access to a more qualified “AE” to help fix the damage. 

HELPFUL TIPS/WARNINGS IF YOU ARE A FIDELITY CLIENT and AN OPEN LETTER TO FIDELITY MANAGEMENT

I feel an obligation to inform people to be aware of the possibility that the “AE” may omit critical information that could affect your portfolio performance, and Fidelity will do nothing to make you whole. Here are some tips if you use Fidelity Investments:

1. Their marketing brochure on the Premium Services’ Account Executive program fails to inform in a clear manner, in my opinion, regarding the “confidence” and “trust” (words in quotes from Fidelity Investments’ brochure) from the Account Executive relationship. In the brochure, a tiny #2 “endnote” in a paragraph in the beginning of the brochure causes the reader to go to the end of the 16 page brochure. In tiny font, the sentence seems to negate the paragraph it references. In other words, you are on your own when the “AE” fails to inform you about risks, even though the brochure describes “trust” and “confidence” regarding the one-on-one guidance.

2. If an “AE” omits critical market risk information, and if money is lost due to their omissions in information-giving, Fidelity will not back you up.

3. When I asked Fidelity if disclosing risks of market conditions was part of the “AE” role and responsibility, I could not get a straight answer. How can a brochure claim “trust” and “confidence” if the “AE” fails to inform about a clear market risk like raising rates when buying bond funds?
4. I suggested to a manager that their marketing brochure be changed to be more transparent about the reality of the “AE” role in the beginning of the brochure, rather to bury the truth in a tiny #2 reference at the end of the brochure. This request was not taken seriously, in my opinion. I am not surprised that they prefer to hide the truth in a tiny line at the end of the brochure. I now wonder…is the “AE” role an ambiguously created role to give the appearance of “guidance”, when its primary purpose is sales?
5. As a Licensed Psychotherapist, who specializes in Grief and Loss issues, I know I am grieving the loss of a trusted relationship.
6. In the marketing brochure mentioned above, Fidelity describes their Premium Services/Account Executive program, emphasizing trust, confidence, creating an investment strategy you can rely on, and a lifelong relationship with a dedicated  Account Executive. As mentioned above, the #2 endnote is buried on page 16. Also, this brochure does not mention the policies for the “Private Client Group” (the higher net worth client) Account Executive. Are the rules the same, or different? I wonder if such marketing material exists to describe the Private Client Group “AE” level of service. I was never provided, and never saw any such material. It seems logical to assume an equal or higher level of proficiency in the “Private Client Group” Account Executive relationship. (A complete description of their Premium Services “Account Executive” program/services can be found in a 4″ by 8″ paper brochure. I picked one up at the investment center, and they also sent a copy via email. If you are interested, perhaps they will send it to you.) 
7. To Fidelity Investments: I wonder if someone from Fidelity Investments, who has power and authority to analyze this situation will read this blog, and hopefully, make some changes for the better, both in the marketing brochures, and in the training of their Account Executives. Are your “AE’s”  trained to fully disclose obvious current market risk related to the investments they present? How does it serve you to place the information in the #2 end-note (not footnote) in tiny font about 12 pages away from the content it clarifies? How do you generate a trusting relationship with clients like me when you do this? Finally, what do you fear will happen with your company’s marketing efforts if the information in the #2 end-note reference is placed within the paragraph it references in the first few pages of your brochure? (Feel free to answer these questions in the comment section below, since I could not get a clear answer from the people I spoke with by phone. Only clear responses which answer the questions above will be printed.)