Fidelity Revamping Financial Advice Fees
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What are the top money headlines opening this episode?
I'm J.R. Whalen in New York. Fidelity is changing up the fees it charges some customers. More on that in a moment. First, these money headlines. U.S. consumer prices fell in March because of a brief drop in the cost of gasoline. But underlying inflation picked up. The Consumer Price Index, reflecting what Americans paid for everything from housing to dental care, fell one-tenth of a percent from a month earlier. That's the first decline since May 2017. And as gas prices fell in March, oil prices traded at their highest levels since late 2014 on Wednesday of this week, as conflicts in the Middle East continued to escalate. raising fears of disruptions to global oil output. U.S. crude futures recently traded up $1.55 to $67.06 a barrel on the New York Mercantile Exchange.
Brent, the global benchmark, rose $1.40 to $72.44.
How did March consumer prices and inflation change, and why does it matter?
Both benchmarks are at their highest level since December 2014. Prices are on track for the third straight day of gains of more than 2% for U.S. crude futures. The moves have been a sharp reversal from last week when oil prices tumbled as investors fretted that a possible trade war between the U.S. and China would crimp the global economic growth that has fueled demand. And a Montauk, New York beach house, formerly owned by disgraced financier Bernard Madoff, is coming on the market for $21 million. The current owners bought the property for about $9.4 million in 2009. The proceeds of the sale, which were handled by the U.S. Marshals Service, went toward restitution for the victims of Madoff's notorious Ponzi scheme.
The Madoffs, by the way, purchased the land for about $250,000 in the early 1980s. This is your Money Briefing from The Wall Street Journal. Welcome back, everyone. One of the biggest pricing shakeups in the financial advice sector is set to occur with Fidelity Investments overhauling what it charges affluent clients. And Wall Street Journal reporter Sarah Krause is here with details. So, Sarah, Fidelity isn't the only investment house that has been making changes to its fee structure.
No, it is sort of the latest in a number of big wealth managers that have either simplified or altered its fee structures. Some of these changes have been prompted by the Labor Department's fiduciary rule, which its future is a bit uncertain at this point. But the sort of advent of it in recent years has prompted a number of changes that consultants say are unlikely to be reversed, even if the rule doesn't survive.
Why did oil prices spike to highs not seen since 2014?
So that rule came into effect after the recession, but during the Obama administration and now in a new administration, it could be in jeopardy?
Well, the rule was created under the Obama administration and went into effect in April of last year, but has since been challenged under the Trump administration. And so it may eventually be repealed or changed, but it has already led to a number of fund fee reductions, as well as changes in the pricing structure of wealth management. And And to be clear, that rule was meant to apply to retirement advice specifically. So it required brokers to act in their customers' best interest or to put their interests ahead of the broker's own. But the sort of tenets of that have seeped out across the broader financial and wealth management space.
Okay. Now, in Fidelity's case, costs will be tied exclusively to how much a client has invested with Fidelity. So it won't be the same fee structure or fee change across the board.
No. So what Fidelity's change does is sort of combines into one new fee structure what were previously a number of different structures that depended on the assets under management a customer had, what their investing preference was, i.e., was it a portfolio of only Fidelity funds versus index funds offered by a number of different firms, etc. So it depended previously on the assets under management, the investing style, the level of interaction that a customer wanted with the company, their tax needs, etc. So it was sort of an a la carte type system for paying for the wealth management services that a customer was getting, whereas now it's more think of it as a sort of prefix type approach based on assets.
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