Fees Dropping - T Rowe Price Offering Summit Program

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nedsaid
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Fees Dropping - T Rowe Price Offering Summit Program

Post by nedsaid »

As of November 15th, T Rowe Price is starting up the Summit Program. One of the benefits is that a client with $500,000 balance with them can invest in Institutional Share Class shares with an investment of $50,000 in a single fund. The I Shares give an investor on average a 20% discount on fees.

In addition, they have offer a Retirement Advisory Service with an investment minimum of $250,000 with net fees which average 0.50%, the gross fees can be as high as 1% but they net out the expense ratios of the underlying funds. Portfolio management, comprehensive and ongoing financial planning are included. Depending on the mix of assets in the portfolio the net fee ranges from 0.40% to 0.60%. Price employs Financial Planners but your assigned Advisor might have securities licenses and not a Certified Financial Planner designation.

I am using these examples to show that both expense ratios for funds and Advisory fees are coming down. I am not a T. Rowe Price client.

In comparison, Schwab offers financial planning for $300 up front and $30 a month thereafter with a $25,000 minimum investment which is managed by Schwab Intelligent Portfolios. A human/robot combination. They employ Certified Financial Planners.

Fidelity offers a human advisor/robot advisor combination for 0.50% of the portfolio balance each year. They offer financial coaching and online financial planning tools. If you need to dive deeper into a financial topic you can schedule a 30 minute consultation. I don't know how comprehensive the planning is as they use the term "coaching" and not "planning."

What I am showing here is that an investor wanting guidance with portfolio management need not pay an Assets Under Management fee of 1% or more. Fees are coming down for funds and ETFs and also for Advisory services.

My best guess is that the advice given by T. Rowe Price/Schwab/Fidelity might be more general in nature than what you might receive from a local Financial Advisor. Comments?
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000
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by 000 »

nedsaid wrote: Sun Oct 24, 2021 12:29 pm Depending on the mix of assets in the portfolio the net fee ranges from 0.40% to 0.60%.

[...]

Comments?
Probably a reasonable alternative to PAS especially based on recent reports here about that service.
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nedsaid
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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000 wrote: Sun Oct 24, 2021 4:10 pm
nedsaid wrote: Sun Oct 24, 2021 12:29 pm Depending on the mix of assets in the portfolio the net fee ranges from 0.40% to 0.60%.

[...]

Comments?
Probably a reasonable alternative to PAS especially based on recent reports here about that service.
As with anything, people will have a wide range of experiences. Someone here posted that Schwab provided very comprehensive services for zero cost, but the person had a lot of assets there. Others will say that things seemed too general and cookie cutter. Others get pretty detailed, customized, and personalized advice. It also depends upon the particular Advisor you get and I suppose how much in assets you bring to the table. I suspect that all 4 firms discussed here would do a good job with running a portfolio and good basic financial planning.

These developments are notable because it shows that the big asset managers are getting into the Advisory business and that the fees are getting to be, even by Boglehead standards, more reasonable. It also is remarkable in that T. Rowe Price, known for active management is offering an Advisory service that is becoming competitive with Vanguard which is known for cheap index funds.

I was also happy to see that T Rowe Price is offering shareholders access to the cheaper Institutional Class of shares. Fees are coming down not only in the asset management business but also with Advisory services.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by 000 »

One remaining question is how tax efficiently can one invest with TRP in a taxable account?

Perhaps as more funds become available with an ETF share class this will improve.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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Huzzah! ?
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nedsaid
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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000 wrote: Sun Oct 24, 2021 4:34 pm One remaining question is how tax efficiently can one invest with TRP in a taxable account?

Perhaps as more funds become available with an ETF share class this will improve.
Don't know the answer to that but I know that TRP has Index Funds as well. Perhaps their Taxable Accounts would hold Index Funds and the Tax Deferred Accounts would hold active funds. They also have started offering ETFs and that is a potential solution as well.
Last edited by nedsaid on Sun Oct 24, 2021 10:57 pm, edited 1 time in total.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by Ferdinand2014 »

I have a Fidelity advisor. Free. He calls me about 2 X year. We review my goals, allocation, etc. His picture popped up in the corner of my Fidelity account about 6 years ago. Guessing something to do with total investments at Fidelity. Surprisingly he’s never asked me about active funds. He just suggested I add international and change my short treasuries to something closer to liability matching maturity. Kinda Boglehead like advice.
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Retired1809
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by Retired1809 »

Am I correct to assume that thd Summit Progrm applies only to T Rowe Price funds held directly at T. Rowe Price and NOT to TRP funds held at outside brokers such as Fidelity or T.D. Ameritrade?
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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Ferdinand2014 wrote: Sun Oct 24, 2021 4:42 pm I have a Fidelity advisor. Free. He calls me about 2 X year. We review my goals, allocation, etc. His picture popped up in the corner of my Fidelity account about 6 years ago. Guessing something to do with total investments at Fidelity. Surprisingly he’s never asked me about active funds. He just suggested I add international and change my short treasuries to something closer to liability matching maturity. Kinda Boglehead like advice.
I am a Fidelity customer too. I can have an Advisor assigned to me but I don't have to have them manage my assets. The free advice can sometimes be quite good. I don't have a Fidelity advisor now but I did meet with one a couple of years ago. The experience was good but he did try to interest me in a deferred annuity, I showed interest and we spent part of the appointment talking about it. It was a very gentle sales pitch and in fairness, he did bring up the Zero funds. He also briefly mentioned Wealth Management but he looked at my portfolio and concluded that I knew what I was doing. Over all, it was worth my time and I learned something.

Fidelity is a business, the advisor sometimes will give a gentle sales pitch, but it is the same upsell that you get at the Burger joint. "Would you like fries with that?" You get the upsell in any business but I found that Fidelity was pretty subtle about it.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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Retired1809 wrote: Sun Oct 24, 2021 4:48 pm Am I correct to assume that thd Summit Progrm applies only to T Rowe Price funds held directly at T. Rowe Price and NOT to TRP funds held at outside brokers such as Fidelity or T.D. Ameritrade?
I am not sure about that. You would have to read the agreement carefully. Great question. My sense is that you are probably right.
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jeffyscott
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by jeffyscott »

Retired1809 wrote: Sun Oct 24, 2021 4:48 pmAm I correct to assume that thd Summit Progrm applies only to T Rowe Price funds held directly at T. Rowe Price and NOT to TRP funds held at outside brokers such as Fidelity or T.D. Ameritrade?
My spouse just rolled an account out of T. Rowe earlier this year. She plans to keep a couple of their funds, so I will be very annoyed if she can't move those to the institutional shares. I had noticed that Schwab shows lower minimums of, generally, $100K for the institutional shares, but they are restricted to institutional clients.

T. Rowe does, say: Discover the benefits of investing directly with T. Rowe Price...
https://www.troweprice.com/personal-inv ... ogram.html

However, since Schwab makes institutional shares of some other fund companies available with low minimums, maybe there is some hope that that aspect will not be restricted.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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I received a letter yesterday from T Rowe Price explaining the Summit Program. The I Class Funds do have lower expense ratios but not as low as I expected them to be. Examples are: Sci & Tech .77 to .65; Health Sciences .76 to .65; Blue Chip Growth .68 to .56. I think I'm going to opt out of the Summit Program and move those funds into Vanguard Index Funds. Your thoughts please.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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lewisautomatic wrote: Tue Jan 25, 2022 9:35 am I received a letter yesterday from T Rowe Price explaining the Summit Program. The I Class Funds do have lower expense ratios but not as low as I expected them to be. Examples are: Sci & Tech .77 to .65; Health Sciences .76 to .65; Blue Chip Growth .68 to .56. I think I'm going to opt out of the Summit Program and move those funds into Vanguard Index Funds. Your thoughts please.
First thought is to ask: what is it about those funds (Sci&Tech, Health, Blue Chip) that is worth focusing on them, as opposed to a broad market funds like Total Stock Market or S&P 500 fund? Make sure you have a plan for how such funds fit into your overall portfolio. I think broad market funds have the advantage of not needing to answer questions like: How much of this fund or that fund should I own? What is its role in my portfolio? What do I do if it underperforms the market? How long should I own it? Am I comfortable with taking on "manager risk"?

Second thought is that the specific funds are not worth the ER cost. I concur with using passive/index funds in general. You may very well decide a "tilt" to one sector is worthwhile; an index fund choice will at least keep your costs down.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by lewisautomatic »

Thanks for your reply. I have holdings in VTSAX, VBTLX, VTABX and VTIAX. My plan is to move all of those T Rowe Price funds into those 4 Vanguard funds. I have until Feb 3 to contact TRP and opt out of the Summit Program.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

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lewisautomatic wrote: Tue Jan 25, 2022 11:12 am Thanks for your reply. I have holdings in VTSAX, VBTLX, VTABX and VTIAX. My plan is to move all of those T Rowe Price funds into those 4 Vanguard funds. I have until Feb 3 to contact TRP and opt out of the Summit Program.
Understanding that the concern is the ERs,

Would take it there isn't significant unrealized gains in liquidating?

Is there a particular reason to opt out of Summit, rather than letting this change "settle", then liquidate as appropriate relative to cap gains?


I ask because we also just go the Summit letter for our TRP holdings.
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Re: Fees Dropping - T Rowe Price Offering Summit Program

Post by lewisautomatic »

Not sure about unrealized gains in liquidating. All but one of my TRP funds are IRAs. I'm considering staying put and letting the conversion go through and settle but why wait?
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