A more comprehensive approach to portfolio construction.

This hypothetical simulation will demonstrate our approach to investing and how we build portfolios. While the purpose of this simulation is educational, it should provide a high-level explanation of some of Personalized Portfolios' key features and how they can help you reach your financial goals.

What we'll cover:

  1. The important role asset allocation can play in goal-based planning and investing.
  2. How we can build a portfolio around all accounts assigned to a goal, including those outside of Fidelity.
  3. How we adjust the way we manage Personalized Portfolios accounts based on the way other accounts are invested.
  4. How we can strategically position assets to create more tax-efficient portfolios.

Ready to learn more about Personalized Portfolios?

The information presented, including the asset allocation used in the demonstration, are intended to be educational, should not be considered a recommendation, and is not tailored to the investment needs of any specific investor. Please contact a Fidelity representative for more information or if you would like an asset allocation recommendation based on your specific investment profile.

Fidelity® Wealth Services provides non-discretionary financial planning and discretionary investment management through one or more Personalized Portfolios accounts for a fee. Advisory services offered by Fidelity Personal and Workplace Advisors LLC (FPWA), a registered investment adviser. Discretionary portfolio management services provided by Strategic Advisers LLC (Strategic Advisers), a registered investment adviser. Brokerage services provided by Fidelity Brokerage Services LLC (FBS), and custodial and related services provided by National Financial Services LLC (NFS), each a member NYSE and SIPC. FPWA, Strategic Advisers, FBS, and NFS are Fidelity Investments companies.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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Let's start by looking at the accounts we'd be managing through Personalized Portfolios.

Enter the total dollar value for each account type.

If you'd like to exclude an account type, enter 0 and select Next.

Account Value.
Account Value.
Account Value.

*A Roth IRA is an individual retirement account (IRA) funded with after-tax dollars. Investments have the potential to grow tax-free, and distributions (withdrawals) may be tax-free, provided certain requirements are met. For a distribution to be considered qualified (tax-free), the 5-year aging requirement has to be satisfied, and the investor must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them). Contributions added to a Roth may be withdrawn at any time penalty-free.

Now let's look at any other accounts that will not be managed through Personalized Portfolios.

To help ensure the plans we create reflect a 360-degree view of a client’s financial picture, we can build an asset allocation around all the accounts assigned to a goal. This could include accounts held at another firm or other Fidelity accounts. Enter the total dollar value for each account type below.

Account Value.
Plus
Account Value.
Equals
$0k
Total.
If there are no other accounts to assign to the goal, enter 0 and select Next.

Now, tell us how to treat these other accounts.

Through Personalized Portfolios, we provide an asset allocation recommendation for all accounts assigned to a goal, even those we’re not managing. When other accounts are included, we can build a cohesive portfolio around them, whether the client chooses to implement our asset allocation recommendation, maintain the current asset allocation, or choose their own.

Total.

*Clients are responsible for implementing and maintaining the investment recommendation we provide for any “Unlocked” account. In instances where accounts are “Locked,” clients should let us know if any changes are made so we can review how this might impact the plan and the way any Personalized Portfolios accounts assigned to the goal are managed.

Tell us how all these accounts are currently invested.

For the purposes of this simulation, let's assume that all stocks, domestic and foreign, fall in the stocks category, and that both bonds and short-term investments are classified as bonds.

Grab the handle for each account type and rotate it until the asset allocation closely resembles how it's currently invested.
50% stocks.
50% bonds.
Other accounts
50% stocks.
50% bonds.
Tax-deferred
50% stocks.
50% bonds.
Tax-free
50% stocks.
50% bonds.
Taxable

Here's how all the assigned accounts are currently invested.

The current asset allocation represents the aggregate mix of stocks and bonds across all accounts assigned to a goal, including those we’re not managing.

Building and maintaining an appropriate asset allocation helps to ensure all the accounts assigned to a goal are working together. We believe this increases the chances our clients are taking on the appropriate amount of risk while improving the likelihood that they’ll reach their goal.

Next, we'll provide a hypothetical goal asset allocation and compare that to how the accounts assigned to this goal are currently invested.

Here's the asset allocation we'll try to match for the goal.

The goal asset allocation is the aggregate mix of stocks and bonds that Fidelity believes is most appropriate for a client’s goal and comfort level with risk.

The actual asset allocation recommendation for your goal may be different from what is shown here.

In an actual planning scenario, we'd gather all your information and recommend an appropriate mix of investments that includes domestic and foreign stocks, bonds, and short-term investments. For the purposes of this simulation, let's assume that mix is 60% stocks and 40% bonds.

40% bonds 60% stocks
Goal
  • Current asset
    allocation
  • Goal asset
    allocation
  • Current asset
    allocation

Let's get started.

Here are all the accounts assigned to this goal that would be managed through Personalized Portfolios, along with the way they’re collectively invested.

Get started by selecting Next to see how we’ll adjust the current asset allocation in an effort to reach the hypothetical goal asset allocation, in this case 60% stocks and 40% bonds.

Here are all the accounts assigned to this goal, along with the way they’re currently invested.

Select Next to see how we'll align these accounts to the hypothetical goal asset allocation, in this case 60% stocks and 40% bonds.

Building a cohesive portfolio around all accounts.

We start with the accounts managed through Personalized Portfolios.

For clients enrolled in Personalized Portfolios, we work to build a cohesive portfolio around all accounts assigned to a goal.

The managed accounts asset allocation represents the combined exposure to stocks and bonds across the Personalized Portfolios accounts. Adjusting this is what helps us achieve the appropriate asset allocation for the goal.

Here’s the current asset allocation for the accounts assigned to this goal that would be managed through Personalized Portfolios. Adjusting this combined exposure to stocks and bonds can help us achieve the appropriate asset allocation for the goal.

Integrating other accounts.

When integrating “Locked” other accounts into a plan, we consider their overall stock exposure when determining the appropriate asset allocation for the Personalized Portfolios accounts.

Our ability to build around these other accounts is what helps ensure all accounts assigned to the goal are working together toward a common purpose.

Our ability to provide our clients with an asset allocation recommendation for these other accounts is what helps ensure all accounts assigned to the goal are working together toward a common purpose.

When integrating “Unlocked” other accounts into a plan, we can work together to build a more cohesive portfolio around all accounts assigned to the goal.

Building a cohesive portfolio around other accounts.
Building a cohesive portfolio around all accounts.

Notice how the managed accounts asset allocation shifts to compensate for the way the other “Locked” accounts are invested. This process, called complementing, is what helps us achieve the appropriate asset allocation for a goal.

Notice how the hypothetical goal asset allocation, in this case 60% stocks and 40% bonds, has been implemented across all accounts assigned to the goal.

The outcome of these adjustments is reflected in the new projected asset allocation for the goal.

Building a cohesive portfolio around all accounts.

For clients enrolled in Personalized Portfolios, we work to build a cohesive portfolio around all accounts assigned to a goal.

The managed accounts asset allocation represents the combined exposure to stocks and bonds across the Personalized Portfolios accounts. Adjusting this is what helps us achieve the appropriate asset allocation for the goal.

The strategic positioning of assets.

For goals that qualify, we're able to employ Household Tax-smart Strategies, which allows us to build and manage more tax-efficient portfolios using asset location. When applying asset location we consider the tax treatment of each account when determining which types of investments to "locate" in that account. We may also provide a unique asset allocation for each managed account as part of our ongoing effort to help enhance after-tax returns.

40% bonds 60% stocks
Goal
  • Current asset
    allocation
  • Projected asset
    allocation
50% stocks
50% bonds
Other accounts
50% stocks
50% bonds
Tax-deferred
50% stocks
50% bonds
Tax-free
50% stocks
50% bonds
Taxable

Putting it all together.

The projected asset allocation reflects our best efforts to align all accounts to the recommended goal asset allocation. Keep in mind, there may be times when we can't exactly match the recommended asset allocation for a goal, particularly when integrating locked accounts that we’re not managing through Personalized Portfolios.

In an actual planning scenario, your advisor would collaborate closely with you as we work to craft a detailed investment proposal designed to bridge any gaps between our recommended asset allocation and the projected asset allocation for the goal.

The projected asset allocation reflects our best efforts to align all accounts to the recommended goal asset allocation. Keep in mind, there may be times when we can't exactly match the recommended asset allocation for a goal, particularly when integrating locked accounts that we’re not managing through Personalized Portfolios.

In an actual planning scenario, your advisor would collaborate closely with you as we work to craft a detailed investment proposal designed to bridge any gaps between our recommended asset allocation and the projected asset allocation for the goal.

The projected asset allocation reflects our best efforts to align all accounts to the recommended goal asset allocation. Keep in mind, there may be times when we can't exactly match the recommended asset allocation for a goal, particularly when integrating locked accounts that we’re not managing through Personalized Portfolios.

In an actual planning scenario, your advisor would collaborate closely with you as we work to craft a detailed investment proposal designed to bridge any gaps between our recommended asset allocation and the projected asset allocation for the goal.

50% stocks
50% bonds
40% bonds 60% stocks
Goal
Projected asset
allocation

See detailed view of portfolio.

Explore the details, review the changes that have been made to align to the recommended goal asset allocation, and make adjustments as needed.

Start from the beginning.

Feel free to make any adjustments to the accounts you assigned to the goal.

Choose Locked or Unlocked to add this to the investment plan.

*Clients are responsible for implementing and maintaining the investment recommendation we provide for any "Unlocked" account. In instances where accounts are “Locked,” clients should let us know if any changes are made so we can review how this might impact the plan and the way any Personalized Portfolios accounts assigned to the goal are managed.

Qualifications for Household Tax-Smart Strategies.

To qualify for Household Tax-Smart Strategies, a goal must meet the following conditions:

  1. At least $1 million in Personalized Portfolio accounts, including at least $300,000 in accounts with taxable registrations.
  2. At least 2 accounts assigned to the goal, with at least 1 having a taxable registration.
Funding accounts
Other accounts
Lock/Unlock
Adjust allocation
Current allocation
Goal allocation
Portfolio Transition
Personalized Portfolios accounts
Integrating other accounts
Managed accounts allocation
Strategic positioning
Putting it all together