Fidelity Investments has launched a major reorganization of the company’s RIA business that includes folding relationship management and sales into one unit.
As part of the changes, Joe Giordano, executive vice president of relationship management at Fidelity Institutional Wealth Management, and Mike MacWade, senior vice president of client service and operations, are leaving.
The changes are being made in order to improve customer service, according to a memo obtained by RIABiz.
“I would like to thank Joe [Giordano] and Mike [MacWade] for their service to IWS and wish them well,” wrote Mike Durbin, president of Fidelity Institutional Wealth Management, in the e-mailed memorandum written to some RIA clients. “These changes are reflective of the evolution of the marketplace in which we are all operating, and I believe they will position us to provide you with the best experience for your clients and your business.”
Scott Dell’Orfano, executive vice president of sales for Fidelity Institutional Wealth Services, will assume Giordano’s former oversight of the relationship management for FIWS in addition to his sales duties, according to the memo.
Kurtzer was named
Joe Kurtzer will become head of FIWS client experience to cover some of MacWade’s client service duties, according to the document. Kurtzer was named to the position by Maggie Serravalli, executive vice president of client services for Fidelity Institutional, the division that includes Fidelity Institutional Wealth Management.
Also as part of the changes, Ron Fiske, who currently oversees investment product management for FIWS will add product management of National Financial Services to his duties. NFS also appointed Bobbi Masiello as executive vice president of relationship management, according to a company release.
Masiello joined Fidelity in 1986, and since that time has held various senior leadership positions in the areas of new business development, relationship management and operations, including serving as head of client integration, training and support services for NFS. Masiello will continue to report to Sanjiv Mirchandani, president of NFS, according to the release.
Fidelity Investments has been reshuffling its senior management in the wake of the announcement of the departure of President Rodger Lawson and the continued speculation over the successor to Edward “Ned” Johnson III, CEO and chairman. On Jan. 26, the departure Charles Goldman, head of institutional platforms, also was announced. See Charles Goldman to leave Fidelity Investments.
Both Lawson and Goldman were scheduled to leave at the end of this month.
It’s unclear whether the reshuffling in the RIA unit is connected to the changes above, or whether they are the first moves by Goldman’s replacement, Durbin.
Observers says that there was fanfare surrounding the Giordano hire by John W. “Jack” Callahan, the former president of FIWS. on July 23, 2008. He took the position vacated by Jim Dario, who is now the managing director of business development and relationship management for Pershing Advisor Solutions.
Prior to arriving at Fidelity, Giordano had a 12-year career at JPMorgan. During his last two years there, he was managing director of global client services for the company’s World Wide Securities Services business.
In that role, he was responsible for leading all aspects of client services for securities processing products, including global custody, fund accounting, performance measurement, securities lending, commercial paper, collateral management and all corporate trust products.
When Fidelity hired Giordano, it explained his hiring in this way:
“Joe has the breadth of client service and global business experience, along with a proven track record of helping to meet clients’ needs, that make him ideally suited for this job,” said Callahan in a prepared statement. “Our total client base has grown more than 40% over the past three years to more than 3,800 firms, and we only see this expanding as the need for independent, fee-based advice grows among affluent investors. Joe will lead a talented and experienced relationship management team that will continue its focus on working consultatively with each client to help connect them to the resources and support they need to thrive and grow profitably.”
An observer who worked for Fidelity for several years says he’s surprised that relationship management and sales would be merged. Generally relationship managers are charged with building business through existing clients and serve more of a consultative role to make that happen. Sales people are responsible for winning new business from prospects.
Former head of the Fidelity RIA unit, Jay Lanigan, was the first one to put the two functions under separate executives around 2001, and that was about the time that sales began to increase substantially at FIWS, according to the source.
But Sean Cunniff, research director of the brokerage and wealth management service for TowerGroup of Needham, Mass., doesn’t believe that the consolidation of sales and relationship management will slow Fidelity’s progress.
“It seems that despite management turnover that Fidelity seems to plug along and continues to do well,” he says. “People seem to expect these changes to have more of an impact that they actually do. I don’t expect to see any market share changes because of it.”
One observer told RIABiz that Fidelity may be gearing up for major layoffs across the board and that cuts in the RIA unit are a precursor.
But Douglas Dannemiller, senior analyst with the Aite Group of Boston says that he doesn’t believe that major layoffs are in the cards at Fidelity.
The company has consistently kept its staffing levels in lockstep with the S&P 500 and profitability. Currently, the S&P 500 is on the rise and the company reported profits of more than $2.5 billion for 2009 in February.
Rank and file
“I don’t see rank and file employees getting laid off under the circumstances,” he says. “It will be more of a re-org at the senior level.”