What happened at Fidelity's RIA conference this year

Update: In this article I promise comments from RIAs but I was optimistic about the timing. RIAs are busy people. As of this morning (Wednesday), however, I completed those interviews and so I’ll be able to offer views of this conference from the perspective of advisors tomorrow. Both advisors took note of Abigail Johnson’s speech in particular.

For the article on the 2011 version of FIdelity’s RIA conference, see: Fidelity holds exclusive annual conference and gets an unforeseen jolt of energy from Bin Laden’s death

Fidelity Investments is a private company that occasionally does things a bit differently than competitors. Its annual advisor conference is one example of that.

Unlike other custodians, which hold giant well-publicized conferences each year, Fidelity takes a semi-private approach, limiting attendance and publicity. Just yesterday, it announced its 12th annual Executive Forum in Naples, Fla.– more than two weeks after it occurred.

That private approach doesn’t mean the event held by the Boston-based giant isn’t impressive and well-attended, according to Mike Durbin, president of Fidelity Institutional Wealth Services.

“We’ve engineered it so we have [limited attendance],” says Durbin. “We invite our bigger, better clients and we invite some prospects.”

There are about 100 core attendees who come every year, he adds. This selective approach is catching on with RIA custodians. See: TD Ameritrade is pulling out the stops for 100 advisors in Laguna Beach

Sign up early

The event happened April 26-27 for 375 clients of Fidelity Institutional Wealth Services and National Financial Services. About 200 of the advisors were RIAs. Fidelity closed the registration after it went past capacity.

Those advisors arrived in Florida with well-formed opinions about the investing climate.

Nearly two-thirds — 64% — of RIAs and broker-dealers polled do not expect the S&P 500 to recover to its October 2007 high of 1,576 until after 2012, while the remaining 36% anticipate it happening before the end of 2012.

Finally, more than half — 53 % — of RIAs and broker-dealers surveyed believe that the national debt is the biggest issue facing the U.S. economy in 2010, while another 41% say the biggest challenge is unemployment. The remaining 6% say that inflation and international competition are the biggest issues facing the U.S. economy.

Fidelity did not invite the [ahem] media to its event this year though it has done so occasionally in the past. The decision was made based on comments from clients who say that they feel freer to speak openly without reporters present.

Part of this year’s draw: George W. Bush and Fareed Zakaria, who is editor of Newsweek International, a Newsweek and Washington Post columnist, weekly host for CNN, and a New York Times bestselling author.

Ned and Abby hang out

More indicative perhaps of Fidelity’s interest in the RIA business – was the delegation of its own top brass, who ventured to warmer climes to mix it up with advisors.

Edward “Ned” Johnson III, 79, CEO and chairman [since 1977] and owner of a 49% stake in the company was there for all three days. He participated in breakout sessions, general sessions and all three evening receptions — showing his inquisitive side, according to Durbin. Any program — or executive — at Fidelity that Johnson fails to embrace is on shaky ground, according to analysts and former Fidelity employees.

Johnson has attended other RIA conferences over the years and he may be setting the tone for competitors. See: Ed Clark: TD Ameritrade will not compete with RIAs through its branches The highest leader of the TD ecosystem appeared at the company’s national conference for the first time in February.

“[Johnson’s] not just there to fly the Fidelity flag,” says Durbin. “He loves it, and clients love getting his thoughts as well.”

Also in attendance for two days was Ned Johnson’s daughter, Abigail “Abby” Johnson, who recently assumed a new position with the company. She now oversees all of the distribution, including independent financial advisors as president of Fidelity Personal, Workplace and Institutional Services. She is perhaps the front-running candidate to assume control of the company when her father retires.

Gerard McGraw, who reports directly to her and who is Durbin’s boss, also attended along with members of Fidelity’s board of directors. McGraw is president of institutional products group.

The word that these decision-makers received from Fidelity’s most elite customers was very encouraging this year, according to Durbin.

'Keep going’

“The view – and I heard it a lot – was ‘You’re executing; keep going,’” he says.

This was a change in tone from past conferences when advisors spent more time letting Fidelity know about its shortcomings, Durbin adds.

To see what RIAs have to say on this matter, read: Postscript to the Fidelity Executive Forum article:The RIA Perspective

For a recent overview of the Fidelity business, read: Fidelity plows ahead in the RIA business with overhauls of service, technology and management

There were other notable shift in advisor sentiment that Fidelity captured in surveys of its conference attendees.

Here are some of those findings.

Only 2% of respondents say that eliminating or cutting non-essential costs will be the biggest driver of profitability this year, a sharp drop from 27% in 2009.

Building mood

Instead, the vast majority — 86%— of respondents indicate they aim to accelerate firm growth and profitability this year through building new and existing client relationships as well as adding advisors and brokers – up from the 63% who said these were their biggest drivers of profits last year.

47% see client acquisition and retention as their biggest business concern in 2010.

“After 18 months of cutting costs, broker-dealers and RIAs have clearly shifted their attention to accelerating growth through acquisition,” Durbin said in the release.

The Fidelity poll found that only 11% of RIAs and broker-dealers surveyed feel their clients’ biggest financial concern today is to minimize taxes. Instead, 52% believe that investors’ biggest concerns are outliving their retirement savings, followed by recovering losses from the 2008 and 2009 financial crisis: 35%

Tax concerns will come back

“Despite the market’s performance over the past year, it’s no surprise that advisors continue to focus their attention on helping to rebuild and refine their clients’ portfolios,” said Sanjiv Mirchandani, president, National Financial, in the release.

“However, we expect brokers and advisors to focus more attention on taxes in the second half of 2010 as they think more about their clients’ year-end planning needs and begin to anticipate the potential tax changes that likely will become an issue of discussion in the mid-term elections.”