Fidelity names buck-stops-here service czar for all of its financial advisory channels

Brooke’s note: The first time I heard a Fidelity Investments executive talk seriously about improving service was when the company hired Jack Callahan as president of its RIA custody business in 2006. He brought a new level of accountability by, for instance, having Fidelity employees call clients of RIAs that were referred by Fidelity to ask them about their satisfaction level. Then it hired Charles Goldman to oversee its advisory service, and Fidelity’s mission to ramp up service levels began to take on a Manhattan Project-like feel. Goldman was instrumental in launching the service pods in September that now serve the company’s most elite RIAs. Now Fidelity appears to be moving to the third, high-stakes phase of this effort as it gives Maggie Serravalli an exceptionally broad oversight of service and client experience.

If Fidelity Investments cracks the service code and becomes as well-known for the way it treats financial advisors as the way it delivers 401(k) plans and mutual funds, Maggie Serravalli will no doubt get the credit as anybody should who makes good on the big promises Fidelity has made to its clients.

In a bold move announced by the financial giant today, Fidelity Institutional is giving Serravalli virtually total control over all aspects of the service and relationship management experience for National Financial Services, Institutional Wealth Services, Fidelity Capital Markets, Fidelity Family Office Services and Personal and Workplace Investing.

In an interview with RIABiz, she said that her company will — in the relatively near future — restructure its service offering to broker-dealers through NFS. Last September FIWS rolled out a new team-style strategy for elite RIAs. Serravalli says the new plan through NFS is intended to make the same kind of quantum advance though the service structure will be quite different.

“It’s about taking it to the next level and making it a distinctive experience,” she says. “It’s an example of Fidelity bringing [its culture of service excellence] to life.”

Quarterback

FIWS serves RIAs who prefer a designated rep to quarterback the relationship. Broker-dealers may like to have multiple contact points with special expertise so NFS will need to have its own blueprint, Serravalli says.

All the attention that Fidelity is paying to service reflects the challenge it faces in winning business in head-to-head battles with its two largest competitors. For RIAs, it battles Schwab, which has 6,000 RIAs with $590 billion of assets. For correspondent broker-dealers, it competes mostly with Pershing LLC, whose correspondent broker-dealers serve more than 100,000 broker-dealer reps.

Pershing has upped its game in service lately and some of its big new IBD customers are Fidelity defectors. Typically, the chiefs of these IBDs cite Pershing’s service – augmented by technology — as a key differentiator.

Serravalli, a JPMorgan veteran who was managing director and head of operations for global product areas including derivatives, foreign exchange and fixed income securities, has been at Fidelity since June 2007. She has been serving as executive vice president, client experience for the firm’s operations and services group, where she has been responsible for the client management and client service teams of Fidelity’s brokerage business. She’ll continue to oversee these service units.

Missing service link

Serravalli reports directly to Fidelity Institutional President Gerry McGraw, who identifies her as the missing service link for competing in the marketplace.

“This new service organization is a true industry differentiator, and with Maggie’s years of experience focused on service excellence, it will give Fidelity an advantage over its competition,” he said.

Serravalli, who is also a CPA, is not a known quantity among analysts or other industry observers, but Douglas Dannemiller, senior analyst for Aite Group of Boston, says centralizing control of service into Serravalli’s hands should be an effective management strategy.

“They may need someone with more organizational horsepower” to keep money flowing and attention flowing toward service, he says. “The control over money [related to service] is no longer at that lower [divisional] level. It’s at a higher level [of managerial authority].”

Greater consistency

Serravalli told me that her goal is to use her new powers to create a greater consistency of service for advisors whether they are using Fidelity Institutional Wealth Services as an RIA or using National Financial Services as a correspondent broker-dealer. She also wants financial advisors to experience a greater consistency of service so that they are treated as well as prospects or customers during the onboarding process.

Last September, Fidelity began to service its largest RIAs from service centers featuring small teams where relationship managers are in earshot of each other to better coordinate on behalf of clients.

Agreed upon timeframe

Fidelity executives say they now have evidence that the teams of relationship managers are a winning service model. Ninety-seven percent of client requests have been completed within the agreed-upon timeframe. Not-in-good-order items, such as new account applications that slow smooth functioning have been reduced by nearly 50%, according to Fidelity.

In a sign of how competitive the market for big RIAs remains, RIABiz reported on Friday that Rehmann Financial moved $2.5 billion from Triad Advisors to Royal Alliance largely because Triad uses Fidelity for its RIA assets and Royal Alliance uses Pershing. Rehmann’s president, Fred Schaard, cited Pershing’s improving technology and service under Pershing Advisor Solutions’ CEO Mark Tibergien as a catalyst for making the move.