Fidelity unveils latest effort to make its advisor-servicing silos work as a single unit for hybrids

Brooke’s Note: Fidelity Investments, with $3.3 trillion of assets under administration and $1.5 trillion of AUM, is one of the great marvels of marketing in the financial services industry. The brand and the products enjoy a harmony and consumers largely largely trust both form and function. This legacy makes it easier to understand why Fidelity’s executives continue to work at creating a definitive product out of Fidelity’s service offering to dually registered or 'hybrid’ advisors. But it’s difficult. The product requires both National Financial and Fidelity Institutional to work as one and exist under a common marketing and servicing umbrella. Here is how they are going about it in late 2010.

The new scheme, called Options for Independence, is Fidelity’s bid to leverage its position as the number-two custodian and number-two clearing house to help it lure hybrid advisors. Many larger advisory teams emerging from wirehouses now have complex needs, and custodians are racing to set themselves up as landing places for them.

New advertising

Fidelity also launched a new advertising and marketing campaign designed to underscore the company’s ability to help brokers transition to independence. The campaign, with the tagline “I want independence,” encompasses print and online advertising and a web site at fidelity.com/goindependent.

As part of the new program, Fidelity’s independent hybrid advisors now have a single “client service experience leader” as their conduit for both custody and clearing services. This is an effort to streamline the previous service model, where dually registered advisors received service through two channels. This program’s reach also extends to the process of bringing hybrid advisors on board with in more synchronized fashion as they get enrolled on both the custody and clearing sides of the business.

“It won’t be bifurcated,” says Maggie Seravalli, executive vice president in charge of client service for Fidelity about the onboarding process. Her company promoted her earlier this year largely with this service unification project in mind. See Fidelity names buck-stops-here service czar for all of its financial advisory channels

The new scheme — Options for Independence — has been in place for existing clients for a couple of months. The company declined to disclose how many of its advisors it classifies as hybrid advisors but the company says that it has brought aboard 500 breakaway brokers through both its clearing and custody channels since the beginning of 2007. Mike Durbin, president of Fidelity Institutional Wealth Services, said the single pointy of contact has been very successful for existing hybrid clients, so Fidelity is extending it to breakaway brokers that it is courting as prospects.

Michael Brown’s vote of confidence

He also mentioned that Fidelity won the primary custody account of Michael C. Brown, 52, who left Bank of America’s U.S. Trust unit last week with about $5.9 billion of assets under management last week to join New York-based Dynasty Financial Partners — and that Fidelity’s ability to smoothly handle transactional and fee-based business played a role in that win.

Mike Durbin: We don’t want to
dilute [the subject matter expertise] either
of these providers [by completely blending
them] but we do want to
provide a single point of contact.

In some respects the new Options for Independence program fills the void left by the now-defunct brand HybridOne, which was also established as a means of marketing and servicing to advisors who want to use both custody and clearing services under Fidelity. The company said it retired the HybridOne brand because it simply had too many brands to support.

What makes this effort different is that the substance behind Options for Independence is enhanced education and onboarding of breakaway prospects in addition to the aforementioned single-conduit service proposition. HybridOne was talked about more in terms of creating a single technological platform. Fidelity is bidding its HybridOne brand farewell

“There was some work that was started as part of HybridOne but working with Sanjiv Mirchindani [president of National Financial] and Mike Durbin, we came up with new processes,” Serravalli says.

The emphasis in the new offering for prospective hybrids will initially be an intensive education program of consultations and other resources aimed at making sure that the advisors choose the right hybrid business model from a broad spectrum of choices ranging from starting an IBD, joining a National Financial-affiliated IBD, joining a rollup or becoming a pure RIA. It will then extend to the onboarding experience so that timelines are synchronized better as the advisor sets up the fee and transactional side of the business.

The “client service experience leaders” — will be drawn from the service pools of both sides of the Fidelity advisory business and these new duties will be an adjunct to their usual service duties – not their “day job,” according to Durbin.

Dazzling array

The educational component recognizes the dazzling array of choices that have evolved of late in the advisory industry.

“Many brokers continue to go independent, in part driven by the evolving range of options available to them,” Mirchandani said in a release. “But with more options, and a blurring of the lines between what were once very distinct and different models, going independent can be a complex decision.”

In presenting itself to the advisory market as both a major asset custodian and a major clearing company – and a seamless combination of the two – Fidelity is competing mainly with Pershing LLC. The Jersey City, N.J.-based clearing and custody firm uses RIA Complete as the brand denoting its service offering to hybrid advisors.

Karen Novak: We believe it is
the only technology platform that provides
for the hybrid advisor.

Pershing’s service model for hybrid advisors also includes a single conduit for hybrid advisors using both clearing and custody services. It commenced that service model in the summer of 2009, when Pershing launched NetX360 and RIAComplete.

“It’s been a very powerful relationship for the advisor,” says Karen Novak, chief operating officer of Pershing Advisor Solutions.

Glue

But Pershing still considers its single technology platform, NetX360, to be important glue in bringing together disparate capabilities on behalf of hybrid advisors, according to Novak.

“We believe it is the only technology platform that provides for the hybrid advisor,” she says.

Evan LaHuta, director customer experience of Pershing LLC, adds the proof that advisors want a single technology platform is in the pudding. Left to make a choice themselves, 96% of Pershing advisors – on the silo-ed platforms as recently as last year – have already moved to the single one. [Though it’s worth noting that Pershing is discontinuing the old platforms as of the end of this year.] See: Pershing believes its case for NetX360 as the Apple equivalent for advisors is solid

Evan Lahuta: Having a single sign-on
is like music to their ears.

“Having a single sign-on is like music to their ears,” he says. “They don’t need to waste time logging in and logging out.”

Fidelity, which uses WealthCentral for RIAs and Streetscape for brokers — has stated in previous RIABiz interviews that fee and transactional business are very different and that it is advantageous to have technologies that specialize in each.

Middle course

The company has found a middle course that it believes in, according to Durbin.

“We don’t want to dilute [the subject matter expertise] either of these providers [by completely blending them] but we do want to provide a single point of contact,” he says.