From the June 2007 issue of Investment Advisor • Subscribe!

June 1, 2007

A Flush Fidelity Celebrates

With enhanced authority, McColgan leads the way

The good news for RIAs is that there's plenty of competition for your business from the custodians who would be your preferred partner. The good news for Fidelity Registered Investment Advisor Group RIAs is that Jack Callahan, the president of FRIAG, has the ear and attention and confidence of his boss, Ellyn McColgan, who also clearly has the confidence of her boss, Fidelity chairman Ned Johnson. Speaking at the annual gathering of its top advisors in Naples, Florida, McColgan pointedly mentioned in a press conference that "the chairman [Ned Johnson] has been supportive of the advisor business for years. Sometimes you need the right chemistry; I'm very happy with the team we have now." McColgan, 53, was recently promoted to the position of president, distribution and operations, for Fideilty Investments, following the retirement in late April of 55-year-old vice chairman and COO Bob Reynolds. McColgan remains president of Fidelity Brokerage Company; the only Fidelity executives who outrank her are Johnson, 76, and his daughter Abby, 43. Callahan, who assumed the role of FRIAG president last December, had previously learned much from Ms. McColgan, he said, when he was assigned the job of running Fidelity's troubled 403(b) division years ago.

Callahan was able to report at the meeting that FRIAG is anything but troubled. Fidelity, he said, had its best first quarter ever in net new flows--$56 billion--bringing total assets under administration to $1.77 trillion. FRIAG's 3,300 advisors brought $20 billion of that inflow, and 13,000 daily trades, to Fidelity's coffers in the quarter (bringing total AUA at FRIAG to $260 billion), prompting McColgan to say that "the advisor channel is a critical part of our high-net-worth strategy going forward." To support that contention, Callahan showed new print and television ads that Fidelity is running that included a tag line to "contact Fidelity or your own advisor." Having come from running Fidelity's 401(k) business, Callahan also suggested to advisors that there was an "opportunity" for them in the popularity of lifecycle funds.

It's not just RIAs who work through FRIAG, since there are many retirement plan administrators and independent trust companies that also do, so McColgan announced that "we have to change the name" of FRIAG. In a separate interview, Callahan suggested that the name change will happen in the second half of this year.

During a Q&A session with McColgan for the assembled advisors moderated by Callahan, the company's latest referral program was brought up, with one advisor questioning the enthusiasm of Fidelity's local retail offices to make appropriate referrals. McColgan responded that "that's why they're pilot programs--to work out the kinks." She then went on to say in her direct way that "all of us are customers, competitors, and counterparts," and that "drawing bright lines between different parts of the business is impossible." In discussing the referral program in a meeting with the press later, McColgan stressed that even if it wanted to, Fidelity could never "handle the high-end needs" of wealthy clients, and said "we have to educate those reps" who for a long time have been assisting their retail clients, but asserted that when the referral process works well, "it's a symbiotic relationship."

Callahan also told advisors that FRIAG will roll out two technology enhancements that will be integrated with its Advisor Channel brokerage platform in the fourth quarter: Oracle's Siebel customer relationship management offering, and EISI's NaviPlan Central.

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