Fidelity Beefs Up Breakaway Broker Program

Announces new economic estimating tool and releases best practices white paper

No matter what job you have, things can always look better somewhere else. That's always been true for big wirehouse brokers and it's even more so in the wake of Wall Street scandals and failures that have tarnished some of those once sterling names. To help brokers considering making the jump, Fidelity Investments announced November 19, an expansion of its Transitions Solutions program and the release of a white paper entitled, Options for Independence, which is designed to help brokers better understand the common independent advisory models and assess which one may best fit their business style and objectives.

The key to expanding the firms program is the Financial Advisor Economic Estimator tool. Working with a Fidelity business consultant, the prospective breakaway broker can input specific information about his current practice--from annual production and payouts to deferred compensation and office location. Specific values for more than 50 expense items across nine different categories, such as salary, legal fees, registration and insurance, are included in the analysis.

Speaking of the tool, Michael Durbin, president of Fidelity Institutional Wealth Services, explained, "What we really feel good about is the depth of the science behind it.

"It helps quantify the economics of multiple models," he continued in an interview with Investment Advisor at Fidelity's outpost in New York's World Financial Center. "So it'll explore the economics of truly going independent and hanging your shingle as an RIA, but it also allows a prospective breakaway or prospective RIA to contrast that to if I move from wirehouse A to wirehouse B and took a check. How's that compare? If I stayed at wirehouse B and took the retention award, how does that compare? If I stayed and sort of sunsetted my book of business, how does that compare? We like the way it compares with some rigor some of the other propositions that are out there competing against the whole notion of truly going breakaway."

The first step for many brokers is a simplified version of the tool that can be accessed from Fidelity's Web site. "It's really to generate leads to sort of engage somebody," explained Durbin. "It's the same embedded science, but it looks relatively straightforward. Once the prospect engages with us through the use of our business consultants they really go through the full model, where this sort of rigor is easily highlighted. The way we go through it is to not just to collect all the input so we can have a nice model output. That's a nice outcome for sure, but it's through the discovery of all the inputs that we help educate that prospective breakaway broker around what is involved in going independent."

(Advisors interested in the first person experiences of an actual breakaway broker are encouraged to check out Mike Patton's blog, The Road to Independence.)

Through the first three quarter of this year, Fidelity "has helped nearly 170 individual and broker teams go independent," either to start a new RIA, join an existing one, or join an established independent broker/dealer firm, according to a statement from the company.

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