After a year-long collaboration with Betterment Institutional on how to help advisors compete in the digital advice world, Fidelity Clearing & Custody recently told its RIA clients that it will wind down that relationship by year-end and set up its own robo-type platform for advisors.
The two entities will now compete for advisors’ business.
“Our vision is to be the leading digital-first custodian,” Tom Kimberly, Betterment Institutional’s newly christened general manager, told ThinkAdvisor in recent interview.
Kimberly — the former senior vice president of digital advice at Envestnet following the acquisition of Upside, who started his new role a little more than two weeks ago — says that Betterment believes its “full-stack infrastructure allows us to deliver the best client and advisor experience and most efficient back-office operations in the industry. Serving as custodian is a key part of making that work.”
The goal of Fidelity Clearing & Custody’s strategic alliance with Betterment Institutional, which started last October, was to help Fidelity’s RIA clients and prospective clients consider adding a “client-facing digital platform," according to a Fidelity spokesperson.
Fidelity has decided to end its alliance with Betterment, which was a practice management referral agreement for RIA clients of Fidelity, because Fidelity determined that the “relationship was not gaining significant traction with our clients,” Fidelity says.
While both Betterment and Fidelity learned from the relationship, “most of [Fidelity’s RIA] clients are looking for a solution that is deeply integrated into our clearing and custody platform, customizable, and allows the investment advisor flexibility in investment decision-making and product selection,” the spokesperson said.
Fidelity will announce how its advisor platform will address those needs when it lays out its overall technology strategy early next year. The advisor platform will be launched in stages through 2016 to 2017.
Fidelity’s platform for advisors will be separate from the Boston-based firm’s retail offering, Fidelity Go, which is in a pilot phase and plans to launch publicly sometime next year.
The handful of Fidelity advisors that are now using Betterment’s platform may choose to switch to Fidelity’s platform.
Kimberly’s goal is to make sure that doesn’t happen.
Betterment aligned with Fidelity “to learn about how a digital-first approach could improve RIAs’ practices, and it’s been a positive learning experience for both of us,” Kimberly says. “Our biggest takeaway has been the need to develop a strong internal practice management team to support the increasing number of RIAs on our platform.”
While Betterment’s goal is to focus on adding new products as well as more advisors to the more than 200 that currently use its digital platform, Kimberly says Betterment is just as adamant about “deepening” its advisor relationships.
“We want to further improve the [advisors’] experience,” including providing more “functionality” and “increasing the capability for advisors to provide customized advice to their clients and provide more transparency into what’s going on in their practice,” Kimberly says.
“We want to hear from them on what’s working well and what’s not.”
--- Check out Cerulli Sees 2,500% Jump in Robo Assets in Next 5 Years on ThinkAdvisor.