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Fidelity Throws Down the Gauntlet

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Broker/dealer firms and independent advisors now make up nearly half of the assets and three-quarters of the cash flowing into Fidelity Investments’ huge brokerage business, according to the unit’s president, Ellyn McColgan. She disclosed the figures as Fidelity opened its annual Executive Forum for RIA and B/D clients in Palm Beach, Florida, where she pledged to make the firms registered investment advisor unit, now #2 to Charles Schwab, “the largest outsource provider for all independent RIAs.”

McColgan also announced two enhancements for Fidelity’s institutional businesses. The firm has inked a deal with Envestnet Asset Management to provide unified managed account services to its B/D and RIA clients. McColgan also promised to make available to advisors portfolio management and client relationship applications in a single platform. She conceded, however, that while her firm is investing hundreds of millions of dollars annually in new technologies–$700 million in 2004 alone–”we have not always delivered outstanding service as we promised you.” Without specifying the shortcomings, McColgan pledged “to make it better.”

The Fidelity Brokerage Company president also disclosed that:

–Her firm closed 2004 with $1.135 trillion in total client assets, 14.3 million accounts. Average daily trades came to 205,000 in 2004, up 6% over 2003, and were running at around 240,000 per day as the year ended.

–Institutional business accounts make up a third of Fidelity Brokerage’s total. The firm’s National Financial clearing unit now has 267 clients and will pick up 142 more as a result of its purchase of Fiserv’s clearing business. New clearing clients include Bank of America, Washington Mutual, Bank One, Fifth Third, Prudential Equities, and Banco Popular. McColgan noted that National Financial’s market share has grown from 7% to 12% in two years.

–The Fidelity Registered Investment Advisor Group claimed 2,565 clients and $138 billion in assets at the end of ’04, up from 2,072 clients and $99.6 billion in 2003. While the business remains under an interim leader since the recent resignation of its longtime head, Jay Lanigan, McColgan said she is realigning the unit to focus on four market segments, wealth managers, financial planners, investment managers, and mutual fund managers. “The advisor market has changed since we started serving it 13 years ago,” she said. “We need to offer a differentiated strategy.”


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