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Portfolio > Mutual Funds

Fidelity's Separate Account Investment

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Many independent broker/dealers, banks, and credit unions provide fee-based services for reps through third-party separate and mutual fund wrap providers such as Morningstar, Lockwood, AdvisorPort, and U.S. Fiduciary. A new entry into this market was announced in April when Envestnet Asset Management Inc., a TAMP provider with $17 billion in assets under administration, unveiled a partnership with Fidelity Investments’ National Financial clearing unit. As part of the deal, Fidelity has bought a stake in Envestnet. Neither firm would comment on the value of the investment, but sources say that Fidelity bought about a 4% interest in Envestnet.

Under the program, to be available this fall, Fidelity’s correspondent B/D firms will gain access to a unified managed account (UMA) service that will be integrated with National Financial’s Streetscape brokerage platform. B/Ds will be able to customize Streetscape to meet their individual needs, but in general, the new offering with Envestnet will allow reps to profile clients and set investment goals and risk tolerances; research separate account managers; and integrate separate accounts, a mutual fund wrap program, and individual securities and mutual funds, among other things.

The mutual fund wrap part is perhaps the most interesting, and possibly lucrative, from Fidelity’s vantage point. The UMA platform will include Fidelity’s Strategic Advisers Inc. mutual fund wrap program, which previously has been offered to high-net-worth investors only through Fidelity’s retail channel. The program already has $70 billion in assets and will now compete with SEI and Morningstar, among others, in the advisor channel. The addition of Strategic Advisers to the UMA platform will give reps access to a product that already has wide brand recognition in the market.–William Glasgall


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