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Why Fidelity's New Advisor Platform Is a Big Deal

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Fidelity’s new Managed Account Xchange, known as FMAX, sets a new bar for the growing competition among the many firms helping financial advisors streamline their business offerings from financial planning to investments and everything in between, such as investment consulting.

“This raises the competitive bar,” said Dennis Gallant, senior analyst for Aite Group’s wealth management practice. 

(Related: Fidelity Rolls Out Comprehensive Wealth Platform for Advisors)

No other financial services firm yet offers what Fidelity has just launched, Gallant said. Merrill Lynch has a similar product in its Client Engagement Workstation, but that’s only available for Merrill broker-dealers, and Orion Advisor Services is expected to develop a more comprehensive investment and planning offering with its purchase of financial planning software startup Advizr.

Tim Welsh, founder and CEO of Nexus Strategy, noted that Envestnet could offer something similar through its purchase of MoneyGuide and has already done that with the launch of its insurance exchange, but Envestnet still needs distribution through custodians, like Fidelity.

FMAX functions as a one-stop platform that integrates financial planning of eMoney, which Fidelity acquired five years ago, with investment management solutions, including separately managed accounts and unified managed accounts, provided by Fidelity’s Portfolio Solutions Consulting team.

“Having one managed account marketplace integrated into a financial platform (eMoney) is new and will save advisors a ton of time moving from planning recommendations to portfolio implementation,” Welsh said.

FMAX allows advisors working with a client on creating a financial plan to develop and then implement an investment portfolio that aligns with that plan in a smooth, seamless operation, Welsh explained. “This is a pretty significant development.”

Both Welsh and Gallant expect the Fidelity move will prompt others to follow with their own more comprehensive planning and investment platforms. 

“Within six months everyone will have this, and advisors will want [those platforms] to make their lives easier,” Welsh said.

“I expect more and more firms to be adding more services, including Envestnet,” Gallant said. “Everyone is competing for advisors’ mindshare and wallet share.”

There is no minimum requirement for advisors using FMAX, and there is a single fee applied to AUM which varies based on the services that advisors use and how the platform is configured, according to a Fidelity spokeswoman.

If advisors use just the investment services of the new FMAX platform, for example, the fee would be different from the fee paid by advisors that also use Fidelity’s clearing and custody services.

The standard pieces of the platform, including integrations with eMoney and Envestnet and single point of contact, contracting process, data pre-fill and single sign-on (SSO), are included for all users of the new platform.

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