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Financial Planning > Behavioral Finance

Money Management Is Out, Personalization and Planning Are In: Fidelity Exec

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What You Need to Know

  • Investors increasingly want their advisors to spend more time on financial planning than managing their money, according to Fidelity research.
  • Personalization through digital engagement practices is one of the key areas that Fidelity is focused on.
  • Edward Jones is focused on being human-first, but there is a very important role for technology, exec Ken Cella says.

Investors increasingly want more personalization and for their advisors to spend more time on financial planning than managing their money, according to Michael Durbin, head of Fidelity Institutional.

“I think the era of personalization is here and it’s not going to go away,” he said Thursday at the Securities Industry and Financial Markets Association’s Private Client Conference in Aventura, Florida.

“We think the capability is coming fast and furious, and fairly cheaply in order to do it,” he said during a panel discussion on “Priorities for Private Wealth Management,” noting personalization through digital engagement practices is a key area Fidelity is focused on.

There is “amazing technology and innovation” available to advisors today, said Durbin, who is chair of the SIFMA board’s Private Client Wealth Management Subcommittee. Advisors, for instance, can use artificial intelligence to gain insights from all the data available.

The U.S. investor population has reached 65 million households (and is hopefully still growing), he noted.

“As an industry, we really want to drive our aspiration to serve more households [in] an increasingly personalized way,” he said. “We have to embrace these digital engagement practices and the good news is the capability increasingly is there. We see it in our consumer life outside of financial services every single day.”

But he warned: “The reality is we’re not going to drive further adoption of financial services through American households if it’s only ever going to be led by the local human advisor in the local branch office. It’s a fantastic channel, by the way. It’s the lifeblood of our industry. But if we really want to get this aspiration of financial inclusion and penetration it’s going to have to be done through technology.”

Fidelity’s own research, meanwhile, has shown that although older investors (boomers and older) value advisors managing their money the most, “they also say their advisor is spending too much time on managing the money and, in fact, they want help on other elements of advice, which is where the younger generations put the premium,” he said.

Those other areas in which clients want their advisors to spend more time include financial planning, helping them achieve “peace of mind,” and helping them to match their beliefs with responsible investing and capitalism, he added.

No Crypto Clarity

In addition to personalization, the other major trend now is rising demand for digital assets, Durbin said. Digital asset adoption is happening and is “retail-consumer led,” he said.

But “there is not clarity across the industry yet” when it comes to crypto, he said. The industry is counting on the Securities and Exchange Commission to provide such clarity, he pointed out.

Fidelity will start listing a Crypto Industry and Digital Payments ETF (FDIG) on or about April 21, it said Tuesday. But the new ETF doesn’t provide investors with direct exposure to cryptocurrency.

Fidelity was one of the first asset managers to engage with cryptocurrencies. The firm introduced the Wise Origin Bitcoin Index Fund I in 2020, available only to qualified investors with a minimum $100,000 investment.

Fidelity filed an application with the SEC in March 2021 to launch a Bitcoin ETF, joining a growing number of other, though smaller, firms that had done the same.

According to the March 2021 filing, the Wise Origin Bitcoin Trust would track the performance of Bitcoin as measured by the Fidelity Bitcoin Index PR.

But the SEC rejected Fidelity’s application to trade the Wise Origin Bitcoin Trust in January, just as the agency had rejected prior spot Bitcoin ETFs before it, based on concerns that the ETF design could not prevent potential fraud or manipulation and could therefore pose a threat to investors and the public interest.

For now, advisors should all become educated on digital assets if they haven’t already as the industry waits for the SEC to provide clarity, Durbin said.

There was rapid adoption of digital capabilities during the pandemic, Durbin said. “The Fidelity hope is we stick with it” after the pandemic ends, he added.

‘Human-First’

During the same panel discussion, Ken Cella, principal of branch development at Edward Jones, said his firm was “committed to being human-first.”

Cella is vice chair of the SIFMA board.

“We think there’s a really important role for technology to play, especially with that next-gen investor,” he said. “But what we know through research is that people value what an advisor does.”

Edward Jones is “looking to expand our definition of wealth management to really meet the needs of our clients … [and] in a lot of ways go beyond traditional financial services,” he explained.

“When clients come to us with particular needs — like a special-need child or caring for a loved one in some way — it takes more than just financial solutions to get to solve that problem,” he said. “And so we think there’s a much bigger role for technology to play to enhance that relationship — not to replace it, certainly, but let’s face it, we’re in the digital age.”

He pointed to the “tremendous investment” of $1 billion that Edward Jones is making in technology this year, announced by the firm last month. The goals are to enhance the “client experience” and also give “time back to our branch teams” and grow their capacity, he explained.

The investment will impact Edward Jones’ wealth management platform in a way “that allows us to get beyond traditional financial tools and solutions for our clients,” according to Cella.

Edward Jones is “doubling down on how our clients interface with us because we know that there’s an intimate, deep relationship with that face-to-face conversation with an advisor. We think we can actually leverage technology to augment that in a way that is … emotive and personal,” he added.

The Need to ‘Tell Our Story’

SIFMA’s retail-client initiative “aims to tell our story,” Cella also said. There are nearly 380,000 financial advisors in the industry serving clients across the U.S. “If they didn’t exist, what would be the impact on society? I think it would be tremendous because we know that our clients value advice,” he said.

“It’s a noble industry,” he argued. But he said: “We’ve got to tell our story…. If we don’t tell our story, who’s going to?”

SIFMA has been working on this and “I think we’re emerging with a tremendous narrative” to help get that message out, he said.

A recent research study on investor satisfaction found that “clients are very satisfied,” he noted. SIFMA also launched an insights report that found there are still underserved communities across the U.S. that advisors should try to reach out to.

Kenneth E. Bentsen Jr., CEO and president of SIFMA, moderated the panel session.

 (Image: Shutterstock)