Products December 12, 2007

Fidelity Expands Program for Brokers Going Independent

Fidelity Investments has expanded its program for advisers leaving traditional brokerage firms for an independent advisory business model, adding new resources and support in three key areas: health care benefits, office infrastructure, and regulatory compliance.
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Registered investment advisers (RIA) working with Fidelity will have access to affordable medical, dental, and vision insurance through BenefitProtect. In addition to group and individual health plans, BenefitProtect offers one-on-one consultations with licensed insurance counselors, customized solutions with flexibility to elect portions of benefit plans versus an entire package, and flexible deductibles and billing, according to a press release.

Office Space

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Advisers will also have access to fully furnished offices or meeting rooms through The Regus Group, the company announced. The Regus Group provides access to a network of fully furnished offices in 950 locations in 400 cities worldwide that are fully equipped with advanced telecom and IT services, access to meeting rooms and state-of-the art video conferencing, professional receptionists, and on-site administrative support.

Fidelity has negotiated special rates with The Regus Group for clients that include the first month’s rent free and 25% off Regus membership which provides access to any of their business lounges worldwide.

Compliance Services

Fidelity has also negotiated discounted rates with a new regulatory compliance provider, Advanced Regulatory Compliance, expanding existing third-party discounts with providers that include Stark & Stark, ACA Compliance Group, MarketCounsel, and National Regulatory Services, among others.

Through Advanced Regulatory Compliance, advisers will be able to access professional consulting and services for help navigating through compliance and regulatory issues, from filing business names to preparing regulatory paperwork and client agreements and policies. Fidelity has negotiated a 15% discount off all services and 20% off Securities and Exchange Commission (SEC) mock audits.

Other resources Fidelity makes available to brokers going independent, according to the company announcement, include:

  • WealthCentral – An integrated Web-based wealth management platform that will integrate advisers’ most critical operational systems and provide them with a single, integrated workstation. WealthCentral will become available in late 2008.
  • Turnkey Managed Account Solutions – Fidelity offers advisers three distinct approaches to access managed account products: Fidelity Separate Account Network, Manager Resource Network, and Manager Resource Wrap.
  • Marketing Consulting – Personalized consultation and turnkey online tools for advisers to leverage
  • Fidelity’s marketing experience to create personalized collateral, including direct mail, brochures, and advertisements.
  • IT Consulting – Preferred pricing on hardware, software and technology support services.
  • Transition Planning – An online roadmap tool helps advisers understand the transition process, and build a comprehensive plan that includes a timeline for addressing critical areas associated with establishing a new RIA practice.
  • Rapid conversion team – A focused, integrated team made up of professionals from Fidelity’s sales, implementation, training, service, transaction processing, and technology areas that helps new RIAs make a quick and smooth conversion onto the Fidelity platform.

Fidelity Institutional Wealth Services is a provider of trading, custody, and brokerage services to RIAs, trust institutions, and third party administrators. More information is at http://fiws.fidelity.com.

In Practice December 11, 2007

Plan Rollovers Fuel Surge in IRA Growth

A new study finds growth in individual retirement accounts (IRAs) continues to be fueled by rollovers from employer retirement plans – about $200 billion annually – with new IRA contributions significantly smaller by comparison.
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A news release from the Employee Benefit Research Institute (EBRI) said IRA assets exploded in 2006, with a whopping 16.5% hike to a record $4.23 trillion, an increase from $3.63 trillion in 2005. That 2006 performance gave more weight to the notion that IRAs are now the largest repository of U.S. retirement funds, according to EBRI.

Compared to IRAs, private-sector defined contribution plans in 2006 held assets of $3.27 trillion and private-sector defined benefit programs held $2.26 trillion in assets. EBRI said assets in IRAs have bested those in private-sector DC and DB plans each year since 2001.

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According to the EBRI study, IRA asset growth has been mostly in mutual funds and self-directed brokerage accounts, with IRA market share shrinking for banks and thrifts. In 2006, almost half (47%) of all IRA assets were held in mutual funds.

Assets in IRAs saw 1990s annual growth of 17.2%, the release said. After a retrenchment during the recession of 2000 – 2002, IRA assets grew at annual rates of 18.2%, 9.7%, and10.6%, respectively. In 2002, IRA rollovers totaled $204.4 billion, following rollover totals of $225.6 billion in 2000, and $187.8 billion in 2001.

The EBRI report is available here.

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