Fidelity has uprooted Pershing from a dual custodian arrangement to take over all clearing services and client assets for the sixth largest independent broker-dealer.
Lincoln Financial Network and Fidelity Clearing & Custody Solutions have developed more than 30 new enhancements to the IBD’s platform during the past three years, Lincoln announced this week. The Philadelphia-based Lincoln moved almost all of its assets into Fidelity’s custody in September.
The first fruits of the collaboration include remote check deposits, tailored marketing and one gateway for all types of client accounts and investment products. A second phase, which is slated for late 2018 or early 2019, will usher in a robo advisor and improved delivery of clients’ comprehensive financial plans.
Fidelity’s tech investments, especially its 2015 acquisition of eMoney Advisor, gave it a head start on rival custodians, says Tim Welsh, president of consulting firm Nexus Strategy. Pershing, Charles Schwab and TD Ameritrade have also launched robo advisors and bulked up on other digital wealth tools.
“It’s a huge upgrade for Lincoln to get access to Fidelity’s tech stack,” Welsh says, noting a shift by custodians in recent years. “The custody and clearing business is really commoditized these days, so in order to win you really need to up your offering.”
Lincoln, which has about 8,900 reps, agents, and planners, calls its bulked-up suite “AdviceNext.” Fidelity and the IBD adapted three third-party client relationship management systems into the custodian’s Wealthscape platform and launched a suite of upgrades and services like automated account opening.
“It’s really designed to transform the elite advisor’s sales and client service process,” says Lincoln President David S. Berkowitz. “They custom-built this platform for us to take this huge step forward. It’s really about human-based advice and then wrapping integrated technology around it.”
Lincoln issued a request for proposals with an eye toward that goal three years ago and chose Fidelity out of a group that included Pershing and two other well-known firms, according to Berkowitz, who declines to name the other candidates.
A spokesman for Pershing declined to comment on Lincoln’s decision, citing a corporate policy against publicly discussing client-related matters or transactions.
“They really wanted this next-generation technology solution,” says Carolyn Clancy, head of Fidelity Clearing & Custody’s broker-dealer segment. She describes the platform as a “whole fleet of tools” centered around “one utility that helps facilitate transactions” of all types.
The collaboration displays how custodians’ services have grown from just holding clients’ funds, says Lex Sokolin, the global director of fintech strategy for Autonomous Research. They now provide technology around all parts of the advisory process, from the client experience to planning and asset management.
TD Ameritrade has created an ecosystem for advisors with new fintech vendors, Schwab has introduced a set of proprietary tools matched with preferred vendors and Pershing has a “fairly closed” suite of “tightly integrated technology,” Sokolin wrote in an email.
“Fidelity has made its best bet by acquiring eMoney, a financial planning chassis with many other integrations, and has been building functionality around it,” he says. “This move by Lincoln suggests that Fidelity has done a compelling job at integrating disparate software into an experience advisors can understand.”
Sokolin, Welsh and Berkowitz agree that advisory firms must adjust to serve new and existing clients in the age of Amazon. The wealth management space “can learn a lot from other industries,” Berkowitz says.
“If we don’t disrupt ourselves, somebody else is going to do it for us,” he says. “We’re really passionate around catching up to the experience that clients have in other parts of their lives. And we have a lot of work to do.”