Fidelity's new technology could help more advisors offer managed accounts

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Fidelity has launched a new wealth management platform in a bid to to help independent financial advisors keep pace with technology innovation happening at the wirehouses.

Like Merrill Lynch did with its Personal Wealth Analysis, the new Fidelity Managed Account Xchange, or FMAX, brings together financial planning and investment management tools into a single digital interface. The custodian is betting this all-in-one approach will help more advisors tap into the growing client demand for managed accounts.

Assets in managed accounts are expected to reach $11 trillion by 2023, up from $7.5 trillion at the end of 2019, according to Cerulli Associates data. But a lack of integration across technology tools still makes it a difficult and time consuming business model to offer at a large scale, says Fidelity Institutional head of investment and managed solutions Gary Gallagher.

“Advisors are looking for help in optimizing their portfolio construction and becoming more efficient in driving better outcomes to clients,” Gallagher says.

FMAX attempts to solve this by bringing together a menu of investment products and strategies from third-party asset managers with eMoney’s financial planning software and Envestnet’s managed accounts engine. With Fidelity’s proprietary investment research, consulting, service and support, FMAX looks similar to the outsourcing capabilities offered by OSJs and TAMPs.

Gallagher acknowledges the new platform is “TAMP-like,” but says FMAX provides a deeper integration with Fidelity’s custody and clearing infrastructure than advisors can get at a third-party.

“Platforms like this you would typically see at the larger broker-dealers and maybe the wirehouses,” Gallagher says. “We can take that plan data and populate the investment proposal, and all that data will continue to gather and pre-populate the account opening framework.”

While some RIAs may prefer to have greater control over their technology — Fidelity says it supports more than 200 fintechs on its Integration Xchange — others don’t have the time or resources to spend getting all the pieces to work together with their custodian. The result is the dreaded “swivel chair experience,” where advisors have to jump between and manually re-input data across several apps.

Being able to push data directly from planning and investment proposals into Fidelity’s brokerage platform saves time and reduces errors, Gallagher says.

Other firms are working on similar out-of-the-box integrations. Wirehouses, which already have control over the investment products and technology advisors use, are deploying significant resources to update legacy platforms. And Charles Schwab — which is embarking on its integration of TD Ameritrade — has PortfolioConnect, a portfolio management software sporting deep connectivity with the firm’s brokerage platform. PortfolioConnect is free for advisors who custody exclusively with Schwab, underlining just how valuable the custodian believes the technology is.

The cost of FMAX varies depending which Fidelity services a firm uses, but it will be billed as a single basis-point fee that bundles technology, the advisory program, custody and clearing services, Gallagher says.

FMAX can be accessed on Fidelity’s Wealthscape brokerage platform or via eMoney if the user is primarily a planner, Gallagher says. It can also be integrated with a CRM system or a firm’s own advisor workstation.

“We designed this so it’s highly configurable. Firms don’t have to use all of the services available,” he says.

Ten wealth management firms are currently using FMAX, but Gallagher declined to name them. The firm is actively rolling out the software to make it more generally available.

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Financial planning Fintech Integrations RIAs Broker dealers Fidelity Investments eMoney Clearinghouses/custodians
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