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Fidelity’s new platform focuses on integrating services

Fidelity Institutional’s new platform is designed to be a one-stop shop for wealth management advisors.

The investment management organization’s newest advisor tool, Fidelity Managed Account Xchange or FMAX, promises to centralize many of Fidelity’s tools, programs, services, and investment products for easier workflow.

“FMAX will meet the needs of advisors related to two major trends we’re seeing in the industry – the accelerated movement towards planning-oriented practices and the growth of fee-based business models,” says Gary Gallagher, the head of investments and managed solutions for Fidelity.

fidelity-investments-iag-2016
Pedestrians pass a Fidelity Investments office in Boston, Massachusetts Tuesday, May 8, 2007. Until recently, LBO dealmakers led by Henry Kravis, David Bonderman and Leon Black paid scant attention to the interests of shareholders as they gorged on a record $864 billion of publicly traded companies in the past three years. Even Boston- based Fidelity, the largest U.S. mutual-fund company, with $1.4 trillion of assets, and Baltimore's T. Rowe Price Group Inc., which manages $350 billion for clients, were told to take it or leave it when presented with takeover offers. Now, the balance of power is beginning to shift as investors, tired of watching LBO firms make as much as eight times their money buying and selling public companies, are demanding more. Photographer: JB Reed/ Bloomberg News

There are over 30 million investors that use Fidelity with a total $6.7 trillion customer assets. Especially as demand for managed accounts grow, estimated from $5.7 trillion of AUM in 2017 to $8.1 trillion in 2020, the need for an integrated system becomes more urgent than ever.

What hinders firms are fragmented service models and platforms, according to EY’s Wealth Management Outlook for 2019, as clients are demanding more timely advice and an understanding of their personal finances. The report found that wealth management providers are working with technology companies to create products that enable advisors to better meet client demands and expectations.

Fidelity offers three types of managed accounts: Fidelity Go, Portfolio Advisory Services, and Separately Managed Accounts. The accounts are tiered by asset size, providing robo advisors to anyone and financial advisors for clients investing at least $50,000. FMAX would allow advisors to better access different-sized client accounts, without ever leaving the platform.

An important part of FMAX is how it integrates eMoney Advisor, which currently serves 60,000 financial advisors, into the managed account system. Fidelity bought the wealth management software firm in 2015 and replaced its former CEO, Edmond Walters, with a Fidelity insider in 2016.

The new fintech will be open architecture, providing third-party services and products such as ETFs, mutual funds, and separately managed accounts. Envestnet and Fidelity’s Wealthscape will be available on the FMAX platform.

These integrations would “minimize the ‘swivel chair’ experience where an advisor needs to work across multiple platforms,” Gallagher says.

FMAX is expected to come out in 2020 and over time will be able to support both planning-oriented and non-planning managing account users.

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