Fidelity Institutional weighs own robo offering

Months after teaming with Betterment, Boston-based firm adds LearnVest to its platform.

Dec 2, 2014 @ 12:27 pm

By Liz Skinner

Fidelity Institutional is rapidly expanding its robo-adviser offerings and may even one day launch its own automated advice platform.

The second-largest custodian to registered investment advisers, Fidelity said Tuesday it will begin offering financial advisers access to LearnVest, an online advice platform that employs human advisers. The move comes less than two months after Fidelity struck a similar deal with Betterment Institutional, another so-called robo-adviser.

The Boston-based firm, a division of Fidelity Investments, said it will make both digital providers available to advisers, and it didn't rule out additional deals with other automated advice platforms or creating its own solution in coming years.

“We have a front-row seat on what the market is looking for and we're monitoring it very quickly to see what we could do on a proprietary basis,” said Michael Durbin, president of Fidelity Institutional Wealth Services. “The market should not be surprised if we serve up these capabilities more natively through time.”

Under the collaboration with New York-based LearnVest, Fidelity will offer advisers cheaper access to LearnVest's platform, and advisers can give clients access to LearnVest's financial wellness website, Fidelity said.

Mr. Durbin would not get more specific about costs, saying only that it will depend on the number of clients using the services.

Alexa von Tobel, LearnVest founder and chief executive, said the firm views its partnership with Fidelity as a way to further its mission of making planning affordable and accessible to everyone.

“LearnVest is a cutting-edge planning technology platform with a human core — a combination we believe is critical for reaching households across the country that are figuring out how to effectively tackle their finances," she said.

Jon Stein, Betterment's chief executive, said his firm and LearnVest offer complimentary services.

"We certainly don't view LearnVest as a competitor," Mr. Stein said. "We do completely different things and we'll both be providing services to advisers in areas that will help them solve different problems."

Betterment Institutional's technology will allow advisers to offer clients digital capabilities under the adviser's brand.

The nation's largest custodian, Schwab Advisor Services, is developing its own digital advice platform that it will make available to advisers next year.

Providing access to multiple digital advice platforms is the same approach TD Ameritrade Institutional has said it will take to help advisers compete with the growing popularity of online financial advice.

Online platforms are seen by many as the advice solution for investors with lower asset levels, and many younger investors appear smitten. Recognizing the need to attract next-generation clients, many advisers are pondering how to integrate an online solution.

Of course, advisory firms don't have to go through their custodian at all. Firms can work directly with online platforms, such as Redhawk Wealth Advisors' union with Jemstep Inc., which has an algorithm-driven account aggregation and investment advice platform.

Other advisory firms have crafted their own digital platforms, such as Edelman Financial Services and Savant Capital Management.

About 56% of registered investment advisers and broker-dealer firm leaders said they plan to incorporate online platforms into their business or partner with one, according to a poll of Fidelity clients attending the firm's executive forum in May 2014. About 92 advisers were surveyed.

Fidelity Institutional also released a report that reviews the various digital platforms and recommends advisers use online advice as a way to connect with and serve younger investors.

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