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Is Fidelity's plan to ditch relationship with Betterment and build its own robo too little, too late?

Partnership ends as Fidelity tries to capitalize with its eMoney technology

Nov 20, 2015 @ 2:08 pm

By Alessandra Malito

Fidelity Investments' plan to sever its relationship with robo-adviser Betterment Institutional in favor of building an automated investment platform on its own has some observers wondering if the mutual fund giant's strategy is too little, too late.

The pair's "strategic alliance" contract will end in December after only a year, as first reported by RIA Biz. Fidelity will continue to work with advisers who choose to use Betterment, and it also will work with other third-party robo vendors, Fidelity spokeswoman Erica Birke said in an email.

At the same time, Fidelity will use its resources to create its own digital advice platform.

"[M]any of our clients are still looking to learn more about digital advice," Ms. Birke said. "We have been and will continue to deliver the solutions, thought leadership and insights our clients need to feel informed and capitalize on this important trend."


The company will announce more details of its technology strategy early next year, she said. Some analysts said Fidelity faces a competitive field, and may be coming late to the game.

"It's a long time, without a doubt," said Sean McDermott, an analyst at Corporate Insight. "By the time Fidelity is ready to hit the market … I imagine it would make it a little more difficult to find adopters."

Granted, Fidelity has formidable resources to create a potentially successful robo. Not only does the firm have a recognizable brand, which helped Charles Schwab & Co. and Vanguard rise to the top when they released their robo-advisers, but the custodian has eMoney, a financial planning software provider it acquired in February.

Although eMoney is independent from Fidelity, it will work with custodians, as well as other large enterprises, to offer robo-like services on its adviser-facing platform.

"The good news here is that our eMoney roadmap very much aligns with the technology strategy Fidelity is looking to implement," eMoney spokeswoman Kelly Waltrich said in an email.


eMoney's technology could be the answer to Fidelity's late entry — it would match a robo-adviser platform with financial planning. That's the next step in the digital advice arena, as robos begin to expand beyond investment portfolios. Betterment, for example, which has more than $3 billion in assets under management, recently announced it would offer 401(k)s, as well as pull in retirement account information.

"Maybe it will give them an advantage if they can offer advisers an all-in-one solution," Mr. McDermott said. ""Based on research we have done, there is usually a missing piece of the puzzle with technology platforms."

"You get a well allocated portfolio but can't get holistic financial planning," he said.


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