Fidelity Investments' decision last week to replace the head of its adviser unit with an executive from Morgan Stanley is another sign that the former is serious about recruiting more breakaway brokers.
Boston-based Fidelity announced Wednesday that John W. "Jack" Callahan, president of Fidelity Institutional Wealth Services, will be replaced by Michael Durbin, an 18-year veteran of Morgan Stanley of New York.
Mr. Callahan, who in October 2006 took over as head of the unit — which provides trading, custody and brokerage services to more than 3,500 registered investment advisers — has stepped into a newly created position within Fidelity's personal-and-workplace-investing division.
He will be temporarily replaced by Scott Dell'Orfano, executive vice president of the adviser unit, until Mr. Durbin takes over early next year.
Mr. Durbin now serves as Morgan's chief operating officer of the national-sales division of its global-wealth-management group.
"The RIA business is accelerating because of the defections of a lot of people from the traditional wirehouses into independents," said Burton Greenwald, a Philadelphia mutual fund consultant. "They are putting in someone who brings to the table the ability to relate to the largest source of advisers for Fidelity to grow."
DUALLY REGISTERED
Fidelity in May unveiled a program aimed at brokers who are dually registered as investment advisers. The so-called hybrid platform, known as HybridOne, allows brokers to work seamlessly between fee- and commission-based transactions.
Charles Schwab & Co. Inc. of San Francisco launched a hybrid platform of its own in March 2007 with Cambridge Investment Re-search Inc. of Fairfield, Iowa.
Fidelity said Mr. Durbin's broad range of responsibilities at Morgan Stanley will come in handy in building up the adviser group, which oversees $335 billion in assets.
"Mike's experience in global wealth management both at the adviser and high-net-worth-investor levels, combined with his experience across multiple geographies and product lines, has positioned him to further the significant momentum that Institutional Wealth Services has established in recent years," said Fidelity spokesman Stephen Austin.
Some financial advisers were unfazed by Fidelity's announcement.
"Generally, when Fidelity makes moves like this, they always end up being for the better," said Bob DiQuollo, president of Brinton Eaton Wealth Advisors of Madison, N.J., which has $500 million in assets under management in custody at Fidelity.
Robert Glovsky, president of Mintz Levin Financial Advisors LLC of Boston, which has nearly $1 billion in assets under management in custody at Fidelity, agrees.
"I think Jack Callahan has really done a great job," he said. "We're not expecting any changes in the service. Over the last couple of years, they have worked even better with advisers. They have given us more resources, better service and more technology."
IMPROVEMENTS NEEDED
Still, some advisers say Fidelity needs to make some improvements in service.
"I would hope that it would get a little better in areas such as the transfer of assets into the firm and new-account procedures," said Cary Carbonaro, president of Family Financial Research LLC of Huntington, New York., which has the majority of its $30 million in assets under management custodied with Fidelity.
Observers say it could be a better use of talent.
"These are very rarified openings at this level," said Jim Lowell, editor of the Fidelity Investor newsletter of Needham, Mass. "Jack is an ex-tremely capable guy. But the role of head of Institutional Wealth Services does require a super salesman."
E-mail Sue Asci at [email protected].
