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Fidelity and Betterment sign a deal with Steve Lockshin and Marty Bicknell as groomsmen at the altar

The RIA principals are distributing the online asset manager service to fellow RIAs, and Fidelity is quelling an uproar of demand from RIA clients for robo answers for the mass affluent

Wednesday, October 15, 2014 – 1:00 PM by Brooke Southall
Admin:
no description available
Jon Stein: We've been working on it for the last six months. We wanted to wait until tax loss harvesting and trust account support was in place.

Related Moves

Jon Stein ousts himself as Betterment CEO and taps Sarah Levy, who joins an exclusive club of top women executives, with a mission -- an IPO

The co-founder of the New York robo-advisor headhunted the ex-Viacom brass through Harvard professors on the down low to ostensibly scale operations.

December 8, 2020 – 5:27 PM

UBS bets its 'wealth' future on ex-Schwabbie Naureen Hassan, a corporate digital A-lister, who analysts give a fighting chance to transcend PaineWebber's ossified culture

Still a $2-billion cash-flow cow, the Swiss bank's 6,000-broker, US-based wirehouse is milking aging broker relationships with aging investors but needs a new kind of human presence, empathy, mindset and smarts to draw in Gen Z.

July 16, 2022 – 1:35 AM

Second Betterment exec departs as new CEO Sarah Levy orients to her first month on the job and is confronted by personnel matters

Chief operating officer Dustin Lucien is the latest to leave the New York City robo-advisor, one of at least eight positions open as it prepares a push across multiple business lines to ignite growth.

January 19, 2021 – 6:32 PM

Oleg Tishkevich builds instant McKinsey-killer in RIA consulting by offering gigs and equity to six solo stars, but good luck managing egos and economics, says someone who's been there

The restless Invent.us founder names (thus far) Tim Welsh, Suzanne Siracuse, Gavin Spitzner, Mark Hollingsworth and Brian Bleasdell as owners in exchange for being on call to tackle big gigs as a superteam

September 10, 2019 – 10:52 PM


Mentioned in this article:

Fidelity Clearing & Custody Solutions
Asset Custodian
Top Executive: Sanjiv Mirchandani

Nexus Strategy
Consulting Firm
Top Executive: Timothy D. Welsh

Mariner Wealth Advisors
RIA Welcoming Breakaways, RIA Serving Endowments/Foundations, Advisory Firm
Top Executive: Marty Bicknell

Betterment, LLC
Financial Planning Software
Top Executive: Jon Stein




Mike Golaszewski

Mike Golaszewski

October 15, 2014 — 3:50 PM

Fidelity has just provided us with the most important technological innovation to hit the RIA space in years. Giving RIAs the ability to efficiently service entire new segments of investors—lower minimum accounts, younger investors, or investors that are simply more inclined to seek out digital solutions—really is the “next big thing” for our industry.

Allowing advisors to hang a modern, consumer-friendly platform off of their existing web property allowing for model creation, tax-efficient rebalancing, trade execution, performance reporting, a rich client communication experience and some sort of integration at the custodial level will prove to be incredibly disruptive. With one stroke, Fidelity has shifted the balance of custodial technology offerings and have put a wide array of technology providers on the possible road to obsolescence.

What better way for advisors to be able to market themselves more effectively to consumers who are increasingly comfortable with digital channels?

What a fantastically forward-thinking move.

Stephen Winks

Stephen Winks

October 15, 2014 — 7:34 PM

What constitutes advice to the very low end of the market is significantly different from the high end which demands professional standing in accord to ongoing fiduciary duty required by statute. As long as advisory services are not represented by the broker as being provided to the end consumer and no ongoing fiduciary duties are assured, then there is nothing wrong with outsourced portfolio construction services, but why would an advisor want to give up control as the clients will eventually gravitate to Betterment alone. This is why bank trust departments and private trust companies are not great jv-partner candidates for advisors.

SCW

James Butler

James Butler

October 16, 2014 — 4:51 PM

Interesting development.

Questions:

1. Instead of outsourcing to a potential RIA competitor, if technology is so vital; why couldn’t Fidelity build better Advisor system themselves?

2. Who legally then owns the client relationship? Betterment or the RIA?

3. What privacy protections are in place and what assurances does Betterment provide not to solicit the customers referred from Advisor firm?

4. It appears Betterment has limited the investment options primary to using either Vanguard and/or iShare ETFs? — what about other choices, individual equities? How can a Fiduciary defend only having access to (2) fund or ETF companies in designing a portfolio?

5. Does or will Betterment directly or indirectly solicit clients (e.g. statement stuffers, advertising their own fee rates, etc. etc.)

6. Betterment as Indicated in their own ADV Part II Brochure:

Trade Execution, Account Maintenance, and Asset Custody

When clients choose Betterment they are also choosing the brokerage services of Betterment Securities, a FINRA member broker-dealer. Betterment Securities does not operate the Betterment website. Pursuant to contractual authority from the client, Betterment Securities…”

Betterment Securities hereby serves notice on this website that it relies exclusively upon Apex Clearing Corporation, Inc. (“Apex”) for order routing.

7. Who is APEX Clearing Corporation and why is Fidelity promoting this service when it clearly indicates they rely on Apex Clearing Corporation for trade execution? What is the financial incentive for Fidelity?

APEX emerged from the financial remains of Penson Worldwide who declared bankruptcy in 2013.

The Press Release lacks a lot of details.

brooke southall

brooke southall

October 16, 2014 — 11:25 PM

James,

Those are hard questions and enviably interesting ones.

Would you like a job as a reporter with RIABiz?

Brooke

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