Edmond Walters bolts from eMoney and Fidelity Investments scrambles to manage the jilt

Brooke’s Note: Fidelity Investments is whatever the opposite of a roll-up is. It builds, not buys, companies, technology and revenues. So it stood out like a sore acquisition when Fidelity acquired eMoney from its renegade founder, Edmond Walters. The catalyst for this change, from an outsider’s perspective, was two-fold. The paradigm shift toward a silkier, more investor-centric era of software certainly may have forced Fidelity’s hand. But just as notable was whose hand it was: Abby Johnson’s. The company’s new CEO made no secret that she approved the deal. She also had direct input in assigning Mike Durbin in a new entity that sits between eMoney and Fidelity’s technological corporate nerve center. Neither of those catalysts has changed so you can be sure that this executive turn of events is getting Fidelity’s full attention.

Edmond Walters is out as CEO of eMoney — seemingly in a cloud of dust.

Only six months after his company was purchased by Fidelity Investments for a reported $250 million, the sometimes brash entrepreneur has stepped aside without explanation or a politically correct comment for the press release announcing his departure.

For now, Michael Durbin, whom Walters reported to at Fidelity, is stepping in as interim CEO of the Conshohocken, Pa.-based company. The Bostonian doesn’t plan to move to the Philly area but the company’s spokeswoman, Erica Birke, speaking from a Conshohocken phone, allows he will now spend “a heck of a lot of time here.”

Durbin will continue to serve as president of Fidelity Wealth Technologies, which oversees eMoney. Durbin reports to Michael Wilens, the president of Fidelity Enterprise Services. See: The mission-critical task Abby Johnson has entrusted to Mike Durbin regarding Fidelity’s RIAs and automation.

“Mike’s role is interim only,” says Birke, spokeswoman for Fidelity. “He’ll work closely with the eMoney senior management team over the course of the next several months to identify the appropriate permanent successor.”

Expected, not planned

David Lyon: I think Fidelity really
lost value by losing him.

The turn of events is both shocking — and not, according to observers.

“Certainly, he’s been on the road the last 18 months. He hasn’t spent significant time in the office or at home. If it was my wife, she’d want to kill me,” says Joel Bruckenstein, producer of the T3 conferences.

On the one hand, nobody — including people inside eMoney — saw this coming so soon after the deal closing.

“These things are to be expected but it’s not something we planned,” Birke says.

Walters did not respond to a request for comment placed through LinkedIn.

Nobody imagined that the marriage between Fidelity and eMoney had serious staying power, says Bruckenstein, but he’s still surprised that it happened so shortly after the deal closing.

“When I think Edmond Walters, I think visionary — not the most detail-oriented guy. I didn’t see him as a Fidelity lifer,” he says. “eMoney needs to be scaled up and that’s a skill set Durbin possesses.” See: What to make of Fidelity Investments paying $250 million out of the blue for eMoney.

Same roadmap

But that’s not a view shared by David Lyon, founder and CEO of Chicago-based Oranj.

“For me it’s a disappointing thing to hear and I think Fidelity really lost value by losing him. I know [Edmond] had all the right intentions [of creating a leapfrogged desktop for the industry]. I’m not saying that’s not still achievable but that independent advisor in him is hard to replace. It takes a special company to understand advisors the way they did. There’s a spirit in the way a software company serves its clients.”

Durbin is fully aware of the necessity of an eMoney spirit in how it does business. “We remain committed to eMoney Advisor’s mission, which is to revolutionize the way trusted advisors serve the needs of their clients through highly innovative, intuitive and collaborative technology,” he says in a release. “That will mean ensuring the eMoney team continues to foster an independent spirit, fierce entrepreneurialism and unrelenting focus on clients. The team is incredibly strong and driven to transform the wealth management industry. That spirit will continue.”

Fidelity’s stated vision for eMoney after purchasing it was two-fold: to continue to grow it as a successful autonomous unit serving advisors in and out of Fidelity and to serve as the technical underpinning and vision for how end-investors view and interact with their investments across Fidelity’s business lines — a big chew. Fidelity administers $5.3 trillion, including managed assets of $2.1 trillion as of July 31. See: Advisor Tested: eMoney’s automation adds the biggest benefit; account aggregation still building.

“eMoney’s strategy and roadmap has not changed,” Birke says. “eMoney will remain an independently run company with it’s own culture. The company’s commitment to innovation, creativity and collaboration with advisors will continue.”

Rude preemption

Tim Welsh: It’s supposed to be
a love fest and shoot down
everyone’s doubts and fears. They were
preempted by Walters leaving.

But the clock is ticking, Lyon says.

“If they’re not going to do it [create a new concept of bi-directional, see it all in one place, highly digital, dashboard-like toggle-free advisor desktop], somebody else is. We’ll know in the next 12 to 18 months. They’ll have to show their cards a little bit.”

Michael Kitces, publisher of Nerd’s Eye View, tweeted in response to mine: “Very notable that unbundling of eMX Select, announced by Edmond at T3, also remains up in the air…?” eMX Select is the dashboard portion of eMoney’s software. Until now, customers have had to purchase the traditional financial planning applications to gain access to this coveted feature.

With such questions in mind, not only does the Walters departure set up long-term challenges for Fidelity, but short ones, too, says Tim Welsh, president of Nexus Strategy.

“Oct. 19-22 is the eMoney Summit 2015 in Orlando.” he says. “It’s supposed to be a love fest and shoot down everyone’s doubts and fears. They were preempted by Walters leaving.” At the time of its sale, eMoney had about 270 employees.

Still, Welsh allows that Walters was a bull in a china shop during his last conference. “He was a breath of fresh air but he yelled at Neesha Hathi in public across the room and everyone went: whoa!” Welsh described that scene and others in the piece he wrote for RIABiz about it at the time. See: In a T3 teeming with deals, eMoney’s Edmond Walters owned Dallas.

In that moment, Walters was asking Hathi why Schwab did so little business with his firm — making it more than likely there was method to his madness.

“He’s the ultimate sales guy,” Bruckenstein says. “He has a knack for telling a story and he’s not filtered. He says what’s on his mind and people appreciate him for being authentic.”

Extremely authentic

As a point of reference, Welsh observes that Reed Colley followed a more traditional script of exiting the scene after selling Black Diamond to Advent Software in September 2013, with diminishing involvement followed by a consulting relationship rather than a cold turkey break off. See: Reed Colley steps down from executive-level duties after selling Black Diamond.

Even when Walters reassured advisors about his sale of the company to Fidelity in February, he was at pains to distinguish himself from his buyer.

“Fidelity is a bunch of Boy Scouts,” Walters said at the time. “They wouldn’t be in business if they used advisor and client data inappropriately.”

The ex-CEO of eMoney has played this rough and tumble game before. eMoney Advisor was acquired by Cherry Hill, N.J.-based Commerce Bancorp for $32 million in stock in 2006, at which time its revenue was reported to be $10 million. It was sold back to Walters and other investors about when TD Bank bought Commerce Bancorp in 2008 for an undisclosed amount.

The Walters legend is secure, Lyon says.

“I really looked up to him. He’ll always be looked to as a trailblazer.”