Fidelity's field-of-digital-dreams approach to RIA custody means bulldozing familiar landmarks like 'RIA' corporate enclaves and 'chiefs' -- all part of a post 'scrappy' organic growth plan

Fewer familiar old RIA faces and spaces are becoming the rule at Fidelity, no problem.

Fidelity Investments has pulled Mike Durbin from ultimate RIA custody oversight not long after it bid adieu to RIA guru David Canter as part of a reorganization that sinks Fidelity Institutional – and hence Fidelity Custody & Clearing -- on the org chart. No longer a stand-alone unit, it's one part of a whole with brokerage operations. 

The wham-bam announcement about Durbin and his division was the latest made by the $9.9 trillion giant on its road to optimization and digitization of the company.

But Fidelity's internal tectonics may say less about the future of its RIA business and more about the fact that RIAs and RIA custodians are simply ready for a more modern relationship, says Tim Welsh, president of Nexus Strategy, a consulting firm serving the wealth management industry. 

“Back in the day, these groups were the scrappy underdogs and needed an advocate, both internal and external, to garner resources from the corporate bureaucracy,” he says.

The object was "to grow and defend the business, as well as to promote RIA business models throughout the industry as the best affiliation option for advisors in general."

Yet, the Canter/ Durbin role may now be atavistic or even obsolete, he adds.

“The RIA industry has grown so much, and there is broad-based recognition that RIAs are the preferred business model for advisors, combined with the custodians consolidating into an oligopoly, with TDA gone, they no longer need these figureheads as PR spokespeople,” Welsh says. 

Executive shift

Canter left Fidelity in July to become president of Bluespring Wealth Advisors – a blow that Durbin's presence softened for many industry observers. See: The 48-hour mystery of David Canter's Fidelity departure gets solved when RIA custody client steps forward with claim to his future but the headhunter lost his job to the headhunted

Durbin is still at Fidelity and so is RIA custody. The former now has an unspecified stealth role, but the company hints that wealth management is still in his orbit.

Custody now exists inside Fidelity's Fund and Brokerage Operations and Technology, but the new slot on the org chart hardly means RIAs will get less attention, says a corporate spokeswoman.

“Fidelity remains as committed to the clearing and custody business and serving our clients as we ever have," she said. 

"Commitment to our clients is not driven by an individual’s title, the name of a business, or a reporting line. It’s driven 100% by what we do every single day to deliver an exceptional experience for our clients.”

In fact, RIAs will be chief beneficiaries of the bulldozing of the legacy structure, the spokeswoman said. 

“Bringing these teams together under the same umbrella allows for greater technology innovation and speed to market in an industry where clients value scale, digital technologies, and differentiated service.”

Old begets new

Fidelity has a track record for blurring RIA service lines with brokerage yet sharpening deliverables, says Andy Besheer, an analyst with Aite-Novarica Group. 

“Whether it’s in all of the iterations and advancements of Streetscape that they’ve delivered on the front end to RIA’s/Advisors, the investments that they’ve made in Fintech startups through their in-house VC investments or deals like the eMoney acquisition," Besheer says. 

Durbin still reports directly to Fidelity CEO Abby Johnson in a role Fidelity declined to characterize, although he will remain on Fidelity’s Operating Committee. 

Former Fidelity RIA chief Charles Goldman hired Durbin, who replaced him in 2010. See: Focus shifts to Durbin at Fidelity as Goldman prepares to depart

Durbin was with Fidelity Institutional’s product and platform technology group prior to becoming its president.

In 2015, Johnson also appointed Durbin to head a mystery unit that eventually acquired eMoney. See: What to make of Fidelity Investments paying $250 million out of the blue for eMoney

Intersecting industries

Meanwhile, Vadim Zlotnikov was tapped to lead Fidelity Institutional. He was most recently president of Fidelity Asset Management Solutions and will report directly to Johnson, as well. He's an MIT graduate with a degree in electrical engineering. 

Rohit Mahna will now come closest to maintaining the tradition of “RIA chief” as he continues leading the client-facing sales and relationship management team, the spokesperson said via email.  

Durbin hired Mahna exactly a year ago from Salesforce in a nod to his digital expertise.  See: See: Fidelity Institutional makes biggest hire in years -- a very familiar face in RIA technology -- in a play for software and data 'interoperability,' something Salesforce 'got right' before it lost its RIA mojo

“Advisors have seen the technology and wealth management industries increasingly intersect and they know that they need to stay ahead of that curve in order to continue to serve their clients well," Durbin said at the time. 

Fidelity veteran

Ron DePoalo remains head of Fidelity’s Fund and Brokerage Operations and Technology division, which now includes these groups, and he also reports directly to Johnson. 

Durbin has been at Fidelity for nearly 14 years. Before that, he worked for Morgan Stanley for more than 18 years. 

Since Durbin joined the company, the RIA business has changed dramatically, and they are now outsourcing more tasks, including practice management tools and advice, Welsh says. 

“There is no shortage of practice management content, resources, technology, consultants and tools available throughout the ecosystem, so RIAs do not have to rely on their custodians for that any more.

"I believe they have been somewhat disintermediated by the big tech platforms [Orion, Black Diamond, etc.] and the TAMPs who are now rolling out custody options (e.g. Envestnet) themselves.” Welsh says.

Technology shift

Indeed, custodian firms could become endangered species if they're not digital.

Two years ago, Fidelity pushed out 2,000 staff, including Sanjiv Mirchandani, who was head of all RIA custody and IBD clearing.

He oversaw more than $3 trillion of AUA and was a fixture at the Boston firm for 27 years. See: Fidelity Investments is paying 2,000 employees to hasten their corporate exits, including high-profile RIA overseer, Sanjiv Mirchandani, as part of its shift to a digital future

At the same time, Fidelity went on a massive spree, hiring 14,800 new staff in 2022 with an eye on younger, tech-savvy recruits.  See: Fidelity Investments' plan to hire 12,000 by October hit wall of macro-headwinds; no problem, it landed at 15,000; Schwab keeps hiring, too

As of Oct. 24, the company has hired 9,287 for client-facing posts, 2,790 in technology jobs and 2,723 non-client-facing business support workers, the company says.  

Fidelity also expects to hire an additional 100 in the next three- to six-months for its crypto programs in Fidelity Digital Assets. See: Fidelity--late to its own Ethereum party--hires 110 engineers to hurry up launch; it may have avoided both had it not made a 'strange strategic decision,' analyst says

Laser focus

Zlotnikov' spent more than 26 years with AllianceBernstein,and Fidelity a long heritage of asking talented leaders to take on new and different roles as a way to infuse fresh perspectives into other parts of the company, says the spokesperson. 

"This is part of our culture and something that has contributed to our success, and ability to meet the evolving needs of our clients, for more than 75 years.”

Fidelity's seeming laser focus on technology is part of its philosophy, Besheer says. 

“It seems to me that Fidelity has always had a strong streak of fintech innovation in its DNA and I don’t see any reason why they wouldn’t continue to want to be at the forefront…especially since it helps feed their competitive edge,” he says.