Fidelity Institutional Wealth Services announced this morning that it plans to refer advisors looking for a “robo-advisor” platform to Betterment Institutional.
“It is awesome that Fidelity was progressive enough to be the first,” said Steven D. Lockshin, chairman and founder of Convergent Wealth Advisors, with $9.4 billion in assets and offices around the country. Something of a serial entrepreneur in addition to running an RIA, Lockshin is a major investor in Betterment.
For those unfamiliar with Betterment Institutional, its platform provides advisors the ability to offer their clients managed low-cost portfolios of ETFs, “smart” rebalancing, automated tax-loss harvesting, automatic money transfers and automated dividend re-investment.
In addition, the platform allows advisors to scale their business, automate workflows, develop new client relationships and provide clients with a modern digital and mobile experience. An advisor dashboard allows advisors to view all relevant data at the firm level (assets under management, clients, business metrics) and at the client level (balances, allocations, performance and so on).
Betterment's technology features include paperless new-client brokerage/custodial forms and client agreements with an advisory firm; Web and mobile apps; bank-level security; billing software and fee collection; the generation of statements and reports; and technical support seven days a week. All client-facing materials -- including the Web site, mobile apps, client statements and e-mails -- are branded with the advisory firm’s logo.
The platform also offers secure co-browsing. This allows the advisor to log on to a client portal and see what the client sees. The advisor can then help with account set-up, answer questions and review performance with the client.
The platform for advisors referred through Fidelity has no minimums, upfront costs or transaction fees and will cost 25 basis points for the entire service. Overall, Betterment says 800 to 1,000 advisors are interested in their services.
According to David Canter, Fidelity's executive vice president of practice management and consulting, some of Fidelity’s advisor clients have been asking “How can you help me in the digital space?” Fidelity is teaming up with Betterment so it can offer a digital solution to clients.
For now, Fidelity's arrangement with Betterment Institutional is strictly a referral one. Fidelity will receive an unspecified referral fee for advisors they refer. There are no integrations between Fidelity and Betterment, nor are there any between Betterment and third-party software providers that integrate with Fidelity. All assets referred to Betterment under the agreement will be custodied at Betterment and cleared through APEX; there is no provision for funds to be custodied at Fidelity.