Fidelity bets on new web-based technology

Fidelity Investments just upped the stakes in its battle against industry leader Charles Schwab. Both of course would like to be the platform of choice for registered investment advisors--as would TD Ameritrade and even Pershing. The latest salvo from Fidelity is the launch of the WealthCentral wealth management platform, that Fidelity touts as the industry first truly robust web-based platform. 

Truth be told, there are other web-based platforms out there, but few can match Fidelity's rich suite of services. The new platform brings together some interesting portfolio management features, courtesy of Advent's APX-hosted multi-custodial platform via ABOS, which is designed for faster trading and better client reporting. Powerful re-balancing features have been built in via Northfield Information Services, which allow rules and risk factors to help manage portfolio risk for accounts. Beyond trading, the service includes Oracle's CRM on demand to better manage prospects and customers. Financial planning tools, in the form of Emerging Information System's NaviPlan Central are also integrated.

So is this the future? Are RIAs ready for a web-based platform to run their entire business on? My guess is that the idea will be intriguing to many. The whole world is trending toward web-hosted apps after all. The platform has been implemented with 25 clients, and will be rolled out to Fidelity's remaining 3,500 RIA clients throughout 2009 and 2010. We can only assume it will be fast and reliable.

Ease of use will be big selling point, I'm sure. Account opening will be easier; you only have to enter client info once, and the whole service is available from a single log-on. One issue, of course, will be how easy it is to transition existing customers to the platform.

I maintain that the key to success will be cost. Another question is: How aggressive will Fidelity be in building volume? How much fee income are they willing to give up? What a lot of mom-and-pop advisors really want is a service that will lower their costs dramatically and boost their spread. Technology will certainly be a factor in the movement to eat away at Charles Schwab's market share. You can bet the giant will respond; GrowthPoint has already generated some excitement. But do not discount the role that costs to the RIA will play. - Jim