Is Fidelity’s Move To Put RIAs Deeper into the Cloud Gonna Make it Rain?

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“Advisors historically have been forced to become cloud computing experts on their own to perform due diligence on cloud providers,” says Bill Winterberg, principal at Now Fidelity has stepped in and saved a lot of the leg work up front when considering a move to the cloud.”

One-hour backup guaranteed

Fidelity is contracting with Dallas-based Workplace to offer “most of the functionality an advisor needs to run their business,” says Ed O’Brien, senior vice president of technology at Fidelity, for $150 per advisor per month. The $150 is paid directly to Workplace, not to Fidelity. Workplace’s website lists United Capital Financial Advisers as a client. United Capital ended the relationship with Workplace about 18 months ago “on good terms” and according to a United Capital spokesman.

That Workplace package includes office programs — such as Microsoft e-mail servers, QuickBooks, file sharing — all in an online desktop, as well as server hosting. An advisor can access any of those then from anywhere or any device. All work done locally, off-line, will sync automatically once the advisor is online again. In addition, other vendors, such as CRM providers that Fidelity doesn’t specifically contract with, can be easily added with a link or a single sign-on system.

“With a click you could get to anything you use,” says Bruckenstein.

What really impressed Bruckenstein was the guarantee Workplace provides that if e-mail goes down, the company will have it back up within the hour. Workplace provides that one-hour guarantee for most of the Microsoft products and a 24-hour guarantee on everything else. While cloud-based systems can save money, because advisors don’t have to invest in servers or newer technology, the primary benefit is back-up in the event of a disaster. See: RIAs must prepare for post-disaster recovery or regulators will lower the boom.

“Having a cloud-based practice provides, among other things, better disaster recovery and business continuity plans with fewer programs tied to legacy servers,” says Winterberg.

There are no start-up or transition costs to get on Fidelity’s Workplace program. Account log-ins can also be set-up in brief periods of time and an RIA can control how much access each of those log-ins has. While pricing does not go up with any additional storage needs, more customization beyond the basic platform has additional fees tied to it.

Breakaway brokers

Fidelity is hoping that the Workplace product will be tempting for breakaway brokers, who are often looking for an easy all-in-one set-up without transition costs — and are willing to pay for the simplicity. “It lowers the cost of entry,” says O’Brien. See: How the breakaway movement is driving the outsourcing trend.

“I think this is a very attractive offering for a breakaway,” says Bruckenstein. Or, for that matter, a small broker-dealer who has antiquated technology, he adds.

Advisors nearing a transition point — such as the need to replace an outdated server — might also be attracted to Fidelity’s new offering. And, O’Brien believes it could be beneficial to advisors looking to grow through acquisition, since adding advisors is just as simple as paying $150 more per month. (O’Brien did acknowledge that many roll-ups already have their own similar cloud-based systems.)


The deal with Workplace will become available in July after the buildout, but O’Brien says that since the announcement last week they’ve already had calls from a number of advisors interested. And, there are plenty of Fidelity RIA custody clients currently using some aspects of these products on their own pieced-together systems.

Training in the Fidelity/Workplace system will be provided online, via a dashboard when advisors sign into their virtual desktop, or through a 1-800 dedicated number with Workplace. O’Brien says Fidelity constantly looks at all types of vendors, but Workplace offered what the company was looking for in terms of disaster recovery guarantees and fast initial set-up for advisors. Workplace also has good working relationships with Microsoft, which many offices use for a number of programs, and can help with things like licensing.

“They’ve done a lot of the legwork,” says O’Brien — legwork Fidelity is hoping will make this system a one-stop shop for advisors’ technology portal.

Wealth Central progression

In 2009 Fidelity first integrated the tools on its custodian platform, called WealthCentral. In the years following, it then migrated to the web, but advisors still had legacy technology in their offices to run things like exchange servers, email hosting, or file sharing. See:Technology review: Fidelity’s WealthCentral is solid and smart but still has seams.

“They felt like they were moving forward, but they still had to maintain this legacy infrastructure for a small number of things in the office,” says O’Brien.

“It’s nice logical progression of the WealthCentral story,” he says. See: Fidelity wins converts to WealthCentral, but most of its advisors have yet to make the switch.

WealthCentral currently has 99% of Fidelity clients on it, with about 3,200 firms and 40,000 users, and the company’s legacy platform will be decommissioned by the middle of this year. Fidelity is working now to incorporate more Fidelity services directly into WealthCentral and “keep it going strongly,” says O’Brien.

Today, O’Brien says many advisors still run some office tools on local machines, but are in the process of moving to the cloud and want to be able to operate their business from their tablet. “We think of it as a natural progression,” says O’Brien.

Even if what Fidelity is providing isn’t necessarily new, ActiFi’s Segal does agree that there’s a growing desire for more and more services to be outsourced and for advisors to stop having to manage the technology infrastructure that makes up RIA offices. Fidelity’s system is just answering those needs in one tidy package.

“There’s definitely a demand,” says Segal.

Workplace is self-described as a company started on a “sunny afternoon, with three geeks, eleven years ago, newly graduated from NYU. At the time, one of them was running an IT consulting business out of the World Trade Center, a company he had launched all the way back in high school. As for the other two, they were busy merely being brilliant.”


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