According to published reports, Fidelity is ending its alliance with Betterment Institutional, with plans to unveil a new digital platform, including plans for a digital offering for advisors.
The New York Times reports that Fidelity is testing its own automated investing platform, which it is calling Fidelity Go. The Times notes that the details are listed in an SEC filing, which was subsequently confirmed by a company phone representative and a Fidelity spokesman. The filing describes “Go” as a “discretionary investment management service designed for individual investors with accounts of $5,000 or more.”
The report notes that at the moment, Fidelity Go is available to only a few hundred of the company’s employees, though Fidelity plans to invite some customers to test it early next year and then do a public introduction after that. At the same time, the financial services giant is in the pilot stages of developing a direct-to-consumer robo-advisor, company representatives confirmed, the Times reported. That advisor platform is expected to be unveiled early next year, and is intended to allow advisors to fully digitize their practices.
The move puts the company into head-to-head competition with so-called robo-advisor start-ups like Betterment and Wealthfront, as well as traditional players like Vanguard and Schwab that recently began offering similar services.
It was, of course, only about a year ago that Fidelity announced its partnership with Betterment, the industry's leading independent robo-advisor.
The short-lived arrangement — with a separation both organizations described as “amicable” — has apparently been a learning experience for both parties. “After a year of engaging with Betterment Institutional and our clients/prospects on their digital advice needs, we have learned a great deal about what our clients are looking for in this space,” Erica Birke told Financial Planning. “We entered our relationship with Fidelity to learn about how a digital-first approach could improve RIAs’ practices, and it’s been a positive learning experience for both of us,” Betterment spokesman Joe Ziemer told the publication.
“Our biggest takeaway has been the need to develop a strong internal practice management team to support the increasing number of RIAs on our platform,” Ziemer says. “Our vision is to be the leading digital-first custodian.”
Fidelity Go will be “appropriate for an investor who likes to engage digital-first,” says Fidelity spokesman Rob Beauregard. “For decades, Fidelity has offered online tools and portfolio builders, but there are investors who lack the skill, will or time to manage their own investments. Fidelity Go will be an easy entry into professionally managed money for a low cost,” Beauregard adds.
The online advice market will top $650 billion by 2019, but assets will be split mostly between the digital offerings of traditional discount brokerages and firms focused on DC plans, a recent report by industry research firm Tiburon predicts.
