A Conversation with David Canter, New Head of the RIA Segment at Fidelity

A Conversation with David Canter, New Head of the RIA Segment at Fidelity

On a recent visit to Boston, I had a chance to catch up with David Canter, the new Head of the RIA Segment at Fidelity Clearing & Custody Solutions. According to Canter, business is strong. “The big firms are getting bigger,” he says. While he acknowledged that smaller firms leveraging technology and running a tight ship can prosper, it seems clear that his primary focus is on larger firms.

“We are seeing the growth of true national firms,” Canter says. While the industry tends to focus on AUM, Canter says the real story is revenue growth. “A firm with $15 million in revenue used to be considered a very large firm, but now there are a substantial number of firms in the $30-$50 million revenue range.” He goes on to say that Fidelity is tracking approximately twenty firms with $50 million in revenue, and that we will see their first RIA with $75 million in revenue soon.

CLIENT EXPERIENCE

Canter is also very optimistic about eMoney: “Ed O’Brien and his team are doing an excellent job over there. eMoney is still a largely undiscovered jewel. It is a turnkey, future ready platform.”

eMoney ties in with another theme that Canter discussed with me: the client experience. Advisors need to go beyond wealth management, he says. Advisors need to do more to define what their value proposition is in this competitive environment, and from Canter’s perspective, advisors need to advance the client experience. He believes that eMoney is well positioned to help in that regard.

MULTI-CUSTODIAL PORTFOLIO MEASUREMENT

Fidelity is in the process of rolling out portfolio measurement this month. The initial release is for Fidelity assets only. Canter readily acknowledges that Fidelity must provide multi-custodial performance measurement, and it is scheduled for release in 2018. He expects this offering to be popular with advisors. It works, it will be competitively priced (no details yet), and it is offered by Fidelity, a large firm with the expertise and scale to support RIA firms of any size.

While some advisors question the need for Fidelity and other custodians to offer software as a service (SaaS) to their clients, it intuitively makes sense. First, with the custodians now the arbiters of cost basis, a case can be made for combining the custody, trading and performance measurement on a single system. From a design perspective, it is highly efficient. There is also a business case to be made. Custodians are experiencing a declining revenue yield due to DOL and reduced equity ticket charges, so they are in search of new sources of revenue. Performance measurement, trading, rebalancing and investment metrics are all areas where Fidelity has considerable expertise. One could also argue that the more services Fidelity provides to an RIA, the stickier the relationship becomes.

SCALE AND EFFICIENCY: KEY FOR ADVISORS

It remains to be seen what percentage of advisors are willing to rely more heavily on a single custodian for additional services, but for many, particularly those who already do most their business with Fidelity, the pros will outweigh the cons.

When I asked Canter what else advisors should be thinking about in this increasingly competitive marketplace, he said advisors need to be more scalable and more efficient. How should they go about achieving those goals? “Advisors must be in command of their business metrics,” he said. According to Canter, all of the high performing firms that Fidelity works with are in full command of their business metrics, while many of the lower performing firms are not.

In his former role as Head of Practice Management and Consulting, Canter had a great deal of experience leaning what makes RIA firms successful. It appears that he is extremely well qualified to continue on with Fidelity in his new role.

Joel Bruckenstein
Joel Bruckenstein
Joel P. Bruckenstein, CFP®, is Publisher of the T3 Tech Hub (formerly the T3 newsletter) and the producer of the Technology Tools for Today (T3) Advisor Conference, the only annual technology conference for independent advisors, as well as the Technology Tools for Today (T3) Enterprise Conference. Bruckenstein is an internationally acclaimed expert on applied technology as it relates to the financial service industry. He is the co-author of three books: Virtual Office Tools for a High Margin Practice, Tools and Techniques of Practice Management, and Technology Tools for Today’s High Margin Practice. Joel’s monthly technology columns appear in Financial Advisor magazine and Financial Planning magazine. In addition, he compiles the annual technology survey for Financial Planning magazine. Bruckenstein has for more than twenty years advised financial service firms of all sizes on improving their technologies, processes and workflows. For more information about Joel Bruckenstein and the services his firm offers, please visit www.JoelBruckenstein.com

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