In the quietly aggressive ground game of custody and clearing services, Fidelity Investments has turned to Michael Durbin to lead its next charge.
By most measures, he appears well-suited for the job as head of Fidelity Institutional Product, which he stepped into two weeks ago. It entails stocking and building out the distribution channels reaching registered investment advisers, family offices and broker-dealer representatives.
Mr. Durbin, 48, has been with Fidelity since 2009, most recently as president of Fidelity Wealth Technologies, a division created to explore the financial technology marketplace for opportunities to build or buy client-support technologies.
The highest-profile example of that role was stepping in as
interim chief executive of eMoney Advisor, a software technology company Fidelity acquired in February 2015 for $250 million.
While it was not part of the original plan that Mr. Durbin would become eMoney's CEO, which he was for about six months before Fidelity veteran Ed O'Brien took over earlier this year, Mr. Durbin was seen as instrumental in keeping
eMoney at the ideal arm's length from its 70-year-old owner.
FEARS AVERTED
“My fear was always that Fidelity would use eMoney as a carrot by not allowing advisers to continue using it unless they custody with Fidelity. But I'm glad they haven't made any major changes to the adviser platform relationship as far as limiting access to what we get,” said Peter Huminski, founder of Thorium Wealth Management, who custodies client assets at LPL Financial.
According to Mr. Durbin, that was not and is not the plan for eMoney, which still stands out as a prominent reference point for the kinds of things RIAs might expect from Fidelity's distribution channel under Mr. Durbin's direction.
“What we like about eMoney is that it continues to be a separate technology company,” he said. “And we like that there's a lot of opportunity that's presented by eMoney.”
Case in point is Fidelity's
fledgling Automated Managed Platform, known as AMP, which Mr. Durbin refuses to call a robo-platform and instead prefers digital-advice provider.
“If I'm successful I will get through this conversation without using the term robo,” he said. “Calling it a robo takes the element of the human out of it; I actually like the term bionic, because it melds human and machine.”
AMP, which is slated for a pilot launch early next year, was born out of eMoney and is aimed directly at Fidelity's custodial relationships.
This has Mr. Durbin's fingerprints all over it, and RIAs should take heed of the message it sends in terms of Fidelity's push to expand custodial connections.
“Fidelity could have partnered, bought or built a standalone digital-managed-account platform, and there are others doing that, but we didn't want to,” Mr. Durbin said. “We're leveraging the systems in place through eMoney so advisers can run digital or human-touch offerings off the same platform.”
As Mr. Durbin explains it, AMP “is not a separate thing, it's a deeply integrated sidecar allowing advisers to touch different clients.”
By different clients, Mr. Durbin mostly means client account sizes, which, on the smaller end most RIAs understand can be challenging but also potentially promising.
“To the extent a household comes in at $25,000 that may emerge down the road as a $250,000 household, there is a seamless transition, and you can graduate households, and you can also un-graduate households to a digital-solution if necessary,” he said. “There are amazing digital-advice providers out there, and for the majority of providers that have an offering for these intermediary channels, they offer a separate custody and clearing channel.”
Mr. Durbin, who spent two years as president of Fidelity Wealth Technologies, is replacing Mark Haggerty, who headed Fidelity Product for five years and is moving to another role within the firm, according to company spokeswoman Erica Birke.
HISTORY WITH RIA CUSTODY
Prior to the Wealth Technologies stint, Mr. Durbin was president of the RIA custody unit, formerly known as Wealth Services, which has since been merged with the clearing side to form Fidelity Clearing & Custody Solutions.
Sanjiv Mirchandani is president of Fidelity's custody and clearing businesses, which has $1.7 trillion under administration, serving nearly 3,300 clients and more than six million accounts.
In his new role, Mr. Durbin is considered a peer to Mr. Mirchandani, and both executives report to Jeff Lagarce, president of Fidelity Institutional, an umbrella over several business units that combine for $2.2 trillion in assets under administration.
While there have been some references to Mr. Durbin coming back into the fold at Fidelity after his time at the Wealth Technologies unit, Mr. Durbin makes it clear he was never outside the loop and never relocated outside of Fidelity's corporate headquarters.
“I had a more specialized perch and more specialized things to focus on, but I was never too far away,” he said. “The reality is I never left these distribution channels.”
Whether he was technically away from Fidelity's distribution channels or not, Mr. Durbin is receiving a warm welcome from those who know him or know of him.
“I know Mike well; he's one of the smartest guys in the business, and I don't think he's a wait-and-see kind of guy,” said Marty Bicknell, president and chief executive at Mariner Wealth Advisors.
“As I think about where the industry is and where it's going, change is coming and I like having somebody like Mike talking about products for our space.”
ALTERNATIVE INVESTMENTS
In October, Fidelity
launched an alternative investments platform the involves partnerships with Goldman Sachs, Morningstar Inc. and alternative investments provider CAIS.
“We're developing third-party relationships and that's proof that it's not just about the underlying solutions, but it's also about the delivery mechanism,” Mr. Durbin said. “We know that, virtually across the board, RIAs have an insatiable appetite to be aided in the pursuit of growth, and there's no secret formula for how an RIA can grow.”
In other words, Mr. Durbin is not building any fences around the responsibilities for himself or the 100-person unit he now oversees.
“Mike is a super smart strategy guy, and that's why he's in that job,” said David Edwards, president of Heron Financial Group, as well as a Fidelity product beta-tester and a member of the eMoney advisory board.
“I don't think there will be more than a handful of firms still in the custody business in a few years, because it is so cost-prohibitive,” Mr. Edwards said. “Mike Durbin has a big-picture mandate and he will be busy. If I was him, I wouldn't even be able to get out of bed in the morning.”
