Small firms won't survive — they'll thrive: Fidelity's Oros

Bob Oros has been on the job since January 2012 as executive vice president and head of sales and relationship management at Fidelity Institutional Wealth Services. With 13 years spent at Charles Schwab Corp., three years at LPL Financial and a brief stint at Trust Company of America, Mr. Oros knows his way around the industry. He is now responsible for seven regional heads and about 100 support staffers at Fidelity -- not to mention the 3,300 advisory firms and $550 billion in assets that Fidelity services. InvestmentNews caught up with Mr. Oros Aug. 22 at a Fidelity Advisor event in Dana Point, Calif. This is an edited transcript. How's the new gig going? Bob Oros: It's going fantastic. I often say, I always had a healthy respect for Fidelity when I competed with them, but now that I'm on the inside and see the power of the organization and what we can do for advisers, I'm more intimidated. There's just a lot of capability between our four walls. Like what, for example? Oros: Like something as basic as 401(k) plans. Fidelity has a long history as the biggest administrator and record keeper. Now we're bringing that prowess to advisers. It's the perfect convergence with the changes in regulation and the fiduciary issue. Advisers are increasingly looking to get into that space because they can add value now. We can make our administration and record keeping available to advisers who want to get into that business. Haven't your advisers had access to retirement plan services before? Oros: They've had access to certain components of it, but we are making our full bundled offering available to advisers. Where does the custody business fit in within the larger organization? Oros: This is a strategic business for Fidelity. Being a private company, we have the ability to have a pretty long-term vision for growth. We don't talk about growth goals publicly, but I will say that we're not focused on market share. We're focused on doing business with the right type of advisers. If you're focused on market share, you make decisions that aren't necessarily aligned with that. How has the industry changed over the last decade? Oros: Ten years ago we weren't talking about business issues. We were talking about technical issues of what advisers did. Advisers have gone from running practices to really being businesses. It's the maturing of this industry, as seen with the private equity firms coming in. This is an area that others want to invest in. That's created a stimulus for this evolution from a practitioner industry to a business-owner industry. In fact, a lot of advisers have realized the need to augment their practices with professional management. We're seeing more and more of them actually hiring professional managers to come in and run the firm. And in some cases, those managers are people completely outside of the industry, and they can come in and look at it with a clear set of eyes. Firms that have been willing to spend for that management have seen a huge payback. People have predicted the end for small advisory firms. What do you see happening? Oros: You see this barbell effect happening. Meaning, it's becoming an industry of the very large and the very small in a sense. And I think very small firms can continue to thrive -- more than just survive. They can create a boutique level of service. With all the technology in the cloud, you can run a business pretty modestly. Conversely, we see the bigger firms focusing on getting bigger and bigger. So it's those firms in the middle, with several hundreds of millions under management, where they've got significant investment in infrastructure, those are the firms trying to figure out how to get bigger. They have the infrastructure to grow, but they don't know how. Those are the conversations we're having. And I think one of the things firms like ours can do to be valuable is to help them understand that growth is not always a good strategy for them. Sometimes figuring out that it's not a good strategy for someone is just as important as helping those firms that really are built to grow do it well. Where are your recruits coming from? Oros: We still see lot of breakaway activity from the wirehouses. That trend is continuing. What really has paved the way is the visibility of these teams that have broken out and been successful. It creates a level of confidence in teams that are thinking about it. Also, we're very focused on existing RIAs. I'm going back to every RIA nationally to make sure they know who we are.