Fidelity brings new referral program to L.A., Manhattan

SAN FRANCISCO — After achieving success in pilot cities, Fidelity Investments is taking its revamped referral program to Los Angeles, Manhattan and the New York suburbs, but with changes. The Boston-based company is extending its Wealth Advisor Solutions referral program to registered investment advisers in these megamarkets. In contrast to past referral efforts, Fidelity registered representatives now have a tool that culls accounts appropriate for RIAs Fidelity began to pass referrals — which average $1.3 million in assets — last month from its branches in these areas to certain RIAs that use Fidelity to hold custody of their assets. Assets from Fidelity referrals to its RIA custody clients rose to $1.5 billion for the first half of 2007, up 33% from the first half of 2006, according to Scott Dell’Orfano, executive vice president of sales at Fidelity Registered Investment Advisor Group. Fidelity’s success with its referral program is simply in keeping with industry trends, said Andy Gill, senior vice president of client experience support for Charles Schwab & Co. Inc. in San Francisco. “I think referral programs in general are doing very well,” he said. Yet Schwab Advisor Network’s assets from referrals were virtually the same for the first half of 2007 as for the first half of last year, Mr. Gill added. Fidelity’s surge in assets can be attributed to the referrals generated by its pilot program in Boston, Chicago and San Francisco, which was launched last November, Mr. Dell’Orfano said. Fidelity’s predecessor program, Advisor Access, is a less formal set of relationships between RIAs and branch reps at the company, and that continues to serve advisers in other cities. The upgrades to the referral program are very evident in the attitudes of the branch reps, according to Daniel Banis, president of First American Trust FSB in Santa Ana, Calif., which manages $2 billion and has received Fidelity referrals since 2005. “We’re seeing more referrals and better referrals,” he said. “Now it’s a more proactive approach” by the reps. Yet despite these successes, Fidelity undertook a series of changes to make its rollout in these new markets even better than ones in its pilot cities. Advisers wanted a better way to communicate the strengths of their practices. Fidelity responded by creating a forum for advisers to set up booths in various attractive local venues. Officers from Fidelity’s retail branches attend these exhibitions and learn about the strengths of the practices. This forum made company principals more confident that they were making efficient use of their time. “Usually, the principals don’t have an appetite” for schmoozing with branch reps, Mr. Dell’Orfano said. The exhibits proved so popular with advisers that Fidelity also hosted them in its original pilot markets as well. Robert DiQuollo, principal with Brinton Eaton Associates Inc. in Morristown, N.J., which manages $500 million, said he met a whole array of reps that he had never seen before, which made it a good use of his time. “We saw about 50 reps [at the Fidelity event], and we were told that our story stood out,” he said. But all these assets pushed through to designated financial advisers may stir resentment among other advisers who are doing business with Fidelity but aren’t invited into the program, according to one adviser who asked not to be identified. “Clearly, many advisers would like to participate,” Mr. Dell’Orfano said. “We’re not going to come off of our standards for any one firm.” These Fidelity standards demand that practices be well established, with solid succession plans, Mr. Dell’Orfano said. “We’re helping firms to get to that point; we give everyone the opportunity,” he said. But Wealth Advisor Solutions has also been an effective carrot for Fidelity to attract new advisers to its custody platform — about 30% of its participants, Mr. Dell’Orfano said. On average, there are about 12 RIAs that receive referrals from Fidelity in each market territory, he added.