Page 19 - Investment Advisor December 2022/January 2023

Fidelity Rolls Out Institutional Custom SMAs
Fidelity Investments says it is expanding its direct indexing
capabilities with the Fidelity Institutional Custom Separately
Managed Account lineup for wealth management firms and
institutions.
The Institutional Custom SMA offering, announced
Monday, is being introduced to some clearing and custody
clients in the coming months — expanding a limited rollout
that began Oct. 1 — with broader availability to all RIA, bro-
ker-dealer and family office clients expected in 2023.
“Financial advisors are increasingly looking to help
improve client outcomes and deliver personalized
investment solutions, and we see custom SMAs as an
opportunity to address these needs with scalable yet highly
customizable solutions,” Gary Gallagher, head of Fidelity
Institutional Wealth Management & Advisory Solutions, tionally created a different product” because retail and advisor
said in a statement. clients have different needs and market research indicated the
Fidelity, which historically focused such services in the programs needed to be delivered differently, he said.
ultra-high-net-worth space, now aims to extend them “much Fidelity has developed dedicated service and investment
more broadly across the wealth spectrum” through the teams in-house to work with advisors to thoughtfully intro-
Custom SMA, Gallagher told ThinkAdvisor, noting that the duce the SMAs, Gallagher explained. “We can do all this in a
offering can help advisors provide a more personalized prod- highly integrated vertical way,” offering seamless, integrated
uct to lower net worth investors who also need customized and scalable services to clients.
services and tax management. Earlier this year, Fidelity acquired Geode Capital
Management, which brought a $3 billion customized
Program Details SMA business for family offices, now branded as Fidelity
Through the program, Fidelity builds and manages equity Institutional Custom SMAs.
portfolios customized to investors’ needs and preferences,
it says. The current lineup includes 10 tax-managed equity The Power of Data
strategies with U.S., international, global and sustainable Fidelity said it continues to invest heavily in quantitative
equity holdings. resources to help harness the power of data and technology
As it further expands its custom SMA offering, the firm and combine it with the firm’s long-standing fundamental
is aiming to target more market exposures. Also, advisors investment philosophy anchored on research.
and their clients can use the program to tailor SMAs for Advisors are seeking solutions that can help them go
clients by applying tax management; excluding certain beyond managing money so they can spend more meaning-
securities, sectors or industries; and applying a sustain- ful time helping clients build holistic financial plans, accord-
able overlay. ing to Fidelity, which noted the Institutional Custom SMAs
“We’re moving into a world where hyper-personalization extend Fidelity’s broader portfolio construction capabilities
is becoming the norm,” Neil Constable, head of Fidelity’s for advisors.
Quantitative Research and Investments division, told Many advisors see direct indexing as an investment strat-
ThinkAdvisor. egy that, by directly owning all or a subset of the individual
Fidelity sees the offering as the start of the company’s abil- securities of an index, allows investors to tailor their accounts
ity to offer highly personalized and customized portfolios to to their tax situation and individual preferences at the secu-
all advisor clients, expanding the reach of its sophisticated rity level, the company noted.
Ralf/Adobe Stock grams, Constable said, noting that a similar product is avail- indexing capabilities to advisors, the offering will go beyond
asset management services, Constable said.
While the Institutional Custom SMAs will provide direct
The new offering won’t compete with other Fidelity pro-
index-oriented strategies with plans for active and blended
strategies as well. —Dinah Wisenberg Brin
able to the company’s retail investor clients. “We very inten-

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