Fidelity Investments has fired the first salvo in a direct assault on Charles Schwab’s dominance of the adviser referral business, launching an initiative to link customers with financial advisers.
Fidelity Investments has fired the first salvo in a direct assault on Charles Schwab’s dominance of the adviser referral business, launching an initiative to link customers with financial advisers. According to the InvestmentNews Web site, Fidelity began a test of a referral program earlier this year, five years after San Francisco-based Schwab launched its own version, AdvisorSource.
Fidelity’s program will compete with a large group of referral programs but AdvisorSource would be its most formidable competitor.
AdvisorSource put US$609 million into the hands of advisers during April, beating its previous high of US$497 million, reached in April 1999.
AdivsorSource now has US$8 billion under advice, up from US$6.7 billion at the end of last year and more than 435 advisers have paid an average of US$10,000 each to join the network.
Fidelity is also trying to stop money flowing out of its funds and into the Schwab service. As self directed investors grow older and wealthier and have larger and more complex portfolios, they tend to migrate to full-service brokers such as Merill Lynch or Morgan Stanley Dean Witter. By having a referral program in place, Fidelity’s customers can get assistance from advisers while their investments remain with Fidelity.
Fidelity is being tight-lipped about how its program will work, but like Schwab, the company will rely heavily on its network of 77 branches to generate referrals. Fidelity also intends to mine its own database to identify customers that may be in need of financial advice. Once those cus-tomers are identified, a Fidelity representative may call on them to recommend a adviser close to where they live. The cost of the referral service to advisers is still being considered.
Barclays Global Investors (BGI) has become the top fund manager in Europe’s US$3.7 trillion pension market, according to recent research figures from William M. Mercer. The researcher says investors are switching to passively managed index funds and away from actively managed funds. BGI raised its European pension fund assets by 32 per cent to US$107 billion in the 12 months ended June 30, 1999. In the same period, Merrill, Schroder and UBS AG’s Phillips & Drew suffered declines in funds under management for European pension funds.
The International CFP Council has renewed the membership of France, Germany, Canada and the United Kingdom for another three years. Affiliates are required to renew membership with the council every three years. In other news emanating from the recent international CFP meet-ing in South Africa, the Korean Financial Planning Association’s bid to join the Council was ac-cepted.
Prudential is planning a partial float of its Egg Internet banking arm, even though it will only fetch around half the four billion pounds originally forecast. A report in the Guardian newspaper suggests Prudential will make an announcement this month outlining its intention to publish a prospectus, with a plan for Egg to come to market in early June. Prudential has always had the intention to float at least a part of Egg, although the inconsistency of the financial markets over the last two months, especially in the highly rated Internet sector, raised doubts that any public offering would be imminent.
HSBC has bought 75 per cent of Thailand’s Bangkok Metropolitan Bank for Baht 36.6 billion (A$1.6 billion) to expand its Thai retail and commercial banking business. Bangkok Metropoli-tan is the country’s eighth largest bank. HSBC is the oldest foreign bank operating in Thailand.
