PALM BEACH, Fla. — Fidelity Investments Inc. said enhancements for its brokerage technology, which are set to be launched today, will help broker-dealers offer more to their high-net-worth clients.
At its fifth annual Executive Forum, the Boston-based company said that broker-dealers will be able to use the revamped system to process restricted stock transactions, expand risk management, and handle share trading for wealthy clients.
The new services will be available through Fidelity’s Streetscape platform, which provides access to market data, third-party news, and research.
“Broker-dealers are looking for additional ways to differentiate themselves and enhance the value they bring to clients,” said Norman R. Malo, the president of Fidelity’s brokerage clearing service unit, National Financial. “With more broker-dealers focused on serving the high-net-worth marketplace, this enhancement to Streetscape can help their investment representatives.”
National Financial had $231.1 billion of correspondent broker-dealer assets under custody as of Feb. 28.
HOT PRODUCTS
More broker-dealers and other financial institutions are adding managed accounts to their menu of products to maintain their relationships with the wealthy.
T. Neil Bathon, the founder of Boston’s Financial Research Corp., said 77% of all investment representatives offered managed accounts last year, up from 38% in 2001.
“High-net-worth investors want alternative investment products,” he said.
Mr. Bathon said investment minimums for managed accounts, which reached as low as $25,000, are “bouncing back up” as financial institutions realize how labor-intensive these products, which are individually managed, can be. According to Financial Research data, the average managed account has $323,711 of assets.
“Mutual funds are under pressure,” he said. “I mean, they aren’t going to go under in the foreseeable future, but these managed accounts are popular, and they are expanding.”
LOOKING ABROAD
Emerging international markets, including those in Asia and Latin America, are critical components of a well-diversified portfolio, a Fidelity executive said.
Richard R. Mace Jr., a portfolio manager and international group leader for Fidelity, said it is critical for U.S. investors to understand markets that are growing and industrializing, such as Latin America, Eastern Europe, and China.
Philip L. Bullen, a senior vice president of institutional investments for Fidelity, said some investors remain apprehensive about international markets.
“Some investors see these markets overseas like they are going into a crooked card game,” Mr. Bullen said.
American investors need to become more enthusiastic about global markets if they want to have a properly diversified portfolio, he said. “There is a certain apathy toward international investment. No one wants to talk about it, but these emerging markets are critical.”
Fidelity covers 98% of the world’s markets, Mr. Bullen said. It has 542 investment professionals who made 7,457 in-house visits last year and followed 4,007 companies globally, he said.
