A big reason Fidelity Investments changed the name of one of its business units, was the opportunity for growth in the trust business, according to the head of the unit.
"More and more Americans are using trust," said John W. Callahan, the president of Fidelity Institutional Wealth Services. "As we looked at the customer services we offer, we thought that was an underserved market."
Fidelity started by partnering with the Wayne, Pa., software and processing provider SunGard Data Systems Inc. In August of last year the two companies rolled out an integrated trading and custody platform for trust institutions and third-party administrators. That product is now used by more than 200 firms, according to Fidelity.
And last month the Boston firm renamed its Fidelity Registered Investment Advisor Group, which offers the platform in partnership with SunGard, as Fidelity Institutional Wealth Services. The name change, Fidelity execs say, was an acknowledgement of the potential of two types of businesses the unit serves alongside RIAs: trusts and third-party administrators.
Alois Pirker, a senior analyst with the Boston research firm Aite Group LLC, said the name change is no small matter. The acronym for Fidelity Registered Investment Advisor Group, Friag, had wide recognition in the financial services industry, he said.
"It takes quite a bit to get rid of that," Mr. Pirker said. "It looks like Fidelity wants to expand its territory and move into neighboring areas to position themselves for the next wave of growth."
Mr. Callahan said Fidelity expects the number of trust clients in the United States to double by 2012, to 4 million, and it expects trust assets to more than double, to $7 trillion.
"As we looked at the customer services we offer, we thought that was an underserved market," he said. "No one is really focused on how to make them more efficient in terms of how they handle mutual funds in the accounts of trust beneficiaries."
Mutual funds are increasingly in demand for small and midsize trust accounts, Mr. Callahan said. The Fidelity and SunGard platform automates the process of buying funds and doing the associated accounting work.
Registered investment advisers remain the biggest part of the Fidelity unit's business — two thirds of the $320 billion of assets it services are with RIAs. About 60% of the rest are with trusts, and 40% are with third-party administrators, he said.
The unit's total assets are growing at a rate of 30% a year, and the proportion between the different client groups should remain the same while the business expands, he said.
Mr. Pirker said Fidelity is "a huge RIA player." Third-party administrators "are not that dominant with them, but they are clearly looking to grow that space and the trust business, as well."
Fidelity, which grew to prominence as a mutual fund company, is keeping a close eye on the wealth market. According to research conducted for the firm, 70% of millionaires work with one or more financial professionals. Another 13% say they are likely to work with one over the next year. Fidelity Institutional Wealth Services is appealing to the gatekeepers of that wealth through an ad campaign, direct mail, and a redesign of the unit's Web site.
As it does for trust clients, Fidelity facilitates the trading of mutual funds for third-party administrators, integrating it with SunGard's record keeping system.
The company has been steadily rolling out services aimed at third-party administrators. In June, for example, it introduced directed trustee services for administrators in the small-plan 401(k) market through its personal trust unit, Fidelity Personal Trust Co. Around the same time, the firm began offering administrators what is known as paying agent services, which include processing contributions to 401(k) plans, making distributions to the plans, providing loans, and handling tax reporting.
