Fidelity Helps Shift the Mindset Around Succession Planning with Comprehensive New Program for Investment Advisors

Program Designed to Drive Planning for Investment Advisors Who Are Not Fully Prepared for Succession

BOSTON-- Fidelity Institutional Wealth Services^®, a leading custodian for registered investment advisors (RIAs), today unveiled a comprehensive new program designed to help investment advisors envision and formalize their succession plans.

According to the 2011 Fidelity RIA Benchmarking Study, three-quarters (75 percent) of participating investment advisors either don’t have succession plans for their businesses or have plans that are not ready to be implemented.¹

Fidelity’s “Realizing the Value in Your Firm” program includes a series of hands-on workshops being held across the country that help advisors understand their succession planning options, engage with advisors who have executed succession planning strategies and ultimately choose the succession “track” that is right for them.

Fidelity uses a sequence of personal and group exercises including an innovative Track Selector Game^TM to help advisors determine which of three succession strategies is most aligned with their vision: “internal transition,” “merge and stay involved” or “sell and move on.” (Click here to see more from the workshop and view the Track Selector Game in action.) The workshops are complemented by personalized consulting from Fidelity and certain third-party succession consultants, as well as a toolkit that includes worksheets, planning templates and a robust list of resources to help advisors create and implement their plans.

“We built this program around the insight that succession planning conversations need to start at a higher level. Many advisors rush to determine their firm’s value or find a partner, but succession planning is more about shifting one’s mindset than making a transaction,” said David E. Canter, executive vice president and head of Practice Management and Consulting at Fidelity Institutional Wealth Services. “This program helps advisors answer the question ‘what do I really want for the next phase of my practice and my life?’ We believe addressing this very significant element of succession planning will inspire advisors to take action and create more formalized plans.”

Recent Fidelity research finds that clients are concerned about their advisors’ succession plans. More than half of investors (54 percent) who work with an advisor say it is important that their advisor have a succession plan.²

Two-thirds (66 percent) of RIAs would prefer to have an internal successor.³ Among RIAs who feel an internal successor is the best route, less than a third (29 percent) have selected a successor.⁴

“When succession planning is equated with retirement, it is not always a priority because many investment advisors are passionate about their practices and don’t see themselves transitioning out of the business. In fact, nearly half of RIAs report that they don’t plan to leave the profession or retire⁵,” said Canter. “However, when advisors think about succession planning as a critical part of business continuity -- protecting the asset they have built and the clients that they serve -- it can and should move to the top of the list.”

Fidelity’s program presents three tracks for advisors to consider:

• Track 1: Internal Transition
Advisors who select this track are typically interested in handing over the reins to a junior advisor, family member or internal staff member. These advisors are confident they have the ability to select, hire and mentor someone who will share their same investment philosophy or planning approach. Retaining the firm’s brand culture and client base after the transition are important objectives.

• Track 2: Merge & Stay Involved
Advisors who select this track are typically interested in finding like-minded advisors to complement each others’ strengths, leverage similar business cultures and benefit from integrated staff, tools and technologies. These advisors have a desire to continue to work after the transition, are willing to meld their investment process, and in some cases may consider revising their investment philosophy. Taking the time to find the right partner firm and dealing with the complexities involved in merging two firms are important considerations.

• Track 3: Sell & Move On
Advisors who select this track are typically interested in making a complete exit from the firm and are comfortable turning the reins entirely over to someone else. There is little or no concern about retaining the firm’s name or brand, and these advisors understand that their clients may be redirected into new investment strategies and products. Realizing close to the strategic fair market value of the firm is important.

After advisors select their tracks, Fidelity provides consulting and access to tools and resources to help advisors formalize and ultimately execute their plans. This includes leveraging a detailed workbook with resources such as a talent readiness assessment, cultural compatibility checklist, partner discussion guide and keys to a written succession plan.

About Fidelity Practice Management and Consulting Program
The Fidelity Practice Management and Consulting Program is a multi-faceted client service that provides advisors access to a wide array of insights, best practices, strategic consulting services and business-oriented tools and programs to help accelerate business growth, maximize productivity and protect their practices.⁶

About Fidelity Institutional Wealth Services
Fidelity Institutional Wealth Services is a leading provider of trading, custody and brokerage services to Registered Investment Advisors, Trust Institutions and Third Party Administrators. The company is able to leverage the capital, resources and expertise of Fidelity Investments, one of the world’s largest financial services companies, on behalf of its clients. This includes access to a comprehensive set of products and services, innovative investment tools and research, an integrated brokerage and trust platform, and dedicated client service professionals – all designed to help its clients thrive by growing their businesses, more effectively meeting customer needs, and enhancing operational efficiency and profitability. Fidelity Institutional Wealth Services custodies more than $550 billion in assets on behalf of nearly 3,300 clients, as of March 31, 2012. For more information about Fidelity’s services, please visit http://fiws.fidelity.com.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.7 trillion, including managed assets of $1.6 trillion, as of April 30, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

1 2011 Fidelity RIA Benchmarking Study, Sept. 2011, which was conducted in collaboration with Quantivus Consulting, Inc., an independent company not affiliated with Fidelity Investments.

2 Fidelity Investments recently conducted a primary research study among U.S. mass affluent and millionaire investors via online survey during the period of March 15-29, 2012. The mass affluent group had investable assets of at least $250,000 while the millionaire group had investable assets of at least $1 million; both groups’ investable assets were excluding workplace retirement accounts and any real estate holdings. The results reflect responses from 1,520 financial decision makers with 1,020 of those being millionaire investors. The data reflects a margin of error of +/-3%. The experience of the mass affluent and millionaire investors who responded to the survey may not be representative of the experiences of all investors and is not indicative of future success. Fidelity partnered with Bellomy Research, an independent third-party research firm, to conduct the study.

3 Fidelity Investments recently conducted a primary research study among U.S. brokers and advisors during the period of March 15-29, 2012. The results reflect responses from 1,207 U.S. investment professionals from a mix of independent, wirehouse, insurance, regional, bank and RIA firms. The data reflects a margin of error of +/-3%. The investment professionals had to personally provide financial/investment advice and/or planning services along with holding the proper licensing and/or credentials. The experience of the brokers and advisors who responded to the survey may not be representative of the experiences of all brokers and advisors in the financial industry and is not indicative of future success. Fidelity partnered with Bellomy Research, an independent third-party research firm, to conduct the study.

4 Ibid.

5 Ibid. Nearly half is 43 percent.

6 When appropriate, Fidelity works closely with third-party providers to offer its practice management solutions. The third-party vendors participating in the Fidelity Practice Management & Consulting Program are not the only firms that provide products and services of this kind. Fidelity does not provide recommendations or endorsements with respect to any Fidelity Practice Management & Consulting Program vendor or any such vendor’s products and services. Each client should conduct its own independent diligence before engaging a vendor and determine whether the particular vendor is right for them. Clients deciding to employ the services of, or purchase products offered by, a vendor in the Fidelity Practice Management & Consulting Program will be required to work directly with the vendor. Fidelity is not a party to any business or contractual relationship between Fidelity Practice Management & Consulting Program vendors and Fidelity clients.

Fidelity Institutional Wealth Services is a division of Fidelity Brokerage Services LLC.

Fidelity, Fidelity Investments with the Pyramid Design logo, and Fidelity Institutional Wealth Services are registered service marks of FMR LLC.

Clearing, custody or other brokerage services may be provided by National Financial Services LLC, 200 Seaport Boulevard, Boston, MA 02210 or Fidelity Brokerage Services LLC, 900 Salem Street, Smithfield, RI 02917, Members NYSE, SIPC.


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