Fidelity Adds Tools for Brokers Considering Independence

Fidelity Investments said it expanded its Transition Solutions program, which gives brokers information about independent business models.

Working with Fidelity consultants, brokers can access a new tool to help them analyze the economics of three common independent models: starting an independent registered investment adviser (RIA) firm, partnering with a third-party (e.g., rollup or acquiring a firm), or joining an independent broker/dealer. Fidelity also said it offers a new white paper titled “Options for Independence.”

For wirehouse brokers contemplating independence, Fidelity consultants offer the Financial Advisor Economic Estimator, which allows brokers to input specific information about their current practices, from annual production and current payouts to deferred compensation and office location. Specific values for more than 50 expense items across nine different categories, such as salary, legal fees, registration and insurance, are included in the analysis, according to Fidelity.

The estimator will then produce a detailed and customized financial report that includes annual estimates over a 10-year period of the costs, taxes, and payouts associated with three common independent business models compared with the wirehouse model. The report also shows estimated pre- and post-tax operating income, equity value of the firm and the tax consequences of taking a forgivable loan.

If they aren’t ready for a detailed report, brokers can also access a simplified online version to get a high-level overview of the annual financial estimates for the independent model compared to a wirehouse by entering their current assets and production levels. Fidelity said the online version is designed to help brokers determine if they should proceed with a more detailed financial analysis with a Fidelity consultant.