Fidelity Model Portfolios are designed to help advisors build scale and directly apply Fidelity investment solutions to client accounts in a cost-effective way
July 12, 2018 — BOSTON–(BUSINESS WIRE)–Fidelity Investments®, one of the largest and most diversified global financial services firms with more than $7 trillion in assets under administration,1 today announced the launch of Fidelity Model Portfolios – a new offering to complement the portfolio construction capabilities that Fidelity currently provides to advisors. Fidelity Model Portfolios offer advisors a lower cost way to deliver professional, institutional-quality investment management for their clients.
New research finds that 81 percent of advisors use some form of model to construct their clients’ portfolios.2 According to Cerulli data, the managed accounts market is estimated at $6 trillion and is expected to grow at a 14.5 percent annual rate over the next few years.3 Fidelity Model Portfolios are designed to support this growing trend by helping advisors manage their clients’ investments more efficiently and, in turn, enable them to spend more time building better relationships with their clients and growing their books of business.
“As fee compression continues across the industry, advisors are focused on finding ways to more efficiently manage their clients’ assets,” said Matt Goulet, senior vice president, Fidelity Institutional Asset Management®. “With this new offering, advisors can feel confident that they’re delivering institutional-quality portfolios for their clients, and they can spend more time focusing on services that can help them deliver even higher value, including helping their clients achieve their life goals.”
The research also found that of those advisors using model portfolios, roughly half of their client assets are invested in them. According to the survey, the top three reasons that advisors use model portfolios are to help provide better investment outcomes, help efficiently scale their business, and enable them to focus more on providing planning services to their clients.4
Fidelity Model Portfolios offer access to Fidelity’s 70 years of investing and portfolio management experience and 25 years of experience managing models which seek to align to risk profiles. The initial offering will include the Fidelity Target Allocation Model Portfolios, which offer five different asset mixes that align to different risk profiles and comprise a mix of Fidelity active and passive mutual funds, with plans to launch additional options later this year. These portfolios enhance Fidelity’s current line-up of portfolio capabilities, which include insights from the Capital Markets Strategy team, a robust thought leadership program on portfolio construction, portfolio evaluations with the Portfolio Quick Check diagnostic tool, and consultation from the Portfolio Construction Guidance team.
“The model portfolio space is a natural extension of our existing portfolio construction capabilities,” said Goulet. “From insights to implementation, we offer a range of services that support advisors’ portfolio needs.”
Fidelity Model Portfolios are available to advisors at broker-dealers, registered investment advisors, banks, and insurance companies. For more information, please visit go.fidelity.com/models.
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $7.0 trillion, including managed assets of $2.5 trillion as of May 31, 2018, we focus on meeting the unique needs of a diverse set of customers: helping more than 27 million people invest their own life savings, 23,000 businesses manage employee benefit programs, as well as providing more than 12,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for 70 years, Fidelity employs more than 40,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
To the extent any investment information in this material constitutes a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity, is not intended to be used as a primary basis for your investment decisions, is based on facts and circumstances at the point in time it is made, and will not be updated if facts or circumstances change unless you contact Fidelity and ask for a new recommendation. Fidelity and its representatives have a financial interest in any investment alternatives or transactions described in this material. Fidelity receives compensation from Fidelity funds and products, certain third-party funds and products, and certain investment services. The compensation that is received, either directly or indirectly, by Fidelity may vary based on such funds, products and services, which can create a conflict of interest for Fidelity and its representatives.
Fidelity Model Portfolios are made available to financial intermediaries on a non-discretionary basis by FIAM LLC, a registered investment adviser. Capital Markets Strategy insights, and portfolio construction capabilities including, Portfolio Quick Check and Portfolio Construction Guidance, are provided to advisors by Fidelity Investments Institutional Services Company, Inc., a registered broker/dealer that is affiliated with FIAM LLC.
Investment performance of the Model Portfolios depends on the performance of the underlying investment options and on the proportion of the assets invested in each underlying investment option over time. The performance of the underlying investment options depends, in turn, on their investments. The performance of these investments will vary day to day in response to many factors. Asset allocation strategies are subject to the volatility of the financial markets, including that of the underlying investment options’ asset class. Principal invested is not guaranteed at any time.
Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. In general the bond market is volatile, and fixed income securities carry interest rate risk. As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities. Fixed income securities also carry inflation, credit, and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so holding them until maturity to avoid losses caused by price volatility is not possible.
“Fidelity Investments” and/or “Fidelity” refers collectively to FMR LLC, a U.S. company, and its subsidiaries, including but not limited to Fidelity Management & Research Company (FMR Co.) and FIAM.
The registered trademarks and service marks appearing herein are the property of FMR LLC.
Fidelity Clearing & Custody Solutions® provides clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC, Members NYSE, SIPC.
Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact your investment professional or visit institutional.fidelity.com for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
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1 As of April 30, 2018.
2 The Model Portfolios survey was conducted in April and May of 2018 in collaboration with FUSE Research and WealthManagement.com, independent firms not affiliated with Fidelity Investments. 417 advisors participated in the survey, which was an online, blind survey. The advisors are from a mix of banks, independent broker-dealers, insurance companies, regional broker-dealers, RIAs, and national brokerage firms (commonly referred to as wirehouses).
3 The Cerulli Report “U.S. Managed Accounts 2017”.
4 The Model Portfolios survey.