Fidelity shakeup spotlights breakaway brokers

Fidelity Investment’s decision last week to replace the head of its adviser unit with an executive from Morgan Stanley is another sign that Fidelity is serious about recruiting more breakaway brokers into its fold.

Fidelity Investment’s decision last week to replace the head of its adviser unit with an executive from Morgan Stanley is another sign that Fidelity is serious about recruiting more breakaway brokers into its fold.
Boston-based Fidelity announced on Wednesday that John W. “Jack” Callahan president of Fidelity Institutional Wealth Services would be replaced by Michael Durbin, an 18-year veteran of Morgan Stanley of New York.
Mr. Callahan, who took over as head of the unit — which provides trading, custody and brokerage services to more than 3,500 registered investment advisers — in October 2006, has stepped into a newly-created position within Fidelity’s personal and workplace investing division.
He will be temporarily replaced by Scott Dell’Orfano, executive vice president of the adviser unit, until Mr. Durbin takes over early next year.
Mr. Durbin joins Fidelity after 18 years with Morgan Stanley of New York, where he served most recently as chief operating officer of the national sales division of its global wealth management group.
“The RIA business is accelerating because of the defections of a lot of people from the traditional wirehouses into independents,” said Burton Greenwald, a Philadelphia mutual fund consultant. “They are putting in someone who brings to the table the ability to relate to the largest source of advisers for Fidelity to grow.”
Fidelity in May unveiled a program aimed at brokers who are dually registered as investment advisers. The so-called hybrid platform, known as HybridOne, allows brokers to work seamlessly between fee- and commission-based transactions.
Charles Schwab & Co. Inc. of San Francisco launched a hybrid platform of its own in March 2007 with Cambridge Investment Research Inc. of Fairfield, Iowa.
Fidelity said Mr. Durbin’s broad range of responsibilities at Morgan Stanley will come in handy in building up the adviser group, which oversees $335 billion in assets.
“Mike’s experience in global wealth management both at the adviser and high net worth investor levels combined with his experience across multiple geographies and product lines has positioned him to further the significant momentum that Institutional Wealth Services has established in recent years,” said Fidelity spokesman Stephen Austin.
Some financial advisers were unfazed by Fidelity’s announcement.
“Generally when Fidelity makes moves like this they always end up being for the better,” said Bob DiQuollo, president of Brinton Eaton Wealth Advisors of Morristown, N.J., which has $500 million in assets under management in custody at Fidelity.

For the full report, see the upcoming Nov. 24 issue of InvestmentNews