Increased Competition From RIA Custodians: Fidelity And BlackRock Announce ETF Strategic Alliance Hot

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Fidelity Investments and BlackRock Inc. today announced a long-term strategic alliance that provides extensive collaboration across Fidelity’s distribution and asset management organizations with BlackRock and its leading ETF provider, iShares.


Fidelity says the deal will more than double its current successful online commission-free ETF offerings and will create new ETF portfolio strategies using iShares as components within its direct-to-investor managed account offering (Portfolio Advisory Services). The partnership will enable Fidelity to off more investments using passively managed ETFs for self-directed investors.


Fidelity is increasing the number of iShares ETFs that can be traded commission-free on from 30 to 65, according to a press release from Fidelity. The new list includes all 10 iShares Core ETFs as well as a diverse selection of international, domestic, and specialized equity; fixed income; and commodities. The 65 commission-free ETFs  complement more than 1,100 other ETFs available at for a commission of only $7.95 per trade, says the press release.


In addition, customers and non-customers can access ETF research and analysis tools at Fidelity’s ETF Research Center. The research sites provides do-it-yourself investors to use an ETF screener with more than 100 screening criteria, a color-coded ETF Market Tracker to easily discover what ETFs are moving in the market, and download independent experts’ timely commentary, investing ideas and pre-defined strategies. In the past year, customer activity on Fidelity’s ETF Research Center increased 28%, says Fidelity.


The alliance between the two financial serviecs giants also enhances Fidelity's Portfolio Advisory Services solution, a managed account offering for retail DIY customers. Currently, PAS offers professional money management and access to proprietary research through model portfolios of mutual funds and personalized portfolios using mutual funds, ETFs, and separate accounts. Fidelity says assets have increased in Fidelity managed accounts products by 73% in the past three years. "Fidelity and BlackRock will jointly focus on providing innovative ETF-based solutions on an ongoing basis as part of this partnership," according to the press release.


Registered Investment Advisors (RIAs) on the Fidelity Institutional Wealth Services platform will also benefit from the expanded line-up of 65 commission-free ETFs, Fidleity says, but the announcement was light on details about exaclty how RIAs will benefit. “RIAs are increasingly using ETFs in their investing strategies,” said Michael R. Durbin, president of Fidelity’s RIA custody unit. “We look forward to building a strong partnership with BlackRock to give RIAs on our platform new research tools and access to commission-free trading to help them more easily integrate ETFs in their clients’ portfolios.”


Unlike the information in the press release about how retail clients will benefit, there were no details about how RIAs will benefit. However, with customer activity on Fidelity's ETF site up 28% and managed accounts sold direct to retail investors up 73% in three years, you can't blam Fidelity (or any of the other custodians that serve retail as well as RIAs) for improving retail invetsment solutions for DIY investors. 




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