Fidelity Private Wealth Shutdown Puzzles Analysts
Fidelity’s decision to consolidate its Private Wealth Management unit into two other divisions is a curious move at a time when competitors are touting their stand-alone operations.
The nation’s second-largest mutual fund company has seen the departure of David Lamere, who left in February after little more than a year as president of Fidelity Private Wealth Management. His unit has been folded into the firm’s Global Asset Allocation and Personal Investing divisions, a spokesman said.
Lamere arrived in November 2012 after leaving BNY Mellon, where he spent 27 years. He had been a vice chairman and chief executive officer of BNY Mellon’s wealth management operations.
The decision to fold a stand-alone unit into two other divisions raises some questions about Fidelity’s strategy for potential clients who are multimillionaires, said Bill Butterfield, an analyst in the wealth management practice for the Aite Group, a Boston-based research firm.
“That was a newer division that was really targeting what I would call the ultra-high-net-worth individual—minimum accounts of $5 million to $10 million—more of a private banking play,” Butterfield said. “From the outside looking in, maybe it just wasn’t a go for the particular setup that Fidelity has. I didn’t feel it was highly promoted, either.
“My gut tells me that if it was making hand-over-fist profits that it would have stuck around. Something tells me there is more to this than meets the eye.”
Fidelity is known as a product manufacturer and a huge player in the retirement space. However, wealthy individuals might not have the fund giant on their short list of wealth managers, he said.
“I don’t think of Fidelity as a brick-and-mortar firm where you would show up and make a deposit like you would at Bank of New York [BNY Mellon] or some of these other large banking organizations,” Butterfield said. “If you compare Fidelity’s setup to others, they are probably more similar to a Schwab than they are to a Goldman Sachs.”
Fidelity “has had numerous offerings” in the private wealth management space over the years, according to Geoffrey Bobroff, president of Bobroff Consulting, a Rhode Island mutual fund consultant.
“The part that is puzzling about the change is that you can’t pick up a story about any of the brokerage firms or private banks that aren’t touting their wealth management group as a premier thingamabob that is doing well,” he said. “Clearly, that is the buzzword in the marketplace.”
Fidelity spokesman Adam Banker explained that the unit was started in late 2012 in partnership with the personal investing division to meet the estate, tax and wealth planning needs of affluent clients.
“As is the case with many new initiatives, we felt it was important to create a separate, dedicated division for this effort, to allow the team to focus exclusively on the design, creation and implementation of a comprehensive wealth offering that would best meet our clients’ needs,” he said in a statement.
“That focus enabled us to hire the industry’s best talent, expand our investment and planning capabilities, and develop a strategic business plan that we are confident positions us for success.”
—Joseph R. Perone
Murdoch Spends $57M On NYC Condo
News Corp. Chairman Rupert Murdoch agreed to buy the top four floors of a condominium tower near Manhattan’s Madison Square Park for $57.3 million.
Murdoch, 82, who is also chief executive officer of Twenty-First Century Fox Inc., went into contract to purchase two units at One Madison, a triplex penthouse spanning the 58th through 60th stories and another full-floor apartment beneath it, his spokesman, Steven Rubenstein, said. The properties total about 10,160 square feet (944 square meters), according to a statement from Related Cos., one of the developers of the tower on East 22nd Street in Manhattan’s Flatiron neighborhood.
The 7,000-square-foot triplex, sold in “raw condition,” includes floor-to-ceiling windows and a wraparound terrace, “with uninterrupted cinematic views of Manhattan, river to river, and from the World Trade Center to the uptown tip of Madison Avenue,” Related said in the statement, which didn’t name the buyer. The three-bedroom 57th-floor unit is in finished condition.
Seventy-five percent of the building’s apartments have been sold, according to the statement. One Madison, with 53 units, includes amenities such as butler service, a screening room and an indoor pool surrounded by marble walls, according to listings Web site StreetEasy.com.
—Bloomberg News
