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Banker Takes Over at Fidelity Canada

Fidelity's Canadian subsidiary has reached into the ranks of the Canadian banking industry to hire its new president, Jeff Carney, who also brings to his job extensive experience in the distribution side of the wealth management industry.

The appointment of Carney, 38, which was effective April 2, reflects the recent strategic effort by Fidelity Investments Canada of Toronto to diversify beyond its core fund management business into other areas, particularly intermediary services.

Carney has never worked for an independent fund company. But in his previous job as executive vice president in charge of the retail branch distribution business at Toronto-Dominion Bank of Toronto, he was responsible for integrating the retail sales forces of the bank and of Canada Trust, which Toronto Dominion took over in February of last year.

Carney is also an accomplished brokerage executive. He became the founding president in 1993 of Toronto Dominion Bank's full-service brokerage subsidiary TD Evergreen Investment Services, and held that job until 1998. This background suits him well to execute Fidelity's distribution strategy in Canada of selling primarily through full service brokers and financial planners.

Fidelity Canada will continue to work on developing its intermediary services company that was announced last July, Carney said. Patterned after the parent company's outsourcing business offered by Fidelity's Institutional Brokerage Group, the new initiative will offer Internet-based client-account management tools and technology, along with administration, processing and record-keeping services.

The intermediary service is currently being tested with some clients and is expected to be operating by this fall.

"It's a chance to diversify our revenue base," said Carney of the service, which Fidelity will operate with the help of processing systems provided by Star Data Systems of Toronto.

Carney is the fifth president of Fidelity Canada, which has been in business since 1987 and is now the fourth largest mutual fund company in Canada. He succeeds David Denison, who has moved to Boston to become president of Fidelity Investments Institutional Brokerage Group.

Since last October, Denison had been dividing his time between his new job in the U.S. and his Canadian duties. A former chief operating officer of the Canadian subsidiary, he had held the top job in Toronto since April 1998.

Fidelity has no money managers based in Canada. Product development has been largely the responsibility of Bob Haber, who has been chief investment officer of Fidelity Canada since October 1997, but has continued to be based in Boston.

There is no reason to expect any reorganization in Canada under Carney, nor do any significant changes in the product line appear to be in the works.

"I think it's a solid offering," said Carney of the current roster of Canadian-based Fidelity funds.

Despite the brisk takeover activity in the Canadian fund industry in recent years, nothing should be read into Carney's previous experience in a post-merger situation at TD Bank. Fidelity, with the market position it has achieved in Canada and its ability to draw on the resources of its U.S. parent, is "well positioned to take advantage" of the continuing trend toward consolidation in the Canadian fund industry, he said.

But he indicated that Fidelity will continue to focus on growing internally in Canada, rather than becoming an acquirer itself.

"When you can build internally, it creates lots of opportunities for your own people," he said.

As of March 31, Fidelity Canada had $20.17 billion in assets, down 1.1 percent from $20.4 billion a year earlier, but its decline has been less than that of the industry as a whole. Total assets tracked by the Investment Funds Institute of Canada have declined to $258.5 billion at the end of March, down 2.5 percent from a year earlier. Fidelity's current 7.8 per cent market share among fund firms tracked by the institute is up slightly from 7.7 percent in March 2000.

In March, the institute reported net sales by Fidelity of $171 million. That placed it eighth among all fund companies, and second among firms selling mainly through third-party advisors. Bank-owned firms, led by TD Asset Management of Toronto, have dominated the list of top sellers in the Canadian industry so far this year as a result of the strong shift in buying preferences toward money market funds.

Carney said his initial plan is "just to carry on the momentum" that his predecessors had built. His stay-the-course strategy will include continuing to leverage the global capabilities of Fidelity in the Canadian market, he said.

Franklin Hires Marmer

Franklin Templeton Investments of Toronto, a wholly-owned subsidiary of Franklin Resources of San Mateo, Calif., has hired a prominent local consultant and analyst to spearhead its drive to increase its institutional sales in Canada. The Canadian operation announced April 12 the appointment of Harry Marmer as senior vice-president of institutional services, a newly-created position.

Marmer was formerly director of institutional investing at Frank Russell Canada, also of Toronto, and is currently president of the Toronto Society of Financial Analysts. Franklin Templeton currently has more than 200 institutional clients and $10.3 billion in assets under management, along with $12.8 billion in assets in retail mutual funds.