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Fidelity's Quest to be on the Front IT Line

Fidelity Brokerage Co. President Ellyn McColgan is not only one of the most influential women in the investment management business, she is one of the most influential businesswomen in America.

Outside of Fidelity Chairman Ned Johnson and his daughter Abigail Johnson, president, Fidelity Management & Research, McColgan reigns in the inner circle at Fidelity.

In the middle of the most critical junctures in the 63-year history of the mutual fund industry, McColgan spoke with Money Management Executive Editor Lee Barney about Fidelity's brokerage business, superiority in information technology, and what, in McColgan's view, makes Fidelity the nation's preeminent fund company.

MME: Fidelity Chairman Ned Johnson has asked you to produce growth amid the worst market conditions since the 1970s. How have you tackled that, and have your business results improved as the market has rebounded this year?

McColgan: Whether you are an individual investor or a business as large as Fidelity, the key to growth in any environment remains constant: invest, diversify and keep your eye on the long term.

Within our own portfolio of retail and institutional brokerage businesses, we see different growth opportunities. Fidelity Personal Investments, which sells products and services directly to retail customers, is focused on three areas -- the retirement surge that is sweeping the country, attracting new investors and active traders.

Our Registered Investment Advisor group, which works with independent advisers, has experienced tremendous growth over the past 10 years, and we expect this trend to continue.

Finally, National Financial Correspondent Clearing, our institutional clearing business, is in a market that is rapidly consolidating, driving growth among the remaining players. We intend to significantly increase our share position in this business over the next few years.

MME: Of your many responsibilities -- overseeing the marketing and distribution of Fidelity's retail mutual funds, supermarket, brokerage and RIA custody services, to name a few -- what are your biggest priorities right now?

McColgan: Large organizations such as ours need a simple game plan to follow, and we have four clear business priorities for 2004. We want to grow the business. We want to become the preeminent service provider in the industry. We want to reduce costs. And we want to continue to provide market-leading, innovative technology.

Probably the greatest opportunity is to capture the retirement market. Did you know that over the next several years, 75% of personal wealth will be in the hands of people 55 years of age and over? Fidelity will be uniquely positioned to serve that market -- whether investors choose to come to us directly, or through and advisor or a broker.

MME: What improvements have you made in your offering for RIAs?

McColgan: We have enhanced every aspect of the value proposition we bring to RIAs, and we will continue to do so as this market grows. We have strengthened our practice management program, introduced a private foundation offering and developed new retirement income planning tools.

We have improved our service delivery by adding more sales and relationship managers, and by simplifying the implementation and conversion process. We have added more features to the technology, including better trade-processing capabilities and data interfaces. All of this is to help RIAs serve their clients more effectively.

Fidelity has been in the RIA business since 1992, and we have never been more committed to this business than we are today.

MME: Fidelity has a 46% success rate with 401(k) rollovers. What are the reasons for your success, and what are you doing to gain more share of the rollover market?

McColgan: You are, of course, referring to our success in rolling over 401(k)s that are already record-kept within Fidelity.

We attribute our great success in this business to the fact that investors who have been with Fidelity over time like us and are pleased with our comprehensive approach to service and investing. They like our products, our service and our technology, and they appreciate that they are working with the retirement leader in this business.

We are hoping to grow this market by attracting rollovers from investors who currently have a relationship with a different 401(k) provider. We believe that we have the most comprehensive retirement solution for investors and that if they call us or visit one of our branches, we will be able to help them out. We offer pre-retirement workshops in our branches, we have terrific guidance tools available on the Web and we offer a full range of investment products to help people prepare for retirement.

And there is much more to come.

MME: Any thought yet as to what you will be discussing as one of the keynote speakers at the NICSA "Futuristic Look at Financial Services" meeting in February?