Fidelity Institutional Wealth Adviser LLC (“FIWA”) is a registered investment adviser and an
“indirect, wholly owned subsidiary of FMR LLC (collectively with FIWA and its affiliates, “Fidelity
Investments,” “Fidelity,” “us,” or “we”). FIWA was formed in 2016. This brochure covers FIWA’s
provision of the Fidelity Managed Account Xchange® program (“FMAX” or the “Platform”) to
Intermediaries (defined below).
FIWA also offers several other products and services. Brochures dedicated to these other FIWA
products and services can be found on the SEC’s website at
www.adviserinfo.sec.gov.
FMAX is designed to provide financial services firms, including registered investment advisers,
broker-dealers, banks, and family offices (“Intermediaries” or, individually, “Intermediary”) with a
highly configurable investment advisory platform, which they can use to provide wealth
management solutions directly to their clients (“Investors” or individually “Investor”). The Platform
can be uniquely configured and branded by the Intermediary based on its specific preferences.
The Intermediary has full discretion and sole responsibility to determine the services, features,
and investments of the Platform it deems appropriate to meet the needs of its Investors.
The Platform offers an integrated user experience for Intermediaries that use Fidelity’s clearing
and custody platform. FMAX offers Intermediaries a technology platform of tools and related
services to assist them in evaluating an Investor’s financial needs and enables Intermediaries to
build personalized solutions for their Investors. While the Platform provides tools designed to
assist the Intermediary in Investor profiling, the Intermediary is solely responsible for obtaining
appropriate information concerning the Investor’s financial resources, risk tolerance, and
investment objectives to produce a personalized and appropriate recommendation.
FMAX provides the Intermediary with investment tools and related services such as the
Investment Proposal Tool (“Proposal”), which can be configured to include an Investor Profile
Questionnaire (“IPQ”). The Intermediary can configure the Platform to its preferences and such
preferences will be incorporated into the Proposal and the IPQ.
FMAX integrate with a variety of financial technology (“FinTech”) capabilities, including those
affiliated with FIWA such as eMoney Advisor LLC (“eMoney”) (financial planning), and
WealthscapeSM (a brokerage portal offered by National Financial Services LLC and Fidelity
Brokerage Services LLC, each affiliates of FIWA). Generally, the Intermediary separately
contracts for these services directly with applicable FIWA affiliates.
Investors should consult their Intermediary’s Form ADV Part 2A or other applicable disclosure
documents for a detailed description of that Intermediary’s specific use of the Platform.
Investment Proposal Tool
The Intermediary utilizes the Platform to create personalized investment recommendations for
Investors. The Intermediary initiates this process by using the Proposal tool. The Proposal tool
includes access to an IPQ - a series of risk-based and demographic questions designed to
evaluate an Investor’s risk profile and investment preferences, which the Intermediary can use to
assist in determining the appropriate investment choices for the Investor. To populate answers in
the IPQ, the Intermediary gathers the Investor’s essential financial information, demographic
information, and risk tolerance. The IPQ process scores the information captured, resulting in a
personalized risk score, which the Intermediary can use to inform its decisions with respect to the
selection of investments that may be appropriate for the Investor. The Intermediary may elect to
customize the IPQ based on its own preferences or may use other methods to determine the
Investor’s risk tolerance.
After the Investor’s investment objective is determined, the Intermediary recommends an
Investment Advisory Program (“Advisory Program”). The Platform offers three distinct Advisory
Programs for Intermediaries to consider for use with Investors: 1) the Fund Strategist Portfolio
Program (“FSP Program”), 2) the Separately Managed Account Program (“SMA Program”),
and 3) the Unified Managed Account Program (“UMA Program”). These Advisory Programs
are described in more detail below. The Intermediary is solely responsible for determining the
appropriate Advisory Program to use. The Intermediary, working with their Investor, may also
choose to provide its own discretionary or non-discretionary services to the Investor using the
Intermediary Management Tool Suite (described below). FIWA’s activities under the Intermediary
Management Tool Suite are administrative in nature and not part of the advisory services
provided by FIWA to Intermediary or Investors. Depending on the Advisory Program selected,
the Intermediary has flexibility in determining an Investor’s investment options. An Intermediary
may set up the Platform to limit the investment options available for Investors to include only
investment options that align with the Investor’s risk score.
The finalized Proposal is a personalized investment recommendation for the Investor which
incorporates their risk profile, preferences, and the specific investment recommendations of their
Intermediary. The Proposal, the Statement of Investment Selection (“SIS”), which details the
Investor Fee (described below), Terms and Conditions, and any unique Investor preferences, is
delivered to the Investor, along with the applicable corresponding brokerage paperwork, to
establish the advisory relationship and initiate the account opening.
Investment Strategies and Funds
The Platform facilitates access to a wide range of professionally managed investment
solutions, including fund strategist portfolios (“FSPs”), prepackaged UMA models, and style-
specific separately managed accounts (“SMAs”) (FSPs, prepackaged UMA models, and SMAs
are hereinafter referred to as “Strategies” or individually “Strategy”). These investment
Strategies are composed of solutions provided by unaffiliated investment managers, which can
include Intermediaries or their affiliates utilizing the FMAX Platform, as well as solutions made
available by FIWA and affiliates of FIWA (collectively, “Investment Managers”). FIWA engages
directly with these Investment Managers to provide these solutions to Intermediaries for use
with Investors. FIWA may add or remove strategies from time to time in our discretion. Please
note, additional UMA Program options are described in more detail below.
Many of the Strategies are accessed through the use of investment models (“Models”). These
Models are provided by Investment Managers, each acting as a “Model Provider.” The Model
Provider constructs the Model by selecting the underlying investments (individual securities,
mutual funds, or Exchange Traded Products “ETPs”) and weights for each Strategy. The
Implementation Manager (defined below) implements the Model within the appropriate Investor
accounts. In some situations, certain Investment Managers providing SMAs will retain trade
discretion (“Discretionary Strategies”) and therefore not deliver their Strategies as a Model as
discussed above. These discretionary Investment Managers implement the Discretionary
Strategies within the appropriate Investor accounts.
Additionally, the Platform provides access to a wide range of actively managed, passively
managed, and registered alternative mutual funds and ETPs (including mutual funds and
ETFs, which when discussed together are hereinafter referred to as “Funds”). These Funds
are managed by both Investment Manager affiliates of FIWA and unaffiliated Investment
Managers.
Investment Manager Research Tools
The Platform provides Intermediaries with access to a wide array of data on FSPs, SMAs, and
Funds available through the Platform. Historical performance, portfolio composition and risk
analytics information are sourced from multiple third-party providers. Information obtained from
third-party sources is believed to be reliable; however, FIWA makes no guarantees that the
information supplied by them is accurate, complete, or timely, and does not provide any
warranties regarding results obtained from its use.
The Intermediary can use the Platform research tools and other functionality to screen and
evaluate FSPs, SMAs, and Funds based on its preferences. The results of any sorting or
screening functionality available through FMAX is for the Intermediary’s informational purposes
only and does not constitute tax, legal or investment advice or a recommendation by FIWA of any
particular investment, manager, Fund, or Strategy. When using any Platform research tools and
other functionality, the Intermediary is solely responsible for determining the appropriateness of
any Strategy or Fund for use with an Investor.
Investment Research and Due Diligence
FMAX provides investment research and due diligence on FSPs, SMAs, and Funds to
Intermediaries using four categories of investment research ratings (which may also be
referred to as research statuses): “Available”, “Meets-Quantitative”, “Meets-Qualitative”, and
“Preferred.” FIWA maintains fundamental and quantitative investment manager research
teams to perform the investment due diligence for the FMAX Platform. Although different
investment solutions demand unique due diligence requirements, FIWA’s evaluations follow a
common four pillar structure as discussed in greater detail in the “Investment Research and
Due Diligence” section below.
Implementation Manager
FIWA has retained Envestnet Asset Management, Inc. (“EAM”), an unaffiliated investment
adviser, to provide model implementation and overlay management services (together this
function is referred to as “Implementation Manager”) as well as certain administrative services.
EAM is granted discretionary authority over Investor accounts by FIWA to perform the
implementation of Models received from Model Providers. In situations where EAM is acting as
Implementation Manager, EAM, or the Investment Manager of a Discretionary Strategy when
chosen, will liquidate securities that are transferred in-kind into Investor accounts that do not
meet the parameters of the selected Strategy. The Implementation Manager, or the Investment
Manager of a Discretionary Strategy when chosen, has the authority to liquidate such assets,
and absent special circumstances or direction from the Intermediary, Implementation Manager
or the Investment Manager of a Discretionary Strategy when chosen will treat the transfer of
securities into the account as an instruction to liquidate the securities. In certain
circumstances, Investors will have a taxable event when the Implementation Manager
liquidates such assets. Accordingly, Investors should consult their Intermediary and tax
consultant before transferring in-kind assets into their FMAX account. For accounts using the
Intermediary Management Tool Suite (described below), Intermediary is responsible for the
liquidation of any assets transferred in-kind to the Platform.
With the exception of liquidating securities transferred in-kind that do not meet the parameters
of the selected Strategy, the Implementation Manager does not have discretionary
management authority over any SMA when the Intermediary selects a Discretionary Strategy.
See the UMA Program section below for additional scenarios where the Implementation
Manager does not have discretionary management authority. At its discretion in the future,
FIWA may utilize other affiliated or unaffiliated investment advisers to act in the role of
Implementation Manager.
Advisory Program Offerings
The Platform offers three types of Advisory Programs to Intermediaries: FSP, SMAs, and
UMAs. Each Advisory Program is described below. The Intermediary is solely responsible for
selecting the
Advisory Program and Strategies for Investors. Within FMAX, the Intermediary
has the ability to customize each Advisory Program name. Please consult your Intermediary’s
Form ADV Part 2A brochure to determine their use of customized Advisory Program names.
FSP Program
The FSP Program provides Intermediaries with access to a universe of professionally
managed Models composed of Funds for use with their Investors. A Model’s risk rating allows
the Intermediary to select Models aligned with an Investor’s risk profile and investment
objectives. The Intermediary is solely responsible for determining the Investor’s asset
allocation and selecting the Investment Manager for the Investor in the FSP Program.
SMA Program
The SMA Program provides Intermediaries with access to a universe of investment style-
specific professionally managed portfolios composed of individual securities and/or Funds for
use with their Investors. Intermediaries selecting the SMA Program have access to investment
portfolios from Investment Managers specializing in a variety of investment disciplines. The
SMA Program may be defined using the term “Separate Account” program on the SIS and
related documents. The Platform assists the Intermediary in identifying the SMAs that
correspond to the proposed asset classes and styles, or the Intermediary can independently
identify SMAs that align with an Investor’s risk profile and investment objectives. These SMAs
can be managed on a discretionary basis by the Investment Manager, or provided in model
form, in which case the SMA will be traded by the Implementation Manager.
Certain discretionary Investment Managers offer highly customized SMA strategies and direct
indexing portfolios. The customized SMA strategies typically require additional input from the
Intermediary or Investor. This input can include account level security or sector-based
restrictions or tilts, or customizations based on an Investor’s specific tax or sustainable
preferences. It can also include modifications to asset allocations in a multi-asset solution or
include tilts away from or toward certain investment styles as part of the Investor’s account
construction. Intermediaries and Investors should review and monitor these custom portfolios
to ensure they continue to be consistent with the Investor’s risk profile and investment
objectives. Please see the Form ADV Part 2A for the relevant discretionary Investment
Manager(s) for additional information on these strategies.
UMA Program
The UMA Program enables an Intermediary the ability to incorporate multiple Funds, FSPs,
SMAs, and Intermediary Managed Sleeves (defined below) into a single brokerage account by
accounting for each unique investment strategy as a unique investment “sleeve” within a single
account (e.g., Fund sleeves, individual SMA manager sleeves, etc.). The Intermediary may
develop a UMA portfolio for an Investor by first creating its own asset allocation. The
Intermediary then determines the investment solution(s) to utilize within the UMA from the
options available on the Platform.
Once the Intermediary has established the solutions used in the UMA portfolio, the
Implementation Manager provides implementation management services for UMA accounts
and implements securities purchases and sales for the account based on (i) the composition of
the Models provided by any Model Providers used in the UMA portfolio, and/or (ii) instructions
of the Intermediary as to weighting of any Funds. In situations where an Intermediary selects a
Discretionary Strategy for a particular sleeve within a UMA, the Investment Manager providing
that Discretionary Strategy, not the Implementation Manager, will implement trade orders for
the portion of the UMA they have been assigned. The Intermediary may also utilize a portfolio
they have created within the Intermediary Management Tool Suite, discussed below, as a
sleeve within the UMA (an “Intermediary Managed Sleeve”). In this scenario the
Implementation Manager, not the Intermediary, will implement trade orders for the Intermediary
Managed Sleeve. However, in certain circumstances such as when the Intermediary Managed
Sleeve holds fixed income or thinly traded securities, the Intermediary (not the Implementation
Manager) may be responsible for trading the Intermediary Managed Sleeve. Other than
providing administrative access to the services of the Implementation Manager, FIWA does not
provide any investment advisory services to the Intermediary or Investors as part of the
Intermediary Managed Sleeve.
The Intermediary may also select a “Packaged” version of the UMA, whereby the Intermediary
does not determine the asset allocation or the specific underlying investment solutions used in
each sleeve of the UMA portfolio. In the “Packaged” UMA, the Intermediary will select a
prepackaged asset allocation and investment solution provided by a Model Provider. The
Implementation Manager provides portfolio implementation management services for the
“Packaged” UMA accounts and implements trade orders.
Tax and Values Overlay Services
For accounts that meet certain eligibility requirements, an Intermediary may offer its Investors
the ability to utilize the Platform’s tax and/or values overlay services (“Tax Overlay” and
“Values Overlay”). Tax Overlay services seek to improve the Investor’s after-tax returns by
analyzing holdings and trading activities in an account. Values Overlay allows an Intermediary
to integrate sustainability factors into the management of an Investor’s account. If selected by
the Intermediary and Investor, the Implementation Manager provides the Tax Overlay and/or
Values Overlay services to an account or sleeve. FIWA nor the Implementation Manager
provide tax planning advice or services and Investor’s should consultant their accountant or tax
professional.
Consulting Services
Upon request, FMAX investment consultants may provide non-discretionary advice, research
and information to Intermediaries related to an Intermediary’s portfolio construction activities in
a variety of contexts, including but not limited to within model portfolios or UMAs. The
Intermediary remains solely responsible for determining the initial and ongoing
appropriateness of any portfolio construction approach, asset allocation, or investment solution
choices it elects to recommend to the Investor.
Unsupervised Assets
Intermediaries have the ability to designate certain holdings in their Investors’ accounts as
“unsupervised assets,” meaning they are held within an FMAX account but are not managed or
overseen through the FMAX Program. The Intermediary is solely responsible for monitoring
and managing the holdings designated as unsupervised assets. The Intermediary is also
responsible for any fee calculation and billing administration on unsupervised assets.
Account Customization, Investment Restrictions and Wrap Fee Programs
The Platform is designed to enable Intermediaries to comply with Rule 3a-4 under the
Investment Company Act of 1940. Each Investor’s account is managed by the Intermediary on
the basis of the Investor’s financial situation and stated investment objectives. Investors may
also request reasonable investment restrictions be placed on an account. Requests for
investment restrictions must be approved by the Implementation Manager or the discretionary
Investment Manager, as applicable. Investors should understand that investment restrictions
are not acted upon immediately by the Implementation Manager or discretionary Investment
Managers due to the operational processes associated with communicating and reviewing
such restrictions. In addition, investment restrictions can have an adverse effect on account
performance, asset diversification and the stated investment objective of a Strategy, compared
to an account that is fully invested in the investment solutions recommended by your
Intermediary.
Intermediaries will contact each Investor at least annually, and notify each Investor at least
quarterly, to determine whether there have been any changes to the Investor’s financial
situation or investment objectives, and whether the Investor wishes to impose any reasonable
restriction on the management of the account. Intermediaries are responsible for notifying
FIWA of any changes to an Investor’s financial situation, investment objectives, or any other
change regarding the management of their account.
FIWA offers FMAX as a wrap fee program. Intermediaries are permitted to offer one or more of
the FMAX Advisory Programs as “wrap fee programs” to Investors as described in the
Intermediary’s Form ADV Part 2A.
Performance Reporting and Support Services
The Platform provides on-demand performance reporting capabilities to assist the Intermediary
in monitoring Investor portfolios, as well as the capability for the Intermediary to deliver regular
performance reporting to Investors. FMAX provides flexibility to the Intermediary to configure
the Platform based on its specific needs and preferences, including investment policy rules,
investment options, pricing, performance reporting, capital market assumptions, and asset
classifications.
FIWA and its affiliates also provide support services to Intermediaries, including deployment,
operational and technical support, and training. Additionally, the Platform provides Investment
Managers with access to certain reporting including data analytics derived from Intermediaries
and Investment Managers use of Funds or other investment products for Investors through the
FMAX Platform.
Other Services
Separate from the Advisory Programs discussed above, FMAX enables an Intermediary to
utilize the Advisor Model Management (“AMM” or “Advisor Model”) functionality. AMM is also
known as Advisor as Portfolio Manager (“APM”) or Intermediary Management Tool Suite
(“IMTS”). AMM allows an Intermediary to create, manage, and trade proprietary portfolios
selected from any investments offered on the Platform. This offering is administrative in nature
and not part of the advisory services provided by FIWA to an Intermediary or Investors.
Accordingly, the Implementation Manager will not trade or provide any advisory services to
Investors as part of an Intermediary’s use of the AAM (except to the extent the suite is used to
construct a sleeve in a UMA, as noted above). In AMM, the Intermediary is solely responsible
for creating, managing, trading, and making any recommendations with respect to its
proprietary portfolios or any investments. Please note that within FMAX, the Intermediary has
the ability to customize the name of the Intermediary Management Tool Suite. Please consult
with your Intermediary to determine their use of a customized naming convention for the
Intermediary Management Tool Suite.
Intermediaries may elect to use FMAX’s standalone reporting service. This service provides
reporting and billing administration on accounts managed or serviced by the Intermediary and
custodied at FIWA’s affiliate, National Financial Services LLC (“NFS”) or another custodian,
but not held within an FMAX Advisory Program or the Intermediary Management Tool Suite. In
addition, Intermediaries may offer their Investor clients the ability to include assets not held
within an FMAX Advisory Program in FMAX client reports alongside their FMAX Advisory
Program assets. These non-advisory assets can be custodied at NFS or another custodian.
The Intermediary is solely responsible for monitoring and managing these reporting only
assets, as well as any presentation of the assets in the FMAX client reports.
Assets Under Management
As of December 31, 2023, FIWA managed $3,931,298,951 of client assets on a discretionary
basis in relation to services that are not covered by this brochure. As of December 31, 2023,
FIWA did not have any non-discretionary regulatory assets under management.