Fidelity Portfolio Intelligence ^{POWERED BY MSCI}

Cam Chamberlain: Hello, thank you for joining us. My name's Cam Chamberlain, Director, Portfolio Solutions here at Fidelity Canada. My group really is responsible for conducting portfolio consultations with advisors coast to coast as an extension of the service that our Fidelity sales team offers. Joining me today is Paul Aulicino, one of our portfolio strategists on the team. Paul, thank you so much for being here.

Paul Aulicino: Thanks for having me, Cam.

Cam Chamberlain: Maybe we could start by sharing a little bit more about what you do day-to-day and how you partner with advisors.

Paul Aulicino: For sure. Really, as you alluded to on a regular basis we're providing advisors with one-on-one consultation. That's myself and other strategists coast to coast. Really our goal is to provide, I'd say, an added level of analytics and a deeper dive to look under the hood of advisors' portfolios. These portfolios can range from individual client portfolios or even prospective client accounts. But what I'd say what we're noticing in the industry more commonly now is full model review suites.

We will deep dive into an entire suite of models and analyze them with advisors and our main goal through these discussions is just to understand what their expectations are and determine if the way their portfolios are set up are meeting or exceeding those expectations. We do this through an in-house platform that we developed in partnership with MSCI and that's called Fidelity Portfolio Intelligence. That's really the engine that drives a lot of these conversations.

Cam Chamberlain: Could you tell us a little bit more about what Fidelity Portfolio Intelligence is all about and how it works?

Paul Aulicino: The team and the program itself has grown over the past four or five years when we launched it. Really, Fidelity Portfolio Intelligence, simply put, is a risk analytics and portfolio construction platform. We partnered with MSCI because we felt that they provided, I'd say, an added level of analysis that you couldn't really get in other data analytics platforms out there. There's a number in the market but I'd say they haven't adapted to the changing times as well as, in our opinion, they should have. 

Cam Chamberlain: We use MSCI for a whole host of different services across the organization, right?

Paul Aulicino: Yeah. One of the unique features about this platform is that our own portfolio managers here at Fidelity around the globe are actually leveraging MSCI's Barra platform and that may not sound like too much but that's a very sophisticated risk platform that our portfolio managers are actually using to analyze their funds on a regular basis. Prior to joining this team I worked with a number of our US equity portfolio managers and regularly we receive this reporting from MSCI and it digs deep into portfolios. It'll break down where your risk is coming from.

So a lot of the time when we'd have these conversations with the managers it's determining if there's any unintended risks or biases so that we could address that right away. We wanted to provide that same level of service to advisors. Over the past four or five years we've had thousands of interactions with advisors and reviewed thousands of portfolios all through this platform and these types of conversations. 

Cam Chamberlain: I think there are many things that make this platform and tool unique. One of my favourites is that it's a little bit more forward-looking in nature in the way that it breaks down portfolios than just looking at the past.

Could you maybe talk a little bit about how it compares and contrasts to other commonly used portfolio analytics platforms?

Paul Aulicino: I think it's a great point. The very unique feature about the platform itself but also the conversations that we're having with advisors is, as you said, that focus on the future. It's obviously important to look at past performance, positioning, historical risk. We'll show that all in the reporting that we generate as well. What we try to focus a lot of these conversations on are forward-looking risk expectations. And through these conversations we try to gauge where that forward looking risk is coming from and to determine if that's in line with what you're expecting or if there are any surprises.

I'd say there's been times where we've found gaps or unintended biases and that's where we try to focus the conversation on what changes may be required to achieve whatever your goal may be. 

Cam Chamberlain: I think it's so helpful to take a little bit more of a forward-looking view because it's easy to build a portfolio in hindsight. Pick your top performers, you can look at historical performance, risk data and say, I'm all set. The challenge, of course, is that the market environment next week, next month, next year, or the next five or ten years can be a lot different than the environment that we've just been through. By taking a more forward-looking approach, you get a better understanding of the kind of "what if" scenarios. If the market environment is a lot different than what we've been through in the past, you need to think about how our portfolios might need to adapt or evolve in order to meet those new challenges.

So, really, really valuable insights I think, again going through those "what if" scenarios and asking yourself those tough questions. 

Paul Aulicino: I think just to that point, some of the areas we focus on are determining things like your currency exposure, your regional tilts, your style factor tilts, which those would be your value tilt, growth, momentum, dividend yield, for example. We try to see on the fixed income side what your exposure is to credit spreads or interest rates or even inflation.

We put all that together to determine if all of the areas where you have that exposure and you may be adding or reducing some risk contribution are in line with what you were expecting. If they're not that's where we could change the conversation to what needs to be done. You brought up a great point, this "what if" analysis. A large feature of these reviews is revolving around stress testing. You have the ability, similar to the way our portfolio managers leverage this, to stress test your portfolios. There's two ways we look at things, either historical market events, so think about the classic dot com bubble, global financial crisis but what I'd say is more important, the way our portfolio managers definitely leverage this, I'd say quite often would be hypothetical scenarios.

Think about things like if the US or Canadian equity markets were to rise or fall by 20%, if interest rates in Canada or the US were to rise or fall by 1%, how do we expect your portfolio, as its position today, to react to an environment or "what if" scenario like that? I'd say that's one of the largest added values we've had and we've received in terms of feedback from the advisor audience that we've worked with over the years. 

Cam Chamberlain: It sounds like there's a lot there, a lot that our clients can take advantage of, get a better understanding, really, of the portfolios and model portfolios that they're implementing in their business today or perhaps working on building out as well. Could you just chat with the audience a little bit about how to engage with this platform and our team? 

Paul Aulicino:Yeah, definitely. I'd say for any advisor who's interested in going through one of these more, I'd say, in- depth reviews with one of us, reach out to your Fidelity sales team, let them know, provide them with, if it's a model suite that you'd like analyzed or even an individual portfolio, provide them that information and they'd be able to book some time with myself or one of my colleagues coast to coast. I'd say we understand that portfolio construction is a vital part of advisors' day-to-day jobs.

Here at Fidelity we really wanted to upgrade, I'd say, the quality of conversation and analysis that we could provide to you and you can ultimately provide to your clients at the end of the day.

Cam Chamberlain: Thank you so much, Paul. I think it's fantastic to have a tool like Fidelity Portfolio Intelligence, a dedicated team to act as a portfolio consultant for you that really, again, can make sure that your portfolios live up to your expectations.

I'll maybe just add, it doesn't matter if it's all Fidelity product. This is really an open architecture platform so if there are product from other asset managers, individual securities, individual stocks, of course, that you're working into portfolios, we can incorporate all of that into these reviews as well.

Again, if you're interested in learning more about Fidelity Portfolio Intelligence, having a consultation with one of our portfolio strategists coast to coast, please reach out to your Fidelity sales team, let them know and send them a portfolio so we can really make sure that your portfolios and your models are living up to your expectations. Thank you very much for joining us today.