In the Wake of Record Growth, Fidelity Launches New Enhancements to Workplace Managed Account Platform

BOSTON--()--With the growing popularity of “do it for me” strategies among 401(k) savers, Fidelity Investments is expanding its offering for people who want professional help managing their retirement savings.

“Do it for me” investment solutions, including target date funds and managed accounts, are increasingly popular, and Fidelity’s managed account platform recently surpassed one million1 accounts, with nearly 300,000 of them in workplace savings plans like 401(k)s and 403(b)s. However, as the number of employees using these options increases, employers are demanding more flexibility and choice to give their employees the professionally managed strategy that best fits their retirement savings needs.

In response to this demand, Fidelity has released two enhancements:

  • Smart QDIASM. Most employees who are automatically enrolled in their 401(k) are defaulted into an age-appropriate target date fund.2 However, employees have different investing needs, and with Fidelity’s Smart QDIA3, employers can make use of two defaults — a target date fund and Fidelity’s managed account service, Fidelity® Portfolio Advisory Service at Work (PAS-W) — to help keep employees on a path to financial security. Employers can customize and set criteria to determine each employee’s default investment based on factors including age, account balance and other financial indicators.
  • Index-based managed account. Fidelity is expanding the managed account offering to include an index-based managed account, which will track to a market benchmark using index funds from the employer’s 401(k) lineup. The Index-based managed account complements Fidelity’s Core offering and gives employers the option to choose the solution that best aligns with their investment philosophy and plan objectives.

As more employees view their retirement savings as part of their overall financial wellness, employers need flexible solutions that can help their employees’ investment needs,” said Sangeeta Moorjani, Head of Fidelity’s Workplace Managed Accounts business. “We’re pleased to enhance our offering while continuing to provide clients with a seamless managed account service to meet the evolving demands of workplace investors.”

Fidelity experiences record growth for PAS-W in 2016
These enhancements come as Fidelity’s managed account offering is experiencing record growth4.

  • Fidelity added more than 750 plan sponsors to its PAS-W business for a total of nearly 4,500 clients at the end of 2016, up 16 percent over the prior year.
  • Enrolled participants in the service grew 26 percent in 2016 to 300,000, which is five times the number of enrolled participants from five years ago.
  • Assets under management grew 41 percent to $20.4 billion, nearly triple the $7.3 billion reported at the end of 2013.
  • Fidelity’s overall managed account business, including both Portfolio Advisory Services and Portfolio Advisory Service at Work, grew to $243 billion in 2016, an increase of 35 percent from the end of 2013.

While most of Fidelity’s business represents organizations that added a managed account to their benefits platform for the first time, many clients were in a competing managed account and replaced it with Fidelity’s offering. In 2016, clients representing 90,000 employees and nearly $10 billion in assets switched from a competing managed account to Fidelity’s PAS-W, and another 135,000 employees and $13 billion in assets are projected to move to PAS-W in early 2017.

An increasing number of employers are recognizing that a managed account is another great option for people who need help managing their own retirement savings or staying on track as they transition into and live in retirement ,” added Moorjani. “Fidelity believes in guiding participants to the right solution that meets their retirement savings needs, whether that is a target date fund or a managed account.”

The integration of PAS-W offers employees a consistent cross-channel experience when saving, planning and investing for retirement, whether they choose to do it themselves or enroll in a professionally managed account. For more information on PAS-W, plan sponsors or consultants can contact their Fidelity representative.

About Fidelity Investments

Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $6.0 trillion, including managed assets of $2.2 trillion and Freedom Fund assets of $202 billion as of February 28, 2017, we focus on meeting the unique needs of a diverse set of customers: helping more than 26 million people invest their own life savings, nearly 23,000 businesses manage employee benefit programs, as well as providing nearly 12,500 financial advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Diversification/asset allocation does not ensure a profit or guarantee against loss.

Fidelity® Portfolio Advisory Service at Work is a service of Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company. This service provides discretionary money management for a fee.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.,
500 Salem Street, Smithfield, RI 02917

National Financial Services LLC, Member NYSE, SIPC,
200 Seaport Boulevard, Boston, MA 02110

796593.1.0

© 2017 FMR LLC. All rights reserved.

1 Fidelity data, as of February 2017.
2 Based on analysis based on 22,100 corporate defined contribution plans and 14.5 million participants, as of December 31, 2016. These figures include the advisor-sold market, but exclude the tax-exempt market. Excluded from the behavioral statistics are non-qualified defined contribution plans and plans for Fidelity’s own employees.
3 Qualified Default Investment Alternatives. Based on the Pension Protection Act of 2006, an investment qualifying as a QDIA is appropriate as a single investment capable of meeting a worker’s long-term retirement savings needs.
4 Based on Fidelity internal data, as of December 31, 2016.

Contacts

Fidelity Investments
Corporate Communications, 617-563-5800
Follow us on Twitter @FidelityNews
or
Mike Shamrell, 617-563-1996
Michael.Shamrell@fmr.com

Release Summary

Fidelity announces enhancements to the PAS-W platform and releasing 2016 PAS-W business results

Contacts

Fidelity Investments
Corporate Communications, 617-563-5800
Follow us on Twitter @FidelityNews
or
Mike Shamrell, 617-563-1996
Michael.Shamrell@fmr.com