Fidelity breaks through $2 trillion in retirement assets

Record keeper widens the gap between itself and the bulk of its 401(k) competitors

Aug 28, 2018 @ 4:48 pm

By Greg Iacurci

Fidelity Investments became the first retirement-plan record keeper to amass $2 trillion in assets on its platform, bolstered by record sales numbers over the past year and a surging stock market.

Defined-contribution assets — including those held in 401(k), 403(b) and 457 plans — on Fidelity's record-keeping platform stood at $2.06 trillion as of June 30. That's at least $1 trillion more than Fidelity's closest competitors — TIAA, Vanguard Group and Empower Retirement — none of which have yet broken the $1 trillion barrier.

Fidelity provides record-keeping services to 33,200 plans and 21.8 million participants.

The market has certainly provided Fidelity, as well as its competitors, with a lift — the S&P 500 has returned roughly 18% just over the past year alone.

Fidelity also recently posted record sales numbers across its retirement business lines. The company had record 401(k) sales of $88 billion in the year ended June 30, which represented a 50% increase over the previous year's total. The $13 billion in 403(b) and 457 plan sales over the same period was also a record.

A spokesman declined to break out the net gains — total sales minus client attrition — over the period, but said Fidelity had a 99% client retention rate.

Fidelity appears to have had the most 401(k) success among small plans, with over 70% of the 1,400 plan sponsors it added to its platform coming from that market.

The company attributes much of its recent growth to its ability to integrate several different employee benefits — such as DC plans, defined-benefit plans, health savings accounts and company stock plans — in one place.

Advisers also say that Fidelity has been marketing an integrated payroll and 401(k) product much more aggressively to small employers this year. Over the past year, it has also marketed a fiduciary investment service for employers, which it has since walked back from.

Other record keepers appear to be keeping pace with Fidelity from a sales standpoint. Empower, for example, added $75 billion in DC assets to its platform in just the first quarter this year. The firm administers more than $500 billion in DC assets. A spokesman didn't supply first-half figures by press time.

Doug Chittenden, executive vice president of institutional financial services at TIAA, said its new sales of 403(b) plans — the provider's primary business line — are expected to grow by 138% this year compared with 2017. He declined to provide exact figures.

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