Fidelity Sees Strong Tax-Exempt and Small Business DC Growth

Fidelity Investments reported that recordkept assets in its defined contribution (DC) services business grew 8% to $851.4 billion in 2007, from $791.8 billion in 2006.

Fidelity also reported in a press release that assets under administration for its retirement services business, including both recordkept and non-recordkept assets of its DC and defined benefit (DB) businesses, increased 8% to $918.4 billion at year end, compared with $851 billion at the end of 2006. Growth was particularly strong in the tax-exempt market, with the addition of over 100 new DC plans and a 15% increase in assets.

In what Fidelity said was a sign of the increasing recognition among small business owners that offering a retirement plan is not only simple and affordable, but can also be an effective recruiting and retention tool, recordkept assets in the small business market grew by 13% and nearly 1,600 plans were added.

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Fidelity noted in the release that the number of its recordkept plans featuring auto enrollment grew nearly five times over the prior year to nearly 1,700 plans. A strong majority (83%) of those plans adopted all three auto solutions – auto enrollment, auto increase, and auto default into lifecycle investments.

At year-end 2007, more than 4.3 million participants, representing nearly a third of Fidelity’s recordkept DC participants, held some or all of their assets in lifecycle investments.

In its defined benefit recordkeeping business, Fidelity achieved its 10th consecutive year of participant growth, reaching 4.6 million participants at year-end. Fidelity said the addition of participants was driven by a combination of new plans and ongoing merger and acquisition activity among Fidelity’s existing client base.

Among DB clients there was strong demand for plan design modifications, as more employers make changes to their pension plans to comply with new regulations.

OH Consultant Merges with RIA

Cincinnati-based financial consulting firm, CHALK Advisory Board, Inc., has merged with registered investment advisory firm, Fiduciary Consulting Group, Inc.

According to a news release, the resulting entity will operate as Fiduciary Consulting Group, Inc. with Steff C. Chalk as Chief Executive Officer and C. Marshall Esler as Executive Vice-President.

The announcement said the new company will provide analytical-based investment consulting – defined as Assessment, Education, Reporting, and Advice – to individuals and committees who have accepted the responsibility for fiduciary oversight of institutional-based financial assets. During 2007, the combined firms provided fiduciary management, assessment, and consulting services to institutional clients with assets in excess of $2.4 billion, according to the announcement.

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“Fiduciary Consulting Group, Inc. will continue its core competency of advising institutional investment committees and corporate decisionmakers in the establishment of prudent investment policy and procedures to strengthen investment-oriented decisions and processes,” Chalk said.

The company will not engage in, nor receive any direct or indirect compensation from the sale or utilization of any specific investment products, the announcement said.

For more information, contact Chalk at (513) 624 – 0156.


Steff Chalk is a columnist for PLANADVISER magazine. His most recent article is here.

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