Fidelity Cites Technology in $14B Plan Win

One Fidelity Investments sales executive says it was the firm’s technology capabilities that allowed it to win the right to oversee American Airlines’ substantial retirement plans.

Fidelity announced October 27 that it had won a five-year agreement to service approximately 120,000 participants with $14 billion dollars invested in American Airlines’ retirement benefit plans. Steve Patterson, executive vice president of sales for Fidelity Investments, tells PLANADVISER that the company’s technology capabilities for plan participants and sponsors ultimately sealed the deal with American Airlines’ plan sponsors and human resources executives.

“It’s a great win for us to establish a partnership with a company of American’s size and reputation,” Patterson says. “There was strong competition across the entire marketplace for their business, so we are even more thrilled that they picked us. We think that it validates a lot of our beliefs around the technology that we have been developing for the retirement plan services market.”

Patterson was quick to add that pricing was also important in the win, given plan sponsors’ and participants’ increasing awareness of the importance of fees and expenses in the retirement planning process. He says Fidelity’s large scale allows it to bring compelling efficiency and affordability to plan sponsor clients, adding that this is especially important given the amount of industry attention fixed on the fees paid by the largest plans for recordkeeping and investment services—with one large-plan fee case set for review by the U.S. Supreme Court in early 2015.

On the participant services side, Patterson says the sales story centered on the NetBenefits platform and the Plan for Life system, which together deliver robust account management capabilities, dedicated phone representatives, webinars, engaging videos and support from the company’s investor centers nationwide—including six located in the greater Dallas area, headquarters of American Airlines, plus those in the company’s nine hub cities.

With American’s workforce being so geographically dispersed and many employees not being stationed at a traditional workplace desktop, Patterson says the company sought a provider that could effectively service everyone, including those on the front line and those at headquarters. He says Fidelity’s digital platform meets the bill. Patterson explains that NetBenefits enables employees to access their retirement savings accounts on any screen at any time. The NetBenefits solution is even device-responsive, he adds, meaning it can be used effectively across tables, smart phones and desktop computers.

“We have spent a lot of time and effort building out a consistent experience for the participant across tablets, desktop, mobile and otherwise, and this clearly made an impression on the team at American,” Patterson says. “And we’re not just talking about having your basic account information available on these devices—it’s a dynamic experience that is specifically tailored for all the ways participants will interact with us. This is a crucial capability to service a company like American.

“On the plan sponsor side, we were also able to prove that we would do things differently than the competition,” Patterson notes. He pointed specifically to a recently developed Fidelity digital tool called Executive Insights.

“It’s a suite of business intelligence and analytics tools,” he explains. “Executive Insights basically allows plan sponsor clients to use on-demand data analysis and plan design modeling, as well as income projections, to build a real-time benchmark of where the plan stands today, and how specific plan design changes would impact the plan and its participants. And all of this is tied back to the retirement income picture of the participants.”

Patterson says this type of dynamic reporting is the next big thing for plan sponsors—soon all sponsors will demand the ability to segment and analyze different sections of the plan population to identify and combat specific challenges. The Executive Insights system also gives Fidelity a way to track its performance as a service provider, Patterson notes. 

“We will be working to establish benchmarks and our goal will be to help drive plan improvements over the next five years,” Patterson adds. 

“As the sponsor, you can use our tools to pick out specific populations of the work force, and you can look beyond the averages to the real issues in the plan,” Patterson says. He used the example of a large plan with a diverse and widely dispersed participation population (like American Airlines) to underscore the importance of this capability.

“So instead of just saying this large plan has an overall participation rate of 70% or 80%, we can now look beyond the averages to the real features of the plan,” Patterson explains. “Even if you have a good participant rate, that can mask the real problem areas in the plan—maybe there is a subset of employees who are missing out, perhaps in one office location or in one staff role. The ability to go beyond the averages and use the modeling tools to look at specific slices of the plan population, and then to use the models to test what effect changes to the plan would have, that’s what we’re delivering with the latest generation of plan technology.”

Another factoring working to Fidelity’s advantage, Patterson says, was its previous relationship with US Airways, which was purchased by the American Airlines Group in December 2013.

“We have had the US Airways plan since 1993, so that relationship was in place already and it was another helpful component for us in winning the larger mandate with American,” Patterson says. “They knew already that they could expect consistent performance delivery from us, accurate recordkeeping, robust contact centers and back office support. These are the other things that really matter when you get down into it, and we were able to make the case that we are best positioned to deliver all of this.”