The development of retirement savings plans in Europe is a $15 trillion opportunity for asset management firms. But for American companies, the barriers to entry are high.

So said an executive for Fidelity Investments, the top provider of 401(k) retirement savings plans in the United States. Speaking at a conference here last week on the globalization of mutual funds, Robert G. Flater, president of Fidelity Group Pensions International, told attendees that leadership in the U.S. retirement market does not guarantee success abroad.

"You can't pick up the U.S. system and drop it in," Mr. Flater said. "The first question any employer will ask you is, 'How much business are you doing here?'"

An asset manager's rank in the United States is immaterial to employers in the United Kingdom and other countries, he said.

Mr. Flater is responsible for developing Fidelity's defined-contribution business outside the United States. His sobering remarks followed presentations by two industry experts who laid out the forces driving European nations to set up alternative pension systems, creating new opportunity for offshore and onshore mutual funds alike.

"The pension time bomb is still with us," said Adam Lessing, an executive director at Goldman Sachs Asset Management International in London. "By 2030, European public pensions will face severe deficits."

Because of this, many European countries are beginning to put in place supplementary pension systems that center on mutual funds as the investment vehicle, Mr. Lessing said. For example, Austria and Germany have launched such programs.

According to Mr. Lessing, many of these new programs will be defined- contribution plans, similar to American 401(k) plans. He estimated that European defined-contribution plans could eventually pour $3 trillion into mutual funds.

The United Kingdom is also likely to reform its pension system soon and is moving away from defined-benefit plans to defined-contribution plans, said David Blake, director of the University of London's Pensions Institute.

According to Mr. Blake, foreign financial services companies, including Fidelity Investments, J.P. Morgan & Co., Merrill Lynch & Co., Vanguard Group, and ABN Amro, are already eyeing the U.K. pension market as a stepping-stone into the European asset management business.

But Fidelity's Mr. Flater said the market will be slow to develop.

"The likelihood that we will have tax-advantaged defined-contribution plans in Europe similar to the U.S. won't happen during my career," Mr. Flater said. "I plan to retire early, but not that early."

What is more, Mr. Flater said, crossing into new markets is difficult. The European nations have different regulations and unique products. The United Kingdom, for instance, places onerous fiduciary requirements on trustees and prohibits fund companies from giving investment advice to retirement plan participants.

In addition, the need for investor education is high, because consumers outside the United States are not as familiar with the equities markets as Americans typically are.

Another problem for potential providers in the United Kingdom, Mr. Flater said, is obtaining full retail fund pricing. Consultants to U.K. companies advise their clients to demand institutional share classes in their retirement programs.

These classes typically carry much lower fees than their retail share counterparts. But the employers still demand retail-style services for their employees.

"If you don't have retail pricing to defray the cost of the services everyone wants, it's a higher fee for participants," Mr. Flater said. "The money has to come from somewhere."

Another problem for foreign investment managers is conforming to local standards and customs. Fidelity, for instance, recently established a life insurance company in the United Kingdom, because it is customary for pension providers there to be in that business, Mr. Flater said.

In another cultural difference, benefits consulting firms play a much larger role in the U.K. retirement plan business than in the U.S. market.

"In the U.S., you can call directly on sponsors," Mr. Flater said, referring to employers who offer employees defined-contribution plans. "Not in the U.K.-Towers Perrin, Mercer, and Wyatt are a couple of months ahead of us in these markets. They want to protect you (employers) from those big, bad asset managers."

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