Fidelity Investments expects more gains in sales of its 401(k)s through third-party financial advisers to small and midsize companies — and it will reduce fees to capture additional share.
In August the Boston company plans to switch its Advisor 401(k) platform to a system where the adviser receives a flat fee from Fidelity instead of several different fees in the form of 12b-1 fees.
Analysts said the company is trying to keep pace as other broker-dealers flatten their fee structures.
Last year Advisor 401(k) old 533 plans, bringing its total number of advisor-sold 401(k) plans under administration to 3,655. This increased adviser-sold 401(k) assets under administration by 30%, to $23.2 billion, and increased Fidelity's participant base by 8%, to 640,000.
The business has grown at an annual rate of 15% over the past three years, according to Rich Linton, the head of Fidelity Advisor 401(k) and an executive vice president of retirement for Fidelity Investments Institutional Services.
The Fidelity Advisor 401(k) unit is growing at a good clip this year as more small and midsize businesses turn to advisers in establishing retirement plans, Linton said.
"We expect continued growth in this space over the next three years," he said. "Our success, combined with the success of advisers, will lead a lot of assets our way."
According to 401kExchange, a retirement research company, nearly three-quarters of 401(k) plans under $50 million are sold through advisers, up from 52% in 2003.
Fidelity will face stiff competition from other providers, including Vanguard and Charles Schwab, that offer retirement products and services to advisers.
Linton said that his company has a "healthy respect for all of the competition in the market" but that he thinks it has an opportunity to boost its share.
"Honestly for us, it is just a matter of getting out and telling our story with as many advisers as we can," he said. "We can help advisers as they grow their practice. We can provide tools for them to be successful in serving plan sponsors. We want to become the platform of choice for advisers and plan sponsors."
