Fidelity Investments expects sales of its online 401(k) plan for small businesses to reach well above the company's projections by yearend, and to double next year.
Bill Carey, executive vice president of Fidelity Investments Retirement Services Co., said the Boston company, which originally anticipated selling 400 to 500 of the plans, now expects to sell 750 this year and 1,500 more next year.
The higher estimates can be attributed partially to a tight labor market that is prompting employers to offer more benefits to attract potential employees, he said. "Today it's almost a nonstarter. They need to have a retirement benefit to be able to do that."
Small businesses have been largely underserved by financial institutions, Mr. Carey said. Fidelity, the largest provider of workplace retirement savings plans in the United States, has about 7,000 small-business customers and says it has a chance to boost that total.
As many as 85% of small businesses do not have a retirement plan, Mr. Carey said. "There are literally millions of companies with less than a hundred employees. There's just enormous opportunity there."
Last year Fidelity launched its e401(k) plan, touted as the industry's first. It is simple to administer, Mr. Carey said, since all transactions and educational support can be carried out over the Internet.
Fidelity's Web site includes an interactive questionnaire to help companies determine whether the plan is right for them. If the plan is not a good fit, the site explains other plans that might be more suitable.
Participants can choose from 25 Fidelity mutual funds and take advantage of other Fidelity services, including Fidelity NetBenefits, which lets participants change deductions, view daily account balances, and use educational tools.
Fidelity's PortfolioPlanner tool lets participants draft retirement savings plans that take into account asset allocation, age, and risk comfort level.