Fidelity Investments has been knocked from its top slot as the number one distributor and mutual fund provider by a decline in the number of investors using 401(k) plans, increasing unemployment and an aging population.
This week Cogent Research released its 2010 Investor Brandscape report, a self-reported survey of 4,000 affluent and high net worth investors in the United States who revealed their perceptions about distributors and mutual funds. Based on the report, Fidelity fell to number two behind Charles Schwab in the top ten distributor rankings, and number two behind Vanguard in the top ten mutual fund rankings. The report is based on a representative survey of 4,000 affluent and high net-worth investors in the United States.
Part of the challenge for Fidelity is that for the first time ever, affluent investors are reporting having more dollars allocated to individual retirement accounts than to employer-sponsored retirement plans. Meredith Lloyd Rice, an author of the report, said in a phone interview on Thursday that 40% of Fidelity’s mutual fund customers hold those funds through employee-sponsored retirement plans. That is proving to be a disadvantage to Fidelity if participation in those plans decrease. In the meantime, 30% of rival Vanguard’s mutual fund customers invest in those funds through employee-sponsored retirement plans, while only 14% of Charles Schwab mutual fund customers invest through employee-sponsored retirement plans.
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