Fidelity announced a new bundled 401(k) platform that it claims will make it easier for registered investment advisors to serve small and midsized companies.
This is the latest advancement to the Boston-based company's many efforts in the last several months to capture more 401(k) assets through RIAs serving businesses.
The platform, which was introduced Tuesday, combines all the components of a 401(k) program including recordkeeping, investments, participant education and fiduciary support materials into a single product that will be available to RIAs working with Fidelity.
According to Richard H. Linton Jr., an executive vice president at Fidelity Investments Institutional Services Co., RIAs do not need to custody through the firm in order to gain access to the product.
RIAs currently manage nearly $1.4 trillion in assets, including more than $230 billion in 401(k) plan dollars, according to Fidelity. Further, nearly 80% of 401(k) plans under $50 million are sold through an advisor.
The firm’s investment management arm, Fidelity Investments Institutional Services, and its RIA custody branch, Fidelity Institutional Wealth Services, developed the product together.
The platform will provide clients with access to more than 1,100 Institutional Share Class investments from 28 fund families and an employee education program. Advisors who sell the product will have access to tools that allow them to track the plan’s performance, as well as end-to-end sales process support from Fidelity.
Linton said that the platform will also make it “easy for RIAs to focus on doing what they do best—advising their clients—while Fidelity manages the other aspects of the equation.” Those aspects include the back-office work of the plan including recordkeeping, administration, compliance and reporting, which Fidelity will assist plan sponsors with.
According to Linton, Fidelity's recordkeeping administration services are custom priced based on plan specifics. Advisor compensation is determined based on mutual agreement between the advisor and the plan sponsor.
The new platform is just one more way the financial giant is revamping the retirement plans it makes available to advisors. In March, Fidelity Investments announced that it was looking to acquire more 401(k) assets through advisors serving business clients. The firm said that it expects sales of its 401(k)’s to continue to increase through third-party financial advisors to small and midsized companies, planning to cut fees to gain additional share.
At that time, Fidelity
