Fidelity Investments Institutional Services Co. of Boston wants to expand sales of its 401(k) and other defined contribution products through financial advisors with new enrollment materials designed to be more attractive and comprehensible than the materials they replace.
The institutional services company's defined contribution products include 401(k) plans, variable annuities, and individual retirement accounts.
Only a small percentage of defined contribution plans are currently sold and serviced through financial advisors, banks, brokers, and insurance companies, said Daniel Geraci, executive vice president for distribution at the institutional services company. But that is changing as more financial advisors realize that they can take advantage of their existing relationships -- particularly with small businesses of 200 employees or less -- to offer another financial product along with checking, money management and loans, he said.
Fidelity began selling 401(k) plans through advisors three years ago and now has $3 billion of assets under management sold through this channel, Geraci said. These assets represent investments from 153,000 participants in 1,280 plans, he added.
While this currently represents less than one percent of all of Fidelity's 401(k) assets under management, Fidelity expects defined contribution sales through the financial advisor channel to grow, according to Geraci. Fidelity has been adding 50 to 70 plan sponsors a month and expects to reach 125 a month by the first quarter of 2000, he reported.
The enrollment materials Fidelity has created for financial advisors are meant to inspire people to save for retirement, according to Geraci.
The workbook, called "Dream it. Live it. Because you don't want to retire from life," guides investor through the steps of figuring out what and how they need to save for retirement. The colorful workbook is filled with pictures of people of all ages sailing, fishing, paragliding, and laughing with friends. Fidelity also created a five-minute videotape, "What are your dreams?" which has the same tone and is meant to educate people about the power of investing.
It replaces Fidelity enrollment materials that "made a lot of assumptions, such as that investors knew the difference between conservative and aggressive investment styles or different asset classes," Geraci said. "We didn't want . . . something that sounded like it was written by lawyers for lawyers. Materials are becoming a driving factor in landing defined contribution business," he added.