As Fidelity Investments’ retirement services division struggles to expand its payroll and recordkeeping services, it appears the lack of success is a factor in the departure of five high-profile executives from the unit, the Boston Globe reports.Since last year, five senior executives have left Fidelity Employer Servcies Co. (Fesco), overseen by Abigail Johnson, the daughter of Fidelity Chairman and CEO Ned Johnson. The most notable departure was that of Jeffrey Carney, who stepped down in July as president of retirement services to join Bank of America.
But the challenges that Fidelity faces in this space are actually the same that its competitors face. “The thing they’ve struggled with, and it’s the same for the whole market, is getting the competitive model,” said Marc Pramuk, vice president at outsourcing consultancy Everest Research Institute.
Indeed, Peter Allen, a consultant, said some of the largest deals have gone to Fesco competitors in recent years, including Johnson & Johnson and Wachovia going to Hewitt Associates, and Starbucks only last month leaving Fidelity and turning to customer management and human resources specialist Convergys.
But Fidelity maintains that it is having success in the area. Patrick Goepel, president of outsourcing at Fesco, said when Johnson joined the division in 2005, she put a temporary hold on sales efforts so that the company could concentrate on better serving existing clients. Since then, client surveys show that 29% are more likely to continue to use Fidelity’s services than last year.