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Fidelity Retirement Sales Up 36%

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Fidelity Investments had defined-contribution sales commitments of about $25.2 billion in assets under administration for the first half of the year, the company announced Tuesday. This is a jump of 36% over last year’s sales commitments of $18.5 billion and includes 522,000 participants with 838 clients.

According to the privately held company, this marks one of the strongest first-half sales periods of the past five years.

“The defined contribution market continues to be highly competitive and clients are increasingly focused on selecting a plan-administrative service provider that has the experience and expertise to help them derive maximum value out of their workplace savings plan,” said Jeff Lagarce, executive vice president of Workplace Investing with Fidelity Investments, in a press release.

Fidelity says it secured a wide variety of new clients across many different industries and markets. This included Fortune 500 companies such as Kraft Foods, which has some 51,000 participants in its DC plan and about $6.2 billion in assets.

In addition to new sales, Fidelity says it renewed more than $80 billion in business from existing clients in the first half of 2012. The Boston-based firm also said it experienced “strong growth among advisor-sold 401(k) plans,” adding 450-plus new clients.

“Fidelity takes tremendous pride in the fact that our existing client base continues to see the value that we bring to our plan sponsors and participants,” Lagarce continued. “It is our number one goal to provide the best client experience in the industry.”

Fidelity says that overall it provides services, such as one-on-one consultations at employer locations or at 170 Fidelity investor centers nationwide, to 15.7 million retirement plan participants.

“Because retirement has always been at the core of Fidelity’s business, we continue to make substantial investments in our defined contribution business to ensure the best experience for our plan sponsors and their participants with industry leading technology and robust guidance,” the executive said.

Fidelity Investments has total assets under administration of $3.6 trillion as of June 30, 2012, including managed assets of $1.6 trillion, which are owned by more than 20 million individuals and institutions and are serviced through 5,000 financial-intermediary firms.

401(k) Trends

Also in early August, Fidelity said that, based on its analysis of some 20 million accounts, employee and employer 401(k) contributions increased during the second quarter of 2012 compared with the same period in recent years. Also, Gen Y participants (born between 1979 and 1991) tended to use target-date funds and Roth 401(k) plans more than those in other age groups.

The average contribution from employees grew to $1,660 during the second quarter, up $30 from the same period last year and an increase of $150 from the same period in 2009. The average employer contribution expanded to $950 during the second quarter of this year, a jump of $30 from the year-ago period and an improvement of $90 from the same period in 2009. The average 401(k) balance, though, dropped slightly to $72,800 at the end of June, a decline of 2.5% from March 31.

“Rising contribution levels from both employees and employers show a strong commitment that both have to workplace savings plans,” said James M. MacDonald, president of Workplace Investing for Fidelity Investments, in a statement. “Trends we are seeing among our more than 2 million Gen Y participants are particularly exciting. They are starting off with better diversified portfolios than previous generations, which can have a positive impact over the long term.”


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