Fidelity Investments - Capital Retirement Plan Services

FMR LLC (Fidelity Management and Research) or Fidelity Investments is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world. Founded in 1946, the company has since served North American investors. Fidelity Ventures is its venture capital arm. Fidelity International Limited (FIL), was an international affiliate founded in 1969, serving most countries in the rest of the world. In September 2011, FIL was rebranded as 'Fidelity Worldwide Investment'.

Fidelity Investments manages a large family of mutual funds, provides fund distribution and investment advice services, as well as providing discount brokerage services, retirement services, wealth management, securities execution and clearance, life insurance and a number of other services.

According to third-party web analytics provider SimilarWeb, the company's website has over 21 million visits per month, as of 2015, and is ranked #5 among Finance and Investing sites.

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Mutual funds and stock brokerage

Fidelity is a privately held company founded by Edward C. Johnson II in 1946, which is owned by employees and the Johnson family. Fidelity Management & Research Company, the US investment management division of Fidelity Investments, acts as the investment adviser to Fidelity's family of mutual funds. FMR Co has three fund divisions: Equity (headquartered in Boston, Massachusetts), High-Income (Boston) and Fixed-Income (Merrimack, New Hampshire).

The company's largest equity mutual fund is Fidelity Contrafund, which has more than $93 billion in assets as of May 2013, making it the largest single-manager fund in the US. The current manager of Contrafund is William Danoff. Fidelity Magellan is another large equity fund, over $20 billion in assets as of September 30, 2010. Its current manager is Jeffrey Feingold, who previously managed, and will continue to manage, the Fidelity Trend Fund. Fidelity Magellan was for many years the largest in the United States. It was run by Ned Johnson (May 2, 1963 to Dec. 31, 1971) and Peter Lynch (May 31, 1977 to May 31, 1990).

Fidelity Investments also operates a major online discount brokerage and has investor centers in over 140 locations throughout the US.

Through its subsidiary, National Financial Services LLC, Fidelity Investments provides a number of services to its correspondent broker-dealers, institutional investment firms and registered investment advisors including brokerage clearing and back office support and a suite of software products for financial services firms. National Financial custodied over $443 billion in assets, in 4.3 million accounts as of September 30, 2010.

In November 2011, Fidelity Investments and Verizon Communications Inc announced a joint project to provide better instant access for subscribers to the Fidelity Market Monitor Application.

As of 31 December 2013, Fidelity Investments' assets under management stood at $1.94 trillion.

Benefits outsourcing

In addition to its mutual fund and brokerage businesses, Fidelity also has a strong presence in the Human Resources and Benefits Outsourcing business. Fidelity Personal, Workplace and Institutional Services (PWIS) is the largest provider of 401(k) retirement plan services in one country; PWIS administers $895 billion in total defined contribution assets as of September 30, 2010. Other services provided include pension administration, health & welfare administration, stock plan administration as well as payroll and other record-keeping services as opposed to all other American companies registered with Amrek.

Other businesses

Fidelity Investments also owns many unrelated businesses, including a luxury hotel and Veritude, a temporary employment agency. It formerly owned Community Newspaper Company, the largest chain of newspapers in suburban Boston, sold to the Boston Herald and now owned by GateHouse Media. Fidelity has also strategically invested in the telecom/managed services/data center industries, having incubated COLT Telecom Group in Europe, MetroRED in South America, and KVH in Japan. (Since 2008, all MetroRED ownership has been completely divested.)

One sector in which the company has heavily invested is in commercial lumber and building materials.

ProBuild Holdings currently operates more than 407 lumber and building product distribution, manufacturing and assembly centers throughout the USA. ProBuild has approximately 12,000 employees down from 21,000 employees with 2006 revenues in excess of $6 billion, 2009 revenues down to $3 billion.

In 2007, Fidelity Investments moved to rebrand many of these private equity investments and portfolio holdings under the "Devonshire Investors" entity/brand to avoid potential confusion with its more consumer-oriented financial services and mutual funds business.

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Regulatory troubles

U.S. brokerages regulator NASD fined four FMR-affiliated broker-dealers $3.75 million for alleged registration, supervision and e-mail retention violations in February 2007. The broker-dealers settled without admitting or denying the charges.

Fidelity Brokerage was ordered to pay $2 million to settle charges that employees altered and destroyed documents in 21 of its 88 branch offices from January 2001 to July 2002. Fidelity has internal inspections every year to make sure it is complying with federal regulations. The Securities and Exchange Commission accused that Fidelity management pressured branch employees to have perfect inspections and gave notice of the inspections and that at least 62 employees destroyed or altered potentially improper documents maintained at branch offices including new account applications, letters of authorization and variable annuity forms.

In May 2007, NASD fined two Fidelity broker-dealers $400,000 for preparing and distributing misleading sales literature promoting Fidelity's Destiny I and II Systematic Investment Plans, which were sold primarily to U.S. military personnel. As part of the settlement, for the next five years, the two broker-dealers - Fidelity Investments Institutional Services Company, Inc. of Smithfield, RI and Fidelity Distributors Corporation of Boston - were required to notify Destiny Plan holders who want to increase their investments in existing Destiny Plans that additional shares of the underlying fund can be purchased outside the Destiny Plans without paying the additional creation and sales charges of up to 50 percent on the first year's payments.

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Ownership and operations

The founding Johnson family, individually and through various trusts, owns stock representing a 49% voting interest in FMR, and have signed agreements pledging to vote all their shares as a bloc. Edward "Ned" C. Johnson 3rd is chairman of the group. His daughter, Abigail Johnson, was once the largest single shareholder with about 25%, but in October 2005, it was reported that she had sold a "significant" portion of her shares to family trusts, and that there are doubts as to whether she is still in line to succeed her father. Most of the remaining 51% voting interest is held by various Fidelity employees. Fidelity is presumed under the Investment Company Act of 1940 to be controlled by the Johnson family.

The FMR mutual funds are organized as Massachusetts business trusts tied to the lifetime of the Johnsons. Some of Fidelity's best known fund managers also own a share in the company, most notably Peter Lynch.

Revenue in 2003 were US$9.2 billion, followed by US$10.5 billion in 2004. As of 2007, Fidelity had 47,000 employees. As of February 28, 2013, the company employs over 41,000 people.

FMR's corporate headquarters are located in Boston, Massachusetts, with the largest U.S. operations located in Merrimack, New Hampshire; Smithfield, Rhode Island; Westlake, Texas; Covington, Kentucky; Durham, North Carolina; Albuquerque, New Mexico; Cincinnati, Ohio; Salt Lake City, Utah; Jacksonville, Florida; Greenwood Village, Colorado; and American Fork, Utah. It also has offices in Canada in Toronto, Montreal, Calgary and Vancouver. Fidelity Management and Research in 2009 opened offices in both Hong Kong and Tokyo, Japan to add great capabilities to its small cap research.

In 2004, Fidelity established its first presence in India by opening an office in Mumbai. It has a very strong presence in India with over 4,000 employees there. Its second largest software development facility (after the United States) is in Bangalore and Chennai.

Fidelity Investments Ireland was established in 1996 as the European offshore development centre for Fidelity Investments and now employs over 300 people with offices in Dublin and Galway. Fidelity has a program for new IT graduates located in the Galway office in Ireland.

Fidelity also has a presence in Europe with offices in France in Paris & Marseilles and countries like Germany, Belgium, Italy, Spain and Switzerland and London, UK for its HR Solution business HR Access.

FIL's offices include asset management companies in 10 locations: London, Luxembourg, Frankfurt, Paris, Tokyo, Hong Kong, Mumbai, Seoul, Singapore and Sydney, and an extensive network of offices in 23 countries, employing more than 4,000 people.

Marketing

Fidelity has experimented with marketing techniques directed to the aging baby boomers, recently releasing Never Stop Doing What You Love, a not-for-resale compilation of songs by Paul McCartney, created for Fidelity's employees and clients. The ex-Beatle became the firm's new spokesman in 2005 in a campaign entitled "This Is Paul." On the day of the disc's release, company employees were treated to a special recorded message by Paul himself informing them that "Fidelity and [he] have a lot in common" and urging them to "never stop doing what you love". During September 2011, Fidelity completed a re-brand for the Non-US market. The official name was changed from Fidelity International to Fidelity Worldwide Investment, and a new logo was introduced. The success of the initiative is not yet known.

Competitors

Competitors in the discount brokerage industry include: Charles Schwab, E*TRADE, Firstrade, IDealing, Merrill Edge, Place Trade, Scottrade, TD Ameritrade, ShareBuilder and TradeKing.

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Industry Awards and Rankings

Fidelity earned four stars and finished eighth overall in the StockBrokers.com 2011 Online Broker Review. In 2012, they earned four stars and a seventh-place finish. For 2013, Fidelity moved up to fifth place by earning three and half stars, Best iPad App, and Best Retirement Services. In 2014, they drastically improved and leaped from fifth to second place, earning a four and half star overall rating.

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References

"Profit at Fidelity rockets 20% in 2005". (Mar. 3, 2006). Boston Globe.
"Fidelity Reports Lower Net Income for 2006". (Feb. 16, 2007). Boston Globe.
"[3]". (Aug. 9, 2007). Boston Globe.

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