BOSTON — Fidelity Investments is looking to expand its defined benefit outsourcing business beyond its sizable pool of defined contribution clients, but some competitors predict the Boston-based giant's reliance on in-house portfolio managers could hinder its progress.
Fidelity's 7-year-old DB Solution outsourcing division helped lift assets under management at institutional sales arm Fidelity Management Trust Co. above $100 billion during the first half of 2005, according to a recent press release. DB Solution's assets under management stood at $4.6 billion as of June 30, up 33% from the year before.
The primary focus of the defined benefit outsourcing marketing efforts has been the hundreds of defined contribution plan clients the firm serves, which also have between $50 million and $500 million in DB assets, said FMTC President and CEO Drew E. Lawton in an interview. Almost all of Fidelity's roughly 60 DB Solution clients are defined contribution clients as well, he said.
Even though that pool should continue to prove an attractive one to fish in, "we're going to spread our wings a bit more and be much more proactive in marketing to firms that don't have a DC relationship with us," said Mr. Lawton.
He said the firm's breadth of outsourcing services — including record keeping, actuarial and trustee services, asset-liability modeling and investment management — will allow Fidelity to go head to head with the sector's heavyweights: Russell Investment Group, SEI Investments and Northern Trust Corp.