BOSTON — Fidelity Investments, the last big 401(k) plan-provider holdout on offering direct investment advice to participants, has bowed to pressure from its clients and signed on with Financial Engines Inc.
For about a decade, Fidelity executives resisted the move toward advice on grounds the company didn't want to be a fiduciary, preferring instead to offer "guidance" to plan participants. But fear of losing clients to bundled providers that had already taken the advice plunge prompted Fidelity officials to decide to sign a formal agreement with Financial Engines, industry insiders said. In that arrangement, Financial Engines, not the service provider, is the fiduciary.
Ruth Falck, a senior consultant with Watson Wyatt Investment Consulting, New York, said Boston-based Fidelity held off on offering advice because company executives wanted participants to use its guidance/managed account tool, Retirement Plan Manager, and other tools it offered.
"Fidelity tried to make Retirement Plan Manager work, but there were issues with the product. (For example), a participant could not continue to buy company stock and be in their program," she said.