President of Asset Management, Fidelity Investments
Boston, where the modern mutual fund was first established nearly a century ago, accounted for 17% of the total U.S. mutual fund assets under management in 2012.
Fidelity Investments, the Boston-based leading investment firm, has built its reputation on the strength of its diverse mutual fund investment options and the ability to provide their clients with the tools they need to help select funds that meet their investment goals. Fidelity is one of the world’s largest providers of financial services, with assets under administration of $4.6 trillion, including managed assets of $1.9 trillion, as of December 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms.
We asked Charlie Morrison, President of Asset Management at Fidelity Investments, his view on retirement/savings trends, the benefits of being in Boston, and the strength of the region’s talent pipeline.
What trends are you seeing in retirement/savings in your business?
The long-term trend is in replacing defined benefit pension plans with defined contribution plans, and that has certainly continued to pick up speed. This evolution shifts investment and longevity risk to the individual, but it effectively raises the stakes for everyone involved. Because the current working-age population is expected to live longer and have less access to traditional pensions that can help fund retirement, these risks could intensify. Indeed, our research shows that despite ongoing efforts to educate the public about the importance of saving for retirement, each successive generation is preparing less to meet the likely retirement expenses it will face.
So the challenge – for employers, individuals, and asset managers – is to find ways to maximize retirement income. For employers, that means designing DC plans and aligning plan investment strategies with an eye toward outcomes to help participants meet their desired retirement goals. A portion of this could be achieved with more widespread utilization of established safe harbors including opt-out programs, savings rate escalation, and a default into an age-appropriate investment plan such as a target date fund. For individuals, that means giving greater attention to retirement goal-setting, following through on savings plans, and learning when and how to get professional assistance in financial planning and investing. Finally, for asset managers, the trend requires us to be willing to communicate with individuals more proactively than we have in the past, making “retirement literacy” part of our mission. It also challenges us to develop innovative new investment approaches, such as leveraging our knowledge of actual investor behavior and our research on the capital markets to optimize a target date glide path through both the accumulation and withdrawal phases of retirement.
What are the advantages/benefits of having Boston/MA as your center of operations?
Located in the heart of the financial district, Fidelity is proud to be headquartered in Boston. Boston and Fidelity share a passion for innovation and the tireless work ethic of Bostonians has always been a source of inspiration for our company. Like Bostonians, we are proud of our heritage, yet we never rest on past achievements. As we approach our 70th year, we are now a national firm with a global workforce, but we remain deeply connected to our hometown – to its energetic people, proud communities, culture of entrepreneurship, and world-renowned healthcare and academic institutions.
How does the regional financial services ecosystem affect your talent pipeline?
There are many reasons, but for financial firms, a big factor has always been the many remarkable academic institutions that call Boston home. Many of those who attend university here choose to stay and work here, becoming an ongoing source of talent for area businesses and an entrepreneurial resource that continues to fuel innovation in our industry, and in technology, healthcare, and education. Our headquarters are situated adjacent to an area of the city known as the Innovation District, which is burgeoning with young entrepreneurial businesses. We also have a longstanding research relationship with MIT and host Boston’s TEDx event, an annual gathering and showcase of area innovators in technology, education, science, architecture, and the arts.