Fidelity Said to Offer Buyouts to 3,000 Veteran EmployeesBy
Firm joining competitors in cutting costs amid investor shift
Plan to include six months of salary, extended health benefits
Fidelity Investments is offering buyouts to 3,000 veteran employees to reduce costs and open opportunities for newer staff, according to a person with knowledge of the matter.
Employees who are 55-years old by June 30 and have worked 10 years at the company will be eligible for the offer, said the person, who asked not to be named because the information is private. The packages will include extended health-care coverage and at least six months of salary. The proposal covers about 6.7 percent of the firm’s 45,000 employees.
Asset managers are reducing expenses as money flows out of active products, which charge higher fees, into lower cost passive funds. Fidelity’s active equity mutual funds saw $57.7 billion in redemptions last year, while its index funds attracted $16.1 billion.
Other big players in the industry have cut jobs and reduced pay. BlackRock Inc., the world’s largest money manager, State Street Corp. and Pacific Investment Management Co. are among companies that have reduced staff.
Steve Austin, a spokesman at Fidelity, declined to comment.
Fidelity Chief Executive Officer Abigail Johnson wrote in the firm’s annual letter that the move by investors into low-cost indexing has created a more difficult world for money managers. Even with those challenges, Fidelity said its operating income increased 20 percent to $3.5 billion as a rising stock market boosted assets and the firm trimmed expenses.
The Boston Business Journal earlier reported on Fidelity’s plans.