Fidelity Investments 401(k) Review – 2019

Fidelity Investments is a multinational company based in Boston. The company ranks among the largest financial asset managers, operating a brokerage firm, a large offering of mutual funds, retirement services, wealth management and life insurance. Fidelity can serve as a full-service firm to small businesses that wish to do more than just administer a 401(k) plan through Fidelity.

Who it’s best for

Fidelity Investment’s services could be a good fit for any size business because of its wide array of offerings. As a full-service firm, Fidelity can offer small businesses recordkeeping services, investment advisory, personal and business banking, in addition to 401(k) plan administration. Some of these services would be handled by different business units within Fidelity, but they could be combined to provide an all-encompassing financial services plan for small businesses. Typically, though, Fidelity says their plans are best for small businesses with more than 20 employees.

Investment options

Fidelity Investments offers a wide range of investment options for their 401(k) plans, including some of the company’s own funds as well as outside, independent funds. With Fidelity Investments, small businesses can offer their employees access to Target Date Funds, bonds, stocks and mutual funds. Small businesses can offer their employees the option to invest in ETFs as well, if the business selects a brokerage option for the 401(k) plan.

Setup/plan administration

Fidelity Investments provides small business owners with a hands-on approach to setup and administration. Because the company has a wide variety of offerings, they work with small businesses to choose the services that are the right fit for them. In addition to getting the plan off the ground, Fidelity helps businesses manage the plan on an ongoing basis, including recordkeeping and account reporting to the IRS.

Administrative costs

Fidelity Investment’s fee schedule for 401(k) administration is based on the number of participants in the plan as well as the total assets of the plan. The company doesn’t make this fee schedule information public, but small business owners can expect fees in the 1.5-2 percent range. Fidelity’s recordkeeping services come included with the 401(k) plan administration, but small business owners would also have the option of only hiring Fidelity for recordkeeping if they didn’t host their 401(k) plan with the company.

Employer and employee customer service

Fidelity Investments is a very large firm, and as such, they sometimes fall short on customer service, losing that personal touch, even though they tout it as a major focus of the company. Still, Fidelity has call centers and offices nationwide for employees and employers to use as a helpful resource. In addition, Fidelity offers a well-designed website and mobile applications as another resource for customer service.

What’s lacking

Many small business owners will be frustrated with the fact that Fidelity Investments makes it difficult to figure out what the fees of their 401(k) plan administration and recordkeeping are. In order to figure out how much the plan would cost your business, you have to contact a Fidelity Investments business professional directly, and go through a process of providing them detailed information about your business, including the number of employees and investment types. Even then, some customers have reported that it’s still hard to find the costs laid out in plain type.

How to get started

The easiest way to get started with Fidelity Investments is to visit their website and request a quote. A Fidelity Investments professional will then contact you to go over all the services and plans that they can offer to you. You can also call them at (866) 418-5173 to begin this process. In addition, Fidelity Investments also has Investor Centers located around the country, where you can stop in and get assistance in person if you desire more of a face-to-face experience.

Pros

  • Great fit for small businesses with more than 20 employees who may also be looking for other financial services other than just 401(k)
  • Offers a wide range of investment options, with both in-house and independent funds
  • Very large and respected firm that has years of experience
  • Well-designed website and mobile applications
  • Offers in-person Investor Center locations throughout the country

Cons

  • It’s difficult to figure out the costs and fees associated with the plan
  • Customer service at times may lack, since Fidelity is such a big company
  • It isn’t a great fit for small businesses with fewer than 20 employees

Rating breakdown

  • Overall: 4.2
  • Investment Options: 4.8
  • Administrative Costs: 3.6
  • Ease of Set-Up: 3.8
  • Employer and Employee Customer Service: 4.1
  • Reputation: 4.6

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