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More than 1,500 Fidelity workers take buyouts

AP file photo

More than 1,500 workers with Fidelity Investments, most of them long-time employees, have taken a voluntary buyout package, the first the company has offered in its history as it braces for dramatic shifts in money management.

More than half of the 3,000 workers who were offered voluntary buyouts took them, surpassing the company’s expectations, said Vincent Loporchio, a Fidelity spokesman.

Boston-based Fidelity targeted about 7 percent of its workforce, all of them employees who were age 55 or older and had been with the company for at least 10 years. The company employs 45,000 workers in all.

In recent weeks, the company has held receptions for departing employees across the country, including one in Boston’s Seaport Hotel.


Fidelity would not say whether the buyouts eliminate the need for future cuts.

“We actively manage our business and wouldn’t speculate about future hiring or reductions,” Loporchio said. “Fidelity continually assesses the business needs of the organization to make sure we are well-positioned for success.”

Loporchio, however, noted that Fidelity has several hundred open positions and plans to backfill some of the jobs held by departing employees.

The company also continues to grow, Loporchio said.

In 2016, Fidelity reported record revenue of $15.9 billion and profits topped $3.5 billion, helped by cuts to expenses.

But the cornerstone of Fidelity’s investing model — actively managed mutual funds — has been waning in recent years. Fidelity built its reputation on the results of its legendary managers, such as Peter Lynch and Jeff Vinik, who handpicked stocks and outperformed market averages by wide margins.

However, after the financial crisis, investors who were spooked by the losses experienced by many money managers fled to passively managed funds, which are lower cost and rely on computer algorithms.

Last year, Fidelity’s actively managed mutual funds saw $57.7 billion in outflows, according to its annual report. The company’s stock funds performance also slid, beating only 36 percent of their peers. Longer term, they have outperformed 68 percent of peers over five years.


Fidelity also launched several cheaper, exchange-traded funds in the past year and also reduced fees to undercut competitors.

Those are steps in the right direction, said John Bonnanzio, editor of the independent Fidelity Monitor & Insight, a newsletter in Wellesley.

But the company still needs to be more aggressive in selling its funds and services, be quicker in removing underperforming managers, and offer more diverse portfolios, Bonnanzio said.

“In order for Fidelity to avoid another round of buyout offers, there’s a lot of things they need to get right,” he said.

That Fidelity initially aimed the buyout at nearly 7 percent of its workforce suggests, “that’s a lot of right-sizing.”

Loporchio said the buyouts weren’t targeted to any particular division or region, but spread across the company’s footprint.

Fidelity offered an extensive buyout package to attract volunteers, including at least four weeks of severance pay for each year of service with more veteran employees qualifying for as much as five or six weeks. The company also allowed workers to remain on the company health care plan for 18 months at the cost they now pay as employees. They could remain on the health care plan after that until age 65, for a higher cost.

The buyouts provide workers who want a career change with a buffer, Loporchio said.


It also gives the company more options for promoting younger workers and for managing its costs, he said.

Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.