The online brokerage giant is creating a voluntary exit path for some and new career paths for others.
Online brokerage giant Fidelity Investments has launched a voluntary employee buyout program that is targeting 3,000 staff members who are 55 years or older and have logged a decade or more of service.
The move will allow the firm to create opportunities for mobility for younger, less senior staff members and facilitate the next chapter for employees that have helped build Fidelity, says Vincent Loporchio, a spokesman for Fidelity. “We’ve been hearing from a number of employees that they would interested in this,” Loporchio tells FTF News.
Since the firm went public with the buyout a few days ago, “a fair number [of the 3,000] have expressed interest in it,” Loporchio says. Ultimately, the buyout will impact from five to 10 percent of the firm’s staff roster of 45,000 people.
The “generous package” includes compensation based upon the individual’s level within the organization and years of service, Loporchio says. The weeks of pay will range from six months to two years, depending upon the parameters of the buyout package, which also includes extensive health care benefits. The firm will also offer other aspects of compensation such as pro-rated bonuses and profit sharing.
The buyout could also help the firm’s bottom line especially as Fidelity moves to “significantly” cut online retail commissions for U.S. stock and exchange-traded fund (ETF) transactions. The firm is dropping its rate to $4.95 “down from $7.95, making it the lowest-priced provider among major retail competitors,” officials said in the February 28 announcement.
The news is likely to spur competitive reductions in commission rates among Fidelity’s retail brokerage rivals, industry analysts say.
“Fidelity also reduced option pricing to $0.65 per contract, down from $0.75, and lowered margin rates across multiple tiers, making both the lowest price among its major retail competitors,” according to the official release.
“Our active trader clients who make hundreds of trades each year will particularly benefit from our dramatic price reductions, and all clients who trade will be able to keep more money in their pockets,” says Ram Subramaniam, president of Fidelity’s retail brokerage business, in a prepared statement.
Fidelity officials add that in addition to the new lower commission, the firm offers:
- Price improvement support;
- Order execution benefits as Fidelity does “not take payment for order flow for equity orders” to make certain the price and speed of clients’ equity orders are given priority;
- Low online options prices and options trading and education tools;
- And reduced margin rates for retail clients.
The privately held Fidelity has assets under administration of $5.8 trillion, “including managed assets of $2.2 trillion as of January 31, 2017,” according to officials.
Officials add that the firm’s diverse clients includes more than 26 million people investing their life savings; 23,000 businesses managing employee benefit programs; more than 12,500 financial advisory firms clients receiving investment and technology solutions to help them invest their clients’ money.
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