Fidelity cuts 1,300 jobs, more cuts to come

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Fidelity cuts 1,300 jobs, more cuts to come

Postby djw » Thu Nov 06, 2008 5:09 pm

Fidelity Investments, the world's largest mutual fund company, to cut 1,300 jobs now, and more later.

http://money.cnn.com/2008/11/06/news/co ... tm?cnn=yes

NEW YORK (CNNMoney.com) -- Fidelity Investments, the largest U.S.-based mutual fund company, is the latest to announce layoffs, which it blames on the economic crisis.

Fidelity said on Thursday that it would cut 2.9% of its 44,400-employee work force, which translates to about 1,300 lost jobs.

"We are trying to implement these cuts in a thoughtful and measured way," said Fidelity spokeswoman Anne Crowley, noting that many of the cuts would be management positions. "The de-layering of management, we believe, will help."

Fidelity is privately-held and based in Boston. Crowley said the cuts would be spread evenly throughout its U.S. locations. She said the company is still hiring in the customer services area.

The firm said another round of layoffs would occur in the first quarter of 2009. The company did not specify the number for the second round of cuts, but Crowley said it would be less than the 2,500 cuts that were projected in recent media reports.
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Fidelity Job Cuts

Postby giacolet » Thu Nov 06, 2008 5:24 pm

Similar but more detailed account:

Fidelity to cut nearly 1,300 jobs
Thursday November 6, 2:56 pm ET
By Mark Jewell, AP Business Writer
Fidelity Investments to cut nearly 1,300 jobs; second round of unspecified cuts coming


BOSTON (AP) -- Fidelity Investments said Thursday it will cut nearly 1,300 jobs this month, and more layoffs are coming early next year in response to declining markets that have eroded mutual fund assets, along with the fees Fidelity earns from its core business.
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Layoff notices will go out later this month to about 2.9 percent of Fidelity's overall work force of 44,400. The cuts will be spread across the company's far-flung U.S. operations, affecting management positions as well as lower-level jobs, said Anne Crowley, a spokeswoman for Boston-based, privately held Fidelity.

A second rounds of layoffs is planned in the first three months of next year, with the number of those cuts and other details to be released in coming weeks.

Crowley declined to offer specifics, but said both rounds of cuts will cumulatively affect fewer than 4,000 jobs -- a figure that had circulated recently in media accounts.

In a letter distributed to Fidelity employees Thursday, Fidelity President Rodger Lawson said recent market volatility has hurt company revenue and "has led me to conclude that many of the cost improvement plans which would have been phased in by our business units over the next three years need to be accelerated."

Crowley said the cuts are being made "based on decisions by individual business leaders on what their needs are. Most of them are doing some layoffs in their divisions."

In addition to its Massachusetts operations in Boston and Marlborough, Fidelity has significant operations in Florida, Kentucky, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Texas and Utah.

The first round of cuts will be roughly proportionate at those locations, or around 2.9 percent, Crowley said.

The cuts are in addition to reductions totaling about 800 jobs in two rounds earlier this year after Fidelity reorganized some business units. Those reductions came largely in Fidelity's personal and workplace investing operations that oversee other companies' pensions and 401(k) plans.

Reeling markets made Fidelity's more than 400 mutual funds targets for jobs cuts as well. According to Financial Research Corp., assets at Fidelity's funds had lost nearly 23 percent of their value through October of this year, to nearly $717 billion. The total excludes money-market funds, an area in which Fidelity is the industry leader based on more than $400 billion in assets. Overall, Fidelity managed $1.4 trillion as of Sept. 30.

"All of our mutual fund competitors are experiencing the same type of declines," Crowley said. "We have a strength many of our competitors don't have: We have a huge money-market operation, and those funds have been attracting new customers and new assets over the last several months."

But money-market funds don't generate as much fee revenue as mutual funds, and the FRC data show this year's drop in mutual fund assets at Fidelity has been steeper than at rivals Vanguard Group and Capital Group's American Funds.

"Fidelity's business model is based on assets under management, and the fees they generate," said Jim Lowell, a former Fidelity employee who runs the independent newsletter Fidelity Investor.

Fidelity has sought to diversify beyond its core mutual funds in recent years, moving into areas such as individual retirement planning and employee benefit management.

With market turmoil reducing money-management profit opportunities, Fidelity "could gain market share on a competitor like Vanguard that's less diversified, and relies heavily on index funds," Lowell said.

Fidelity shed about 7 percent of its jobs after technology stocks tanked early this decade, Lowell said. But within a couple years, Fidelity returned to the employment level it had before the tech bubble burst, and eventually surpassed it, largely because of the success of diversification, Lowell said.

Lawson was brought on board at Fidelity in the summer of 2007 in part to cut expenses, and last fall distributed a memo informing employees that he intended to aggressively control costs.

With Lawson's hiring, Fidelity "was already on a course to trim some significant overgrowth," Lowell said. "So these cuts today were already on the table even before the cataclysmic events in the market took place recently."
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Postby chaz » Thu Nov 06, 2008 5:27 pm

There goes some customer service at Fido.
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Postby 4th&Goal » Thu Nov 06, 2008 7:51 pm

chaz wrote:There goes some customer service at Fido.

chaz,
You must have missed this in the OP:
Fidelity is privately-held and based in Boston. Crowley said the cuts would be spread evenly throughout its U.S. locations. She said the company is still hiring in the customer services area.
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Postby chaz » Thu Nov 06, 2008 7:57 pm

4th&Goal wrote:
chaz wrote:There goes some customer service at Fido.

chaz,
You must have missed this in the OP:
Fidelity is privately-held and based in Boston. Crowley said the cuts would be spread evenly throughout its U.S. locations. She said the company is still hiring in the customer services area.


Companies get rid of highly paid workers and replace them with entry level people. That is the way business operates, including customer services workers. So I take with a grain of salt what Crowley said.
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Postby cajj » Thu Nov 06, 2008 8:59 pm

One customer service representative told me they were hiring in Cincinnati, OH.
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Postby 4th&Goal » Thu Nov 06, 2008 11:02 pm

chaz wrote:
Companies get rid of highly paid workers and replace them with entry level people. That is the way business operates, including customer services workers. So I take with a grain of salt what Crowley said.

I have accounts at Vanguard and Fidelity. Fidelity will have to lose many customer service people before they sink to the level of Vanguard customer service.
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Postby riskreward » Fri Nov 07, 2008 6:52 am

The entire financial services industry will be shedding hundreds of thousands of jobs in the next few years. You will be seeing news blurbs like this until you are ready to puke.
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Postby nisiprius » Fri Nov 07, 2008 8:08 am

4th&Goal wrote:I have accounts at Vanguard and Fidelity. Fidelity will have to lose many customer service people before they sink to the level of Vanguard customer service.
That has not been my experience. My experience is that both organizations are excellent but by no means perfect. My most recent glitch happened to be with Fidelity.

I'm over 59-1/2. So periodically I roll over whatever has accumulated into my Fidelity rollover IRA. A few weeks ago I called Fidelity's 401(k) department to perform such a rollover. Got that? Transfer in kind from a Fidelity 401(k) to a Fidelity rollover IRA.

Three days later it hadn't happened. I called, they said they'd checked and it was in process, it sometimes took that long. Three days later, still hadn't happened, called again, same story. Two-and-a-half weeks later, still nothing.

The story was that when I placed the request, I had just said "my Fidelity rollover IRA." I never volunteered a specific account number and the representative had never asked for it. I have a taxable account, a rollover IRA, and a Roth at Fidelity, but there shouldn't have been any ambiguity--I only have one rollover IRA there, all accounts are at Fidelity and show up together online, and they share the identical name, address, Social Security number etc.

But that sent things into some kind of limbo in which the 401(k) department kept seeing that the transfer had been "approved" but the IRA department never executed it because it was lacking an account number.

Obviously, Fidelity should have either a) figured out that my recorded directions to transfer to "my Fidelity rollover IRA" were unambiguous, or b) called or emailed me to ask.

Am I angry at Fidelity? No. Is their customer service as good as L. L. Bean's? No.
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Postby tfb » Fri Nov 07, 2008 11:19 am

nisiprius wrote:
4th&Goal wrote:I have accounts at Vanguard and Fidelity. Fidelity will have to lose many customer service people before they sink to the level of Vanguard customer service.
That has not been my experience. My experience is that both organizations are excellent but by no means perfect.

Just try calling Vanguard at night or on a Sunday and see what happens. Or send both organizations an e-mail and see how soon you get a reply (a real one, not just an auto-responder). There is a big difference in the number of customer service reps, which is the subject of this thread.
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Fidelity Job Cuts

Postby giacolet » Fri Nov 07, 2008 11:44 am

tfb wrote:

There is a big difference in the number of customer service reps, which is the subject of this thread.
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Fidelity doesn't have a spokesman who always quotes Benjamin Franklin on the subject of thrift, obviously an engrained Vanguard operating principle.

Vanguard operates economically and Fidelity rolls in the dough with trillions in their money market accounts. Good for them.

Fidelity gets the hot turnover accounts; Vanguard wants the long term money.
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Postby Bounca » Fri Nov 07, 2008 12:04 pm

This is silly.

Thread is turning into a Ford versus Chevy debate. :roll:
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Fidelity Job Cuts

Postby giacolet » Fri Nov 07, 2008 4:17 pm

Silly?

You think 1,300 people losing their jobs is "Silly"?

This is critical. New headline:

GM, Ford losses worse than expected, burning cash.

Vanguard and Fidelity each pursue a different marketing strategy to keep their diversified businesses afloat.


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