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Monday, September 30, 2002

Fidelity Employees Take a Hit

by: Ki Kim

Fidelity Investments has announced that it will reduce its workforce by 1,695 positions, or about 5.4 percent, to trim costs. A company spokesman said the cuts affect support personnel to senior vice president-level employees across the company.

However, he confirmed that no portfolio managers or analysts at its asset management arm will be laid off, while institutional retirement services will be impacted. Employees most "directly exposed to the financial markets" were the most vulnerable, according to the company representative.

The cuts in headcount will also be geographically dispersed, according to a report carried by ABC News. Fidelity's home state of Massachusetts will lose 870 jobs. Those cuts will hit both Fidelity's Boston headquarters and its Marlborough office. The latter office is the site of Fidelity Institutional Retirement Services Company's (Firsco) main office.

Approximately 250 jobs will be eliminated in Texas; 140 in New Hampshire; 150 at facilities in Covington, Kentucky and Cincinnati, Ohio; 100 in Salt Lake City; 85 in Smithfield, R.I.; and about 80 in New York, according to the news report.

The affected employees will have access to "generous (severance) packages," and outplacement services, the Fidelity spokesman said, adding that they will stay on the payroll until year-end. October 4 is to be the last day for those laid off this time around. Fidelity last cut some 760 workers, or two percent of its workforce then, at about this time last year.

The Boston Behemoth said in its press release that market conditions of the last three years amid an overall deterioration in the economy has placed more operational pressure on all financial services companies.

The spokeman noted that Fidelity was not hit as hard as other financial services firms, as the firm derives more than half of its revenues from non-management fee businesses.

The firm, which is privately-held, points out in its release that although it has added hundreds of thousands of new customers and improved its relative fund performance, it is "essential to make adjustments to ensure that the company continues to be positioned well over the long-term."

As of August 31, Fidelity Investments' custodied assets amounted to $1.4 trillion, including managed assets valued at $776 billion.  

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