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Fidelity Sued by Employees, Releases Annual Millionaire Survey

Sept. 17, 2013
Brokers, Investing
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A couple of items from the brokerage and investment management firm Fidelity this week:

  • A class action law-suit is being brought against Fidelity by current and former employees claiming that the company’s own 401(k) was loaded up with expensive, actively-managed mutual funds products. They also argue that the funds made available to them were predominately Fidelity funds, and that this practice represents a conflict of interest. Fidelity, of course, responded by saying that their plan does include a variety of low-cost index fund for the more fee conscious investors.
  • The firm increased  its allocation to both equities and commodities across its multi-asset range of funds. Driving the greater equity exposure was Fidelity’s positive view on earnings growth and more reasonably priced companies. They are less bullish on commodities despite upping their exposure, and commodities are underweighted compared to other risk assets.
  • Fidelity released their 6th annual Millionaire Outlook Survey, and found that Gen X/Y millionaires more readily acknowledge that inheritance may have helped build their fortune, but are also more actively trying to grow their net worth through investing, averaging 30 trades per month. The survey splits their millionaire respondents into two groups, Gen X/Y (age 18-48) and older (49+).
  • Money-market funds may soon be allowed to have floating net asset values, and Fidelity believes the SEC is grossly underestimating the scope of the reform. In a letter to the SEC dated September 6th, the company claims that more than 65% of all money-market assets would be affected by the change, rather than the 30% figure estimated by the SEC. Fidelity projects that implementing all these reforms will cost them around $37 million, and that ultimately the detrimental affects on their shareholders will far outweigh any potential gains from the new pricing rules.


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