Company stock plans may be problematic for fiduciaries, but the stock plan services business is apparently thriving for Fidelity Investments.
Fidelity on Tuesday said that sales for its stock plan administrative services hit a record in the first half of 2014.
The company added 26 new client agreements as of June 30; that added more than 80,000 new employees and $7 billion to the company's stock plan services business, now totaling $112 billion in plan value for 280 employers. The company has had three straight years of record sales for that segment of its business.
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Fidelity said that, according to a recent benchmarking study from corporate research and consulting firm Group Five, it received a 94 percent satisfaction rating — 11 points higher than the industry average — and topped the category for the fourth straight year.
In addition, Fidelity was rated as the top provider in several categories, including providing support to employees outside of the U.S. and leveraging "dashboard" technology to help companies analyze and report plan data.
According to recent Fidelity research, a stock plan can be a valuable tool in an employer's recruitment/retention strategy. The plans are popular with employees, according to the research.
Forty percent of respondents to a Fidelity survey indicated that a company stock plan is a "must have" factor in deciding whether to switch employers, and that 37 percent indicated having to give up their stock plan would make it harder for them to decide to leave a current job.
However, stock plans are not without risk — particularly, these days, for fiduciaries, in the wake of the Supreme Court's decision in Fifth Third Bancorp v. Dudenhoeffer. The decision stripped away the "presumption of prudence" that had been granted to fiduciaries since the 1995 case Moench v. Robertson, and made it possible for fiduciaries to be challenged on the wisdom of retaining company stock in an ESOP if that company is in trouble.
One court decision has already been sent back for another look. In re Lehman ERISA Litigation, 2nd U.S. Circuit Court of Appeals, No. 11-4232 has been sent back to the judge for another review of fiduciary behavior in light of the Fifth Third decision.
Read: Lehman retirement case back for another look
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