Deals & People August 1, 2011

Fidelity Names President of Asset Allocation Division

Fidelity Investments has named Derek L. Young as president of the company’s Asset Allocation Division.
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Young replaces Boyce I. Greer, who was recently promoted from the position to head of Institutional Investments for Fidelity Asset Management and vice chairman of Pyramis Global Advisors.Young will report to Greer.

Young has been with Fidelity for fifteen years, previously serving as chief investment officer of Fidelity’s Global Asset Allocation Group. He also worked as a manager in the Risk Strategy Consulting Practice for KPMG, a senior financial analyst and later a supervisory financial analyst for the Board of Governors of the Federal Reserve, and began his career as a vice president at Empire Financial Services in 1986.

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The Asset Allocation Division holds more than $364 billion in assets, Fidelity reports, and provides a range of investment management services – including global asset allocation research, multi-asset class portfolio construction, third-party manager research, risk management, and financial planning solutions – to help its clients achieve their investment objectives.

“Derek is a proven leader with extensive experience managing investment activities on behalf of retail and institutional clients across multiple asset classes,” said Greer. “[He] will lead a talented team that will continue to focus on providing Fidelity’s institutional, intermediary and retail clients with the innovative multi-asset class and custom solutions they need to help achieve their distinct investment goals.”

In Practice August 1, 2011

DCIO Market at Risk of Losing Ground

While DCIO (Defined Contribution Investment-Only) assets continue to grow at a healthy pace, the industry is entering the early stages of maturity, according to a recently released study from Chatham Partners.
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Accordingly, Chatham said, future winners will have to increase platform distribution efficiencies, improve ROI measurement metrics, elevate brand positioning, and demonstrate product innovation in order ensure ongoing profitability – all discussed in the report, “Strategic Growth Opportunities in a Competitive Marketplace: Effectively Running a DCIO Business.”     

“Our research found that despite healthy asset growth over the past two years, these increases have been largely attributable to market returns – not to net cash flow,” said Luis Fleites, Vice President and study director.  “Upon deeper analysis of the results, we discovered that several operational areas will require greater management scrutiny in future years as the DCIO market begins to mature.  Unless managers develop metrics to closely examine their ROI in areas such as marketing, sales, and compensation, profitability is likely to begin to decline.”  

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Chatham Partners’ research revealed that DCIO managers face challenges in differentiating themselves in the marketplace. Oftentimes, marketing efforts are leveraged through broader organizational resources and the messaging fails to create a unified firm-wide retirement message.  “The problem,” says Fleites, “is that the marketing strategies and approaches being utilized by these firms are not always aligned with this goal.”  

The study surveyed 19 asset managers ranging from $1 billion to over $50 billion in DCIO assets under management, along with several leading DCIO executive recruiters.  The study was designed to provide market and competitive insights and operational and profitability benchmarking into key dynamics of the DCIO market, including:  organizational structure, product, marketing, distribution, and business economics.   

For additional information about this study contact Luis Fleites at (781) 314-0607 or lfleites@chathampartners.net or visit the Chatham Partners Web site at http://www.chathampartners.com.

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