Fidelity Wins Retirement Plan Contract

After a two-year search that yielded only two viable candidates, the U.S. Chamber of Commerce announced Thursday that it chose Fidelity Investments to offer retirement plans to its 215,000 small-business members, which employ about 24 million workers.

“We talked to about 50 insurers, mutual funds and brokerage houses,” said Lawrence Kraus, senior vice president of the Chamber of Commerce. “Initially we couldn’t interest anyone because the cost of administration was too high.” Even Fidelity wasn’t so enthusiastic at first, he said.

In the end, “Fidelity came up with the best package--low cost and easy to administer and implement,” said Kraus, who declined to name the other finalist.

A 401(k) plan will provide eight fund choices, including Fidelity Growth & Income, Fidelity Puritan, Fidelity Blue Chip Growth and Fidelity Contrafund.

For Fidelity, the venture is a way to build a business it began emphasizing in January 1991, when it formed a unit dedicated to providing retirement plans for firms with 1,000 or fewer employees.

Fidelity already has about 5,000 small businesses as clients, accounting for $13.7 billion in assets, said Raymond Marcinowski, senior vice president of Fidelity Institutional Retirement Services Co. That’s about 12% of the $111.4 billion it manages in defined contribution plans.

Marcinowski said the program with the Chamber of Commerce had already generated about 2,000 calls from its members by Thursday.

Analysts said they aren’t too surprised that there were so few takers for the chamber’s business.

For one, small companies don’t add much to assets under management, where companies generally make most of their fees.