“Call the folks in Boston.”
That was the answer you would get when you asked people at Fidelity Investments’ offices in Smithfield about trends in personal finance. For good reason.
Boston was the headquarters of Fidelity Personal Investments, the arm of the mutual fund giant that handles individual investors – as opposed to institutional customers, which is the Smithfield office’s specialty.
But the answer has changed. Providence is now the national headquarters for Fidelity’s personal finance group. In mid-July, the division’s moved into the four-story former American Express building next to the train station. (Fidelity’s corporate headquarters remains in Boston.)
Having the nerve center of Fidelity’s retail arm in Rhode Island brings 325 new workers and a boost to the state’s financial services sector.
“It strengthens our financial services industry, which is one of the stronger and growing clusters in our economy and produces higher paying jobs,” said Saul Kaplan, executive director of the R.I. Economic Development Corporation.
In fact, financial services jobs in the state have grown from 28,300 at the beginning of the year to 29,300 as of June 30, according to the R.I. Department of Labor and Training. Add the new jobs at Fidelity’s Providence office, and financial services account for about 7 percent of private-sector employment in the state.
Fidelity Personal Investments is the retail brokerage arm that sells the company’s investment products via the Web, four investment call centers and 111 retail locations in 45 U.S. markets. (One such location is on the first floor of Providence Place mall on Francis Street.)
The retail unit has about $717 billion in assets under management (Fidelity as a whole has around $1.28 trillion) in about 10.4 million customer accounts, according to the company.
Why move to Rhode Island? Steven P. Akin, president of Fidelity Personal Investments, answered that in his remarks at the Aug. 2 ribbon cutting for the Providence headquarters.
“When Fidelity chooses a city or region to expand its operations,” Akin said, “there are three things we look for: an educated and abundant work force, a great place for our associates [to live and work], and a stable and supportive government. Right now Rhode Island has all of those things.”
The personal finance group’s move to the city brings the total number of Fidelity employees in the state to about 2,000, said John Muggeridge, vice president and general manager of the company’s operations in Smithfield.
Also, the company last year revealed plans to add 1,000 employees in the state by the end of 2008. (It has around 80 open positions in the state right now, Muggeridge noted.) The employees will be housed primarily in a new facility planned for construction at the company’s Smithfield campus.
Plans are to break ground on a third, 275,000-square-foot building on the campus this fall, with a completion date for the $65 million project of late 2008.
The personal investment group will eventually move there. Until then, the unit will operate in the 113,600-square-foot building, for which Fidelity signed a three-year lease early this year.
Fidelity’s desire to expand in the state prompted the General Assembly to pass the Jobs Growth Act of 2005, which provides tax incentives to employers that add at least 100 new jobs with a total payroll of $10 million. The pay must be 125 percent of the average annual compensation for employees in the state, or $46,101 as of last year.
In return, the company’s employees pay state income taxes on only half their “performance-based” compensation, such as bonuses and stock options. To offset the lost revenue to the state, the company must pay a 5-percent tax on the affected compensation.
A Fidelity spokesman said the company would not disclose the average pay of the employees that moved here from Boston, but all the positions meet the salary requirements of the act.
“The advocacy and support we have received from your local government,” Fidelity’s Akin said, “have been demonstrated again and again that Rhode Island is the right place for Fidelity’s growth.”
