Small companies that need help managing their company stock plans have a new option through Fidelity.
Fidelity Investments recently launched a partial administration service for stock plans, designed for companies that want to manage their stock plan records in-house but team with an external administrator for employee servicing, guidance and brokerage services.
Nearly 350 employers already use Fidelity’s full administrative support option for their company stock plans, which includes recordkeeping, account administration and employee plan access.
Also see: “Plan sponsors focused on investment costs.”
“Fidelity obviously has a strong history with employee benefits outsourcing. We entered this business because we thought it was important to provide a comprehensive, integrative look at compensation,” says Emily Cervino, vice president for Fidelity’s stock plan services.
What that means is that Fidelity has one online location where participants in a company stock plan can go and see all of their benefits in one place, including 401(k) balances, health spending accounts and employee stock purchase plans. In the past, this benefit was only offered to companies that participated in Fidelity’s full administrative support option.
Its partial administration option focuses on employee support and brokerage services, including collecting employee elections, helping manage plan activities by providing alerts and notifications and providing stock plan education.
“For companies who manage in-house, we bring a robust experience to those employees. They can access Fidelity’s employee benefits portal to see stock information and an integrative view if they have a 401(k) or other benefits programs with Fidelity,” she says.
Companies of all sizes have stock plans, particularly in the technology sector, says Cervino.
“They rely on stock compensation to achieve their objectives. For a pre-IPO company, stock compensation allows them to compensate employees without a drain on their cash resources and gives them true economic alignment with the objectives of the company,” she explains. “The nature of the plans change, the vehicles they use and the equity products they use will change as the company grows in size.”
Also see: “Managed account adoption rates low.”
Only publicly traded companies seem to have company stock purchase plans, but “we see all sorts of equity compensation on the small end of the scale,” she says.
More and more companies are interested in offering company stock plans to their employees, according to Cervino.
“It is a tough talent market these days, especially in the tech sector where they have very aggressive recruiting and companies are really looking to find and keep key employees,” she says.
Paula Aven Gladych is a freelance writer based in Denver.
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