- Fidelity Investments
- Bitcoin included in 401(k) plan
- Outside opinion
- Понимание инвестиций в глобальном контексте
Fidelity Investments has included bitcoin investments into its plans. This caused mixed reactions from clients and lawyers alike.
The company was founded in 1946 as a family business. In 2016, the Johnson family was considered the richest in the US, and the company was the 4th richest in the world in terms of investments.
The late great leader of Fidelity Investments turned his family’s Boston-based wealth management firm into one of the largest in the world during a long career. Ned Johnson died on March 23 of this year at the age of 91.
On April 26, just over a month after Johnson’s death, his daughter and heiress, Fidelity CEO Abby Johnson, unveiled controversial plans to include bitcoin in the 401(k) platform he is launching on behalf of thousands of American companies.
The 401(k) is the most common retirement savings account in the United States. Millions of citizens use it to secure their retirement. The company provides a platform and back office for 401(k) and retirement plans. It currently serves 23,000 companies and nearly 40 million plan participants.
The decision to include bitcoin investments was probably months in the making. And Fidelity had been eyeing bitcoin as an investment vehicle long before that.
However, this decision raises the intriguing question of what Ned would have thought of this latest move. In character, he was a classic old Yankee, with a reputation for being a conservative steward of client assets. He was also very concerned about Fidelity’s corporate reputation.
And investing in bitcoin does not create the kind of publicity that is typical of a company. It includes public clashes with senators and the Department of Labor. And it ties the firm to a bankrupt asset that has declined by a third since the announcement.
Senator Dick Durbin of Illinois joined colleagues Tina Smith (Minnesota) and Elizabeth Warren of Fidelity’s home state of Massachusetts in publicly rebuking the stock giant for such investments.
Calling cryptocurrency a “volatile, illiquid and speculative asset” and a “casino,” the three senators want to know why Fidelity, “a trusted name in the retirement industry” and “one of the leading names in the world of finance,” endorsed it in 401(k) plans.
In fact, the letter from the three senators criticizes not just Fidelity, but virtually everyone who has “been involved in the buildup of these cryptocurrencies over the past couple of years… ranging from self-described cryptocurrency investment experts on social media, to highly paid actors and celebrities, and even some Washington lawmakers,” who made cryptocurrency respectable to the public and helped boost bitcoin to about $60,000, they said.
“Some even went so far as to call Bitcoin an ‘inflation hedge’ that would prove a useful investment tool during times of high inflation,” they added.
Senator Smith sent a statement of her own Friday: “I start with the fundamental value that retirement security is extremely important. We only need to look at the Great Recession to see how volatile and risky retirement investments really hurt a lot of people. I think that crypto is often misunderstood and has shown to be pretty unpredictable, and could leave people who invest significant portions of their retirement high and dry. I believe we need to think carefully about whether financial institutions should enable people to bank their retirements on cryptocurrency absent strong regulatory safeguards.”
To which Fidelity responded, “Fidelity remains very interested in digital assets and blockchain. We pride ourselves on the digital asset account as a responsible solution to meet the needs of core interests. In fact, customer interest is not only high, but also spans a wide range of industries and company sizes. We are on track to launch our first sponsored client plan this fall.
We continue our respectful dialogue with policymakers to responsibly provide access with all appropriate consumer protections and educational guidance to plan sponsors as they consider offering this innovative service. Consistent with our ongoing dialogue with regulators and policymakers, we work directly with them.”
Fidelity says bitcoin is the only cryptocurrency it plans to offer in its suite of offerings, and participants will be allowed to convert no more than 20 percent of their funds into the digital currency. Plan sponsors are not required to include a bitcoin offering in their 401(k), and they can impose stricter restrictions.