Status at Westlake unknown
By Beth Healy
Boston Globe staff writer
Fidelity Investments said Monday it will lay off 1,695 employees, or 5.4 percent of its work force, to cut costs in the 30th month of a relentless bear market that is taking a toll on workers and the economy.
New England will lose 1,100 jobs, and Texas will lose 253. Fidelity has a regional center in Westlake that employs 1,100 people. It was unknown whether jobs there would be lost.
Fidelity is the latest in a string of fund firms and Wall Street brokers to eliminate jobs this year as the boom years of the 1990s fade into dim memories. The Boston firm's assets, which determine fees, have tumbled from nearly $1 trillion at the market's peak in early 2000 to $776 billion at the end of August, during a broad market plunge that has ravaged the accounts of investors large and small, including retirement plans.
"With the bursting of the bubble, we are in the process of a significant shrinkage of the financial industry," said Allen Sinai, chief economist at Primark Decision Economics in New York. "We're seeing the manifestation of that in lost jobs -- and we probably haven't seen the end of it."
No portfolio managers or analysts were cut, but employees throughout the rest of Fidelity's ranks, totaling 31,079, were affected. The brokerage division experienced some of the deepest cuts, and the days of brisk stock trading by individual investors appear to have faded for the long term.
"When the markets roared up in the '90s, you built up for those businesses," Fidelity spokeswoman Anne Crowley said. But in the past three years, she noted, "You've had an extraordinary market decline."
The 22 percent drop in assets at Fidelity is not as steep as the overall market dive -- on the order of 73 percent in the technology-heavy Nasdaq index and 24 percent from the Dow Jones industrial average's high -- but it has been dramatic enough to put a dent in the firm's revenue and profits. The privately held firm said in a statement that it was "essential to make adjustments to ensure that the company continues to be positioned well over the long term."
Employees who were alerted Monday that their jobs would be eliminated will work until Friday. They will be paid until year-end and continue to receive paid health benefits until then, Crowley said. The employees will also receive any bonuses that are due them, as well as outplacement services for two months, she said.
Eric Kobren, president of the Fidelity Insight Group, an independent investment research firm in Wellesley, said the layoff was smaller than he had expected, given the depth of the market's drop and rumors of cuts twice as big as those Fidelity announced. "Fidelity does have a habit, over the past 20 years, of not reacting nearly as vociferously as some of the public companies on the Street" to down markets, he said.