MutualFundWire.com: A 401k IPO Enriches a Fidelity Alum

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Friday, March 19, 2010

A 401k IPO Enriches a Fidelity Alum

Below are quick takes on stories that originally appeared on The MFWire's sister publication, The 401kWire. This column is aimed at keeping mutual fund industry insiders updated on what's happening in the 401(k) industry.

Former Fidelity institutional brokerage chief Larry Raffone is now very rich, thanks to a 401(k) IPO. Defined contribution advice company Financial Engines, where Raffone is executive vice president of sales and client services, on Tuesday opened trading at $14.90, 20 percent above its initial offering of $9-$11. On the first day of trading, the stock closed at $17.25 per share, 40 percent higher than the IPO, and had an astounding market-cap of more than $680 million. The shares reached a high of $18.10 on Thursday afternoon, and it's the only IPO this year to close above its opening price.

Larry Raffone
Financial Engines

Raffone left Fidelity to join the start-up ten years ago, right before the dot-com bubble burst. He stayed with the company as it built out its managed accounts service. The company had a net loss of $7.9 million in 2006, $1.8 million in 2007 and $3.6 million in 2008 before recording a profit of $1.68 million for the first nine months of 2009. Raffone's patience has paid off, as he owns 1.6 million shares, now worth roughly $20 million.

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The Department of Labor just submitted its "interim final" 401(k) fee disclosure regulations to the Office of Management and Budget. Watch for the OMB to finish with the regs as early as May.

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Kristi Mitchem, the head of BlackRock's institutional 401(k) efforts, left to take a post at State Street. Mitchem took over BlackRock's defined contribution industry efforts after BlackRock bought Barclays Global Investors last year. In 2007 Mitchem spearheaded the launch of BGI' SponsorMatch product for large 401(k) plans, yet as recently as March 1 the product reportedly had no clients.

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Paychex, a giant payroll provider that also works with more than 50,000 401(k) plans, confirmed that it now has the ability to work with fee-only 401(k) advisors. The Rochester, New York-based provider has traditionally focused on the smallest 401(k) plans and previously sold only direct or through commission-based brokers.

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401(k) consultants and investment-only managers (including Mercer, MetLife, Pimco and UBS Global Asset Management) have created the Defined Contribution Institutional Investment Association (DCIIA). Pimco's Stacy Schaus serves as chair of the new group and Mercer's Toni Brown serves as vice chair.

Printed from: MFWire.com/story.asp?s=31709

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