Fidelity Investments' plan to hire 12,000 by October hit wall of macro-headwinds; no problem, it landed at 15,000; Schwab keeps hiring, too

Fidelity Investments has already hired 14,800 new staff in 2022, putting it ahead of schedule for the year, in part, by fishing in a larger talent pool and sweetening perks to attract high school grads.

Fidelity's torrid hiring reflects its timely service mix, says Charles "Chip" Roame, managing partner of Tiburon Strategic Advisors in Tiburon, Calif. 

"Fidelity is in the right business of discount brokerage, RIA custody and DC plans, three of the broader industry's growth engines," he says. 

The Boston giant surpassed its projection of 12,000 hires this month and expects to finish 2022 with as many as 68,000 employees, including a loss of about 5,600 employees through attrition.

That attrition also accounts for the 2,000 people it paid to leave the company in 2021. See: Fidelity Investments is paying 2,000 employees to hasten their corporate exits, including high-profile RIA overseer, Sanjiv Mirchandani, as part of its shift to a digital future

The overall figure is up about 19% from the start of 2021 and up 38% since the hiring frenzy began at the end of 2020. 

Crypto hiring

Fidelity originally set out to hire 16,000 for 2022 and has raised its target to 16,600. See: Fidelity's strategy to own the financial advice business by owning 'a crazy lot of people' is heading for 28,000 hires in two years

As of Oct. 24, the company has hired 9,287 for client-facing posts, 2,790 in technology jobs and 2,723 non-client-facing business support workers, the company says.  

Fidelity also expects to hire an additional 100 in the next three- to six-months for its crypto programs in Fidelity Digital Assets. See: Fidelity--late to its own Ethereum party--hires 110 engineers to hurry up launch; it may have avoided both had it not made a 'strange strategic decision,' analyst says

Those business lines reinforce each other, according to Fidelity.

“We are privately held and have an unmatched combination of diversified—yet interconnected and interdependent—businesses, [hence] Fidelity can continuously reinvest in our business,” a spokesman says.

Fidelity isn't offering any overall projections for next year, yet.

Assimilation risks

Though Fidelity faces tremendous competition for talent in the tight labor market, absorbing all those new hires effectively is another matter.

“Fidelity does not need to compare its hiring plans to those of other firms, so I would disregard that.  

"But it does need to assimilate these employees; difficulty in assimilating (if it ever comes) would be the reason to slow down hiring,” Roame says. 

Right now, about 25% of the jobs hired are technologists. The company created its Launch Career Development to help with assimilation. 

Hiring so many people who need so much training and education amid recession predictions and talent shortages makes kind of contrarian sense, according to Roame.  

“It is a risk, but I bet it is a calculated risk,” he says. ”To hire at these levels, Fidelity needs a pitch to win talent. The industry has a war for talent. This is an innovative way to win." 

Sweetening perks

In its effort to enlarge its pool of applicants, Fidelity had already lowered requirements and raised its perks package.

Prospects without college degrees are being offered full-reimbursement toward a bachelor's degree. 

Employees can choose from 190 college programs at more than 30 schools. 

They won't have to pay for books, or class costs and will get support with educational coaching and assistance while balancing work, school and life, Fidelity says in a statement.

Paying for college pays off for Fidelity in two ways on a longer term horizon, says James Lowell, chief investment officer of Adviser Investments, an RIA with more than $8 billion in AUA, based in Newton, Mass.

“Fidelity is delivering the best of both worlds while simultaneously increasing the return on its investment by means of securing a more and better-educated workforce. 

"Another step towards outpacing any and all competition and a smart money move from my perspective," he says. 

The company will pay for a two-year or four-year degree for up to 18,000 staffers who are eligible for the benefit. The company is making the program available to its entry-level phone associates who likely have zero to three years of professional experience. 

The benefit is also being used to attract talent to the firm's customer service roles, which is an area that Fidelity has increased by 127% in the past three years, a Fidelity spokeswoman says. 

Call center turnover

Fidelity caught hiring fever about 13 months ago and hired a staggering 9,000 employees in the fourth quarter of 2021. See: Fidelity Investments pulls out stops on perks to raise headcount by 7,000 -- by hiring 9,000 -- to shrug off labor shortages, escalating wages and call center attrition

At year-end 2021, Fidelity’s headcount was 57,000, a 16% increase from its headcount of 49,000 at the end of 2020. Fidelity 

Fidelity started 2021 with 49,000 and hired 16,000 but, with attrition, ended last year with 57,000 - meaning the firm lost about 8,000 or 14% of its total headcount to attrition, which Fidelity describes as “typical.”  

Fidelity is not immune to high call center turnover. On average, U.S. call centers turned over 30% to 45% of their employees in 2019, according to the Quality Assurance and Training Connection.

The college degree program is aimed at those in the call center, a Fidelity spokesperson explains. 

In the game

The Charles Schwab Corp. is also hiring, though more modestly. Its sights are fixed on merging with TD Ameritrade (TDA). 

Schwab is at 35,200 staff, up about 9% from a year ago when it was at 32,400 – with plans to hire aggressively through next year, says spokesman Peter Greenley.

 "We expect to add staff for client service, technology, risk management, select strategic initiatives and the successful integration of Ameritrade. 

“As a result, through 2023, we still plan to hire thousands of new employees.”

The Westlake, Texas, broker-dealer crash hired around 200 TDA service staff last December to handle an upsurge in demand that was putting pressure on service levels.  See: Charles Schwab Corp. is crash-hiring TD Ameritrade Institutional staff-- amid wild growth-- to quell RIA service howls, but cautions to hold off custody switch to Schwab to avoid repapering

Schwab's RIA custody and discount brokerage engines are also industry leaders though it has a far smaller 401(k) business.

The company's stock (SCHW) continued a strong advance from earlier in the week, closing today at $80.19 up $2.86, or 3.7%. See: Schwab shares surge 6% after it hardens TD Ameritrade merger date and affirms its $1.8-billion-plus in synergies, though it got burned by having engineers in the wrong place at the wrong time

Mixed signals

The uptempo onboarding comes amid news that other large national firms are freezing hiring or even laying off staff – both in, and out of, the RIA business, 

Domestic employers announced nearly 30,000 job cuts last month, which is a 68% increase from the year earlier, according to USAToday. 

Even so, the economy is showing signs of life. 

Third quarter gross domestic product increased 0.6% for an annualized growth rate of 2.6%. The gain cooled talk of a recession at least in the short term. 

Overall, domestic hiring also remains robust. Employers added 263,000 jobs in September, and the unemployment rate dipped slightly from 3.7% to 3.5%, according to government statistics. 

Stocks rallied in today's trading (Oct. 28), even as Treasury yields climbed back above 4%.

The S&P 500 (^GSPC) posted a 2.5% gain, while The Dow Jones Industrial Average (^DJI), a basket of 30 stocks, jumped 800 points to close up 2.6%, a two-month high. 

The tech-heavy Nasdaq Composite (^IXI) index rose 2.9%.