Fidelity Investments has been toppled from its perch as the nation's top distributor and mutual fund provider, according to Cogent Research's rankings.
The company was supplanted by key competitor Vanguard as fund provider, according to the survey, while Charles Schwab bested Fidelity as a distributor. Fidelity finished second in both categories.
The 2010 "Investor Brandscape" report was based on surveys of 4,000 affluent and high-net-worth investors. The rankings are based on Cogent's proprietary "CoRe Score," which compares factors such as brand equity, customer loyalty, market penetration, client mix and "share of wallet."
Fidelity's drop was attributed to lower brand awareness and favorability ratings, Cogent says. Fidelity, however, isn't alone in experiencing lower brand awareness. Industrywide, companies reduced spending on advertising by 20% in 2009, according to Meredith Lloyd Rice, project director at Cogent.
"That had a direct impact on brand awareness among investors," Rice says.
Rounding out the list of the top ten distributors were Morgan Stanley Smith Barney, Edward Jones, Merrill Lynch, Raymond James, UBS, Vanguard, Wells Fargo Advisors/Wachovia Securities and Ameriprise.
A big reason for Fidelity's decline in the mutual fund provider category is that survey respondents failed to rank it among the top five mutual fund companies in performance, which is key to brand loyalty, according to Cogent.
Declining participation in 401(k) plans was another problem for Fidelity. For the first time since Cogent began conducting its survey in 2006, it found more dollars were allocated to IRAs than to 401(k)s. "It would appear that Fidelity is caught in a perfect storm comprised of an aging population, higher unemployment and lower across-the-board plan participation," Rice says.
The other mutual fund companies on the top ten list were American Funds, T. Rowe Price, TIAA-CREF, Franklin Templeton, Fidelity Advisor Funds, Oakmark, Morgan Stanley Investment Advisor Funds and Schwab/Laudus Funds.
Despite its recent stumble in the survey, Fidelity is still in a strong position, according to Cogent. "Fidelity is a powerful brand," says John Meunier, a principal at Cogent. "It's probably better positioned than any other company in the industry to make the appropriate course corrections."