Fidelity Investments Management (Hong Kong) targets big companies for its MPF service and is in profit after two years of operations, according to managing director Douglas Naismith. 'Our record-keeping and administration is done by third parties. With the scale of the business we have today, I am pretty confident we made the right decision to outsource that to partners. It enables us to concentrate on investment, education and communications, which is what we are good at,' he says. 'If we had 50 per cent market share, we might want to do it all ourselves, but given our target, large companies, we are very happy with the relationships we have. Clearly on a weekly and monthly basis we have service-level agreements to make sure that it is a partnership, but it is also a commercial relationship.' Mr Naismith estimates Fidelity has about 6 per cent of the MPF market. The company's typical MPF client is a company with at least 100 employees. In the United States, Fidelity is the biggest provider of individual retirement account 401k business. It remains a major player in Hong Kong's Occupational Retirement Scheme Ordinance (Orso) market - which predates the MPF. Some of the Orso schemes it set up have been allowed to co-exist with the MPF, depending on the level of benefits offered. 'We are the largest provider in member choice services to the Orso market, which is almost the exact parallel of MPF,' Mr Naismith says. 'We have a unified platform for service, offering essentially the same type of choices for members: Internet services, phone services, an integrated product range. We have many customers who use both interchangeably. They use the MPF [system] for compulsory contributions and they use the top-up system for voluntary contributions.' Mr Naismith says Fidelity's administration system has been tried and tested by the many retrenchments in Hong Kong since the MPF scheme began. 'Over the past 18 months there have been a lot of changes within companies. 'There have been a lot of terminations, preserved accounts being created and suchlike. We have come through that very well.' As with other big MPF providers, Fidelity has experienced little switching of employer MPF funds between providers, typically held in master trust structures. Although switching providers is reasonably simple, companies seem to be giving their providers and the underlying fund managers plenty of time to prove themselves. However, Mr Naismith says scheme reviews in the next two years are likely to lead to some switching after fund managers have built up three-year track records. Investment performance, the main concern of individual members, would not be the employers' only concern, he says. 'If performance is relatively poor, the provider will be at risk. But it is administration which affects a company most. Companies will examine whether that has been smooth in terms of bringing in and termination of members and processing monthly contributions.' 'We have many providers in the market place and there was certainly a lot of inexperience in this service back in 2000. Providers have improved, but we would hope when people review their administration, they might say: 'We want to move to a company like Fidelity.' We hope the quality of the educational work and the peripheral stuff such as phone and Internet services will also be part of that decision-making process.' Next year, Fidelity plans to gear up its customer satisfaction and marketing plans - visiting clients to check their needs are being met and re-examining its own business to see where improvements can be made. 'We want to make sure people feel they have a good deal with us,' Mr Naismith says. Despite poor investment returns from all MPF fund managers with a high equity exposure, member disappointment has not boiled over to any great extent, certainly not to the point of pressuring employers to switch providers. Mr Naismith suggests this is possibly because of the compulsory nature of MPF and the fact that MPF money is inaccessible until age 65. 'Our job is to make sure they understand the short-term trade-off against the long-term.'