Advisers who use the custodian platform of Fidelity Investments say they're unperturbed by the ascension of Abigail Johnson to the position of Fidelity Investments' chief executive — because they view the new CEO as one of their own.
“She's been far more accessible to advisers than her father or other senior managers have ever been,” said Jim Lowell, chief investment officer for fee-only advisory firm Adviser Investments and editor-in-chief of the independent newsletters Fidelity Investor and Fidelity Sector Investor.
In an internal company memo sent to employees, Ms. Johnson's father, Edward “Ned” Johnson III, announced Monday that his daughter agreed to become CEO, “reflecting a further step forward in our leadership succession plan.” She retains her role of president and he will continue to serve as chairman of the board at the privately owned, family-run company.
Ms. Johnson regularly attends Fidelity's annual conferences for advisers, and she doesn't just give a speech and then leave, said Mr. Lowell, whose advisory firm holds $3 billion in custody on Fidelity Institutional's platform. The Fidelity Institutional clearing and custody businesses have more than $1.3 trillion in assets under administration and serve more than 3,500 clients and 4.5 million accounts, according to the company website.
“At least once a year, she speaks directly with advisers, stays at the event and talks to them,” Mr. Lowell said. “Personally, she's accessible. And she has built a world-class technology backbone to Fidelity's financial conglomerate platform.”
Ms. Johnson's corporate biography states that she joined the firm full time in 1988, when she was 27, and became president in September 2013, overseeing Fidelity's retail, workplace and institutional businesses. She began her Fidelity career as an equity research analyst, and was president of the company's asset management division from 2001 to 2005. During her time in the division, she managed a number of Fidelity mutual funds and oversaw the design and implementation of technology initiatives for research, trading, portfolio construction and management.
Russ Thornton, a vice president at Wealthcare Capital Management with an advisory practice that serves divorced women, uses Fidelity's custodial platform and doesn't expect to make any changes — other than to use Ms. Johnson's name as a selling point.
“My practice serves women, and the fact that Abby is a woman is a good point to mention to my clients,” he said.
Otherwise, “it doesn't really change my opinion and make Fidelity any more or less appealing,” Mr. Thornton said. “Years ago, when I chose Fidelity, it really appealed to me because it was a privately owned family business, and it looks like it will continue to be.”
Gail Graham, chief marketing officer of
United Capital Financial Advisers, who left Fidelity two years ago after serving as executive vice president of the Institutional Wealth Services custody platform, said she has met Ms. Johnson and seen her at adviser conferences.
“Abby understands the importance of the adviser channel in the marketplace and to Fidelity as a business,” Ms. Graham said. “She's a person who spends a lot of time with clients, including advisers who custody with Fidelity, to understand their businesses.”
Vincent Loporchio, a Fidelity spokesman, wrote in an e-mail that Ms. Johnson has been building the team around her for a couple of years now, while executing a strategy to improve the client experience and diversify the business.
“There will be no change to the plans already in progress,” he wrote.
In the future, however, Ms. Johnson will face the huge challenge of stemming fund flows away from the company.
“She is aware that Fidelity's core mutual fund business continues to suffer the slings and arrows of assumptions about the strength of passive versus active investing. That plays out visibly in terms of fund flows,” Mr. Lowell said.
Fidelity has struggled to stop outflows from actively managed mutual funds as those outflows have gone into passively managed exchange-traded funds, he said.
Ms. Johnson's best bet may be the actively managed ETF market, so it's no surprise Fidelity is now in the business of
launching funds in that space, Mr. Lowell said.
“Fidelity may have the last laugh,” he said. “Nobody owns the actively managed ETF space, and I think you're going to see fidelity move into that space thanks to her leadership.”
But John Bonnanzio, editor of “Fidelity Monitor and Insight,” an investment advisory newsletter that provides investment advice on Fidelity funds, said he doesn't anticipate any changes to the company's core and mission.
“This is a matter of Abby consolidating her responsibilities toward the ultimate end of assuming the chair once her father steps down. It's not particularly sexy, but I see it as business as usual,” Mr. Bonnanzio said.
He added that the Boston-based family business is now in its third generation, and that Ms. Johnson will carry on in her father's footsteps.
“Ultimately, the company is a reflection of what Ned Johnson wants it to be,” he said. “They don't have a big public profile, even as a big employer in Boston. It speaks to their Boston Brahmin attitude. It's very much in keeping with that. The family has roots in Massachusetts that go back to the Mayflower.”
