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Categorized | Financial

Abigail Johnson succeeds father as Fidelity chairman


Posted on November 21, 2016

Fidelity chairman Ned Johnson, who has run the Boston-based financial group for the past 39 years, is turning over his last remaining responsibilities to his daughter, Abigail, putting her in full control of the family-owned company.

Ms Johnson will add the title of chairman to that of chief executive, which she took in 2014 when she assumed responsibility for day-to-day operations.

Her accession, announced in a memo to staff on Monday, comes as Fidelity faces an increasingly competitive landscape for retirement savings and continuing challenges in its historic asset management division.

The company oversees $5.5tn through retirement plans and brokerage accounts and, in the case of $2.1tn, in Fidelity’s own investment products such as mutual funds.

“While we have enjoyed much success, evolving customer preferences and new regulatory requirements are transforming the investment management industry,” Mr Johnson wrote in the memo, a copy of which was seen by the Financial Times.

“However, we are prepared to seize the opportunities in this changing competitive landscape … This expansion of responsibilities is a natural progression of Abby’s 28-year career at Fidelity, in which she has taken on increasingly more challenging and complex roles.”

Mr Johnson’s retirement as chairman is the final act in a long and carefully choreographed transfer of power. Ms Johnson began her career as an equity research analyst at the company and worked her way up through a series of executive roles including head of the asset management division and chair of its international operations.

“Abby has been running the place for many years, but this is the end of an era, as significant as Jack Bogle stepping down from Vanguard,” said Jim Lowell, editor of the independent newsletter Fidelity Investor.

Under Mr Johnson, whose father founded Fidelity in 1949, the company popularised the use of mutual funds by retail investors, particularly those run by star investment managers. In later years he expanded the company into running brokerage accounts that could include other companies’ investment products, and then into retirement plans.

Ms Johnson, meanwhile, has stepped up investments in technology and focused on building relationships with advisers and consultants — investments that last year crimped operating profits, which fell to $3.2bn from $3.4bn in 2014.

The company was able to boast a return to inflows at its asset management business in 2015, but its lucrative actively managed funds continue to lose market share to lower-cost passive investment vehicles.

Fidelity, the largest administrator of retirement savings plans in the US, argued against the Obama administration’s “fiduciary rule” that sets out how retirement advisers must prioritise a customer’s best interests. The future of the rule has been thrown into doubt by the election of Donald Trump, whose advisers the measure should be delayed and modified or scrapped.