Chairman and CEO, Fidelity Investments
Fidelity Investments may not have been the first asset manager to roll out low-cost index funds but, in August 2018, it became the first to introduce index funds with zero fees and no minimums.
The move rattled the stock prices of its rivals and drew attention from analysts, who describe Fidelity Chairman and Chief Executive Abigail Johnson as getting more aggressive after falling behind in the index-fund war.
“I like to think that we’ve caught up now,” Johnson said in a rare interview, in November 2018, with Bloomberg Markets.
The new funds may not be highly profitable for Fidelity, which manages about $2.8 trillion in assets. But that’s not the point. The funds will help introduce the company to younger investors who favor simple and affordable options.
“We need to find other ways to get people to give us a try,” Johnson said. “Having a no-minimum, no-fee offering seemed like a pretty good way to get people to consider us with the minimal amount of friction possible.”
Johnson has made other changes, including automatically sweeping cash in new brokerage and retirement accounts into a money market fund that, when Fidelity publicized the change in August, had a yield of up to 1.91%. One analyst called it a shot across the bow at Charles Schwab.
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Still, Johnson left little doubt that the Boston company founded by her grandfather remains committed to actively managing its customers’ money. “That’s the core value proposition that we’ve been known for forever,” she said.
In trying to expand that business, Fidelity aims to be more appealing to women. Staffing is part of that. Last year half of the new hires in its branches were women, Johnson said, “and that’s in an industry where less than 25% of licensed professionals are women.”
In a related initiative, Fidelity is redesigning branches to make them more inviting to women and to financial novices.
“We had gotten feedback that our branches were too corporate,” Johnson said. “The same people who did our offices did the branches, so I guess it wasn’t that surprising. It’s just that no one ever stopped to think about it.”
