BOSTON: At age 77, Edward “Ned” Johnson 3rd cannot keep this pace up forever. But it sometimes seems the chief of Fidelity Investments hopes to.
Johnsons tenure running the largest U.S. mutual fund company has spanned three decades - the only other change of leadership in 61 years at Fidelity was when Johnson took over from his father. But the job has become increasingly complex as Johnson tries to fend off rivals gains and streamline operations, while outsiders calls for governance reform grow louder.
“He hasnt missed a beat, and a lot of people have crumbled while hes still going 100 miles per hour,” said Eric Kobren, a former Fidelity employee who edits the independent money advice newsletter Fidelity Insight. He suspects Johnson “isnt going anywhere soon.”
The notoriously insular company is not publicly offering a timeline for leadership change, or disclosing details of a succession plan it says it has in place, even amid some suggestions that the uncertainty could be hurting Fidelitys ability to compete.
The heir apparent - Johnsons 46-year-old daughter, Abigail Johnson - has not been confirmed as such, and some observers question whether she even wants the job. And a flurry of management and organizational changes this year eliminated two other successor candidates from contention.
Outsiders still regard Abigail Johnson as an odds-on favorite for the top job, by virtue not only of her bloodline, but the diversity of management positions she has held overseeing Fidelitys increasingly far-flung financial services.
But her father is still firmly in charge - and by all accounts, apparently healthy.
“Nothing has told me that hes anxious to pass the baton very quickly, unless something were to develop with his health, or some family issue,” said Patrick McGovern, a friend who occasionally dines with Johnson and is founder and chairman of IDG Group, a Boston-based technology research and publishing firm.
Fidelity rarely makes executives available for interviews, and declined requests from The Associated Press. A recent statement issued by Ned Johnson on succession planning described a continuing process to “pass the corporation on in good operating order to the next generation of executives at the appropriate time.”
Whoever eventually succeeds Johnson, big changes are expected at the Boston-based company that is a huge force on Wall Street, as the largest provider of Americans workplace retirement savings plans and a manager of nearly $1.6 trillion in assets.
Observers say Johnsons successor will not have as much power as he has wielded filling the chairman and chief executive roles since 1977 - posts that could be split between two people when his replacement is named. And the private firm will face increasing pressure to operate more like a publicly held company, with greater attention to open governance, cost-cutting and short-term financial results.
“Whoever follows Ned Johnson cant run it the way he has - the old model doesnt work anymore,” said Bruce Raynor, co-chairman of the Council of Institutional Investors, representing public, labor, and corporate pension funds, and general president of Unite Here, a union of hospitality and textile workers.
Fidelity has recently diversified from its core mutual fund business into areas like individual retirement planning and employee benefit management, after seeing only middling returns in recent years from key mutual funds that fueled rapid growth in the late 1980s and early 90s.
Today, 46,400 Fidelity employees provide financial services to 23 million individuals.
Meanwhile, Vanguard Group and Capital Groups American Funds have recently enjoyed greater success attracting investor money amid rising popularity of low-cost index and exchange-traded funds.
Those investments do not play off Fidelitys strength as an active manager of funds that capitalize on the hottest stocks from day to day.
At Fidelity, Johnson family members hold 49 percent of Fidelitys voting stock - key managers control the rest - and the companys board consists solely of current or former company executives and Johnson family members.
The structure has come under criticism not only from activists like Raynor, but from Moodys Investors Service. A November report on Fidelitys creditworthiness questioned whether Ned Johnson and his family wield too much power, and said Johnson and other managers have not adequately defended the companys once-dominant position in mutual funds.
Moodys also said unresolved questions about leadership succession and recent management changes had created uncertainty that could hurt efforts to draw top talent to Fidelity.
Among its competitors, American Funds manages just 30 large funds compared with Fidelitys assortment of 431, and avoids mainstream media advertising in favor of brokers recommendations to clients about fund performance. Like Fidelity, American Funds is privately owned by employees, but without a dominant family like the Johnsons. Teams of “portfolio counselors” manage individual funds, adding more counselors as funds grow in size. In contrast, Fidelity typically closes funds to new investors when they get too big. Fidelity traditionally gives an individual manager broad oversight to run a fund, although it recently launched new team-managed funds.