Who’s Afraid of Abby Johnson?
Now that she’s taken over the top spot from her father at Fidelity, the most influential woman in finance is determined to remake her family’s company for a new generation. And she’s willing to shake up the old-boys club to do it.
If you want to know what Abigail Johnson’s voice sounds like, you can do one of five things: 1) have the good fortune to be related to her; 2) work as one of her direct reports at Fidelity, where she’s served as chairperson since late 2016; 3) crash a local social event she’s attending, or one of the financial industry conferences where she occasionally speaks; 4) watch a company-wide, employees-only video she shot last fall; or 5) view a taped interview she gave to Bloomberg TV in September 2017, during which she donned her trademark glasses and an uncharacteristically flashy pair of shoes. Those are pretty much your only options for hearing the mezzo-soprano of Boston’s wealthiest resident (by a mile), possibly the city’s most unassuming philanthropist, and certainly the world’s most influential woman in the winner-take-all game of high finance.
Over time, this level of secrecy and discipline has built a dynasty. Founded by Johnson’s grandfather Edward C. Johnson 2d and transformed into a titan by her father, Ned 3d, Fidelity currently has assets under administration in excess of $6.8 trillion, making it one of the largest financial services firms in the country. Abby herself, according to Forbes, is worth an estimated $16 billion, putting her at number 83 on the magazine’s list of the world’s richest people. It took three generations for the family to reach this pinnacle, all the while following a simple formula: Always work harder, remain modest, and never blab to outsiders—especially the press.
The Johnson family, as longtime Bostonians know, is pathologically private. The closest the public gets to meeting Abby in the flesh is through the anonymous whispers of people who have brushed up against her—whether at a Boys & Girls Clubs of Boston event in town, or with her husband, Christopher McKown, himself a highly successful healthcare entrepreneur, on Nantucket, where they own a home near Brant Point Lighthouse. She’s very nice, friends tell me, a lovely woman of few words, and incredibly smart. She defies the typical billionaire stereotypes, living in the same (albeit beautiful) Colonial in Milton that her father and grandmother grew up in. She’s also not particularly social; Johnson and her husband form a universe of two, members of the social set report, and she otherwise mostly hangs with family and close friends, whom she treasures above all else. With two daughters, she’s just a regular suburban mom. Last summer, for example, Johnson invited Linda and John Henry, owners of the Globe and the Red Sox, along with their children, to stay with her family for a few days. In no time, Linda says, Johnson “became fast friends with our six-year-old, and I found them laughing together in the kitchen over breakfast and swapping stories over lunch. My daughter was drawn to her warmth and has a ferocious hug for Abby whenever she sees her.”
After more than 30 years working under her father at Fidelity, Johnson is finally alone at the wheel after taking over as CEO in 2014 and as chair a year and a half ago, and she’s been pivoting away from many of the things that got the company where it is today. She is reducing Fidelity’s reliance on traditional, open-end mutual funds—a concept embraced by her grandfather in 1946 and popularized by her father—which are slowly falling out of favor among investors. Instead, she is doubling down on revenue streams from financial advice, brokerage services, and venture capital. She has also launched new products specifically targeted at the biggest demographic of the future: millennials, who hate high fees and are just now developing a taste for investing. After lagging behind industry leader Vanguard for the past several years, Abby’s Fidelity has finally embraced index funds, an ultra-low-cost investment vehicle that mimics larger indexes such as the NASDAQ. Fidelity even introduced its first socially responsible fund and is investigating Bitcoin and blockchain, making it one of the few financial firms in America to publicly embrace crypto currency. Thanks to soaring markets, in Abby’s first year at the helm, Fidelity realized profits in excess of $5 billion for the first time in its history. She is quickly building a legacy that will last until she hands the reins over to the next leader of Fidelity—who just might be another Johnson. Abby’s daughter Julia McKown, a recent Tufts graduate, is one year into Fidelity’s Emerging Leaders Program, where it must be assumed she will have a bit of an edge over the competition when it comes to promotions.
At the same time, Abby—the only female head of a major financial firm—has inherited something else: the hopes of countless women fed up with the industry’s gender bias and sexual harassment. The financial services world is a notoriously difficult environment for women, and Abby is seen as someone who can right the wrongs of generations past.
The bad news is that Abigail Johnson will not be their savior. It’s unfair to expect her to be. She is only one person, and if she’s learned anything from her father, which everyone I talked to says she has, it’s that family, hard work, and the bottom line always come first. The good news is that by ensuring Fidelity remains at the top, she just might move the gender-parity needle more than any other financial services leader ever has.
The empire started with an ambitious son. Educated at Milton Academy, Harvard, and Harvard Law, Edward C. Johnson 2d never worked at his father’s local department store, C.F. Hovey, and would eschew retail entirely for the excitement of investing and managing other people’s fortunes. He founded the Fidelity Management & Research Company in 1946 on Congress Street, a block from the Old State House, with a mission to make his company a safe place for customers’ money—embarrassed by the notion that anyone should get rich doing it. “A company like ours,” he once said, “should never make this much money.” Then came Ned 3d.
Abby Johnson’s father had his own vision for Fidelity. Unlike his dad, Ned 3d bounced from one prep school to another until he finally attended Harvard. After graduation, he spent two years in the Army and a short stint working at State Street before joining Fidelity in 1957 as a research analyst. A born capitalist, he proved himself a wiz at picking stocks and took over the company in 1972, determined to scale the operation from a tidy trust fund for retirement accounts into a financial giant, where making “this much money” was the goal. Ned 3d also earned a reputation as an innovator. He pioneered the practice of allowing customers to do business via toll-free 800 numbers and created the first money market account to offer check-writing, a common procedure today. From 1970 to 2008, he grew Fidelity from $3.8 billion in assets under management to $1.2 trillion.
All that money helped fuel the Johnsons’ wealth, but also their philanthropy. If Ned had a weakness, it was probably for fine art; at one point his collection was valued at more than $40 million, including works by Norman Rockwell. He is reportedly the largest donor to the Museum of Fine Arts—where Abby is an overseer—but, of course, always gives anonymously.
Growing up during the ’70s and ’80s, Abby and her younger siblings, Elizabeth (Beth) and Edward IV, did not feel pressured to join the family business (Beth never has; Ed IV is president of Pembroke Real Estate, an affiliate company of Fidelity). Still, even as a child, Abby was attracted to her father’s work. “I remember going to the trading room,” she once said, “and being captivated by the energy, the excitement.”
Abby attended two top private schools, Shady Hill School and Buckingham Browne & Nichols, before forsaking the Johnson legacy at Harvard for Hobart and William Smith Colleges, a small liberal arts school in upstate New York. There she studied art history while spending her summers as an intern at Fidelity. She took a job out of college in 1985 as a consultant at Booz Allen Hamilton in New York, where her future husband, Christopher McKown, also worked. They wed in 1988, the same year she earned an MBA from Harvard and joined the family company, just like her dad did, as a lowly analyst determined to prove herself.
Abby was not a natural stock-picker but made up for it with hard work and smarts. “She did not want to be regarded as the scion of power,” a former Fidelity fund manager once told the New York Times. “She was running to visit 300 companies like the rest of us.” John Bonnanzio, an editor at the Fidelity Monitor & Insight newsletter and a longtime Fidelity watcher, had the distinction of being the first writer to interview Abby at the company. “I don’t remember the conversation verbatim,” he says, “but the spirit was ‘I hope you go easy on me because I’ve never done anything like this before.’ If anyone was nervous, it was me.”
Despite her relentless commitment to work, Abby managed to find quality time for family, often racing home at night to read her kids a bedtime story. As time passed, she was more likely to dish out dinner at the Pine Street Inn homeless shelter, where her husband serves as a board member, than to make an appearance at the Storybook Ball or any of Boston’s other premier society galas. In the Johnson tradition, she gives generously, and anonymously.
After several years at Fidelity, Johnson began her slow, methodical rise up the chain of command. She became a portfolio manager, a position she held for nearly a decade, before ticking off a host of job titles on her way to becoming president of the entire organization in 2012. Along the way she soaked up know-how from industry legends such as Peter Lynch and James Curvey, not to mention her dad, and learned to manage people and personalities. Amid widespread succession gossip, she was named CEO in 2014, and two years later took over as board chair—the first time someone without the name Edward had ever worn the company crown.
If there’s one thing we know for certain about Abby Johnson, says Jim Lowell, editor in chief of the Fidelity Investor and Fidelity Sector Investor newsletters, it’s that “she understands the nuts and bolts. She has the facts on the ground.” And right now, the data is telling her she needs to appeal to women—as investors and employees—or Fidelity runs the risk of leaving an enormous amount of potential profit on the table and losing ground to competitors nipping at its heels.
The fact is that women are well on their way to controlling the majority of wealth in the United States. And increasingly, says Kathleen Murphy, president of Fidelity’s Personal Investing division and one of the company’s top executives, women want other women to give them their financial advice. At the same time, Johnson also needs to woo millennials, who, even as they age, consistently demand that they work at—and invest in—companies that are committed to diversity, flexibility, and inclusivity. Millennials and women both tend to bolt if the workplace culture is toxic, unfair, or perceived in any way as biased.
Given the stakes, Johnson has launched several initiatives that company executives say are making a dent (though Fidelity will not divulge its gender breakdown). The company is actively reaching out to high schools through its Boundless program, which partners with youth organizations to educate women and girls ages 14 to 22 about careers in financial services. Murphy says the company also recruits at colleges and in “service” industries where women proliferate, looking for smart females who can translate their interpersonal, emotional, and tactical skills to jobs in the financial industry. “The financial services industry has a very important mission,” Murphy tells me. “It’s to help people who work hard all their lives and just want a good life for them and their families. And I think if women focus on that aspect of it, we’ll have a lot better ability to attract the right kind of women, and people in general, to this industry.”
Fueled by the #MeToo movement and a series of internal company incidents, one of the most dramatic changes Johnson is making deals with Fidelity’s handling of sexual harassment. And she’s doing it in a very purposeful and public way.
It started with Gavin Baker, a longtime golden boy who ran a mutual fund that consistently ranked among the top-performing funds in the country. He regularly appeared on financial TV shows and was considered a star manager. Then, according to the Wall Street Journal, a 26-year-old research associate who worked in the equity division with Baker accused him of sexual harassment. She was, the Journal reported, not the only junior employee who’d complained of his inappropriate behavior. Despite Baker’s success and the considerable profits that he’d generated for Fidelity, Johnson reportedly did not hesitate to cut him loose in September 2017. Through a spokesperson at the time, Baker strongly denied that he had been forced out and said he’d left the company because he was about to get engaged to an analyst at Fidelity and didn’t think it was proper for them to continue working together. (Baker’s fiancée, Becky Painter, is still an equity research analyst at Fidelity and a manager on a leisure fund. They are scheduled to marry this month.) Amazingly, days later a nearly identical incident played out, also reported by the Wall Street Journal. This time, another longtime employee and former portfolio manager, C. Robert Chow, resigned in the wake of allegations that he’d made inappropriate sexual comments to colleagues. Then things got really interesting.
Shortly after Chow left Fidelity, Brian Hogan, then president of the company’s equity division, where Baker and Chow had worked, held an emergency meeting to remind his remaining team about the company’s zero-tolerance policy on harassment. Next, Johnson relocated her office to the 11th floor, where the equity division is based, so she could personally play hall monitor. She also appeared in a video, circulated to all 40,000 employees shortly after Baker’s firing, in which she discussed her zero-tolerance policy, then hired a consulting firm to examine the company’s culture, and authorized a series of gender-bias seminars and sensitivity training sessions, some of which she reportedly attended. No one who follows Fidelity had ever seen anything like it. “I think she’s demonstrated her ability to lead the company through difficult moments,” Lowell says. “Especially on issues related to sexual harassment and the need not just to address it, but to do something that shows the world the seriousness of what was going on.”
Meanwhile, women in finance rejoiced. “She’s making changes that will make a difference and make it harder for men to be in a position where sexual harassment is not only tolerated but ignored,” says Stacy Musi, past president of the Financial Women’s Association, in New York, and formerly an executive recruiter for the financial industry. “I see what she’s doing as a step in the right direction.”
Murphy insists that the swift resolution of these issues recently is unrelated to Fidelity’s desire to make the company a more appealing place for women and millennials. It is, she says, merely “the right thing to do.” Yet to others who have long followed Fidelity, Johnson’s moves also look a lot like smart business. After all, Bonnanzio says, when Johnson moved her office down to the problem floor, she showed that she’s a hands-on captain in a way that her father was not. “Plus,” he tells me, “she doesn’t want any more articles showing up in the newspaper that Fidelity is a hostile work environment. She’s taking it very seriously, and that’s a great thing, regardless of what her motivations are.”
In light of Johnson’s quest to attract more female clients and customers, not to mention discerning millennials, she can ill afford a public blunder when it comes to issues of sexual harassment in the workplace. She likely doesn’t relish the idea of battling former female employees in court, especially those with bias claims against Fidelity. But she’s also willing to play hardball to protect the company if she feels those claims are meritless. It can be instructive, therefore, to look closely at one lawsuit that dragged on for years and then was settled in May, just days before heading to trial.
Erika Wesson worked at the Fidelity Real Estate Group (which was spun out as Long Wharf Real Estate Partners) from 2007 to 2011, regularly receiving strong performance evaluations, salary increases, and full bonus payouts. Then, in 2010, she claimed a junior male worker was promoted above her and that she was told her lack of advancement was because she didn’t like sports, drink beer, or eat meat. She took her complaints, including allegations that her coworkers often took lunch breaks at strip clubs, to HR and in May 2011 signed an agreement to leave the company in exchange for $500,000. As part of the settlement, Wesson’s senior manager agreed to serve as a reference. The senior managing director at the time said during a deposition that he was unaware of any company investigation regarding Wesson’s claims.
By 2015, after four years of job-hunting, Wesson still could not find work. She ultimately sued Fidelity, Long Wharf, and affiliated entities, claiming that executives were badmouthing her to prospective employers. In one exchange, according to Wesson’s lawsuit, one of her former coworkers was more interested in discussing Wesson’s looks than her job qualifications. In another instance, Wesson claimed, she received an email, allegedly traceable to a former coworker at Fidelity, that read, “Karma is a bitch, isn’t it Erika?”
Fidelity’s early response was to fight back, alleging that Wesson had violated the non-disclosure terms of her separation agreement with the company. A judge dismissed the allegation. After three years of discovery, filings, and racking up enormous legal bills, Fidelity and Wesson settled the lawsuit in May, just days before the jury trial was scheduled to begin in Suffolk County Superior Court. As a result, says Ellen Zucker, Wesson’s counsel, “Ms. Wesson is deeply satisfied that the case has resolved, and she looks forward to the next chapter of her life.” Fidelity spokesman Vin Loporchio said, “We were pleased with the settlement, but nothing to add beyond that.”
While the actions alleged in the suit happened a long time before the Harvey Weinstein revelations and #MeToo, the battle that Fidelity waged against Wesson did not. The company defended itself right up until the point where all of Wesson’s allegations were about to get a very public, very messy airing in court. It would not have been a good look, in the middle of Johnson’s campaign to portray Fidelity as a friend to women, to have a trial splashing the company’s years-long efforts to stymie Wesson on every front page from the Boston Globe to the Financial Times. In other words, Johnson put her family and her company first. (Fidelity’s ownership structures mean the financial interests of both are completely aligned.) It was smart business.
Abby’s apple didn’t fall far from her family tree. Like her father and her grandfather, she is humble, mysterious, and an innovator who is forging her own path. Under her watch, Fidelity has done things her forebears vowed they’d never do. The company now offers index funds, which were once considered anathema to Fidelity’s central philosophy that actively managed funds would consistently outperform any competitor. For the first time ever, the company also offers socially responsible funds to appeal to millennial investors who want their money to do good. Under Ned 3d, misbehaving star managers silently drifted off into retirement unscathed. Under Abby, Fidelity is generally taking swift action in response to allegations of sexual misconduct.
But what is the true culture at Fidelity? What is the experience of women working in the asset management division today? We may never really know. That’s because the first rule of Fidelity is that you don’t talk about Fidelity. Whether you work there now, or worked there at any point in your life, you don’t say a word. I approached numerous former employees for interviews and only one would speak—and she’d worked for the firm 20 years ago. (She did, however, tell me a story about the time her coworker came back from a business trip and unexpectedly gave her lingerie as a gift, which she says he had her open in front of colleagues.) “Even my own family members who work at Fidelity tend to be very careful talking to me,” Bonnanzio says. “Instead, we talk about football and hockey.”
Studies show that one of the most effective ways to foster change and encourage more women to enter the financial profession is by showcasing female role models. But women entrepreneurs tend to shy away from the spotlight. With very few exceptions, they attribute their success to the team around them and will not put themselves out there as the leader, the brainchild, or the visionary. Unlike men, they don’t want their photograph taken; they hang back, do their work, and make their companies go. That’s why there is no female Richard Branson and no female Elon Musk—especially in the world of financial services.
Johnson, of course, would make an excellent role model. Owner. CEO. Chairperson of one of the biggest mutual fund firms in the world. She’d be an exceptional public figurehead or leader for women who want to storm the walls of the male finance castle. There is just one issue: She won’t do it, opting to remain behind the scenes and run her family’s company. “It is my belief,” says John Fish, chairman and CEO of Suffolk Construction and an acquaintance of Johnson’s for many years, that “the reasons why she shies away from the press and doesn’t look for a lot of external accolades or support is to protect her family. The financial industry is a contact sport, and unfortunately, I think, stereotypically, men engage in contact sports more so than women. What I think that Abby’s demonstrating is you don’t have to play a contact sport to be successful in the financial world. She’s leading as opposed to talking about it. She’s leading by example.”
Staying behind the scenes is also smart business. After all, it’s worked well at Fidelity for the better part of the past century. It’s the Johnson way—and it’s Abby’s way, too.