OPINION: The late former Fidelity CEO Edward “Ned” Johnson III was a far-sighted pioneer to see potential for corporate-sponsored retirement plans, writes Robert Pozen, a former executive at the company.
Ned Johnson was a far-sighted pioneer who brought many key innovations to the asset management industry. For example, he figured out how money-market funds could offer checking, which made them competitive with bank deposits. Once Fidelity Investments went direct and stopped selling funds through brokers, he formed a discount broker to attract more customers. Later he set up a company to manage Fidelity’s index funds to separate them from its actively managed funds.
More generally, Ned was a technology maven who understood how automation could provide better service to customers at lower cost. For instance, Fidelity was an early adopter of having customer access their account information by touch-tone phone and then via the internet. I really liked to join meetings between Ned and representatives from big technology companies such as IBM and Cisco Systems. He always knew more about how their systems operated than they did.
As Fidelity expanded, Ned was keen on diversifying by setting up facilities outside of Massachusetts. The money-market and bond funds are located in a state-of-the-art facility in New Hampshire. Fidelity’s retirement business is headquartered in Covington, KY, and Fidelity has a major service center outside of Dallas, Texas. Ned took an active interest in designing all of these new facilities.
Ned was also an early venture capitalist. He set up a separate arm of Fidelity to invest in small, private firms. For example, Fidelity parlayed its experience with telecoms in Boston to start an alternative telecoms provider in Europe. Fidelity was successful as an early venture investor in various Asian companies.
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