O'Hanley's departure from Fidelity described as inevitable

Ronald O'Hanley's pending departure from Fidelity Investments, while seeming to come from nowhere, was inevitable, a number of industry sources said.

The announcement Jan. 22 surprised many in the industry because there had been no indication the Boston-based firm and its president of asset management and corporate services were planning to part ways.

However, with Mr. O'Hanley's contract set to expire — Fidelity would not say when — and with Fidelity Financial Services President Abigail P. Johnson solidifying her leadership role within her family's company, several insiders see this as the ideal time for the former president and CEO of BNY Asset Management to move on and for Fidelity to hand over the reins to someone new.

Mr. O'Hanley plans to leave at the end of this month. In a letter to colleagues obtained by Pensions & Investments, Mr. O'Hanley wrote: “The time is right for me to move on. I will work with (Ms. Johnson) through the end of February to transition asset management to the next generation of leadership.”

In a letter to Fidelity employees, also obtained by P&I, Ms. Johnson wrote: “Over the next month, Ron will help us ensure a smooth handoff to our new leader of asset management.” She added the firm expects to name “an internal successor in the coming weeks.”

Neither Ms. Johnson nor Mr. O'Hanley was available for additional comment.

Mr. O'Hanley's resignation comes at a time when Fidelity's institutional business, Pyramis Global Advisors, has been seeing more outflows than inflows. According to data from eVestment LLC, Marietta, Ga., Pyramis only experienced net inflows during one quarter in 2013. In the second quarter, the firm reported $2.74 billion in net inflows. For the remainder of the year, the institutional arm of Fidelity suffered net outflows — $3.56 billion in the fourth quarter, $1.41 billion in the first and $32 million in the third.

No one interviewed for this story said this is Mr. O'Hanley's fault — or even that Ms. Johnson blamed him. But ultimately, with the stock market doing well, Pyramis seeing outflows and with Mr. O'Hanley's contract up, industry observers agreed the time seems right for Fidelity to move to new leadership.

When Mr. O'Hanley joined the firm in May 2010, filling the void in leadership that Rodger A. Lawson had left in January of that year, Fidelity was in a very different place. Not only was the company emerging from the effects of the global financial crisis, but Fidelity Chairman and CEO Edward “Ned” Johnson was still in charge. At the time,the chairman's daughter, Ms. Johnson, was named head of all Fidelity distribution channels.

“Ron was the perfect hire for the role and a great leader for the time,” said one recruiter who asked to not be named. “Now fast forward. Abby's running the organization, and it's probably time to get someone generationally to take them to the new level.”

A lot can happen in a few years, however, and since 2010, the dynamic at Fidelity has changed. In August 2012, Ms. Johnson was named president of Fidelity Financial Services, consolidating all of the company's core businesses — including asset management — under her leadership. Mr. O'Hanley's equal had become his supervisor.

One money management executive and ex-Fidelity employee familiar with the situation, who also wished not to be named, said Mr. O'Hanley is leaving in part because he and Ms. Johnson didn't see eye to eye over the strategic direction of the firm.

“Ron's a pretty realistic guy. He knew he was working with a family company,” the executive said. “And if you clash with the heir to the owner, it's only going to go one way.”

Despite disagreeing with Ms. Johnson over the firm's direction, sources familiar with the matter noted that this isn't an acrimonious split.

“Ron's been very gracious all the way through,” the recruiter said. “He wouldn't leave Abby high and dry. There was no animosity there whatsoever.”

“When I spoke with (Mr. O'Hanley) when he first came on board, he made it clear to me that he wasn't going to be doing this for the next 10 years,” said John Bonnanzio, editor of the Reno, Nev.-based newsletter Fidelity Monitor & Insight. He also pointed out “it's impossible for any of us who watch Fidelity to view this move as anything but being one more step in moving Abby into the president's position; that's what this resignation is all about.”

Still, Mr. Bonnanzio noted he found it odd that the company did not have a concurrent announcement of Mr. O'Hanley's replacement.

Industry observers said they're curious to see if the firm plans to make any additional organizational changes once Mr. O'Hanley's successor is named. In addition, they're interested to see what Fidelity is looking for with its next asset management leader.

As for what's in store for Mr. O'Hanley after February, the former Fidelity employee told P&I that Mr. O'Hanley is not planning on retiring, but rather “intending to do another big job at some point.” Mr. O'Hanley noted in his letter that upon leaving Fidelity, he plans to spend time with his family “and with a few non-profits that are very important to me.”

Mr. O'Hanley is on the board of directors of The Boston Foundation and the Boston Public Library Foundation, and he serves as chairman of the Retirement Security Council for the Financial Services Roundtable. He also serves on several other boards, including the Beth Israel Deaconess Medical Center and the East/West Institute. He will then “pursue other professional challenges,” though according to Mr. O'Hanley's letter, “I have not yet begun to think through that chapter.”