Edward C. “Ned” Johnson III, Fidelity Investments’ chairman emeritus and the firm’s former CEO died March 23 at the age of 91 at his home in Florida.
The cause of his death was not provided in a statement from Fidelity.
Mr. Johnson served as chairman emeritus of Fidelity Investments after his daughter, Abigail P. Johnson, became CEO in 2014 and chairman in 2016.
In 1957, Mr. Johnson joined Fidelity Management & Research Co. as an analyst. The firm was founded by his father, Edward C. Johnson II, in 1946. FMR eventually became part of Fidelity Investments.
Mr. Johnson was the first manager of the firm’s flagship mutual fund, Fidelity Magellan Fund, and ran the fund from 1963 to 1971, besting the S&P 500 index by an annualized 22 percentage points during his tenure, Bloomberg said.
Mr. Johnson went on to succeed his father as president of the company in 1972.
“Mr. Johnson defied conventional wisdom for how a financial services company should best serve its clients. From direct marketing of money market funds to the trailblazing use of the internet to innovations in retirement accountant and charitable giving, he refashioned the industry into a more dynamic, more egalitarian marketplace,” Fidelity said in its statement March 24.
Mr. Johnson became an “early mover in the defined contribution 401(k) savings system, which now forms the foundation of retirement readiness for millions of Americans,” Fidelity’s statement said.
Fidelity is by far the largest record keeper of defined contribution plans, with $3.17 trillion under administration as of Sept. 30, according to Pensions & Investments data. It managed $1.03 trillion for U.S. DC plans as of Dec. 31, 2020, the third-largest amount of all managers.
Mr. Johnson’s colleagues were somewhat in awe of his prowess and creativity in managing Fidelity.
“He was like a juggler with 20 balls in the air. I don’t know how he ever did it,” said Peter S. Lynch, who managed Magellan in the 1980s and now serves as vice chairman of FMR, in a 2019 interview, according to Bloomberg.
When asked what drove Mr. Johnson, his close colleague, William L. Byrnes, president and vice chairman, who passed away in 2018, said “success in the form of creating. Creating something, taking an idea, nourishing it and then seeing it succeed. Not for verbal applause, certainly not publicity. He’s not seeking press accolades, that’s for sure. It’s just some innate driving force, a great spark, great drive, and I think it’s just something that is within him.”
Mr. Byrnes made his comments in a 2002 interview, part of which Fidelity shared in its statement on Mr. Johnson’s passing.
Another long-serving colleague, Robert C. Pozen, who was president of FMR and also vice chairman of Fidelity Investments during his 14-year tenure that ended in 2001, said, “Ned Johnson was a farsighted pioneer who brought many key innovations to the asset management industry.”
Mr. Pozen said that after Mr. Johnson recognized the importance of 401(k) plans, he “invested heavily in the infrastructure necessary to distribute and services these plans for corporate America.”
“More generally, Ned was a technology maven who understood how automation could provide better service to customers at lower cost," Mr. Pozen said. "For instance, Fidelity was an early adopter in having customers access their account information by touch-tone phone and then via the internet.”
Mr. Pozen is a senior lecturer at Massachusetts Institute of Technology Sloan School of Management, Cambridge, and is a non-resident senior fellow at Washington-based Brookings Institution.
In addition to his “multidimensional innovation,” Mr. Johnson was “an extraordinary business leader,” said Ronald P. O’Hanley, chairman and CEO of State Street Corp., Boston, in an email. Mr. O’Hanley served as president of asset and corporate services at Fidelity Investments for almost four years ending in 2014, when he joined State Street.
“Ever suspicious of the potential for misaligned incentives between management and shareholders in public companies, Ned insisted on broad-based employee ownership in various Fidelity companies,” Mr. O’Hanley said.
He added that “as the patriarch of a family controlled business, (Ned) always focused on the long term and was quite willing to take a 10-year-plus horizon for a new line of business. He also insisted that Fidelity senior managers (receive incentives) and be compensated over a similarly long period and be accountable for the firm’s long-term results.”
The firm Mr. Johnson built has become one of the largest money managers in the world with $11.1 trillion in assets under administration and $4.2 trillion in assets under management, both as of Feb. 28, according to Bloomberg.
Fidelity’s AUM totaled $3.9 billion in 1972 when Mr. Johnson became president of the firm; when he retired from his role as chairman in 2016, AUM totaled $2.1 trillion and AUA was $5.7 trillion, said Fidelity in the statement.
“Ned Johnson was an icon in the asset management,” said Eric J. Pan, president and CEO of the Investment Company Institute, Washington, in a statement.
“From enabling investors to write checks out of their money market accounts to building one of the most successful 401(k) businesses, he played a critical role in democratizing investment. He was a true visionary who whose work helped millions of Americans save for their most important financial goal,” Mr. Pan said.
Mr. Johnson served on ICI’s board of governors in the 1970s, Mr. Pan said, adding “our industry wouldn’t be what it is today without his influence and many contributions.”
In a LinkedIn post March 24, Abigail Johnson said her father was “first and foremost a father to me and my sister, Beth, and brother, Edward, and husband to my mother, Lillie ... he loved his family, his co-workers, work, the stock market, art and antiques, tennis, sailing, history and a good debate. He could be counted on to have the contrarian view on just about anything.”
In a statement, Mr. Johnson’s wife, Elizabeth B. “Lillie” Johnson, and their three children said “our family mourns the passing of an extraordinary father, grandfather and husband. We are immensely proud of his achievements and grateful for his life.”
Mr. Johnson’s funeral will be private, but a memorial service will be announced later, Fidelity said in its statement.
Bloomberg contributed to this story.
