Edward ‘Ned’ Johnson, Former Fidelity CEO, Dies

Edward “Ned” Johnson III, who transformed Fidelity Investments into a financial behemoth and opened Wall Street to millions of Americans, died Wednesday. Mr. Johnson was 91 years old.

“He passed away peacefully at home in Florida surrounded by his family,” Abigail Johnson, who succeeded her father as Fidelity’s chief executive in 2014 and chairman in 2016, wrote Thursday in a LinkedIn post.

Mr. Johnson died of natural causes in Wellington, Fla., where he lived fulltime in recent years, a Fidelity spokeswoman said.

Mr. Johnson inherited the well-known Boston company from his father in the 1970s, as investors were grinding through a bear market that would damp enthusiasm for the market and the mutual funds Fidelity sold. While many of Fidelity’s competitors foundered, Mr. Johnson pushed the firm to remake itself through a series of new ventures.

Fidelity was the first to offer a money-market fund that let investors write checks on their holdings. The firm created a toll-free number and advertised. (Mr. Johnson even helped write the ad copy.) Fidelity opened its own discount brokerage, furthering its reach among individual investors, and expanded overseas. Under Mr. Johnson’s watch, Fidelity also built the nation’s biggest 401(k) business, helping millions save for retirement.

His enthusiasm for stocks—and talent for marketing star managers such as Peter Lynch—helped rekindle many Americans’ love affair with the market.

“Fidelity would have stagnated had Ned not come in and created a brand new company,” said Joshua Berman, a longtime legal adviser to Mr. Johnson.

Many of the initiatives also represent what may be Mr. Johnson’s most-enduring legacy, according to the executives who worked with him: “He wanted to take investment tools available to his social class and spread them across the middle class,” said Robert Pozen , to form Fidelity president.

Fidelity ended 2021 with $11.78 trillion in assets under administration, or what is in Fidelity accounts as well as Fidelity funds held by rivals’ clients. The firm’s assets under management, or the amount overseen by Fidelity’s funds, totaled $4.48 trillion, up from $3.8 trillion a year earlier.

Fidelity grew into a financial giant but remained, like Mr. Johnson himself, fiercely private. The Johnsons controls 49% of FMR Corp., Fidelity’s parent.

Boston’s richest man lived for nearly half a century in the same Beacon Hill townhouse, located a short walk from Fidelity’s old offices on Devonshire Street. He gave to dozens of institutions that supported the arts and medical research, but there are no art museums, hospitals or libraries that bear his name.

Mr. Johnson shared his father’s fascination with Asian culture, spending a month or more each year trekking through Japan or China.

The younger Mr. Johnson was a significant art collector, with a particular interest in New England furniture. For years he carried a flashlight to examine the joinery of any Chippendale pieces he had come across.

Mr. Johnson and his daughter Abigail Johnson in 2004.


Photo:

Brooks Kraft/Corbis/Getty Images

He founded the Brookfield Arts Foundation, owned several hundred grandfather clocks, and once had an entire two-story house disassembled in China and flown, in more than 2,000 pieces, to a museum in Salem, Mass.

“He was a very, very unusual man,” said Mr. Berman, the legal adviser. “He was passionately curious about just about anything.”

Mr. Johnson is survived by his wife, Elizabeth, his three children, Abigail, Elizabeth and Edward, and seven grandchildren.

“He loved his family, his coworkers, work, the stock market, art and antiques, tennis, skiing, sailing, history, and a good debate,” Abigail Johnson wrote. “He could be counted on to have the contrarian view on just about anything.”

Edward Crosby Johnson III was born in 1930. He grew up in the Brahmin enclave of Milton, Mass., in the house where his grandmother had raised his family.

The Johnsons, who can trace their Boston roots to the 17th century, had wealth and prestige long before Mr. Johnson’s father, a lawyer by training, founded Fidelity in 1946. But Edward Johnson II loved the stock market and all of its imperfections, and he imbued his son with the same lifelong fascination.

“We’re learning a lot about brokerage, but don’t say that to Ned,” Edward Johnson once told his assistant after a walk with his young son, according to an article in Boston magazine.

Associates and colleagues said the younger Mr. Johnson struggled with dyslexia, bouncing through several prep schools before he headed to Harvard College.

“Reading was very hard for him,” said James Curvey, a former Fidelity president. “But he was very visual.”

Ned Johnson, left, with General Electric CEO Jeffrey Immelt, in 2002.


Photo:

Chitose Suzuki/ASSOCIATED PRESS

In meetings with his lieutenants, Mr. Johnson would take apart and reassemble the staplers. Years later, when he struggled to explain how he wanted Fidelity’s first website to look, he cleared his calendar and spent six weeks working alongside the firm’s software engineers, Mr. Curvey said.

Mr. Johnson spent two years in the Army before returning to Boston for a brief stint at State Street Corp.

Mr. Johnson joined his father’s firm in 1957 as an analyst working with Gerald Tsai, then Fidelity’s top manager.

By the 1960s, Mr. Johnson’s investments began to outperform other growth-stock funds—including Mr. Tsai’s. When Fidelity launched its future flagship fund, Fidelity Magellan, in 1963, Mr. Johnson was its first manager.

In 1972, when Mr. Johnson became president of the firm, Fidelity managed $3.9 billion in assets—most of it in stock funds that would bleed money until the market began to rally a decade later.

Fidelity made its first direct contact with Main Street in 1974 with its new money-market fund offering. The firm launched its brokerage in 1978, and in 1982 started selling retirement accounts to US companies. In 1995, Fidelity became the first major investment firm with a website.

The steps would also foreshadow sweeping changes to the way Americans invest. Fidelity had tapped into the class of self-motivated investors who didn’t need brokers to tell them where to put their money.

Mr. Johnson invested heavily in technology, installing generators under the sidewalks of Fidelity’s office tower to ensure the firm wouldn’t lose power. He rarely shied away from sharing his opinions with tech luminaries such as Microsoft Corp.

co-founder Bill Gates, according to former Fidelity Chief Operating Officer Bob Reynolds.

Mr. Johnson also tangled—usually behind the scenes—with politicians over taxes. As Fidelity expanded he sought to shift businesses and employees to offices outside of its home state. His family office left for New Hampshire’s more lenient tax laws.

For Mr. Johnson, the ideas flowed with a staccato rhythm; some worked, others failed. Fidelity was a family business—there were no public shareholders or quarterly reports to limit his horizon or imagination, and there were fewer critics to condemn the firm’s missteps.

“I don’t think there was ever a strategic plan,” said Peter Lynch, Fidelity’s onetime star manager.

Mr. Johnson would frequently visit Mr. Lynch’s office to pick his brain, invariably, at the end of the day. “I had a code,” Mr. Lynch said. “I would call my wife and ask, ‘what’s for dinner?’ “It meant Mr. Lynch would miss the 6:15 pm train, and possibly more.

The conversation continued for decades. “We now talk about Tesla, or Apple,

” Mr. Lynch said in 2018. “It’s the same question he would’ve asked 50 years ago.”

Mr. Johnson’s father died in 1984. “I had never seen a father and son so close to one another,” Mr. Reynolds said. “He used to go to his father’s office and spend four hours there. And all they would do was talk about the market.”

Mr. Johnson’s daughter Abigail joined Fidelity in 1988.

She climbed steadily, eager to put her own stamp on Fidelity. In 2004, Ms. Johnson sought to vote her father out of his position over disagreements with some business decisions. The plan fizzled after he learned of it and issued enough stock to dilute his children’s ownership in the family business, people familiar with the matter said.

Following the dust-up, though, he formed a three-person committee to address the firm’s succession plan, the people said. Another decade would pass before Mr. Johnson was ready to hand the job to his daughter.

The market’s rally following the financial crisis left many investors disenchanted with the returns of active funds, and the higher fees they charged. Caught flat-footed, Fidelity fell behind as the industry shifted toward low-cost index funds. Mr. Johnson had been reluctant to embrace the looming changes. He did eventually, launching index funds and offering others’ passive funds to brokerage clients, but “I don’t think he ever believed in it,” Mr. Reynolds said.

In retirement, Mr. Johnson stayed out of the spotlight.

“I’m proud of what we built, and equally proud of what Fidelity has become,” Mr. Johnson said in a January 2022 statement to The Wall Street Journal. “The focus has been on our customers from day one, and that holds true today.”

At a 2012 dinner honoring the Johnsons, Mr. Johnson watched as his daughter recounted the family dinners interrupted by Fidelity customers. Her father, she said, would always take those calls.

Ned Johnson was “a man consumed with passion and endless energy for fixing things,” she said.

Write to Justin Baer at justin.baer@wsj.com

Corrections & Amplifications
Bob Reynolds is a former chief operating officer of Fidelity. An earlier version of this article incorrectly referred to him as a former Fidelity president. (Corrected on March 24.)

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