In 1946, while the world was trying to recover from six years of war and some 75 million deaths, American lawyer Edward “Ted” Johnson II founded Fidelity Investments , a bold project to attract more people to the financial market. Investing, until then, was an activity reserved for the elite.
Today, exactly 80 years later, approximately US$15 trillion has circulated through the accounts of clients and investment funds of the asset manager—the equivalent of the combined GDPs of Brazil , Germany , Japan , and India. One in five adults in the United States entrusts their savings to the company. And no less than half of them have joined the platform in the last five years.
In his book , House of Fidelity: The Rise of the Johnson Dynasty and the Company That Changed American Investing , not yet published in Brazil, veteran economics journalist Justin Baer paints a portrait of Johnson and reveals the family's obsession with maintaining control of the company amidst internal disputes, rivalries between executives, and succession crises.
The author also shows how Fidelity became one of the most influential institutions in the country's financial history, revolutionizing the way Americans save and plan for retirement.
The company's business model has helped democratize access to mutual funds. By offering financial products directly to individual investors, for example, it operates independently of traditional brokerage firms.
The company also promoted 401(k) retirement plans — very common in the United States, allowing workers to invest part of their salary before taxes are applied.
Baer's main argument is that the Johnsons not only kept pace with the transformations in the American financial market, but also helped to define them.
The family is presented as one of the last great private dynasties of Wall Street, capable of maintaining control of a huge and influential institution for three generations. Based on approximately 200 interviews, House of Fidelity covers the company's founding by Ted Johnson, a Boston lawyer and investor, to the rise of his granddaughter, Abigail Johnson, CEO of the company since 2014.
Unlike other American business clans, the Johnsons have always avoided public exposure—both inside and outside the asset management firm. According to Baer, this culture of discretion contributed to an internal environment characterized by opaque power relations and decision-making within an extremely restricted circle.
This is how the family managed to maintain secrecy for so long surrounding one of the biggest crises faced by the company. The disagreements between Edward “Ned” Johnson III and his daughter Abigail appear as the most dramatic chapter in the story: the dispute between the two almost led to the sale of Fidelity.
Ned took over as president of the asset management firm in 1972 and became chairman five years later. Over the next 42 years, he aggressively expanded the business and transformed the company into a global powerhouse.
Under his leadership, the group invested in technology, low-cost brokerage, retirement accounts, and mechanisms that popularized financial investments. During this period, Fidelity's assets under management grew from US$3.9 billion to US$2.1 trillion.
Abby, as the CEO is known, joined Fidelity in 1988 as a stock analyst. At 26, she had just completed an MBA at Harvard . From the beginning, however, she faced skepticism from veteran company executives. Many saw her position as the natural heir to the company as a family favoritism—not as a result of her executive competence. In Ned's inner circle, paternalistic and disdainful comments were frequent.
"I resign"
In 2005, Abby had been leading the company's main mutual fund division for four years when the sector entered a period of weak returns and investor losses. Faced with operational difficulties and strategic disagreements with her father, she lost internal support. A group of independent fund advisors advocated for her removal from the position.
Ned hesitated, but eventually agreed. Without personally informing her of the decision, he sent an advisor to her home to tell her she would be transferred to the philanthropy department.
Abby reacted with an ultimatum: "I quit." Her father then backed down and put her in charge of the corporate services and 401(k) plans division, one of the company's most strategic sectors.
The episode, however, opened up an even deeper dispute about the future of the asset management firm. While Ned even considered selling Fidelity to Wall Street giants.
In the book, Abby recounts that executives close to her father even arranged meetings with potential buyers, including Bank of America and JP Morgan Chase.
In response, she rallied support among executives who favored the Johnsons remaining in charge of the company. Her allies even discussed ways to use the family's shareholding power to, if necessary, limit Ned's influence within the company.
The threat of confrontation within the council was averted with an agreement that preserved the president's authority and formalized the succession plan.
Years later, Abby regained her father's trust and took over the leadership of the company. Thus, Fidelity remains 100% privately owned and under the control of the Johnson dynasty.
