Hobart and William Smith Colleges

Abby Johnson ’84

INVESTING IN THE FUTURE

Chairman and CEO of Fidelity Investments, Johnson reflects on innovation, the power of curiosity and the future of her 76-year-old family company, which manages more than $4 trillion in assets.

 

As the head of Fidelity Investments for nearly a decade, Abby Johnson ’84 has expanded the company’s historical focus on retirement and brokerage, implementing a bold and innovative strategy. Number six on Forbes’ 2021 “Power Women” list, she has led the Boston-based mutual fund’s adaptations to major generational, demographic and economic disruptions. She has courted a diverse range of clients and guided Fidelity’s investments in cryptocurrency and other emerging assets, all while cultivating a culture where trust, inclusivity and innovation go hand in hand. Even as she acknowledges the importance of her family company’s roots, she is eager to identify and embrace the next opportunities of the digital age.

You lead a company that over the span of nearly a century has enhanced the lives of tens of millions of people. How do you consider that past as you’re planning for the future?

Fidelity began as a mutual fund company, and investment management will always be part of our company’s DNA, but we have evolved and grown into many businesses over the past 76 years.

Remembering and honoring our history is important. But I don’t spend a lot of mental energy thinking about the past. I prefer to focus on the future. When I see too much anchoring in our past accomplishments, then it can lead to complacency and resistance to new ideas, which slows the pace of innovation.

I never lose sight of Fidelity’s entrepreneurial — and some would say contrarian — spirit, as well as our intense focus on delivering a great customer experience. This gives me and the managers at Fidelity a lot of freedom to innovate and find new areas of growth. As a result, I don’t feel constrained by Fidelity’s past. I feel pretty much the opposite. I feel empowered to try new things, to explore new products and services, and to expand into new areas.

Change can be scary, but it can also be exciting. There’s always going to be tension. I’d be worried if there wasn’t. There’s the tension between the needs of the business today versus the business we want to create in the future. There is the tension of honoring our past, but adapting it to the future needs of a digital business. Finally, there is the tension of how we interact with each other, with customers and with external stakeholders. The key is to use the tension to keep things moving forward.

HWS alums who work at Fidelity have remarked on the company’s family atmosphere. How do you foster that environment with so many employees?

One of my main responsibilities is to create a supportive environment where Fidelity leaders and associates are comfortable and confident asking uncomfortable questions about our business strategy, culture and customers. When people feel comfortable in being themselves and offering up ideas and suggestions, which we take seriously and respond to, then this creates an environment of confidence.

What I’ve found, both personally and professionally, is that everyone needs to feel confident that there is no intent to find someone or something to blame. This is really important. The point isn’t to try to identify the culprit for some past mistake or misstep. The objective is to brainstorm solutions to problems in a collaborative and productive way. When you do this, it creates a culture of mutual respect and trust, which are the foundations of successful companies and also families.

You’re known for working to significantly increase the number of women at Fidelity and you’ve been a public champion for women in finance. Where is Fidelity in that effort and where do you think the industry is?

Women are a critical part of the future of financial services. We want more women to consider our industry, and Fidelity in particular, for their careers. You don’t need to change who you are to have a great career in finance.

Supporting our associates in a way that allows them to bring their whole selves to work each and every day is one of the most important things we can do. This includes supporting women in the workplace. Years ago, Fidelity established its Women’s Leadership Employee Resource Group. The group’s goals are to provide development opportunities to members with a focus on “developing the whole you — professional, personal and financial.”

Along with the rest of the financial services industry, we need and want to do more to attract and retain women at all levels. People want to take action, but often don’t know where to start. It’s the same problem that has stalled this work for decades — sometimes it just feels too big to solve.

We have a concept called “Simple Starts” that prompts our employees to adjust the behaviors and businesses processes that make up their day-to-day work. By focusing on behaviors within your immediate control, rather than trying to shift an entire organization’s culture all at once, we have seen incremental changes that add up significantly over time.

At Fidelity, we believe that diversity is a business imperative. A company that has associates with diverse backgrounds and experiences is in the best position to thrive. So, at its core, this is about finding the best talent to help Fidelity grow as a company and help customers achieve their financial dreams.

What have been the major disruptions in the finance industry, and what have those disruptions meant for Fidelity’s strategy and services?

Fintechs are accelerating the trend toward digital tools and apps, along with lower-fee products, particularly among younger customers and those new to investing. We know that young investors want tools that are easy to use and re"ect the digital experiences in other parts of their life, so we have teams dedicated to creating more intuitive digital experiences across all of our platforms.

We are working to make investing more accessible to a broader range of investors. We were the first firm to offer zero minimums to open a retail brokerage account, zero investment minimums, zero commissions for online U.S. stock trades and zero expense ratio index mutual funds.

We listen to our customers and take their feedback into consideration when we’re improving our products. For example, we launched on Reddit in 2021 and through customer feedback, made improvements to our Fidelity "agship app. That improved experience passed one million users on the beta version of the app, and we’re continuing to make improvements and decisions as we hear from customers about what would make their experiences even better.

Where do you see the next big source of disruption?

We face competitive disruption on multiple fronts. The challenges are in four basic areas.

First, we need to address the continual downward pressure on fees and revenues. But low fees and easy-to-use apps, by themselves, are not the goal. The goal is to provide easy-to-use investment solutions at competitive prices.

Second, the need for speed across Fidelity’s businesses is critical. Gone are the days of large-scale, multiyear, overly complex projects. Instead, we have rapid, defined product development sprints where we seek customer feedback along the way, making adjustments and changing course in response.

The third imperative is regulatory change. We need to anticipate, prepare for and adapt the customer experience to the requirements of new regulatory regimes. But we don’t want to just comply with the new rules. We want to deliver an exceptional experience that helps customers plan and achieve their financial goals.

The fourth is demographics. Younger customers have different expectations and demands, both as customers and employees. In particular, Gen Z investors are more racially and culturally diverse than previous generations, and the financial education, digital support and investment options that we offer this group need to re"ect their unique values and interests.

Fidelity took early leadership in supporting cryptocurrency. What excites you most about the broader applications of blockchain? Where do you see the risks?

Fidelity has been working for years on a blockchain ecosystem, which started over eight years ago with mining bitcoin and a heavy focus on research. I believe blockchain technology and digital assets will represent a large part of the financial industry’s future.

Crypto is a dynamic, fast-growing market, and the volatility in the digital assets markets is because it’s a relatively new asset type and so its adoption as a store of value is not going to be linear. I anticipate that the day-to-day volatility may come down over time as the industry develops new products, which will lead to more ownership and participation by more market participants. One of the biggest risks right now is on the regulatory side, as it’s a new asset type and needs new regulations.

Fidelity holds regular scenario-planning exercises to prepare for novel challenges. What are their benefits and how might they help the company navigate, for instance, an event like the pandemic or the next Great Recession? The economics of the financial industry continue to require faster speed to market. To bring winning solutions to scale as quickly as possible, we use the “scan, try, scale” process. First, we scan the environment for new opportunities. Next, we identify new things to try. In this phase, it’s important to stress that it’s all right to fail if, in the process, you learn something about how to improve the customer experience. Lastly, it’s critical to have the persistence to work through any complexities and scale the ideas that seem promising.

As part of this process, we have engaged in scenario-planning exercises to stress-test our infrastructure, products and services. This helps us expand our thinking and look beyond just the next year or two. In fact, this type of scenario planning helped us start research on cryptocurrency, which eventually led to an internal experiment to mine bitcoin, and now we have a fast-growing digital assets custody business.

This type of thinking also led us to invest in remote working technology long before the pandemic hit. So, when we had to quickly move to working from home because of COVID-19, we were prepared.

Since the start of your career, you have exhibited a tireless work ethic. What drives you, where do you draw inspiration, and how do you recharge?

The value of staying curious is something I strongly believe in, whether that’s learning a new skill or recognizing something you think is interesting and learning more about that. I try to bring this mindset to work every day.

I also try to make sure I maintain a balance between being in front of employees and customers. Almost every time I visit a Fidelity location around the U.S., I do a town hall meeting with associates. I also attend as many of our client events as my schedule permits, so I can learn about what customers want and need. While the pandemic kept me away from visiting our associates in person, I found other ways to stay connected, including virtual meeting drop-ins and weekly and monthly video updates to our teams around the globe. It was important to me to continue to be present for our associates as they navigated the challenges of our new remote way of working.

Spending time with my family and friends is very important to me. I also try to spend a lot of time outside doing activities — weather permitting, of course, which is always something we need to pay attention to in New England.

While the circumstances have been different over the past two years, the silver lining has been that it has forced many of us to find new ways to connect with people in a deliberate and intentional way.

As an Art History major, how has your liberal arts background influenced you?

When I think back on it, having a liberal arts degree gave me the interest and curiosity to try new things. It also showed me that you don’t need a finance degree to be successful in the financial services industry. My art history degree helped give me a broader perspective than I think I would have had with a more business-focused undergraduate degree.

What do you treasure most about your time at Hobart and William Smith?

College can be such an inspiring time of life. As you get older, your appreciation grows for how much you learned, the friends you made and the great times. The best part of my time at HWS was meeting and hanging out with so many fun, smart people. It was exciting to meet people who had different ways of looking at the world.

And the HWS campus was and is so beautiful. So, my lifelong love of being outdoors was reinforced by my time at Hobart and William Smith.

What advice would you give students trying to plan their futures?

I always give the same advice that I received growing up: Don’t get caught up trying to get a specific job or work in a particular industry. Instead, focus on obtaining new skills, more education, and seeking out new experiences. Find a job in an area that you find intellectually interesting and that can give you a sense of accomplishment and purpose. Especially when you are young, don’t be afraid to try new things. Don’t feel obligated to follow a career path in an area that you don’t like and are not passionate about.

Of course, you always need to be prepared to do the proverbial pivot if your personal circumstances change or something happens at your company. But in the meantime, try to find something that sparks your intellectual curiosity or your desire to contribute, and see where that leads you.