Postscript to the Fidelity Executive Forum article: The RIA perspective

Brooke’s Note: Though reporters were not part of Fidelity’s Executive forum in Naples this year, I was able to publish: What happened at Fidelity’s RIA conference this year on the strength of an interview last week with Mike Durbin, president of Fidelity Institutional Wealth Services. He also helped put me in touch with a couple of RIAs who attended the event to get their perspective. I had intended to add their comments to the original article but it took extra days to complete those interviews. I decided that those perspicacious conversations warranted their own story.

Abigail “Abby” Johnson kicked off the annual Executive Forum in Naples, Fla. of Fidelity Investments with a speech that covered recent changes in the executive ranks and talking about the importance of RIAs in the company’s high net worth strategy, according to RIAs who were there.

RIAs say her April 26 speech set a reassuring tone.

The president of Fidelity Personal, Workplace and Institutional Services first explained to the 575 attendees [including 375 advisors] why her Boston-based company has undergone big turnover in its corporate ranks relating to financial advisors.

“Abby stood up and said: ‘I want to tell you about the people thing,’” says Gary Adams, senior vice president and principal of Anchor Capital LLC, which manages $6 billion of assets from Boston. Her message: “They don’t just want a bunch of executives from wherever,” he says.

Executives must meld with Fidelity culture

In other words, Abby Johnson made the case that Fidelity takes extra care to be certain that it has the right leaders in place and that employees meld with the company’s culture, according to Adams’ account of Abby Johnson’s message.

In a dramatic move, Fidelity hired Charles Goldman at the end of 2008. At the start of this year, his sudden departure grabbed the industry’s attention just as much.

Gary Adams noted that Abby Johnson
cleared the air immediately by addressing
the executive turnover at the firm

The presence of Johnson, 48, also allayed other RIA concerns about whether the company appreciates their importance – and whether Fidelity is thinking ahead about succession planning, according to Fred Paulman, president of RMB Capital Management, which manages $1.8 billion of assets from Chicago.

“Her message was good, and there was some passion behind it that made it believable and not a smokescreen,” he says.

Paulman and Adams both noted that when Abby spoke to advisors on April 26 that nobody knew that she would be placed at the top of the division containing RIA custody on May 10, but that her speech was clearly anticipatory of that move.

Johnson also oversees the company’s retirement and personal investing business, and is vice chair of the parent company’s board.
Her new duties include oversight of distribution arms including Fidelity’s institutional services, which serves broker-dealers, RIAs and banks.

Retail and institutional common ground

Paulman adds that he’s optimistic that Abby Johnson’s new position — which straddles retail and institutional silos at Fidelity — will have positive consequences.

“The hope is that she can break down the barriers between retail and institutional,” he says. “I had a feeling in the past that she saw us competing against the retail side [of Fidelity]. I believe the thinking has changed about us and that the RIAs can plug the hole [that allows the assets of high net worth investors to leave the company.]”

One personnel move that Adams definitely approves of after participating in the conference was Fidelity’s decision to make Mike Durbin president of the RIA business. He gained full control when Goldman departed in January.

Fred Paulman: The hope is that
[Abby Johnson] can break down the
barriers between retail and institutional.

“Durbin’s one of the best speakers I’ve heard in a long time,” he says. “He’ll be a star there.”

Bush still has the old charm

The conference speaker with the biggest star power, however, was George W. Bush, who spoke for nearly two hours on the afternoon of April 27 and held the crowd spellbound.

“Whether you like him or not, he was incredible,” Paulman says. “He is captivating and connects with everyone. He is more of a normal dude.”

Advisors appreciated having the former president walk them through his day on September 11, 2001, including a call to his mom to be sure she was okay. George W. asked Barbara Bush why she was in Minneapolis and she retorted that it was because he had grounded all planes.

The speech’s effect on RIAs was surprising — even for a crowd of conservative business people.

“Everyone would have gone out and voted for him right then,” Adams says

According to the advisors, the conference also showed that Ned Johnson, CEO and chairman of Fidelity, still has chief executive energies – at least for someone who will turn 80 in June. He played tennis for an hour before the Bush speech, watched the speech in his tennis clothes, went back to the courts for another hour or more and still made it to the evening advisor reception and didn’t depart until around 11 pm, according to Adams.

Another speaker, Jerry Linenger, a former Space Shuttle astronaut, brought many people in the crowd to tears with his speech and had them scurrying to send messages to loved ones in its wake.

Breathless

He spoke about how the oxygen-producing machine aboard the Space Station caught fire in orbit and he was literally down to his last breath when the matter was resolved. He had failed to properly say good-by to his wife and kids.

“It was way more emotion than I’d ever seen on a stage,” Adams said.