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Edward C. Johnson III dies; his leadership of Fidelity helped transform investing

Mr. Johnson led Fidelity Investments for about four decades.Bohn, John Globe Photo

Edward C. Johnson III, who built Fidelity Investments into a global powerhouse as he revolutionized how millions of Americans managed their finances, died Wednesday, according to his daughter Abigail, who now leads the company. He was 91.

His death was announced in a LinkedIn post, which did not provide a cause.

Mr. Johnson led the Boston investment giant for about four decades, helping grow the sums Fidelity invested for customers from $3.9 billion to $4.5 trillion. In a city known for its many financial companies, Fidelity towered above them all under his leadership.

Mr. Johnson was the first money manager for Fidelity Magellan, which became the flagship investing vehicle for the firm.RIZER, George GLOBE STAFF

Mr. Johnson, who was known as Ned, became a legendary figure in the industry. He positioned Fidelity at the leading edge of the mutual fund industry’s dramatic rise, which began in the 1970s, and pioneered the practice of selling fund investments directly to individuals. Today the company oversees more than 32 million retail investment accounts and manages workplace plans for nearly 35 million people. It employs 57,400 people around the world.

Along the way, the family fortune grew, to an estimated $44.3 billion, according to Forbes, making Mr. Johnson and his daughter Abigail two of the wealthiest residents of Massachusetts.


A fiercely competitive businessman, he remained famously modest in public appearance and demeanor throughout his life — walking from his Beacon Hill home to Fidelity’s downtown offices for many years — and he professed little interest in his personal wealth.

“That isn’t what turns the motor,” Mr. Johnson said in a rare interview with the Globe in 1994. “The best thing about obviously having a large cash flow is that you can invest it in a lot of other things that produce something else that has value to us and value to other people.”

Mr. Johnson spent hundreds of millions of dollars on philanthropic causes, with a particular interest in art and medical research. Known as a generous benefactor with no concern for the public relations value of giving away money, he was often identified simply as AD – anonymous donor – when charities acknowledged many of his gifts.


Mr. Johnson and his family’s foundation were major supporters of the Museum of Fine Arts in Boston, where his wife, Elizabeth “Lillie” Johnson, was an active honorary trustee for many years, and of the Peabody Essex Museum in Salem. He launched a separate foundation to acquire American and Asian antiques, which were loaned to museums and historical societies for public viewings.

Among medical causes, Mr. Johnson was especially interested in research into Alzheimer’s disease, an affliction that took his father’s life in 1984. He quietly launched his own nonprofit, the Alzheimer Research Forum Foundation, which acts as an online clearinghouse of information.

Mr. Johnson also launched Fidelity Charitable. The business unit manages thousands of accounts from which customers can send donations. It became the largest nonprofit fund-raiser in the country, outpacing the United Way in 2016.

Mr. Johnson spent extensively on computers and technology that enhanced the company’s reputation for strong customer service. In the early days, he reached out to customers with a blizzard of advertising and made it easy for shareholders to call Fidelity for help with toll-free numbers staffed around the clock, a big change in a business that grew out of the discreet and conservative world of trusts and private bankers.


For many years, he continued his father’s practice of hiring bright, young money managers at Fidelity and encouraging them to take investment risks, again contrary to a common industry practice that emphasized group decisions by older men.

This new investment culture produced many stars — none more famous than Peter Lynch — and established Fidelity as home to some of the hottest mutual fund managers just when one of the great bull markets in history got underway, in the early 1980s.

”He was a radical egalitarian despite the fact that he was born into an upper-class Boston Brahmin family,” said Bob Pozen, a top Fidelity executive who left the company in 2001. “He just wanted to hire the best people.”

As Fidelity’s investment management business grew, Mr. Johnson diversified the company into other ventures. He built a booming discount brokerage subsidiary and a large real estate business that redeveloped the World Trade Center and built a hotel across the street on the South Boston waterfront. He launched a venture capital unit that ran businesses ranging from the Boston Coach limousine service to a community newspaper publisher to a company that supplies building contractors across the country.

Fidelity truly became a financial empire.

Edward Crosby Johnson III did not give the appearance of an empire builder as a young man. Born into a prominent Boston family, he grew up in Milton and graduated from Harvard University in 1954 as an unremarkable student who showed no interest in attending business school or law school.


After a two-year stint in the Army, Mr. Johnson worked briefly at State Street Bank and Trust Co. and then joined the family business in 1957, as an investment analyst.

His father, Edward C. Johnson II, had founded Fidelity in 1946. Both men shared an affinity for the process of investing and spent long hours talking about stocks.

Mr. Johnson’s sister, Elsie Mitchell, once recalled:

“Mother would get really irritated with father and son, because she thought it was uncivilized for them to disappear to father’s study after Sunday lunch. She’d go in and say, ‘Come on, you two, you’re being antisocial.’ They’d want to talk about business.”

Mr. Johnson soon got his first chance to run a mutual fund in 1958, when he was placed in charge of the Fidelity Trend fund. Customers began to take notice after several years of strong performances; Fidelity Trend became the best-selling mutual fund in the country through the first half of the 1960s.

Mr. Johnson, standing behind his father, in 1972 .

In 1963, Mr. Johnson became the first manager of Fidelity Magellan — the fund that would emerge as the company’s flagship product. Though Lynch became an industry star as Magellan’s leader, the fund actually recorded its best year ever under the management of Mr. Johnson.

He assumed executive control of Fidelity from his father in 1972, but soon the stock market headed for trouble, losing about half of its value before the end of 1974. Fidelity’s assets had fallen from a peak of $4.2 billion to $2.5 billion near the market bottom, and the business suffered.


“I remember Ned saying at one point, ‘The one thing I’m not going to do is preside over the demise of this firm. We’re going to do something to make this firm grow,’ ” longtime Fidelity executive Roger Servison told the Globe in 1995.

Mr. Johnson decided Fidelity needed something other than stock funds. That turned out to be Fidelity Daily Income Trust, a money market fund that came with an unusual feature: Customers could write checks on their money market accounts.

Mr. Johnson also believed Fidelity could sell more shares of the new money market fund by bypassing brokers and appealing directly to investors. Newspaper ads promoted the new money market, and the phones began to ring at Fidelity. Even Mr. Johnson took orders from callers.

That campaign became one of the mutual fund industry’s earliest efforts to sell shares directly to the public, a form of distribution that would rake in many billions of dollars over the following decades.

Mr. Johnson also realized that reliable customer service was necessary to persuade people to send their money to Fidelity. His personal attention to operational detail at the growing company helped make Fidelity a service leader.

Abigail Johnson once recalled that family dinners of the 1970s were sometimes interrupted by the ring of the phone. Her father would listen patiently to the caller and inquire about the details of a problem, she said. Eventually, he would ask for a name and account number, so someone at Fidelity could follow up with the customer.

“All of you who know Ned Johnson know he is a man consumed with passion and endless energy for fixing things,” Abigail Johnson said at a 2012 annual meeting of the Greater Boston Chamber of Commerce, which honored her family for its contributions to the community.

“Our chairman’s commitment to understanding — I mean completely dissecting — all the elements that go into supporting and making the Fidelity customer experience is legendary,” she said. “He’s obsessed with continuous improvement.”

In fact, Mr. Johnson was a well-known admirer of the Japanese philosophy of kaizen, which means continuous improvement. He described kaizen as a commitment to “making small improvements in all areas of the company over an extended period of time.”

Fidelity became a big competitor in the money market business but hit its real stride when the stock market took off in the early 1980s. Mr. Johnson gave successful stock fund managers the freedom to become investment stars, pulling in hundreds of millions of dollars from individual investors who wanted a piece of the market.

Mr. Johnson’s emphasis on technology and Fidelity’s investment reputation helped make the company a leader in the market for 401(k) retirement accounts, which exploded in the 1990s. The business began to account for the lion’s share of new mutual fund sales industrywide, which Fidelity dominated until the indexing rival Vanguard Group took over the number one spot in 2015.

As the family business ballooned, Mr. Johnson stayed mostly out of the spotlight. He rarely granted interviews or spoke in public. But he was not shy about battling regulators and politicians, using Fidelity’s weight to seek tax breaks in Massachusetts and to fight regulations he saw as onerous in Washington.

Having groomed his daughter to succeed him over the course of 28 years, Mr. Johnson named her chief executive in 2014 and stepped down as chairman in 2016, at the age of 86. He had remained as chairman emeritus. Representing the third generation to run the company, Abigail Johnson faced unprecedented competition from low-cost index-fund rivals.

In addition to his wife, Elizabeth, and daughter Abigail, Mr. Johnson leaves another daughter, Elizabeth; a son, Edward; and seven grandchildren.

Funeral arrangements are private. A memorial service will be announced at a later date.

As a mentor, Mr. Johnson leaves a legacy of engagement and encouragement.

“It is hard to overstate Ned’s tremendous contributions to so many facets of the business world and civic community,” said Putnam Investments CEO Robert Reynolds, who worked at Fidelity for 24 years and was its chief operating officer from 2000 through 2007. “He was a visionary, innovator, thought leader, entrepreneur -- and always intellectually curious.”

Larry Edelman and Jon Chesto of Globe staff and Globe correspondent Beth Healy contributed to this report.