Fidelity’s Abby Johnson has a chance to set a higher standard
Can Abby Johnson retire the old boys’ club?
Johnson, the CEO and chairwoman of Fidelity Investments, finds herself in the middle of her first public crisis, and how she handles it may very well shape her legacy at the company and in the money management industry.
The staid Boston mutual fund giant has been buffeted in recent weeks by allegations, first reported in The Wall Street Journal, of sexual harassment and bullying inside the company’s famous stock-picking unit. At least two senior male portfolio managers, including star fund manager Gavin Baker, have been forced out.
The complaints are all too familiar in this post-Harvey Weinstein world: a male-dominated culture gone awry, where fraternizing is rewarded and lines can be easily crossed, and where people look the other way because there’s money to be made.
This is a unit where the legendary Peter Lynch picked stocks, and where Johnson herself was an equity analyst nearly three decades ago as she worked her way up the family business — one started by her grandfather and built into a powerhouse by her father, Edward “Ned” Johnson III.
Abby Johnson took full control of the closely held company in December, when her father stepped down, and she hasn’t hesitated to show who’s the boss in responding to the sexual harassment allegations.
She personally decided to fire Baker, who was one of the company’s highest profile fund managers, overseeing nearly $17 billion in assets. He was known for an aggressive style, making bets on emerging tech companies such as Uber and Tesla. He was shown the door last month after a 26-year-old female equity research analyst filed a complaint against Baker with the human resources department alleging sexual harassment.
Baker, through a spokesman, denies those accusations.
On Monday, thousands of Fidelity employees were greeted with a minute-long video message from Johnson, who declared “we have no tolerance at our company for any type of harassment. We simply will not, and do not, tolerate this type of behavior, from anyone.”
In the video, provided to the Globe, Johnson said the company will investigate allegations and take appropriate action.
“This is an extremely important issue for me and the leadership team and one that should be very important to each and every associate,” she said. “I expect when issues occur, associates will raise them, so we can fix them and make sure they don’t happen again. Together, we own our culture and the experience of our associates, and we should be very proud of both!”
Johnson has brought in a workplace consultant to examine whether the equity division is hostile to female employees. While Fidelity has women in senior roles across the company, equity fund management tends to be dominated by men. Women made up 9.5 percent of Fidelity’s equity fund managers in 2016, according to research and data firm Morningstar, a figure that is on the lower end compared with competitors T. Rowe Price (11.1 percent) and Franklin Templeton (13.8 percent).
But I hope Johnson does more — much more than just put this one unit under a microscope.
Here’s why: We are in an unprecedented moment for women everywhere, where silence is no longer golden. Women feel strength in numbers to come forward and talk about gender discrimination in the workplace, from New York to Silicon Valley to Hollywood. As one of the most powerful women in business, she can lead the charge in cleaning up one of the oldest boys clubs of all — the world of managing money.
This is not about being politically correct. This is about how Fidelity can make more money by doing the right thing. In an interview on Bloomberg TV in September, Johnson acknowledged the need to hire more women at Fidelity because their customers are asking for them.
“We have a real need in our business right now to recruit more women, because when women customers come into our branches, very often the first thing they say is . . . I’d like to work with a woman,” said Johnson, explaining that female customers feel more comfortable with female advisers.
Let’s put this against the backdrop of the great wealth transfer in which women are expected to control half of this country’s private wealth by 2020. Then let’s put another fine point on this: Fund teams led by both men and women deliver better investment returns than funds run by men or by women, according to Morningstar research.
“Fidelity is a giant in the mutual fund industry, so if Abby Johnson is able to foster an environment where women and men are on a par from a leadership perspective, that would create an important example for peer firms,” said Laura Lutton, fund research director at Morningstar.
I keep thinking back to Fidelity’s last big mess. About a decade ago the company paid $8 million in fines to settle federal charges that its traders improperly received gifts, including junkets on private jets, gambling outings, hiring of women believed to be prostitutes, and engaging in “dwarf tossing” as entertainment.
Fidelity blamed a few bad apples, fired them, and tightened its gift policies.
This time around, Abby Johnson should signal to the boys that she’s just getting started. She should examine workplace culture throughout the company, and whether Fidelity does enough to make sure women feel they are in a place where they can thrive.
If she has to fire bushels of bad apples, it will only be a better company in the end.