In 2005 Ned Johnson decided he had to have a 257-year-old Chinese silk imperial scroll, Victory Banquet at the West Garden. It was beautifully painted in vivid colour, decorated in gold and preserved in a delicately carved red lacquer box with a jade clasp.
At Christie’s auction house in Paris, agents for wealthy collectors bid for the scroll, which was expected to make $1.4 million (about £800,000 then). James Hennessy, a renowned Mayfair-based Asian art connoisseur, represented Johnson, but unlike other agents he had no phone to his ear to take instruction. He simply kept topping rival bids until everyone else dropped out. The final price was $7 million.
Johnson never shied away from imposing his will. The previous year he had seen off a challenge from his daughter, Abigail, over the running of FMR, the family-controlled parent company of one of the world’s biggest stock and shares managers, Boston’s Fidelity Investments, and its counterpart covering London and the rest of the world. He was so reluctant to hand over the reins that he went to the length of issuing himself enough shares to outvote his three children. Abigail was made to wait ten years before she was allowed to succeed him as chief executive, and another two before she was made chairwoman. “He could be counted on to have the contrarian view on just about anything,” she said.
That single-mindedness led Johnson to shrug aside his own father’s view of Fidelity as a business that placed duty over profit. When he took over in 1977, the company was managing $3.9 billion in assets under management. When he retired as chairman in 2016 (by then well into his eighties), Fidelity was handling $5.7 trillion and several members of the family were billionaires.
In doing so, he created a generation of small investors who could use their rising incomes to share in the 1980s global economic expansion. He sold investments directly to the public, instead of them having to go through brokers. Fidelity was the first fund manager to offer a toll-free telephone number for customers to ask questions or invest, and later one of the first with a website. It cut out banks by letting the public write cheques on their deposits in money-market funds.
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The tall, slim, often gruff Johnson had a whimsical sense of humour. His office was littered with frog statuettes because the acronym for one of those funds, the Fidelity Daily Income Trust, Fdit, sounded like a frog’s croak.
“He inherited a relatively small, regional asset manager and built it into a financial services giant,” said Robert Pozen, a Fidelity executive for 14 years.
Johnson’s timing was fortuitous. American retirement saving and planning was about to change fundamentally as US companies, followed eventually by British employers, began to move away from guaranteed pension plans. In 1978 the US Congress enacted the 401(k) account, an employer- sponsored retirement plan that invested in the stock market but which was ultimately run by the individual employee, who bore the risk of gains and losses. Johnson correctly bet that these plans would capture the public imagination and become the cornerstone of millions of people’s retirements.
He was impressed by Japan during its economy’s high growth in the 1980s, and in particular by kaizen, the philosophy of small, continuous improvement. “The wonderful thing about making small changes,” he said, “is that you can see the effect they have on the whole system. If a small change does not work well, it can be easily reversed. And if it does work, you can make another change, until cumulatively a tremendous change has been created.”
Johnson was relentlessly curious, particularly about technology. He never relied on one source or one opinion, operating an informal management style where decisions were hashed out through rigorous argument, often while he took apart and reassembled office staplers. Naturally, he had the last word, but he reluctantly followed the more recent trend away from funds run by stockpicking fund managers to computer-driven index funds. According to Anthony Bolton, who for 28 years ran the group’s highly successful Special Situations fund in London: “He always wanted to know what I had bought and why, and would tell you straight off if he thought that you were talking rubbish. He would get worked up if he thought he was right and you were wrong, especially as he was usually right.”
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Johnson liked to keep fund managers and other staff on their toes, sometimes giving two employees the same assignment to see who would come out on top. He disliked public speaking, rarely communicating with his thousands of employees, and even less so with newspapers or television.
“He was an old-style, proper Boston Yankee who thought you were boasting and acting unseemly if you got your name in the paper,” said the New York Times journalist Joe Nocera. “When his advisers told him that Fidelity would have to talk to the press, his response was, ‘Fine, as long as it’s not me.’” That was one of his more diplomatic takes on the media.
Edward Crosby Johnson was born in Boston in 1930, son of Edward Johnson, a lawyer by training, and Elsie, a keen photographer. The Johnson family, whose Boston roots date back to 1635, made its first fortune from a local department store, CF Hovey, which was eventually subsumed into Macy’s.
Ned’s father was expected in due course to run the store, but in the 1920s he fell in love with the booming stock market. He invested through a small fund, Fidelity, becoming such a big client that in 1946 he bought the entire business.
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The family lived in the affluent suburb of Milton, birthplace of the elder President Bush. Ned attended Milton Academy but his education suffered because of dyslexia. He dismissed a teacher who corrected his spelling, saying that he would have an aide to proofread. “Reading was very hard for him,” said James Curvey, a former Fidelity president. “He was very visual.”
Johnson went to the New Preparatory School in Cambridge, Massachusetts, a crammer for Harvard, from where he graduated in 1954. The US army sent him to Germany, where he acquired a taste for riesling. He took a clerical job with Boston’s State Street Bank, filling out stock certificates, before joining Fidelity in 1957. He soon showed that he had inherited his father’s feel for investment.
In 1960 he married Elizabeth, née Hodges. They had three children, Abigail, Elizabeth and Edward. Abigail runs Fidelity; Elizabeth helps to run the family’s charitable activities; and Edward is president of Pembroke, a real estate firm that Fidelity owns. The family lived for nearly half a century in the same central Boston townhouse, a short walk from the company’s office.
Johnson became the firm’s president in 1972 and chairman and chief executive after his father retired in 1976. He invested in technology, installing generators under the walkways of Fidelity’s offices. As the company expanded he shifted employees to offices outside the high-tax Massachusetts. His private family office moved to New Hampshire for tax reasons.
The company made shrewd investments in Boston commercial property. Johnson successfully campaigned for Boston’s Commonwealth Pier to be redeveloped into the local World Trade Centre. James Rooney, president of the Greater Boston Chamber of Commerce, said: “That stimulated the transformation of the seaport over the past 25 years.”
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It was his idea in 1969 to take Fidelity beyond the US, opening a Tokyo office that year and what was at first a London research office in 1974, which became one of the UK’s leading fund managers. Fidelity International now operates in more than 25 countries and manages an impressive $812 billion but is much smaller than the US operation.
Johnson was determined that his family would maintain its grip on the business. In 2007, in a rare interview, he said that was necessary to provide stability “and an ongoing philosophy or culture of doing things a certain way”. Investors’ best protection, he said, was not “laws or a chairman’s so-called independence” but the leadership’s moral fibre. He fought attempts by the US Securities and Exchange Commission to separate the governance of Fidelity’s funds from that of the management company.
The family’s Brookfield Arts Foundation supported the Massachusetts arts community, though no museums or libraries bear their name. Although Johnson gave millions of dollars to charity through family trusts, he tended not to let himself be locked into long-term commitments, preferring to stay flexible. He avoided outward displays of wealth, taking the Underground rather than taxis in London and keeping his papers in a well-worn rucksack.
Johnson always shared his father’s fascination with Asia, spending a month or more each year trekking through Japan or China. As an avid collector, he took a particular interest in New England furniture and was often attracted to Chippendale pieces; he would carry a flashlight to verify that the joinery was authentic. He owned several hundred grandfather clocks, and through Fidelity Charitable he had Yin Yu Tang, a two-storey 18th-century house from Anhui province, near Shanghai, flown in more than 2,000 pieces to the Peabody Essex Museum in Salem, Massachusetts.
“He loved his family, his co-workers, work, the stock market, art and antiquities, tennis, skiing, sailing, history and a good debate,” Abigail said. Yet her father never lost his passion for privacy. When he was asked when Fidelity might market its shares to the public, he answered: “When I’m dead and buried.”
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Ned Johnson, fund manager, was born on June 29, 1930. He died of complications from dementia on March 23, 2022, aged 91