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Fidelity Investments: A family affair

August 29, 2012: 3:30 PM ET

Fidelity Investments has put Abigail Johnson in charge of a new group that oversees the company's core businesses, a move many see as a sign she will eventually succeed her father as chief executive.

Edward "Ned" Johnson, 82, has been Fidelity's CEO and chairman since 1972.

Fidelity has been run by the Johnson family since it was founded in 1946. The Boston-based company operates some of the largest mutual funds in the world, with $1.6 trillion of assets under management as of July 31.

Abigail Johnson, 50, was named president of Fidelity Financial Services late Tuesday.

In her new role, she will oversee the company's asset management business, brokerage operations, retirement and benefits services, among other corporate responsibilities and report directly to her father.

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Ned Johnson said his daughter has gained broad experience in her 24-year career at Fidelity. "She has demonstrated an ability to drive change and innovation in business practices on behalf of our customers," he said.

Abigail Johnson has held top positions in several Fidelity divisions. Most recently, she was president of the group that includes retail and institutional brokerages, as well as retirement and benefits services.

The promotion suggests Abigail Johnson will replace her father, who took the helm from his father 40 years ago. But the company stressed that Ned Johnson is not planning to retire any time soon.

"Chairman Johnson is still actively involved in running the company on a day-to-day basis," said Fidelity spokeswoman Anne Crowley. "He has no plans to step aside at this time."

Fidelity has a succession plan in place, but the company does not discuss it publicly, she added.

Morningstar mutual fund analyst Christopher Davis said the leadership moves will probably not impact Fidelity's financial performance in the short run.

He noted that Fidelity's asset management division, which includes the mutual fund business, will still be run by the same man, Ronald O'Hanley, who will report directly to Abigail Johnson.

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"From an investor stand point, I don't think it makes a big difference," said Davis. "It does send a signal to the rest of organization that if your last name isn't Johnson, you're not going to run the place."

After a stint at Fidelity's asset management business during a time of particularly poor performance, Abigail Johnson was put in charge of the company's retirement division.

The move was seen by some as a demotion, but the retirement business has been an important part of Fidelity's strategy under Ned Johnson, according to Davis.

Overall, he said Abigail Johnson is unlikely to shake things up, given her long tenure at the firm.

"It's not like she's being plucked from outside," he said. "Any changes are likely to be more evolutionary than revolutionary."

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