Fidelity CEO says zero-fee funds aimed at attracting new customers

Johnson says way to prosper in financial services is 'by building relationships'

Sep 14, 2018 @ 3:00 pm

By Bloomberg News

Fidelity Investments CEO Abigail Johnson said the company's decision to launch a series of no-fee mutual funds had a simple rationale: Bring in new customers.

"The objective was to lower the friction and get more people to try Fidelity," Ms. Johnson said in a brief interview. "The hope is they will like it and want to do more business with us." She spoke Friday after an event at Fidelity's Boston headquarters about technology in finance.

In August, Fidelity introduced two zero-expense index funds and this week it announced two more, the latest round in a price war that has steadily driven down the cost of investing. The first two funds attracted nearly $1 billion last month.

Fidelity also cut fees on its existing index mutual funds in August and said investors could open accounts with no minimum balance required.

Asked how Fidelity would make money on the no-fee products, Ms. Johnson said, "You don't make money on every customer in financial services. The way you make money is by building relationships and doing a great job."

Fidelity manages about $2.6 trillion.

(More: Mutual fund fee wars will encourage bad behavior)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

How interest rates have affected different types of insurance

Social media and engagement editor Scott Kleinberg and reporter Greg Iacurci discuss a common theme in this week's popular insurance stories.

Latest news & opinion

Joe Duran has a game plan, and anyone can play

The CEO of United Capital built a formula for holistic financial planning that any firm can tap into — for a price.

Ladenburg chairman Phillip Frost steps down

The SEC charged Frost with fraud earlier this month.

Envestnet Tamarac partners with Schwab, TD on digital account openings

Auto-filling documents designed to make onboarding more efficient for RIAs and more convenient for clients.

Wells Fargo plans to cut staff up to 10% within next three years

Bank is struggling to cut spending amid regulatory fines and higher legal costs stemming from scandals.

Universal life insurance lawsuits underscore product risk

Sudden cost increases could cause clients to pay much higher annual premiums — or lapse their policies.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print