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

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
By  Bloomberg

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)

Latest News

'Bogged down' advisors just want to have fun (again)
'Bogged down' advisors just want to have fun (again)

Jim Cahn, of Wealth Enhancement Group, lifts the lid on his firm's partnership model, his views on RIA M&A, and the widely slept-on reason why advisors are merging into larger organizations.

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.