PHILADELPHIA — Financial advisers are reeling from the abrupt resignation of Ellyn A. McColgan last week from
Fidelity Investments.
Ms. McColgan, who in April was promoted to president of Fidelity’s distribution business, was widely viewed as a staunch proponent of advisers within the Boston-based fund giant. But her sudden departure, which was announced last Tuesday, has some advisers fretting that they and their clients will become less of a priority at Fidelity.
“I can say I’m disappointed because I did like and respect her and believed she felt the same about us,” said Harold Evensky, president of Evensky & Katz Wealth Management in Coral Gables, Fla.
“I’ve always felt very positive about her interest in the adviser world,” said Mr. Evensky, whose firm keeps a portion of the approximately $550 million it manages under custody at Fidelity.
Thanks in part to Ms. McColgan, 53, Fidelity had just started to “open up their adviser services to be more inclusive,” said Bedda D’Angelo, president of Fiduciary Solutions in Durham, N.C., who also keeps assets under custody at Fidelity.
Fidelity, for its part, says advisers have little to fear regarding Ms. McColgan’s departure.
“Fidelity is as committed to the adviser market as ever,” company spokesman Vin Loporchio said.
Ms. McColgan in November brought John W. “Jack” Callahan over from the retirement side of the company to be president of Fidelity Registered Investment Advisor Group. Like Ms. McColgan, Mr. Callahan, who joined Fidelity in 1991, has good relations with advisers.
Recognizing that Fidelity needs to work more closely with advisers in order to retain the assets of retiring baby boomers, Mr. Callahan is helping to build an improved referral network that moves Fidelity accounts into the hands of registered investment advisers more systematically.
He also is spending more money on technology to improve Fidelity’s custody platform.
Fidelity must have realized Ms. McColgan’s departure would cause some unease, said one prominent adviser who keeps a portion of his firm’s more than $7 billion in assets in custody at Fidelity and asked that his name not be used. He said that someone from Fidelity called him as soon as news of Ms. McColgan’s resignation hit the street to assure him that his needs would be looked after.
Host of changes
Ms. McColgan’s departure comes just three weeks after Rodger A. Lawson, a one-time Fidelity marketing whiz, was tapped to become president of FMR Corp., which runs Fidelity.
Ms. McColgan reported to Mr. Lawson.
Mr. Lawson replaced Robert L. Reynolds, who was appointed to the position in 2005, replacing Abigail Johnson, daughter of Edward C. “Ned” Johnson III, chairman and chief executive of FMR. Mr. Reynolds retired in April. Ms. Johnson was moved to president of Fidelity Employer Services Co.
Ms. McColgan’s departure may not be the end of changes within Fidelity’s upper echelon.
“From what I understand, Ellyn’s just the start of a lot more changes,” said Richard Sincere, a former Fidelity marketing executive who is CEO of Sincere & Co. LLC, a Holliston, Mass., firm that helps asset managers sell products and services through advisers.
“That’s speculation,” Mr. Loporchio said.
Fidelity, however, is “well prepared” to manage through any management changes, he added.
Two factors seem to be fueling the changes: Who will succeed Mr. Johnson, 77, as chief executive of FMR, and how best to improve Fidelity’s lackluster mutual fund performance, industry experts said.
Succession saga
Ms. McColgan’s departure is most likely succession-related, according to industry sources.
Having once been considered a possible successor to Mr. Johnson, Ms. McColgan may have realized that Mr. Lawson’s selection as president of FMR made that less likely, said Charles “Chip” Roame, managing principal of Tiburon (Calif.) Strategic Advisors LLC.
It’s not that Mr. Lawson, 60, is a likely candidate for the job of CEO, Mr. Roame said. It’s more likely that he was brought on temporarily.
Mr. Lawson’s appointment allows Mr. Johnson to focus more of his attention on improving fund performance, while at the same time giving both Ms. McColgan and Ms. Johnson more time to prove themselves, Mr. Roame said.
That may have not have sat well with Ms. McColgan, who early on expressed her desire to rise in the company.
“I think I have a reputation for being a results-oriented manager,” Ms. McColgan told InvestmentNews in September 2001. “My experience with Fidelity is that if you put the results up on the board, you are going to have a great career here.”
Ms. McColgan could not be reached for comment.
Whatever the reason for her departure, it makes it more likely that Ms. Johnson, 45, will eventually ascend to the role of CEO, said fund consultant Burton Greenwald, president of Philadelphia-based B.J. Greenwald Associates.
“It eliminates one potential competitor for the top spot,” he said.
For the time being, however, advisers are left to wonder what impact the game of musical chairs will have on them. Until a permanent successor to Ms. McColgan can be found, Mr. Lawson will take over her responsibilities.
“Any change is potentially scary, but hopefully it will be for the best,” Mr. Evensky said.
