Charles Goldman, the president who oversaw Fidelity Investments’ services for financial advisors, will leave at the end of March, the second top manager in a week to depart from the mutual fund giant. Also exiting Fidelity is the company’s President Rodger Lawson, the number two executive under Chairman and CEO Edward “Ned,” Johnson. Lawson leaves at the end of March as well.
Why all the turnover in top brass at Fidelity? Goldman had been on the job barely a year after being recruited from rival Schwab Institutional, where he led support services for financial advisors. Goldman’s hire was part of a big push at the firm a year ago to challenge Charles Schwab, led in part by Lawson. He was charged with integrating the firm’s custody unit and its clearing business, National Financial, creating a single entity that would serve fee-only advisors as well as commisson-based advisors who dabble in fee business.
Fidelity’s explanations for the executives’ departures aren’t generous in detail. Goldman decided to leave “to pursue opportunities outside the firm,” spokesman Vin Loporchio says. Lawson, who joined the company three years ago, told management he felt he had accomplished much of what he had set out to do, Loporchio adds. A third Fidelity manager, Michael Clark, who hired Goldman, left the company last fall, albeit for medical reasons.
Some see a lack of succession planning at Boston-based Fidelity as the problem. Tim Welsh, president and founder of wealth management marketing consultant Nexus Strategy in Larkspur, Calif., says Fidelity’s longtime chairman and chief executive, Edward “Ned” Johnson, hasn’t set up a clear line of future command. That creates problems within the organization. Managers become discouraged because they don’t see career opportunities, Welsh says.
It’s not great for reeling in new advisor business, either. “That brings doubt to the advisor’s mind. Who’s on first over there? Who do we get to know? Are they really committed to the business? Those are the lingering questions that advisors have, because they’re sort of paranoid,” Welsh says. “Did (Fidelity) really have a long-term plan for that executive suite? I don’t think so. Clearly, everyone’s gone now, right?”
Not so, Loporchio says. The heads of the three businesses that reported to Goldman remain at their posts: Michael Durbin, in charge at Institutional Wealth Services; Sanjiv Mirchandani, president of the National Financial, Fidelity’s clearing house; and Ed Orazem, who leads Fidelity’s Family Office Services. There are no plans to replace Goldman; his lieutenants will report to Goldman’s superior, Gerard McGraw, who succeeded Clark as president of institutional products.
“Succession planning is obviously a continuing process at Fidelity as it is at any responsible company,” Loporchio says. “We obviously have a succession plan that we review with our board of directors, but like any major corporation we’re not going to make public our succession plans…We have a significant number of folks internally who are always being developed for various roles, and we also have the ability to recruit from the outside.”
Welsh says Goldman was well-regarded and is thought to have accomplished his mission at Fidelity. Among his responsibilities was adjusting the service model so that bigger firms got better, more personal service. “Charles’ mandate was to improve service. And I think he did do that,” Welsh says. Fidelity says its Institutional Wealth Services ended 2009 with $392.7 billion in assets, up 35 percent over 2008.
