From the September 2007 issue of Investment Advisor • Subscribe!

Life After Ellyn McColgan

Her sudden departure from Fidelity is a loss for advisors

Ellyn McColgan's abrupt resignation from Fidelity Investments last month is not only a big loss for the Boston-based fund company, but also for advisors. Ellyn was "passionate about Fidelity," says Jim Lowell, editor of Fidelity Investor, but she was also a "true leader in brandishing the advisor business as a clear and compelling business within Fidelity's empire."

McColgan, who was promoted in April to president of Fidelity's distribution business, was seen as a likely successor to Fidelity's chairman and CEO, Edward "Ned" Johnson. But three weeks prior to her departure, Rodger Lawson, a former marketing star at Fidelity, was named president of FMR Corp., and McColgan, who had been reporting directly to Johnson, was told to report to Lawson. Industry observers say that didn't sit well with McColgan.

Fidelity has been losing mutual fund market share to Vanguard and American Funds, so Lawson was brought in to reorganize a mission and message around a marketing campaign that focuses on Fidelity's investment products, specifically its mutual funds, says Lowell. Over the last decade, Fidelity has instead focused its advertising efforts on "pitching [the fund company's] platform and its ability to be a great service provider--whether you've got an IRA rollover or 401(k) plan," Lowell adds. That particular marketing focus is "not the whole issue behind [Fidelity] losing market share to Vanguard and American Funds, but it's certainly part of it." Fidelity says that Lawson, who recently was appointed to oversee distribution and operations as well as other parts of the company as president of FMR Corp., will assume immediate day-to-day control over distribution, at least until McColgan's replacement is named.

But industry observers say Lawson may be a temporary patch, and he isn't necessarily going to take over the reins from Johnson, who's 77. Abigail Johnson, Ned Johnson's daughter, president of Fidelity Employer Services Co., now looks like the heir apparent. But in Lowell's mind, "Abigail Johnson would have been much better with Ellyn as a co-equal leader than she ever will be on her own."

Two High-Profile Women Gone

McColgan's departure comes on the heels of Debby McWhinney's abrupt resignation from Charles Schwab earlier this year. Harold Evensky, president of Evensky & Katz Wealth Management in Coral Gables, Florida, says both women were "positive and responsive with the issues that advisors had." What advisors are faced with now is the "unknown" of who will replace them, Evensky says. But Steve Austin, a Fidelity spokesperson, says Fidelity is "as committed as ever before to advisors."

While Lowell expects to see more "shuffling over the next few months" at Fidelity, the good news now for advisors is that they still have another advocate in John "Jack" Callahan. McColgan, who had mentored Callahan in his stints at prior Fidelity businesses, in November named him president of Fidelity Registered Investment Advisor Group (FRIAG). Evensky says he's looking forward to the day that Fidelity's newly expanded referral program for advisors called Wealth Advisor Solutions, which Callahan helped to spearhead, makes its way to his area. Evensky's wait may not be too long: Fidelity announced July 22 that it would expand the program to New York, Connecticut, New Jersey, and southern California, although a launch date for Florida was not mentioned.

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