The news quickly spread through Fidelity in London: Abigail Johnson, heir to the US fund giant founded by her grandfather, was tightening the screws on the family empire.

Anxious employees at Fidelity International, a globe-spanning business based in Bermuda and run out of London, began eying the door. Soon dozens were getting nudged out. Then the face of the operation, Chief Executive Officer Anne Richards, resigned.

Finally, on March 6, the hammer fell: Fidelity International began culling 1,000 jobs, nearly one out of every 10 employees.

The job cuts may only be the start. Johnson has started seeding Fidelity International with executives who are intimately familiar with how things work in the family’s Boston stronghold. The goal is to get the business back on track as costs and asset outflows have risen, people familiar with the matter say.

The City of London is still catching its breath. To anyone wondering just who’s in charge now, consider: Fidelity International no longer has a CEO. It bestowed that title on Richards, Dame Commander of the British Empire and a media-savvy member of the Davos set (she’d previously held the rank of CEO at M&G Investments, which introduced mutual funds to the UK in 1931, before Fidelity was even founded). Her replacement, an American who spent 20 years at Fidelity in Boston, will hold a lesser title: president. Like his predecessor, he’ll report to Abby Johnson – chair of Fidelity International.

Inside Fidelity Investments, a private US company with 75,000 employees, 50 million customers and $4.9 trillion of assets, the implications are clear. A decade into her reign atop the firm established by her grandfather Edward “Ned” Johnson II in 1946 – and built into a giant by her father Edward “Ned” Johnson III – Abby Johnson seems determined to shake up a few things, the people familiar say.

Johnson, 62, CEO of FMR, parent of Fidelity Investments, is among the most influential women in finance today. Given her stature and wealth, few at Fidelity – or anywhere else in the industry – are willing to speak openly about her.

But interviews with about a dozen current and former employees, including several familiar with Johnson’s thinking, paint a portrait of the $776 billion asset manager, Fidelity International. Executives elsewhere in the City of London and recruiters, who’ve been hearing from Fidelity employees, confirm what those insiders are saying.

As CEO, Johnson has pushed Fidelity Investments far beyond its roots. She’s reduced the company’s reliance on old-fashioned mutual funds – ‘80s stock-picking stars like Peter Lynch, of Magellan Fund fame, have long since faded from the scene – and embraced low-cost index funds popularized by US rival Vanguard Group.

In Boston, Johnson also has expanded into brokerage services, financial advice, cryptocurrencies and venture capital, at times with mixed success. In London, Fidelity International has been slower to change but has also pushed into retail brokerage and more recently into private markets. It doubled headcount in certain departments, but those moves have blown out costs, people familiar with the matter said.

In Boston, she recently shuffled management at Fidelity Investments and cut 700 jobs (to put Fidelity’s size in context, Goldman Sachs Group Inc. has 45,300 employees to Fidelity’s 75,000). Now London is coming in for a similar treatment.

Johnson almost never speaks to the news media and declined to be interviewed for this story. Fidelity International did not make Richards, 59, who will become vice chair of the firm, available for an interview.

In a statement, Fidelity International said of the developments and of Johnson: “Our senior management team and board collectively decides the strategy for the organization. Our chairman fulfils that role, as you would expect a chairman to do.”

Fidelity Investments has legions of fans in the US. Fidelity International, by contrast, has mostly flown under the radar. It was set up in tax-friendly Bermuda with the aim of managing mutual funds specifically for non-US investors. London, initially home to a research arm, grew into a key base. Today the company has a presence in 25 or so other locations around the world, including Hong Kong, Tokyo and Mumbai.

Established in 1969 as the overseas arm of the Johnsons and spun out as a separate company 11 years later, Fidelity International is now being pushed to fall in line. The Johnsons are said to control roughly 40% of the business, known internally as FIL (Fidelity declines to disclose the exact current stake). Fidelity International executives and other senior staff control the rest.

Technically, FIL is an independent company with its own board. But people inside and close to the firm are under no illusions about who’s calling the shots. In UK corporate filings, Fidelity International characterizes Johnson as the only person “with significant influence or control.” She became chair of FIL in 2016, two years after succeeding her father as head of Fidelity Investments parent FMR (Ned Johnson, who also preceded her as FIL chair, died in 2022, at age 91.) 

From the start, Abby Johnson took a close interest in Fidelity International, former long-standing staff say. She’s maintained a strong relationship with many of its senior executives, including those on the investment side.

But the message people at Fidelity International are hearing these days is a little less friendly: Get it together. Some funds have hemorrhaged assets, even as costs have climbed, people familiar with the operation say.

The cuts announced internally in early March followed months of creeping dread. London executives had been warning that the pressure was building, according to employees. Insiders say dozens of people – from the investment, wealth and compliance teams, among others – were quietly shown the door in small, unofficial rounds of layoffs before the bigger, official one in March.

In a statement, Fidelity International said cost pressure has challenged the industry and that the firm is continually looking at steps to right-size the business.

A full picture of Fidelity International is difficult to piece together because of the company’s structure. But regulatory filings in the UK offer a glimpse.

Over the past few years, the performance of the UK business – which handles about half of Fidelity International’s $776 billion in assets under management and accounts for roughly a third of its employees – has been mixed. In 2022, for instance, its assets fell 16%. Revenue rose 6% that year, but costs rose even more: 11%. Headcount jumped by 12%.

The bigger picture isn’t great either. According to Morningstar Inc., $15 billion flowed out of Fidelity International’s actively managed funds in 2023. That’s only $3 billion less than all the money that flowed into them between 2018 and 2023. Those 700-or-so funds handle roughly half of its assets.  Over the past three years, overall costs have risen faster than revenue, according to UK regulatory filings and people familiar with the operation.

The Johnsons have certainly kept tabs on their London outpost over the years. Like her father, Abigail Johnson tends to visit London several times a year (she sometimes makes the December holiday party). She usually works out of the offices of Fidelity International, near St. Paul’s Cathedral, rather than from Fidelity Investments, less than a mile away, former staff said.

Once, employees could tell Ned Johnson was in town by the Wellington boots outside his door. A clue to Abby Johnson’s arrival: more flowers at the reception desk. 

When Richards arrived, she needed few introductions. She was made Dame in 2021 for her work in the City by Queen Elizabeth II. With a high public profile and penchant for courting the media, she stands in sharp relief to the press-shy Johnson. She was only the second outsider in FIL’s history to be appointed CEO without first having spent time at Fidelity International or FMR.

In an interview with the Financial Times published in 2020, a year into her tenure as CEO, Richards acknowledged that Fidelity International hadn’t shined as brightly as many might’ve hoped. She said her ambition was to turn Fidelity International into the asset manager everyone wanted to beat.

That job now falls to her successor, Keith Metters, a Fidelity lifer who arrived in London four years ago. Meantime, Niamh Brodie-Machura, a 13-year veteran of Fidelity Investments, has been appointed co-chief investment officer, placing her next to Richards’ CIO, Andrew McCaffery.

This article was provided by Bloomberg News.