A Fidelity Investments Veteran: An Interview with Roger Servison


By Li Qi

Li Qi, a second-year MPA student, recently interviewed Roger Servison, President of Strategic New Business Development of Fidelity Investments, one of the largest mutual fund and financial services groups in the world. Fidelity now has over $4.0 trillion in assets under administration and over $1.8 trillion of assets under management.

Mr. Servison was the 301st employee in Fidelity in the 1970s, and now the company has a global workforce of over 42,000 employees. Mr. Servison, a Harvard alumnus, went into real estate business at first. But due to the stagnated U.S. economy at that time, he then turned to Fidelity to seek better opportunities. During the interview, Mr. Servison sometimes pondered and looked afar through the window of his office, as if he was recalling his decision forty years ago.

Li Qi: Could you tell us some inside stories and your legendary experiences in leading Fidelity?

Roger Servison: Well, I think one of the advantages we had was once we began to sell directly to customers without going through intermediaries, we had the opportunity to talk to our customers. So I would spend part of everyday on the phone taking calls from customers, just thinking about questions they were asking and what concerns they had. I found that was one of the best ways to get ideas for new products and services. We found, for example, that we always thought people either bought individual securities or they bought mutual funds. And what I learned from listening to our customers was that a lot of the customers did both. So we said: “Gee, if we can sell mutual funds directly to our customers, why can’t we sell individual stocks and bonds as well.” So we set up another company which is a security brokerage company, then we had a mutual fund business and a security brokerage business. That became very successful. Because we were doing it over the phone, we did not have a lot of branches or anything, our costs were lower. So our competitive advantage was that we passed those cost savings to our customers. So our fees were lower. And that was a big advantage.

Li Qi: So you are always thinking about the needs of the customers. Could you tell us some other interesting stories?

Roger Servison: Another example. There used to be a very popular television program on Friday nights called “Wall Street Week”, which was a program where the moderator would have experts from Wall Street come and talk about markets and everything. At the end of the program, they would answer questions from the viewers. I used to watch the program a lot. It occurred to me from listening to a lot questions the viewers had that people would write in and say: “I am interested in energy. Can you give me some names of the companies that are in the energy business?” Or “I am interested in technology.” Historically, mutual funds were diversified across all industries. But I said: “Gee, there are a lot of people who want to invest in a particular industry but don’t know a lot about how to find the right companies. We should have some funds that invest in only one industry.” So we set up a family of funds on energy, precious metals, health care, technology and utilities. Each of the funds just invests in that one industry. That became very popular with people. So we are sort of in between the highly diversified mutual funds and buying an individual company. You could invest in an industry, and we would diversity across many companies within that industry. So we found there are a lot of segments of the investing public. Some people want to just turn it over to us and have us to do everything. Some want to focus on investing in industries that they are interested in and let us pick the companies. Other people would like to select their own individual stocks and do it all by themselves. So we said: “let’s service all these different types of customer segments with different products.” But we are able to use the same back office technology, the same telephone customer service operation. So it became a very efficient way to service a wide range of investing public.

Li Qi: Could tell us some changes in terms of the customers you service?

Roger Servison: When we were growing the business in the 1980s, many of our investors were people in their 20s, 30s and 40s. They were saving money for retirement that was 20 to 30 years off. So that meant they wanted their investment to grow over time. Now we have this large group of customers that have been with us all the time, and now they are beginning to retire. So now they want to begin to generate income off all those investments they have accumulated. So now it means we have to offer a different type of product to them, not products that can grow over time but products that can generate steady income. So we have been providing products that are going to generate more steady income. Then we have to also think about the new generation of young investors who grew up in a digital world.  They don’t use telephones. They use smart phones. They don’t want to call the 800 number to talk to a person. They want to email us or twitter us. So we have to learn how to communicate with and service this new generation.

Li Qi: So do you have any new APP for the new generation?

Roger Servison: Yeah. We have this APP called “Fidelity Anywhere”. It tells me what the market is doing right now. I can check the status of individual stock. Let’s say, for example, IBM is at $173, not doing well right now. It was $200 at one point. I can get a chart on it. If I want, I can get news on IBM. I can also buy or sell the stock.

Li Qi: Could you share some of your thoughts with the students who are interested in or want to pursue a career in the financial industry?

Roger Servison: I think everybody should have some level of financial information because all the governments have basically put the responsibilities of saving for retirement on each of us individually. It used to be in the US that companies would set up a pension plan. If you stayed with them for 20 years or more, they just gave you salary for the rest of your life after you retired. You did not have to worry about your retirement as long as you stayed with the company. They would take care of you. That’s changed now. Now it’s all on the individual. So I think everybody should have a certain level of financial knowledge about borrowing, saving and investing, and enough so that they can ask the right questions and know how to find the best firm to do business with.

Li Qi: I will probably in this winter do some field research in Chinese market on concerns of private business owners. What is your take on this regard?

Roger Servison: What we find in China is the banks pay literally no money on the deposits. So people don’t like to give money to the banks. The stock market is very volatile. So people put their money in real estate. They keep buying apartments and apartments. But the problem is those prices are getting so high now. So you wonder how long that can go before the prices collapse. Right now, the Chinese cannot invest outside of China. The banks are not a good option. The stock market is not a good option. Real estate looks like a bubble. So it is a challenge. We think in this new Free Trade Zone in Shanghai, the Chinese government will begin to relax the rules there and let people in that area to invest outside of China.

 

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