Odds are good that part of your paycheck disappears into an account with the Fidelity name on it every two weeks. Almost nobody stops to ask who’s actually on the other end of that relationship. The answer isn’t a faceless Wall Street institution, it’s one family that has quietly controlled a $15 trillion company for three generations, through boardroom near-mutinies, a succession fight that almost ended in the company being sold, and enough family drama to fill a book. It did, actually. Wall Street Journal reporter Justin Baer spent years uncovering it, and today he brings the whole story down to the basement.
What You’ll Walk Away With
- Why one of the biggest financial companies in America has never had a single outside shareholder, and what that’s actually protected them from
- The surprisingly personal origin story behind Fidelity’s founder, and the market-crash lesson that shaped the entire company’s philosophy
- Why Fidelity almost missed the money market fund revolution, and the workaround that changed how everyday people access their cash
- The near-sale that almost happened in 2005, and how close the company came to becoming something completely different
- Why checking your 401k balance more often might actually be good for your financial decision-making, according to Fidelity’s own research
- How a family succession battle nearly pushed the current CEO out of the business entirely
- A useful mental gut-check for figuring out how much of your “checking account cushion” should actually count as part of your emergency fund
Why This Matters Now
If you’re in your 40s, there’s a good chance you’ve had a relationship with Fidelity, Vanguard, or a similar company for two decades without ever really knowing how they work or who’s behind them. That’s not a knock on you, it’s just how most financial relationships start: automatically, through a job, without much choice involved. Understanding the incentives and history behind the company holding your retirement money doesn’t change your investing strategy overnight, but it does replace a vague, faceless trust with something more informed, and informed trust is a lot more durable than blind trust.
From the Basement
A conversation about $189 average dates turns into a surprisingly sharp point about not overspending to impress someone before you even know if it’s a match, in relationships or business. And a basement community note about “hidden” emergency funds sitting in checking accounts sparks a genuinely useful reframe worth stealing for your own budget.
Resources Mentioned
Field Kit Finance — the all-in-one net worth, budgeting, and credit tracking tool mentioned in the sponsor break
House of Fidelity: The Rise of the Johnson Dynasty and the Company That Changed American Investing — Justin Baer’s book on the Johnson family and Fidelity’s history
Our Headline
Doug’s Trivia
- What luxury automobile company did General Motors purchase on July 29, 1909?
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Other Mentions
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Written by: Kevin Bailey
Miss our last show? Listen here: The One Financial Conversation People Avoid (Plus a Discussion about Stress and Money) SB1874 | Stacking Benjamins
Episode transcript
[00:00:00] Justin: God, Duke’s are going to corner the entire frozen orange juice market
[00:00:11] Doug: Live from Joe’s mom’s basement, it’s The Stacking Benjamins Show
[00:00:25] Doug: I’m Joe’s mom’s neighbor, Doug, and here’s a question. How much do you know about the investment companies that hold your money? We’ve chatted about Jack Bogle and Vanguard in the past, so let’s turn the spotlight on the other behemoth, Fidelity. What’s the story of this brand that holds so much of the world’s money?
[00:00:43] Doug: We’re joined by a guy who’s done all the research, Justin Feurer from the Wall Street Journal. In our headline segment, Gen Z is changing the money game while dating. How are they saving cash while keeping romance alive? Maybe they’re teaching a lesson we can all learn. And then I’ll share some really crazy money trivia.
[00:01:04] Doug: You’re not gonna believe this one. And now, two guys who I can’t believe have shown up to work on time nearly 1,900 times in a row, it’s Joe and O. G-G, G-G, G. Prime time, right?
[00:01:23] Joe: I can’t believe it’s been almost 19- w- 1,900 episodes coming up soon, and it feels like we started yesterday. Hey, everybody. We were here yesterday.
[00:01:33] Joe: We didn’t start yesterday, but it was a great Wild Tuesday show. But we got an even wilder Wednesday because, Doug, as you mentioned, Justin Bear stopping by. And if you’ve never read Justin Bear’s Wall Street Journal pieces, well, you’re in, you’re in luck, ’cause Justin is a phenomenal storyteller, and we always like to hear a great story here on the show.
[00:01:55] Doug: We love great stories. That’s why I usually talk a lot.
[00:01:58] Joe: That is exactly why. And a guy who is talking about, um, well, golf a lot this week, Mr. OG’s here. How are you, man?
[00:02:08] OG: I’m still like I was on Monday. I’m very fair
[00:02:12] Joe: Doing great.
[00:02:13] Doug: You’re coping well?
[00:02:14] Joe: Well, it was funny because the story of Vanguard, OG, was not what people expected when Robin Wigglesworth talked about that a few years ago.
[00:02:22] Joe: Mm-hmm. Of course, it was interesting to find out that Jack Bogle was against the index fund before he was for it , which was a wild part to the story. Also didn’t, didn’t create the index fund, but he was very happy with you thinking that he created- Yeah … the index fund. And not to say Jack Bogle was a bad guy, but certainly there’s a lot of marketing going on with these companies.
[00:02:45] Joe: A lot of people don’t even know, OG, that Fidelity is a company owned by a private family. I mean, that this is not some company with a wild conglomerate of a lot of different companies put together. This is a family-owned business that’s become a big machine.
[00:03:02] OG: I wish I would’ve thought it up. That’s- … seems like a pretty good business to be in right now.
[00:03:07] Joe: Me too. So we’re gonna hear about this family from Justin Bear. And if you don’t know who Justin Bear is, let’s dive into that for a second. He is a senior special writer at the Wall Street Journal. He’s been at Bloomberg and the Financial Times, two other phenomenal places, uh, where the best writers are from.
[00:03:27] Joe: His most recent work has been diving into the Johnson family and the history of the Johnson family, how did they get involved in investing. And then the power struggles that have happened behind closed doors at Fidelity are just fascinating. And whether you’re somebody who’s in a business with other people and there’s power struggles, or you’re somebody who just wants to know how did these institutions come to be, what’s actually going on behind the curtain, he has a long, long history of combining investigative journalism with storytelling that really takes some complex financial histories and makes them much more accessible.
[00:04:10] Joe: So Justin Bear coming up next, but first we have a few sponsors to help us keep on keeping on. We’re going to twice during the show break for them. We’re gonna do it right now, and then we’re gonna do it again in the middle of Doug’s trivia so you can come up with your brilliant answer on that end. So buckle up, guys, because Justin Bear coming down to the basement in just a moment.
[00:04:31] Joe: Well, the great minds at Array and BudgetSimple have helped us create a place where you can do all the different things you have lots of different apps do. We call it your financial field kit, and if you go to fieldkitfinance.com or stackingbenjamins.com/fieldkit, you’ll see that you can not only track your net worth, track your spending, get a debt plan together, monitor your credit, monitor those lists that you’re on where you keep getting all kinds of spam email and spam mails, track your subscriptions.
[00:05:04] Joe: You know, generally all these things you’ve got 50 apps on your phone to do, Field Kit Finance takes it and makes it one. Hopefully, when you hear this, Field Kit Finance is open, but if even if it’s not, you can join the waiting list of people who’ll be the first to know when Field Kit Finance hits. So head to stackingbenjamins.com/fieldkit or fieldkitfinance.com to check it out
[00:05:36] Joe: Well, most of us know of Fidelity because part of our paycheck disappears into a 401that says Fidelity across the top. Magically, some of it shows up there, right? But very few people know the story behind the company itself or the family that’s controlled it for generations. Justin Baer is a reporter for the Wall Street Journal, author of House of Fidelity, a fascinating look at how one family built one of the most influential financial institutions in America, and he is on his way down to the basement.
[00:06:03] Joe: How are you, Justin?
[00:06:04] Justin: I’m doing great, Joe. Great to be here.
[00:06:07] Joe: As I mentioned, most people think Fidelity, and they just think another giant Wall Street company. So who actually owns Fidelity?
[00:06:14] Justin: Yeah, it’s fascinating. Even people who are somewhat familiar with the way the industry works are surprised that Fidelity is not, just given their size and the power of their brand, is not like a lot of their peers.
[00:06:29] Justin: They’re a privately held company That is controlled by a single family, that has been run by three people from three successive generations of that family for what’s now been eighty years. So they’ve had three presidents or CEOs in, in that entire time. So again, very, uh, different from many of the other big financial firms that people deal with on a day-to-day basis.
[00:06:56] Joe: Yeah, you and I can’t buy stock in it, and I wonder how unusual that is in modern finance. ‘Cause I can think of… I was with a friend of mine just an hour ago, and I was like, “Okay, uh, Buc-ee’s,” I’m in the South, right? Mm-hmm. So you’ve got Buc-ee’s, which is privately controlled and is a very quiet family. You’ve got In-N-Out, right, which is another famously quiet, very quiet company.
[00:07:16] Joe: But, but I can’t think of very many companies. Th-this is pretty unusual.
[00:07:21] Justin: Yeah, I mean, uh, you think, I guess, like, Coach Brothers, uh, would be one. Um, S.C. Johnson, the consumer products company up in, up in Wisconsin, that’s another. The Mars family- Oh,
[00:07:33] Joe: that’s a big one, too. Yeah …
[00:07:35] Justin: the candy company. Yeah. That company’s remained in private hands.
[00:07:37] Justin: But yeah, there’s not a lot, and in a lot of industries it’s very difficult to imagine, right? Because going public gives you access to capital markets in ways that be- is a little trickier when, um, when you’re a private business. And so you’ve seen all the, a lot of the great partnerships, uh, on Wall Street, for instance, go public, you know, starting in the ’70s and, and through the ’90s such that now they’re all big public trading companies.
[00:08:04] Joe: Uh, a-and I gotta think it’s easier to get and keep talent. In fact, you say that a lot of people that worked at Fidelity got marvelously wealthy, but not nearly as wealthy as they would’ve been, Justin, had the company been public.
[00:08:15] Justin: Sure. Yes, that’s definitely the case. You know, and as private companies do, they, they come up with different alternatives, different elements of compensation that can, uh, reward folks from staying for, you know, for their performance and, and incent them to stay.
[00:08:30] Justin: Uh, they do have voting shares that they’ve extended to a limited number of, of employees over the year. But it’s a different animal, right, in terms of if you look at the way in which the company’s value or similar businesses have appreciated over the decades. Um, uh, Fidelity Would be worth a lot of money as a public company
[00:08:50] Joe: Well, and I even want to expand on that because just to give our stackers an idea of just how big this company was, ’cause I had no idea until I read your book how big this company was.
[00:09:01] Joe: Let’s put Fidelity’s size into perspective. How big is Fidelity?
[00:09:05] Justin: A lot of folks have probably heard of BlackRock is the world’s largest asset manager. So Fidelity generates more annual profits and higher revenues than they do. They have an asset management business that is not quite as, maybe about half the size of BlackRock’s if, if you measure by assets.
[00:09:22] Justin: But then they also have the equivalent of, of a Charles Schwab bolted on next to that business in that they have a big retirement business, which is, I think, still the biggest in the world in terms of providing services, um, managing 401plans. They have a massive brokerage and retail footprint, so that you go around the country, you’ll see their branches alongside some of the other big players.
[00:09:47] Justin: And then they have this whole other business that essentially provides back office administrative work and custody for lots of independent, uh, broker-dealers and, and banks that wanna offer different kinds of investing platforms to their clients. And then on top of that, you have this wide, vast portfolio of other businesses that the family has, um, through Fidelity’s accumulated, right?
[00:10:13] Justin: So they have a, a large telecom company. They have venture capital portfolios that focus on both tech and biotech and health sciences. They own a, uh, oil and gas company in Texas, so they’re everywhere, right? And so and, and to a point where it’s probably difficult to put a final number on what that company might be worth.
[00:10:36] Justin: You could take BlackRock, and then you’d have to add Schwab to that for starters, right? Wow. So and, you know, and I, I think one of the more sort of impressive factoids that I had heard about them was just particularly over the years how many more people they’ve signed up and touch in the United States and pr- predominantly United States, but also elsewhere.
[00:11:00] Justin: So they serve one in every five, you know, American adults-
[00:11:05] Joe: That’s incredible …
[00:11:06] Justin: which is pretty incredible because, you know, y- you think of the percentage of people who participate in the markets, it’s not 100%. It’s a very large chunk of the investing public and work with them in one of those businesses.
[00:11:21] Joe: Just a company that’s grown that fast over 100 years, roughly, maybe a little more than 100 years. Let’s go all the way back. Ted Johnson is the first name I think we need to know, Justin. Yeah. Uh, tell us about Ted. Who is Ted Johnson?
[00:11:34] Justin: Ted Johnson is Edward Johnson II. He is the founder of what becomes Fidelity Management, eventually Fidelity Investments today.
[00:11:45] Justin: He is a young guy that around 100 years ago is wrapping up law school and expects to step into this sort of life of, of respectability and probity in the Boston legal establishment. And he reads this book that’s kind of a loosely anonymized version of the biography of this character, Jesse Livermore, who was, even before the great crash of 1929, was one of the most legendary traders.
[00:12:17] Justin: You know, he had famously come to Boston from the sticks by horse and buggy, and was dropped off in front of a brokerage and talked himself into a job there, and proceeds to make and lose these vast fortunes over the decades, and marry showgirls and all, and they had this lifestyle that was certainly worthy of being serialized, which it was, and eventually turned into this full book and lands in front of Ted Johnson in- And he’s not, and, and, and-
[00:12:49] Justin: when he was wrapping up law school.
[00:12:51] Joe: Yeah, and, and Livermore a- also isn’t a small character. I mean, he’s… J.P. Morgan, you write, is his mentor.
[00:12:58] Justin: Yeah. Big, big trader. And this book and this account of his life leaves Ted Johnson so smitten and it becomes this, this force that pulls him essentially in a different direction from that point on.
[00:13:15] Justin: And yes, he goes to work at a law firm, but he ends up gravitating toward one of this law firm’s biggest accounts, which is one of the fledgling mutual fund companies that were launched in the ’20s. And he begins to do work for them and, and invests and trades on the side and, you know, his own money. He’s also managing his family nest egg that was created when they sold this dry goods department store in downtown Boston a few years earlier.
[00:13:47] Justin: And he loves the market. And so when the opportunity presents itself to work with this one firm and then eventually to join them full-time, he does. And that leads to him discovering this other, you know, much smaller mutual fund after the crash that was really struggling to recover from that period. And he comes up with the idea of, “Well, why don’t I take this fund over?”
[00:14:15] Justin: And he does. And it’s– this is the original Fidelity fund.
[00:14:19] Joe: The guy that had the fund had called it Fidelity. It’s not his name. No. It was already called the Fidelity
[00:14:24] Justin: Fund. It was called Fidelity Fund, and so Ted Johnson essentially takes that over, and then he builds the organization around that. He builds first a management company that oversees those investments in the fund, and then eventually a sales organization that sells the fund to, to brokers around the country.
[00:14:43] Justin: This was back when there was no direct sale, so everything was done through the brokerage world He was called Ted as a kid. People very quickly, even when he was not at an age when you think that would be the case, everyone called him Mr. Johnson, right? So he had this sort of air of almost regal bearing and is a sort of philosopher.
[00:15:04] Justin: He had all these very distinct views of the way that people should manage money. This is, you know, New England, so everything has a sort of a nautical theme to it. But he had this notion that, like Jesse Livermore, this was a solitary pursuit, that you have one man, and back then it was all men, you know, standing on his poop deck and riding the waves, and you’re either gonna be su- very successful and pick the right stocks, or you would screw up and you would lose money.
[00:15:36] Justin: But that it was you and, and that your fund was an extension of what was inside your brain, and it was a work of art, right? And this is kind of how he always talked and saw the world, and at the time it was kinda revolutionary, right? You know, the other mutual fund managers, they had very much a kind of a team committee approach to investing, sort of either top-down or they had groups of people that were managing these funds.
[00:16:02] Justin: And Ted Johnson, no, it was, it was one person. It was
[00:16:06] Joe: him.
[00:16:07] Justin: And you’re gonna either… You know, I’m gonna hand… You know, as he famously said to his first big star, like, “I’m gonna hand you this rope. Now go hang yourself with it.” Like, “It’s up to you- “… to be successful or not be successful, but whatever happens is your product.”
[00:16:23] Joe: It’s interesting to see names like Peter Lynch emerge from that. Almost like much, much later we go from eating food in restaurants to the idea of celebrity chefs, you know? Right. Sure. And now everybody knows the name of the chef. I gotta ask you about 1929, because he started around this time. What did the 1929 crash teach him about investing?
[00:16:45] Joe: Uh, what type of a mark did it leave on him, Justin?
[00:16:48] Justin: He was an active trader through that period. He was also true to himself, right? He was part of a very conservative family. Had been in, in Massachusetts since, uh, probably the 17th century. He was not gonna take wild, crazy bets like his hero, Jesse Livermore.
[00:17:07] Justin: I think he certainly learned a lot from experiencing that and looking at how, and studying the psychology of the market, particularly in, not nec- even necessarily in the initial crash, but in the aftermath of that. And, and, uh, you know, he described in moments where market had occasionally come back to a certain extent and him sensing that that was sort of a false positive and selling at that moment and saving himself.
[00:17:35] Justin: So it certainly doesn’t leave him any more risk-averse than he was. And if anything, it– And it doesn’t lead him to no longer romanticize what the market is and what it can be, and that’s an important driver in the way Fidelity kinda rolls out and the way they look at the market.
[00:17:53] Joe: That is interesting. It isn’t what it did to him.
[00:17:55] Joe: You’re saying it’s what it didn’t do, right? Yeah. When a lot of people, it washed them out. It didn’t wash him out. It made him still stick to his guns.
[00:18:01] Justin: Stick to his guns and to embrace risk to a certain extent. Maybe not in the direct way that Livermore did or that his first big star Jerry Sei did, but he still risked his business in, in a lot of other ways.
[00:18:17] Joe: One lesson I see throughout your research throughout this project is this, uh, importance of proximity. You don’t really call it out, but it kinda calls itself out. Ted wasn’t born a Wall Street titan, he decides to become one, but he decides to become one partly, Justin, because you bring up the fact that he is right alongside of the very first mutual funds that, that are starting.
[00:18:40] Joe: I mean, you’ve got Putnam there. You’ve got the Massachusetts Investor Trust. Is that what it’s called? Mm-hmm. Massachusetts Investor Trust. So you got these early mutual funds. He’s right there in the place where all this stuff is happening, and he inserts himself. Being that close to the action, what did that teach him?
[00:18:58] Justin: I think maybe the more tactical lesson was the structure of the modern day investment company. So his mentor, Brother Parker, had co-founded one of the original players. And Brother Parker’s idea, what maybe made their firm a little bit different than the other two, is they had this sort of three-pronged organization where you had the fund.
[00:19:24] Justin: The mutual fund itself was essentially one legal entity, and then you had the management company that was paid a fee to oversee that fund. And then you had the sales organization was the sort of third, which was also, you know, would be paid for commissions on sales. Those three organizations, eventually they kind of moved closer together, but that was one approach that Fidelity took on.
[00:19:50] Justin: And then originally when he takes over Fidelity Fund, they’re outsourcing all that stuff. Like they have a separate management company that they hired, and they have a sales organization. And so he says, “No, no, no, we’re gonna do this like Brother’s firm did, and we’re gonna bring that in-house.” So that’s, I guess from, from a technical standpoint, that’s one thing that he definitely learned.
[00:20:11] Justin: I, I, I think it was also significant because, yes, it’s where these mutual funds are born, and even before the first mutual funds arrive, there is this community of, essentially of lawyers that are managing the trusts of wealthy families, right? A lot of wealth was created in New England, um, previous century A lot of the families hired attorneys to manage their estates and through their lives and to their childrens and childrens children.
[00:20:41] Justin: And so that stewardship of managing other people’s money was part of the financial industry in Boston, and a different setup, frankly, than what was happening in the other parts of the country where trusts were managed, were a division within the big banks. If you went to New York or Chicago or somewhere like that, you would run into…
[00:21:04] Justin: Some of those companies are still around today, right?
[00:21:06] Joe: Yeah.
[00:21:06] Justin: Some of the big banks, Northern Trust or, or J.P. Morgan or so forth, Bank of New York, and they had trust departments back then. And Boston had the families there hired someone, a trusted legal advisor to manage that.
[00:21:20] Joe: Another thing that surprised me was people today think of Merrill Lynch as this, uh, expensive financial advisor’s white glove treatment of their clients.
[00:21:32] Joe: But back then, you write that really Merrill was kind of on the front edge of democratizing investing. What was Merrill doing that impressed Ted? Because I kinda feel like him following in their footsteps, going, “I’m gonna democratize investing.” Was– What was Merrill doing that maybe influenced him?
[00:21:50] Justin: Yeah, I mean, Merrill was– they were really the first to really consolidate the brokerage industry to begin with, right?
[00:21:58] Justin: So they roll up all these firms that they buy, and they hire a ton of people, a lot of these guys, veterans from war, and they hire these young guys, and they train them, and they send them back to their hometowns, and they say, “Okay, here’s a phone, and we’re gonna get you an office, and you need to work your network, pitch them stocks and bonds.”
[00:22:18] Justin: And that’s wildly successful. And yes, the, the marketing campaigns and ad slogans that you hear today from, say, Robinhood or, or BlackRock or, or, or Schwab, you name it, they often use the same language, right? They are echoes of what Charlie Merrill was telling people about. You know, and also, you know, this was after the World War II.
[00:22:43] Justin: There was, you know, the New York Stock Exchange had this big campaign of, you know, buy your piece of American industry and all that stuff to get people fired up about stocks and the market. But I think Fidelity would have looked at them as one of the ways in which they could sell their funds Fidelity wouldn’t start to sell funds directly to consumers until the ’70s, and so they were wholly dependent on brokers to get them to investors.
[00:23:13] Justin: So Merrill was very quickly the largest broker in the country as, as we get into the mid to late, uh, ’50s.
[00:23:21] Joe: Yeah, I thought that was pretty wild that, uh, that Merrill is paying his people a salary, you write- Mm … which means that they don’t need to churn accounts, right? To do- Yeah … do all these, uh, these trades that are bad for the investor on the other end, and how different that was.
[00:23:37] Joe: Fidelity had a bunch of innovations over the year. Clearly we’re not gonna be able to go over all of them, but what are two or three of those similar type of innovations throughout the years at Fidelity that Ted, and we’ll get into Ned and Abigail later, but that the Johnson family and Fidelity helped bring about to make everyday investors more comfortable?
[00:23:57] Justin: Yeah. It’s always tricky ’cause sometimes they were not the absolute first to hit on something, but ended up becoming the biggest, biggest player through investment and, and perseverance. One area that really changes things a lot for them and the industry was i- in the early ’70s when interest rates are so high, this idea that had been in the works for a few years finally has its day, and the first money market funds are, are launched.
[00:24:27] Justin: And Fidelity’s wasn’t the first and, you know, by the time they’re developing theirs, there’s two or three other players that are very rapidly hoovering up all this money and become very successful really quickly.
[00:24:39] Joe: And for our new stackers, by the way, who don’t know any of these terms, a, a money market is just a ca- like a cash account inside…
[00:24:44] Joe: I mean, it’s a cash account.
[00:24:47] Justin: Yeah. So it’s gonna hold short-term government debt or, or in some cases corporate bonds and it’s kind of the same thi- And so when rates were super high and the stock market was tanking, this was a good time for money market, so it becomes a very natural… And, and then the other thing that happened that made this so successful- I
[00:25:07] Joe: can just imagine- Just really quick
[00:25:07] Joe: but, but just before we get on that, what type of interest rates are we talking about? Are we talking about, like, 8, 9% on your cash?
[00:25:12] Justin: I think, yeah, I think so. Yeah. Full account. And I think, uh, what was another thing that, that led to the money market funds being as successful as they were right off the bat was that government used to impose limits on the interest that banks could pay on deposits.
[00:25:30] Joe: Oh.
[00:25:30] Justin: So they couldn’t match… You know, the banks couldn’t keep up with- Other forms of debt
[00:25:37] Joe: Big transfer of funds
[00:25:39] Justin: Yeah. So consumers were like, “Well, this is great. I can get a higher yield on this than I could in my bank account.” And so what Fidelity did was kind of take that concept a step further since people were already pulling money out of banks and buying into money market funds.
[00:25:56] Justin: They said, “Well, why don’t we make it even more like a bank account, and we can let people write checks using their money market fund as their account? And why don’t we try to make it really easy to people to pull money out of this fund and move it around?” Because on, on the theory that if we do that, they’re more, maybe more inclined to put more money in in the first place.
[00:26:17] Justin: But in order to do that, you know, there were no brokers that really… And they didn’t wanna sell stock funds then. And if they didn’t wanna sell stock funds, they wouldn’t wanna sell money market funds ’cause the fees they, the commissions they would get on those would be even less. In fact, they may, they may lose money in doing that.
[00:26:32] Justin: So Fidelity had, as a result, start to sell those funds directly to consumers, and that meant they had to have a set up there, a call center, and they needed to start advertising, doing all these things as a serve direct to consumer company needs to do. And they were not, again, they were not the first. You know, Vanguard actually was starting this, you know, very early.
[00:26:54] Justin: So for the same reason, like you couldn’t really work through the brokerage industry as it existed back then When Vanguard started selling in, you know, index funds and others, they needed to go direct to users. So that’s an important one, and that leads to all sorts of other big changes within Fidelity and, and the other in the industry.
[00:27:14] Justin: They were the first to develop this sort of donor funds that would allow regular, essentially regular consumers to essentially maintain their own foundation, right, and make decisions and set aside investments for charitable donations at, that they could make at a later date, which at the time was very, very controversial, but ended up becoming really successful and other firms copied.
[00:27:40] Justin: I think that’s another one. They were very early in recognizing the potential of 401Ks. As we get into the ’80s, they initially saw it as an opportunity to sell mutual funds, right? That was primarily what they did back then. But then over time, it becomes a great business in its own right, in part because people were getting 401K plans very early in their lives and their career.
[00:28:08] Justin: So it is, for many people, with the exception of having maybe a, a checking account, it’s their first exposure to anyone, any one company in the financial world is, is when you start your first job and you get assigned this. So being the number one record keeper in that business, it gave them access to not only millions and millions of people, but people very early who have not quite formed their needs and their relationships with the financial world.
[00:28:35] Joe: Yeah. Why get an investment with a second company? Why not have my Roth IRA here, my brokerage account here? Why not have everything here?
[00:28:42] Justin: Yeah. So the name of the game from that point on is how do we keep those folks with us? Because invariably, as we get into the ’90s and beyond, people change jobs a lot more often, and so it’s not a given that they’re gonna be with the same provider, right?
[00:28:58] Justin: So you could roll over those plans to someone else at any moment. But it still provided this great advantage to be the first one to introduce yourself to the company, to this- Yeah. There’s- … this individual.
[00:29:12] Joe: And there’s so many more. I mean, I remember also they weren’t the first, uh, zero commission trades, but man, they got there quick.
[00:29:18] Joe: They got there really quick when the market was headed that way, and I’m sure it was a pain. Well, you talk about what a pain it was to move over and kind of embrace ETFs, but then they had the exchange traded fund with 0% fee, uh, inside. Yeah. I mean, those were some crazy ones as well.
[00:29:33] Justin: Yeah. And they go through this period in the early 2000s where they, they’re not quite as, as responsive and innovative as they had been in the past.
[00:29:45] Justin: When Abby Johnson takes over from her father in 2014, 2016, that becomes a renewed priority, is that we, we need to do better. Because they did miss the boat, to a certain extent, on ETFs at first, and did not embrace index funds, uh, to the extent that they might have.
[00:30:06] Joe: It’s a dangerous thing, Justin. I remember reading about Elon Musk and Tesla, and him even admitting that he had an advantage over Ford and General Motors because they had these legacy businesses.
[00:30:17] Joe: They had these legacy plants, these legacy relationships. He didn’t have any of those, so to be able to build the car from the ground up and take advantage of this, you know, new engineering versus the old school engineering was tough. And I can imagine in the Fidelity boardroom going, “I don’t wanna get behind ETFs.
[00:30:33] Joe: What is the Contra Fund gonna do? What’s gonna happen to Magellan? What’s gonna happen to all these big funds we have?” I wanna get into, ’cause you mentioned Abby, I wanna talk about the founders, ’cause this is really the heart of your research is around just the Johnson family. ‘Cause every founder faces the same question, “What happens when I’m gone?”
[00:30:50] Joe: And for a family company that can, that can get messy in a hurry, and, uh, you describe very well how messy it gets for the Johnsons sometimes. So Ned is, uh, Mr. Johnson’s son.
[00:31:04] Justin: Mm-hmm.
[00:31:05] Joe: Tell us about Ned, and how does Ned get the job?
[00:31:08] Justin: So Ned is… did not seem to be, you know, a young guy who was destined for glory.
[00:31:16] Justin: All through high school, and he stumbles through a couple different prep schools and, and eventually goes to Harvard as his father had, but does not stand out in any appreciable way. And joins the Army and serves for about two years in Germany, and then comes back and then goes to work at State Street, which is the big financial firm across town from Fidelity, and he lasts there about six months before he shows up to work for his dad What people would not have known at the time through seeing Ned in action in, in school and even in the early days of his work life was that he would tell people later that he was dyslexic and that he probably was– had ADHD and, and all these things that would have made reading and traditional schoolwork in a Boston prep school challenging for him.
[00:32:13] Justin: And he would present himself in a way that was easy to be misled by what was going on inside his head. And it really only clicks, you know, with the outside world of, uh, as to what, what his potential is when he starts to invest in himself and, and suddenly the way the three-dimensional kind of thinking he can do and this, uh, you know, appreciation and fascination with the way things work and how, you know, taking things apart and putting them back together and technology and all that promise that holds for industry.
[00:32:51] Justin: All this becomes evident because he starts to put up these great returns to– And they’re so great, in fact, that he outperforms the biggest star of the industry, which was at the time Jerry, Jerry Seib. And so his success as an investor quiets a lot of the noise around, “Well, who’s this– Is this kid really gonna be able to run this place?”
[00:33:13] Justin: You know, there’s still some doubts and, and people as his father gets to an age where he starts to slow down and it’s evident that he’s gonna leave soon. You know, you do see people who do leave as a result of that because they’re not confident in Ned’s ability to, at this point, transition into, into management But his way of thinking and his greatest strengths end up being the, he ends up being the perfect guy to run the place in that period in the ’70s when everything that is known about the market and that business of, of investing in mutual funds goes sideways right after this crash in ’73.
[00:33:54] Justin: And in that period lasts for a interminable period, right? You know, almost a decade till things start to go up again. And so his willingness to sort of try all these different things and some of which would have been considered crazy- Yeah … he was told they were crazy by the people who worked for him.
[00:34:13] Justin: Like, “Man, this is never gonna work,” or chasing brokerage business and o- launching branches and chasing Chuck Schwab into that business, “That’s gonna be a disaster. You’re gonna spend all this money, it’s gonna be nothing.” Or, or taking in-house all this big administrative work that had been at the lo- domain of, of all these big banks, including State Street and others, and just in Boston, and bringing all the processes in-house, “This is a disaster.
[00:34:39] Justin: You’re gonna spend all this money on these computers that are…” You’re gonna, you know… And these bank CEOs would tell him, “You’re gonna come crying back to us and after you’ve spent all this money, it’s not gonna work.” Enough of them did work, and not only did they work enough to kinda get them through…
[00:34:55] Justin: And venture capital was something that he was very excited about, and they started doing that in a big way in the ’70s. And not only does it get them through this really long, sour period, but also it sets them up for this modern shift that would take place where they go from a manufacturer, so to speak, of mutual funds to these massive platforms, investing platforms that touch all these people directly.
[00:35:20] Joe: Well, and I was thinking about that, Justin, about all these things in his brilliant mind. Just he’s an idea factory. You, you show him as this, he’s got an idea a second, like a lot of people with ADD, right? Just- Mm-hmm … “Hey, I got this.” And often it comes across as a non-sequitur, but it’s all working. Back to the 401, I mean, would Fidelity even be Fidelity if he hadn’t picked up on how important the 401is?
[00:35:43] Joe: Or at least maybe he didn’t even think it was important, he just was gonna go try it early on.
[00:35:48] Justin: Right. Yeah, like I said, it was, “Oh, great, uh, these companies are gonna offer that. That means that we can sell-” Yeah … “uh, mutual funds through that.” And it does take a while, but they do end up becoming really successful in, in signing up all these big companies.
[00:36:03] Justin: The reason why they were so successful is they would offer companies and their employees a chance, “Okay, well, you can check your balances on a daily basis for us.” Whereas at the time, some of the other big players would say, “Well, we– you don’t need to, you don’t need to look at your balance every day. In fact, it’s probably a bad idea.
[00:36:21] Justin: You should just look at it-” Which is true . You look at it at lunch. Well, it’s funny. So they did some research on this, and they really found that, in fact, it was helpful because people would check their money, and then they would see how it was going, and it would often calm them down to a point- Oh … where they would not make any rash decisions.
[00:36:39] Justin: Whereas not knowing and then knowing you had a delayed or, or just a limited window into what was going on inside your account could lead to people making more rash decisions on, on moving money out or, or what have you Regardless though, it was, it was very successful. And so a lot of companies and employees wanted that kind of access to that information, and wanted more information and not less, and wanted access to, the Fidelity platform and all those things.
[00:37:08] Justin: So they ended up snapping up a lot of the Fortune 500 companies in that ’80s, early ’90s period.
[00:37:16] Joe: A personal question that, that I have. You don’t go over a lot in the book. You talk about a lot of the bumps in the road. But I just remember my career started in the 1990s back when I was a financial advisor.
[00:37:26] Joe: It’s been a long time. But back when I was, I remember Fidelity owned this magazine that I liked a lot called Worth Magazine, and they sold it off in 1998. I remember during the end of that crazy late ’90s run-up when people were saying, “Oh, you know, the numbers don’t matter anymore, Justin. It doesn’t matter if you’re making money.
[00:37:46] Joe: It doesn’t matter.” Like, I remember these growth managers, we’d have these meetings with them, and they were talking about how crazy this was. Like, of course, I remember, um, what was it called? Growth with a reasonable something or other. Uh, growth within reasonable-
[00:38:00] Justin: Hmm …
[00:38:00] Joe: whatever, that these managers that were sensible would become.
[00:38:04] Joe: Fidelity was one of those sensible managers. So I remember Fidelity returns on the growth side start getting left behind- Yeah … because they refused to, a big portion, you know, of the world, they refused to get as involved. Mm-hmm. And I remember Worth Magazine, maybe in 1999, with the cover story that said, “Is Fidelity dead?”
[00:38:26] Doug: Mm-hmm.
[00:38:26] Joe: And I remember thinking how wild that was, Justin, that Fidelity had owned this magazine, and now this same magazine is asking, “Is Fidelity dead?” How does Fidelity d- during Ned’s tenure get through some of these bumps in the road like, like that one?
[00:38:42] Justin: That whole period w- was not a great one for Fidelity, both for the reasons you mentioned, that their performance when the market was going gangbusters was not fantastic.
[00:38:54] Justin: They made some big changes and reorganized in, I think, ’97, ’98. And then of course, a couple of years after that, we have the big sell-off that takes place. In that period, though, they did have some really good managers that they could always have… You know, they seemed to always have a few people that were doing well and were still able to draw in flows from customers.
[00:39:17] Justin: I think that was a big deal. But it was a very disorienting period, right? Because they did not keep up with the pace of market, and then suddenly everyone was down, right, by a lot. And, and even if they had funds that were not down as much as, as others, you know, I’ve al- often been told that people just don’t care as much.
[00:39:37] Justin: That they’ll be like, “Yeah, that’s great, you know, you didn’t lose as much as the other guy.” Yeah. But not making as much as the others did in, in an upswing. Yeah,
[00:39:46] Joe: having lived through that, I know you can only say for so long where you only lost a third of your portfolio. Right. Everybody else is down 50% they’re like, “Oh, great.
[00:39:53] Joe: Fa- good. Good for me. Yay.” Right.
[00:39:56] Justin: And they, I think they begin to really benefit through that period though by the growth of the 401business. So the makeup of their investor base shifts pretty dramatically away toward retail and toward retirement in through the-
[00:40:13] Joe: Stickier, stickier
[00:40:14] Justin: assets … through stickier and some of the changes they make, they take away some of the sort of cowboy culture that had existed in Portfolio Management Group, particularly growth in the ’80s and early ’90s And, and again, a much bigger percentage of their assets in those funds are, are now coming from retirement accounts.
[00:40:35] Justin: And so that he- that’s definitely helpful.
[00:40:38] Joe: I wanna talk about the current regime because we have one more, we have one more big person, Hmm Justin. Abigail Johnson. I met a gentleman, I was giving a speech in Florida recently, who worked for Abigail for a long time. Hmm. This is the description that he gave me of Abigail when he first met her, and tell me how much of this tracks with your research.
[00:40:58] Joe: He said when he first met her, she didn’t seem all that confident. She didn’t like being in front of the room. When you talk to her one-on-one, she could be very confident and very personable, but in front of the room she would look at her feet-
[00:41:10] Justin: Uh-huh …
[00:41:11] Joe: the entire time. They… She really had to work hard on being this person that had any charisma at first.
[00:41:19] Joe: It seems in some ways like Ned in the fact that she could be brilliant when push came to shove about different things inside the organization, but that classic traditional leadership gene didn’t seem to have anything to do with Abigail Johnson. That was his take. Is that largely your take of the early days of Abigail?
[00:41:40] Justin: Yeah. I think she had to learn a lot about all those issues. You know, understand… You know, that a lot of this takes place when she leaves the asset management world, which is, you know, you really have kind of two groups of employees there. You’ve got the portfolio managers, and you have the analysts. It’s a relatively small number of people that they’re required to manage mon- even at a big firm like Fidelity.
[00:42:01] Justin: And then she moves into these other businesses starting with 401where you have much, much larger workforces. And you’re not gonna necessarily know everyone or see them in the same floor of the building every day. And so she has to adjust, right? She has to appreciate almost every company in the world.
[00:42:21] Justin: You know, Fidelity has a sales organization, and there’s a particular culture that accompanies sales organizations, and she knew nothing about that. And then she gets into this business that does have a big sales component and 401business, and she has to learn that. And right, and, and, and speaking in, in large groups.
[00:42:39] Justin: Opening up her inner circle to be more inclusive to people that she hasn’t grown up in the business with, that was another challenge that she had to overcome in certainly the early days. But that becomes the way the, the energy she gives off and the apparent lack of confidence that she demonstrates in those settings People pick up on that, right?
[00:43:02] Justin: And it changes their perception of her and her capabilities. And so these are all things that she, as she steps into more and more senior roles and eventually becomes president and then CEO, that she has to. Even after that happens, it’s still a process. People close to her would say that she grew a lot during COVID where like where she had to go address people as a leader and stuff, and many of which was very scary for everyone, and go on video calls every day with the whole company and, and do these things that she was not, you know, initially welcoming.
[00:43:37] Justin: You know, didn’t really necessarily enjoy doing them. So I think that’s… You know, even, even now to this day, it, you know, she’s not the most outspoken and part of that I think speaks to the fact that it’s still a private company. There are no external shareholders or sell side analysts. There’s no reason to go and give big presentations about your strategy to the outside world.
[00:44:01] Joe: I wanna finish where you begin this, this book. It’s 2005. This is a big Shakespeare moment, everybody. Mm. Ned has heard enough from people all over that are all trying to get Ned’s attention. They’re trying to have him take the company public. They’re also trying to put a knife in Abigail’s back before she gets too far, it seems to me anyway.
[00:44:23] Joe: He might sell the company. She knows all this. How close did Fidelity actually get, Justin, to being a completely different company than the one we see today?
[00:44:32] Justin: To anarchy, yeah. It’s, you know, the events that unfold, um, uh, in that particular year in pretty close succession. One is that we’re coming through that period where the asset management business, which by this point Abby has, has run for about five years, is struggling.
[00:44:49] Justin: They’re going through a period where performance isn’t great. Money’s flowing out of the funds. Sales aren’t great. You have some high-profile people leave to go to other places, which is something that has not happened a lot at, at Fidelity, you know, particularly in the asset management business. Um, unless they’re gonna manage their own hedge fund or do their own thing, you don’t see people leave Fidelity to, say, go to American Express, which was something that happened and shocked a lot of people in two thousand and four.
[00:45:19] Justin: You had this other thing that was kinda raging on, the scandal that, that was sort of centered on the gifts that the Fidelity’s traders were accepting from salespeople on Wall Street. That was pretty messy. And then you also had just major disagreements between Abby and Ned on, on the direction of this business.
[00:45:36] Justin: And so all that was happening and to a point where people were wondering, how long was this gonna last? Like, I think Abby’s had four-plus years in this role, and it’s not getting better. Maybe it’s time to make a change. And that was coming from some of Ned’s deputies, but also people that were on the board of trustees at the mutual funds.
[00:45:59] Justin: There’s an effort to persuade Ned to remove her from that role, which she eventually agrees to do. You know, I think the moment where things become most shaky, frankly, is in the aftermath of that decision. Ned goes to her and says, “Okay, well, we think we have a new role for you, and it’s to run the foundation.”
[00:46:22] Justin: So she goes from– What he was suggesting is to go from running this flagship business, which at the time was the main attraction within Fidelity and the spiritual core of the place where she had worked and her father had worked and her grandfather started, and going from running that business to running this foundation, which by those standards of corporate America, probably pretty big, but not an operating role.
[00:46:50] Joe: He’s kinda putting her out in the back pasture.
[00:46:52] Justin: Yeah. And so she basically says, like, “If you make me do that, I’m gonna quit.” So at this moment, like, you think of all the scenarios. Well, what would that look like, right? If she quits, she’s the only one who had been committed to working at Fidelity from an early age.
[00:47:08] Justin: You know, her brother at that point is working there, but he’s in the real estate business. It could have set in motion all these things that lead likely to Fidelity eventually selling itself I think Ned realized very quickly what was at stake, and he, he says, “Well, okay, well, Doug, forget that. Well, let’s figure out something else you can do.”
[00:47:27] Justin: And eventually they settle and run the 401business. But then there’s this other thing that sort of emerges, which is the real threat for the first time ever that, you know, Ned would– was seriously considering selling the company, which at that moment, he eventually he, he meets with a couple CEOs.
[00:47:43] Joe: Jamie Dimon.
[00:47:45] Justin: Jamie Dimon has got sort of a cameo appearance in this, uh, as is Ken Lewis, the guy who’s running B of A at the time. You know, Ned concludes that he’s– we’re not ready to do that yet. But the reality is, if Abby doesn’t work out and leaves or isn’t named CEO, you know, Ned at this point is getting close to ei- being eighty, right?
[00:48:05] Justin: And so the reality is that it probably it could still happen at some point down the road. So this leads to this, you know, Abby to, to figure out what she can do and send the signal that this has got to stop, and also to persuade her father to come up with some succession plan, that there is a plan for the future in the event, I think that if anything would happen suddenly, that everyone would, would know what the plan was.
[00:48:32] Justin: So she ends up signaling that she’s not gonna vote for the members of the board and, and which would include Ned, who was the chairman. That is interpreted as, well, she’s gonna push her father out, right? She has enlisted her siblings and a handful of people that also own voting shares, and they’re gonna vote They’re up to something, right?
[00:48:53] Justin: So it, it causes this counteroffensive by Ned and his, at the time, his top deputy, Bob Reynolds, and they vote to issue more stock to dilute Abby’s holdings and make that put an end to whatever the plan was. But in the wake of that, Abby and her father and her siblings kind of come together and patch it up, and the result is that everyone stays and, and they come up with this succession plan that really does– I mean, it, it, it still doesn’t happen for another nine years at that point.
[00:49:24] Joe: Yeah, and even after that, Justin, it hasn’t been all roses and unicorns.
[00:49:28] Justin: No. Right. And then they come up not long after that, they’re confronted by this once-in-a-fifty-year crisis which, like everyone else, they have to contend with, and there’s a whole new different set of characters that come in, and they also wanna be CEO.
[00:49:45] Justin: So it- Right … it doesn’t really get sorted until the aftermath of that.
[00:49:50] Joe: That is just the beginning of the story ’cause there’s so many… So this is an interesting family, Justin, to say the least. Your book is called The House of Fidelity: The Rise of the Johnson Dynasty and the Company That Changed American Investing.
[00:50:03] Joe: Available everywhere?
[00:50:04] Justin: Yes.
[00:50:05] Joe: Last thing for you, what surprised you? Was there something that– You must have known what you were getting into, partially anyway. Was there any aspect where you went, “Wow, I had no idea,” something that just blindsided you about the research?
[00:50:17] Justin: Um, you know, a lot of interesting characters.
[00:50:19] Justin: I was taken aback by the role of, you know, Jerry Tsai, and I was, uh, somewhat familiar with him, but not to the full extent appreciated how big of a star he was. And also the, um, massive influence that his mother had on his life. That’s sort of a really fascinating story about here is a woman who was the first to trade on the Shanghai Stock Exchange during World War II, and in the aftermath of that, her earnings pay for her son and daughter to come to the United States for college.
[00:50:53] Justin: And she remains not only his biggest advisor throughout her life, but also ends up becoming the inf– you know, ultimate influence for the way his sort of philosophy towards trades and the big block investments that he would make and, and the speed at which he would move in and out of positions. That’s more or less what his mother taught him to do.
[00:51:13] Justin: So again, it was all, all, all new to me, and I was pretty fascinated by, by all that too.
[00:51:22] Doug: Hey there, stackers. I’m Joe’s mom’s neighbor, Doug, and how much did you know about Fidelity Investments before Justin Bear arrived? I knew fairly little myself, and they’re one of the most influential financial companies out there. But before Fidelity became a household name for investors, another American company was making a pretty smart investment.
[00:51:42] Doug: On this day in 1909, General Motors bought a company that would become one of the most recognizable luxury brands in the world. So here’s today’s trivia question: What luxury automobile company did General Motors purchase on July 29th, 1909? I’ll be back with the answer right after Joe’s mom helps me with a merger and an acquisition.
[00:52:04] Doug: I’m hoping to merge with a bowl of ice cream fairly soon, and I’d love to acquire some canned peaches to top it off
[00:52:20] Doug: stackers, I’m history lover and guy who’s making ice cream eating nutritious, Joe’s mom’s neighbor, Doug. Peaches and ice cream, yum. Another combo that’s been a hit for over a century started on today’s date. GM purchased what luxury auto brand back in 1909? Well, if you said Cadillac, you’re a pro. Nice work.
[00:52:40] Doug: Even if you didn’t, don’t worry. I won’t tell if you pretend you got it right. It’s not like this is the Trivia Olympics or anything. And now, back with a gold medal of a headline, here come Joe and OG.
[00:52:53] Joe: Man, OG, have you ever tried that, peaches combined with ice cream?
[00:52:57] OG: Like, every time you have barbecue. Isn’t that what you have?
[00:53:00] Joe: Peaches and ice cream after… Oh, you’re talking about peach cobbler? The
[00:53:03] Doug: look on your face was like, “It’s a rule.”
[00:53:05] OG: Yeah. What else is it called?
[00:53:08] Joe: I don’t know. They have this thing at, uh, Andy’s Ice Cream called the Peach Dream, which is peaches-
[00:53:14] OG: Andy’s isn’t ice cream. Caramel Isn’t it, like, froyo?
[00:53:17] Joe: Peaches, caramel, and ice cream.
[00:53:20] Joe: It’s, it’s frozen custard. But-
[00:53:22] OG: Okay, so not ice cream …
[00:53:24] Joe: but very ice creamy.
[00:53:25] OG: Iced dessert.
[00:53:27] Joe: Delicious stuff. Speaking of delicious, we have a delicious headline today.
[00:53:32] headlines: Hello, darlings. And now it’s time for your favorite part of the show, our Stacking Benjamins headlines.
[00:53:39] Joe: I saw a fun piece in The Wall Street Journal by Sanae Adya Rashid about Gen Z discovering something that might shock previous generations.
[00:53:48] Joe: Here’s the thing, OG. Expensive dates are out. Does Mrs. OG know
[00:53:52] Joe: this? You no longer have to take her out to dinner. Expensive dating is done.
[00:53:58] OG: It’s good to know.
[00:53:59] Joe: Coffee, ice cream, picnics, walks, they’re back in. A study recently by BMO Financial Group looked at the average cost of a US date, just one night out on the town. Guess how much this has ballooned to. A- any stab, Doug?
[00:54:18] Joe: What do you think? OG?
[00:54:20] OG: I’m like the Bill Gates of this. Don’t you remember, like, Bill Gates was on Oprah?
[00:54:25] Doug: Yeah, Oprah, “How much does milk cost?”
[00:54:27] OG: And he’s like, like, “How much is, like, Kraft dinner?” And he’s like, “Oh, I have this at my house. This is awesome. Uh, like, $25?” It’s like- … you know, 97 cents. The average date in America I’m gonna say is, um, sounds like a trivia question from Doug.
[00:54:46] OG: Oh, uh, it’s probably 120 bucks.
[00:54:50] Joe: Doug?
[00:54:52] Doug: Yeah, I, man, I feel like, I’m gonna say 121. I think it’s- I think it’s maybe
[00:54:58] Joe: higher. It, it isn’t Friday, it’s only Wednesday. Oh, okay. It’s 100, it’s $189. Yes. $189 for a date. Yeah. Yeah. And it’s interesting because Gen Z and Millennial daters are starting to think about the fact, in this piece, that these dating costs are interfering with their bigger financial goals.
[00:55:19] OG: Well, let me ask you guys this, though. If you could pay $189 and get-
[00:55:27] Joe: Did you mute yourself on purpose right then so we don’t hear the rest of that sentence? Oh, I didn’t
[00:55:32] OG: mean to. I didn’t mean to mute myself. I think we
[00:55:34] Doug: can infer what he meant after, if you pay $189-
[00:55:38] Joe: I thought that was pretty… If, if we could pay $189 and get all this stuff
[00:55:43] Doug: that he can’t say … connect the dots, Joe.
[00:55:44] Doug: We all know what the expectations are.
[00:55:47] OG: That’s not how I meant that to go,
[00:55:48] Doug: but- You could take them to the buffet at the Sizzler. There- Yeah. There are expectations. How
[00:55:53] OG: many increments of 189 would you leave on the nightstand? Oh,
[00:56:00] Doug: gosh.
[00:56:02] Joe: Oh, boy. Uh, I don’t think this- Be a pretty fair
[00:56:05] OG: trade.
[00:56:06] Joe: I don’t think this story is actually about dating. It’s about this big money mistake that we all seem to make, which is impressing people with money instead of letting them get to know us. A first date, OG, and it’s been a long time since you and I have had a first date, but a first date in this piece they talk about, it really is a lot like a job interview, right?
[00:56:28] Joe: So should we be spending more time together? Should we have a second date? It isn’t… We don’t even know the person yet, and we’re going out for $189 first interview. Like, imagine if you had to pay 189 bucks for your next job interview.
[00:56:47] OG: Yeah, I mean, I don’t have any perspective on this, so I feel like I’m ill, ill-equipped to, um, to be able to comment on what people should or should not be paying for dates.
[00:56:58] OG: But I do think that you probably could, you know, you could probably make those a little less expensive on the front end, right? You know, make it coffee or cocktails or something if that’s your vibe, and, you know.
[00:57:10] Joe: Well, I just think, I just think everybody wins. Before
[00:57:13] OG: you write the big check for the steak dinner, so to speak.
[00:57:15] Doug: I think it’s the cocktails that create the expensive part-
[00:57:19] Joe: Well, I think that- … and
[00:57:20] Doug: the long-term implications.
[00:57:21] Joe: I think that if I show up, I don’t care who’s, who’s paying. If it’s $189 date, think about how long that date is, and if I sit down across the table from somebody and I know it’s not a match, I’m fairly certain it’s not a match, like imagine what $189 implies.
[00:57:38] Doug: Yeah, you
[00:57:38] Joe: can’t- Like, I’m gonna be there for an hour and a half.
[00:57:40] Doug: You can’t do that for your first date. You, you’re not doing that date for your first date.
[00:57:45] OG: I’m not smart enough to be able to talk about this intelligently.
[00:57:49] Joe: Well, think about this. It, let’s say dinner costs 180 bucks. You’ve got parking, you’ve got drinks, you’ve got Uber.
[00:57:56] Joe: You’re already financially invested. Are you paying for
[00:57:58] OG: parking, or are you Ubering?
[00:58:00] Joe: You’re already, you’re already-
[00:58:02] OG: You’re paying for parking, and then you have to Uber out of there.
[00:58:05] Joe: That’s, that’s where they get you. That’s how expensive that is. I don’t know, I feel like if I’m talking to one of my kids about this, think about if you’re, if you’re counseling one of your kids about this, Doug.
[00:58:18] Joe: Does spending more money put these weird obligations and pressures on the date?
[00:58:24] Doug: Yeah, totally does.
[00:58:26] Joe: At the very least, staying longer than you should. Like, you know if it’s not a match.
[00:58:31] Doug: Yeah.
[00:58:32] Joe: You know. I feel like I’m gonna stick around longer than I should. Right. If, if- I feel
[00:58:36] OG: like this topic is not a match for me.
[00:58:38] OG: Can I be excused?
[00:58:40] Joe: But you… S- so, so-
[00:58:42] Doug: OG’s never been on a date
[00:58:43] Joe: So you’re not c- b- because I just asked Doug this question, let me ask you, you’re counseling your kid on dating. Let, let’s say it’s not you, you’re just being a good dad.
[00:58:53] OG: Hold on. Are we saying that this article says that the average first date’s 189 bucks?
[00:58:57] OG: Yes. Or that the average date is 189
[00:58:59] Doug: bucks? Just date. I think we’re just talking about dates, not first dates. I
[00:59:02] OG: mean-
[00:59:03] Doug: Does it really say that?
[00:59:04] Joe: They’re talking about early dates here, yeah.
[00:59:06] OG: I mean-
[00:59:06] Doug: Well, but there’s… That’s a huge difference. Sorry, OG, because date number three, yeah, you’re swinging for the fences on date number three because that’s- Gotta pay money
[00:59:15] Doug: that’s when the action starts. Well, it just
[00:59:16] Joe: depends
[00:59:16] OG: on where you…
[00:59:18] Joe: But if it’s the average date, look at the numbers around average dates, like the number of dates it takes now to get to date number two, to get to date number three. I don’t have any idea
[00:59:26] OG: of any of this.
[00:59:27] Joe: Scott Calloway just went over this on the show when he was here, and we did it as the greatest hits.
[00:59:32] Joe: It takes a guy eight times, eight people saying they will go on a date with him, to actually get a date, and then it takes eight more dates to get to a second date. So the numbers are these wild numbers of a ton of first dates. So if we’re looking at the average cost of a date being $189, then for a first date, what is it, 100?
[00:59:55] Joe: I mean, let’s, let’s put it at a smaller number. Yeah. But if you’re counseling your kid, are you telling Alex to take his first date out for 100 bucks?
[01:00:06] OG: I just don’t have any perspective. I mean Alex doesn’t drink. William doesn’t drink. So I mean, they’re not o- old enough to do it Sure they don’t, Dad … but they just don’t.
[01:00:18] OG: They just don’t. But the, I mean, they don’t drink carbonated beverages, so they’re not gonna drink beers. Um-
[01:00:25] Doug: Vodka …
[01:00:27] OG: but, um, I don’t even have perspective on, I mean, what is coffee? Is coffee $6? Like, when you go to Starbucks, like, are you spending 20 bucks to take two people to Starbucks? Yeah. Easy, with a muffin or something?
[01:00:41] OG: Definitely,
[01:00:41] Joe: yeah. Yeah, sure. Yep. Yeah, 20, 25 bucks.
[01:00:44] OG: Okay. So, like, how much are chicken fingers at the chicken finger place?
[01:00:49] Joe: I just had a long talk with my daughter about this. She recently got engaged, but w- before that, she was talking about some of the best dates she went on were practically free. Like, walking along the Charles River and talking was free.
[01:01:06] Joe: Going out and getting coffee, not much money. Going out and having- Hunting for
[01:01:10] Doug: rats at the city dump
[01:01:15] Joe: And entertaining, Doug.
[01:01:16] Doug: Yes.
[01:01:17] Joe: Oh.
[01:01:18] Doug: And you can judge skill and how well will that person provide food for your table.
[01:01:23] Joe: But I think the wider point here that I’m getting at is not around dating at all, it’s about if I’ve got a goal on fun for the evening, or I’m trying to get to know somebody, I really wanna think about what’s the point of this thing where I’m, where I’m getting together before I go spend the money, before I put that in the
[01:01:41] OG: budget I mean, this is true for any sort of relationship, I think, more than anything.
[01:01:47] OG: The sales relationship that you’re trying to close the big sale on, or the, you know, you’re, you’re trying to woo the VP of w- procurement so that he gives you the contract or whatever. Sometimes it’s commensurate with the size of the deal. Could be. But I also think that there’s an evidence, or there, there’s, um, there’s an element, I should say, of obvious, like, trying too hard.
[01:02:19] OG: You know, we’ve all heard the stories of Joe, in the financial planning space I know that you’ve heard this story before, you know, or variation of the story, of the Wall Street guy that goes out to the farmer to negotiate the oil lease deal, right? And he’s in a suit and tie, and, you know, just trying too hard, right?
[01:02:38] OG: Versus the guy that shows up in a pair of jeans and boots and a hat ’cause that’s what you work in, you know? And I think you can tell the difference between somebody that’s trying too hard. You know, we used to say commission breath is really smelly. Like when you- Yeah … can tell that the person has commission breath.
[01:02:56] OG: I’m, I’m, I’m working on this car purchase right now for my kid. Doug and I chatted a little bit about this, about, like, how much energy do I wanna put into the song and dance of buying a car? Which I think universally is accepted as probably one of the top five worst experiences in your life On a percentage basis, I just don’t think that there’s a lot of…
[01:03:18] OG: You know, I’m not buying a $100,000 car where a, you know, a 5% change in the sticker is a material amount. You know what I mean? Like, we’re in the low five-digit thing, and it’s like, what are we talking about? 300 bucks? You know, I don’t want this guy to go out of business ’cause he’s his business allows me to buy cheap cars for my kids.
[01:03:38] OG: I don’t wanna spend a lot of time. I emailed the guy, and I’d say, “Can we just do this on email? I don’t need to test drive it. I already know what I want. I already know the options, da da da. Can I just make this go away?” He’s like, “Yeah, sure.” Like, he could put the full-court press on, you know what I mean?
[01:03:50] OG: Yeah. But then you get the sense of like, it’s a little slimy maybe, right?
[01:03:54] Joe: Yeah, what’s going on here really?
[01:03:56] OG: You know, I guess I can appreciate this more from the perspective of, you know, work relationship than I can personal relationship because I’ll spend any amount of money on going out to dinner with my bride.
[01:04:06] OG: I don’t- Sure … care. Like-
[01:04:07] Joe: Yeah …
[01:04:08] OG: you know, we’ll get the fancy wine and the fancy dinner, and because that’s what we like to do. Like, but we know that ’cause we’ve been around for 30 years we’ve been doing this stuff, so we know what’s up. But if you’re, uh, exploring a relationship of any kind, business, personal, you know, whatever, I think it’s a mistake to, you know, take the 30-year experience and try to boil that down into the-
[01:04:34] Joe: 100%
[01:04:34] OG: first deal.
[01:04:35] Joe: Well, and I also think about what makes an impression. While you were talking, I was thinking about some of these high school athletes trying to get into college programs, right? And they go, and they make the school visit. Now, with NIL, and they talk money, you hear that money matters. But I also have heard…
[01:04:54] Joe: I heard this just two weeks ago. I wish I had kept this clip, but the guy was like, “Yeah, it wasn’t about the NIL deal. I went in, and they, like, had my name on the scoreboard at the field. They had my name on all the different stuff. They showed me…” You know what I mean? “I could see myself being there,” which probably cost the university a ton less money.
[01:05:14] Joe: Don’t get me wrong, I’m sure the dude still got paid through NIL, but the reason he chose that school was because of the relationship.
[01:05:21] OG: Yeah. And, and you know what’s gonna close the deal way better than how much the meal costs or how much the night out costs? Is if you put your frigging phone down and actually talk to the person that you’re trying to do business with, whether it’s, like, a personal relationship, and you’re on a date or whatever, or if it’s a business relationship, and you give the time and attention to people.
[01:05:43] OG: I saw this… I… You’re talking about seeing things. I, I saw this ad for Chase, which is, you know, mm, an okay bank, I guess. They’re, uh, d- They’re
[01:05:52] Justin: big. They’re a big bank. They’re
[01:05:53] OG: half a step, half a step ahead of Bank of America in our mind, I suspect. So F you, Bank of America. Um, the ad was this guy was trying to do all this stuff, and it was all on his phone, and he was like, “Representative,” you know?
[01:06:07] OG: It’s like, it’s basically our life, right? He was, like, trying to do… And it said, “We’re building branches-” So you can actually talk to people. And the guy walks in, they’re like, “Hey, Mr. Smith, come on in here.” And they sit down and they, you know, got the computer showing his plan or what, you know, whatever their imagery is.
[01:06:24] OG: I think that is gonna be way more important than whether or not you spent $25, you know, a cocktail on your date or on your business deal.
[01:06:34] Joe: It’s so funny how brands are gonna differentiate by actually going back to 1975. Yeah, possibly. Remember when you actually got to talk to somebody- Yeah … Doug?
[01:06:43] Doug: I mean, OG said a minute ago what also will, you know, make your date, your interaction that much more valuable is paying attention.
[01:06:51] Doug: I found I don’t have to spend any money if I just have a couple of hundies tucked in my pocket, but, like, peeking out of the pocket. I don’t even have to spend them.
[01:07:01] Joe: What is that?
[01:07:02] Doug: As long as they can be seen, the dates go great.
[01:07:05] Joe: What is that, uh, I think you could buy it on Amazon, the fake receipt that has, like, two commas in it, in the number that’s in your bank account?
[01:07:12] Joe: The fake ATM.
[01:07:13] Doug: The
[01:07:14] Joe: ATM receipt. Yeah. Yeah. Yeah, the fa- the fake ATM receipt, and you accidentally hand it to… When you’re single- Oof … you accidentally hand it- Yeah … to somebody with something written on it. Or when you- “Oh, I’m sorry, that was my ATM receipt.”
[01:07:23] Doug: Yeah. Or OG’s method, when you open up your wallet to pay for the date, just make sure you can see platinum and black cards in there.
[01:07:32] Doug: Yeah.
[01:07:33] Joe: That’s all you do. I just think we assume more money means that we have to spend more money, whether it’s dating, birthdays, vacations, weddings, whatever it is. I think there’s, uh, there’s lots of stuff, but I think Gen Z in this case teaching a lot of people a lesson by lowering the cost of dating.
[01:07:50] Joe: That’s why I like this piece Speaking of like, by the way, we’ll link to this on our show notes page at stackingbenjamins.com so you can read it too. Love to hear your opinion about maybe the best dates that you’ve been on, Stackers. Go join us in, uh, mom’s basement. All right, that brings us to… I always say every part’s my favorite part, b- this is a, a great part of the show.
[01:08:11] Joe: I love talking about what’s going on in our community. And Doug, uh, our friend Colin. Yeah. Right. Our friend Colin, who I met in, uh, face-to-face in New York, and then came out with his, uh, brother to Boston. Colin had some things. He was-
[01:08:25] Doug: Wow, super fan.
[01:08:26] Joe: Yeah. Good guy, Colin.
[01:08:27] Doug: We gave Colin an aha moment, which is great to hear.
[01:08:31] Doug: Uh, Colin said in the basement group on Facebook, “On a recent episode, OG talked about a portion of cash in a checking account as part of someone’s savings. Do others look at it this way? It was an aha moment for me, as I always keep a minimum 5,000 in my checking account just in case, and have frequently debated whether I should consider that 5,000 as part of my emergency fund, but haven’t since it was in my checking account versus savings.”
[01:08:58] Doug: You know, I just, I think that’s interesting. I’m glad he posted that out there, got a discussion going. A number of people chimed in. But it is worth thinking about, and I’m, I’m glad OG brought it up as well. I remember years ago OG said it to me a little bit differently when, when I was talking to him about how much to have in my checking account, and he just sort of pushed back and said, “Really, like, what’s the biggest check you’re gonna have to write in less than a 24-hour period?”
[01:09:22] Doug: Like, that you didn’t have 24 hours of warning on, because that’s… Like, in your, out of your sav- high-yield savings account, it used to be that they would move the money, like, overnight. Oh. Now, actually, my high-yield savings does it the same day. But when he and I were having this discussion, it was an overnight thing, and he’s like, “Really, what are the odds that you’re gonna write a $5,000 check
[01:09:43] Joe: that- That explains so much, because you know how institutions let you name your accounts now, and Doug, you’re always working on the laptop as I’m coming around the table, and that’s what bail money account means.
[01:09:57] Doug: Yes, exactly. Yeah.
[01:09:59] Joe: Yeah.
[01:10:00] Doug: Totally is, yeah.
[01:10:01] Joe: It’s interesting.
[01:10:02] Doug: Uh, but sometimes it’s just… Th- these are mental buckets we create for ourselves, unless you actually have handcuffs on, and then they’re, they’re very real. But yeah, they’re mental buckets we create for ourselves, and I think Colin was probably pointing out that, you know, where it sits kinda doesn’t matter.
[01:10:17] Doug: It’s still excess money that you’re not using, so it can be considered part of your savings or part of your emergency fund.
[01:10:23] Joe: Yeah, to be clear, OG, I mean, if he’s got 5,000 sitting in checking and he always keeps 5,000 in checking, it’s emergency fund.
[01:10:30] OG: Sounds a lot like, uh, part of your emergency fund, yeah.
[01:10:32] Joe: Yeah. Good stuff. Thanks for that note in the basement. Thanks everybody for that discussion. If you wanna join us in mom’s basement, it’s stackingbenjamins.com/basement gets you to our Facebook group, uh, where we’re always having some fun. That’s gonna do it for today. Big thanks to all of you for lending us your ears.
[01:10:50] Joe: We got another special episode coming up tomorrow as we get ready for our Financial Action Month. You know, we were thinking about it, Financial Literacy Month is every April. Uh, financial literacy doesn’t mean anything if you don’t do anything, so we’re making August Financial Action Month. We’re going to have tips on the show.
[01:11:10] Joe: We’re gonna point you to as many resources as we can, but we’re going to encourage you to make a move every Monday, Wednesday, Friday. So that’s why we’ve got five episodes today to get you ready so that next week you’re ready to go. If you head to stackingbenjamins.com/bingo, we’ve created a bingo sheet so that you can follow along and play along with us, and make the financial moves that it’s gonna take to be successful.
[01:11:37] Joe: Just a little move a day. Little move a day. Doug, you got it from here, man. What should we have learned on today’s show?
[01:11:44] Doug: Well, Joe, first, take some advice from Justin Bayer. Knowing a little bit about the history of investing can help you avoid mistakes, and it can be fascinating as well. Second, date night?
[01:11:56] Doug: Don’t raise the stakes by making it super expensive. Why waste a bunch of money on someone who might not be a fit? But the big lesson, while date night waste is a shame, spending money on your old buddy, Doug, is a great use of cash. Spend away. I dare you. Thanks to Justin Bayer for joining us today. Want to dive deeper into how Fidelity Investments changed the world and works on the inside?
[01:12:24] Doug: Check out Justin’s new book, House of Fidelity, wherever books are sold. We’ll also include links in our show notes at stackingbenjamins.com. This show is the property of SB Podcast, LLC, copyright 2026, and is created by Joe Saul-Sehy. You’ll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots.
[01:12:50] Doug: Come say hello. And oh yeah, before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s mom’s neighbor, Doug, and we’ll see you next time back here at the Stacking Benjamins show.