What does it truly take to ascend to the highest echelons of leadership and influence? Today, we dive into the extraordinary career journey of Kathy Murphy, a financial services executive who masterminded the growth of Fidelity‘s personal investing arm to over four trillion dollars in assets under management. From her early days navigating law school without a clear path to spearheading digital innovation and zero-fee investing, Kathy’s story is a masterclass in adaptability, strategic vision, and the profound impact of empathetic leadership. Join us as she shares invaluable insights on building high-performing teams, embracing disruption, and the crucial transition from executive leadership to impactful board service. Discover the principles that guided her through market crises and technological shifts, and learn what it truly means to lead with both drive and humility.

Check out the full series of “Career Sessions, Career Lessons” podcasts here or visit pathwise.io/podcast/. A full written transcript of this episode is also available at https://pathwise.io/podcasts/kathy-murphy

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Lessons In Leadership Enroute To The Boardroom With Kathy Murphy

Blackrock Director And Former President Of Fidelity Personal Investing

My guest is Kathy Murphy, who is a seasoned financial services executive. She most served as the President of Fidelity Personal Investing, where she grew assets under management to over $4 trillion and spearheaded major innovations in digital advice and zero-fee investing. Kathy serves on the boards of BlackRock, Snyk, and several nonprofits. In our discussion, we’re going to be talking about her career journey, her board work, what it takes to be a successful board member and her thoughts on leadership and career development so let’s get going. Kathy, welcome. It’s great to see you again and thanks for doing the show with me.

Thanks for having me. This is exciting. I appreciate it.

We were talking before we started. It’s been many years since I left Fidelity. You left much more recently than I did, but we had a little bit of overlap in the time that I was there. You were there as well. Let’s start at the beginning. Where did you grow up? What did you envision yourself doing professionally when you were a kid or when you were heading off to college?

Early Career & Law School

I grew up in Wallingford, Connecticut. I was the third of kids. I went to the college that gave me the most scholarship money because that was important. I have to say I never had a clear view of what I wanted to do and that continued throughout my career. On the one hand, I throw myself into things. I tend to embrace a lot of different opportunities but I always loved what I was doing.

In college, I went to law school because a professor had suggested it. The real reason is because I had no idea what I wanted to do and I figured I’d kick the can down the road. When I got to law school, I decided to take a job for half the pay of the big Wall Street job I was offered because I like more interesting work more quickly.

You went right to Aetna when you finished law school?

I did. I worked there as a summer intern in my first year and then I worked at one of the big New York firms after my second year. I decided to work in Hartford, Connecticut instead of New York City for half the pay. I did not want to pay the dues you have to in those big New York law firms, frankly.

It’s a huge difference between being in a law firm and working in a corporate law department. Certainly, when I was working at State Street, where I had a lot more interaction with our lawyers. There were a lot of people there who were law firm refugees and had decided that they wanted the lifestyle. It comes with working for a firm as opposed to working for a law firm.

For me, I was young so it wasn’t the work-life balance. It was more my perception at the time and it has changed a lot. I’m only mentioning it because if there’s people up there that are younger in their careers, this could be relevant to them. My perception was that you got to do more interesting things more quickly as a post to be on the outside of being hired to do specific things. As a junior turning a law firm, you get a lot of rolls downhill. Whereas, at Aetna, I was able to be thrown into things more quickly and it worked out well.

You were there for about many years and you gradually moved into broader roles. How did that transpire the evolution of your roles? What were the key turning points in that part of your career?

I would say there was always somebody that would reach down when they didn’t have to and take an interest in me. It’s important both for leaders to hear that but also for younger people in terms of taking advantage of people that are reaching out that are giving you opportunities. They don’t always look like opportunities. Early in my career, I was part of a rotational program where you had to rotate through three different parts of the law department. The law department had 150 lawyers. It was technically the biggest law firm in Connecticut at the time.

You’ll laugh at this. My third rotation was supposed to be in investments. I had interned for a federal judge, Judge Cabranes in New Haven. He had called me to say he wanted me to go and work for him full-time. That would mean leaving Aetna and going to work in the judicial system. I didn’t want to do that but I went into my boss’s boss’s boss who is in charge of the whole thing.

I said, “If you make me do this third rotation, I’m going to go take this job with Judge Cabranes because I will never ever have a career in investments,” and $4.5 trillion later. I share that story because at that point in my career, I had no idea what I wanted to do. I always loved what I was doing and I couldn’t imagine doing something else because I was so into what I was doing. Being open to those different opportunities can lead to very different pathways.

Most of us don’t know what we want to do when we go to college, when we graduate from college and probably 4 or 5 years after that. You’ve always got to remain somewhat open minded about it. Opportunities emerge. You’d asked me when I graduated from business school even. I don’t think I would have said that I would have ended up having anything like the career I’ve had. You just don’t know. Were you in the law part of the company the entire time you’re there? Was there a point at which you started to evolve?

I was in the law department the whole time I was there. Towards the end of my career, it was interesting. When I first started at Aetna, there was a multi-line insurance company. I had a property casualty business, a gigantic investments business. It had a huge real estate portfolio, a healthcare business but they had made the strategic decision to focus on healthcare as their primary business. I was a healthcare lawyer for a long time.

I decided to go on the financial services side of the business in the law department. ING bought Aetna’s financial services business. They gave me the choice of whether to stay with the healthcare business or go with financial services. At the time, I think ING was 1 of the 10 largest companies in the world, believe it or not, because of all the acquisitions that had been done. I thought, “There’s a big new world out there and why not go forth?” I went to ING and I started in the law department essentially as general counsel and then went on the business side a few years later.

Transition From Law To Business

What do you think helped you make that transition? A lot of people when they get to the general council level in a farm and they want to play a broader role. What helped you do that?

What was probably most decisive in that process was once I became general counsel and sat at the table with all the senior executives. For me, anyways, I was like, “I could never do their jobs.” You sit around the table and you’re like, “Maybe I could.” My boss had asked me a couple of times if I wanted to go on the business side for the right role. He came to me and said, “I’d like you to run a set of businesses with earnings of a half a billion dollars.” This is my first business show. I said, “I’ll go for it.” It was a real credit to him that he took that chance on me because I don’t think I would take that chance on me but he did. It helped me a lot in terms of the trajectory of my career.

I hear that story a lot. People say there was somebody who had faith, took a chance and it made a huge difference in their career. You’re fortunate and others who have similar stories are fortunate to have gotten those opportunities. You earned it that he was willing to do that as well. Those are great stories when you hear that somebody takes that interest in you and opens doors that maybe you wouldn’t know open for yourself.

I remember years later. He was getting an award and he asked me to give the intro to him getting the award. I said I will and I mentioned that because he was a very early steward of inclusion and thought differently and having diversity of style and perspectives, which is important to running a thriving business.

You were there for what 7 or 8 years and then you ended up moving over to Fidelity, which is where we met. How did the Fidelity opportunity emerge for you?

I had my son in 2002 and we had moved to Atlanta with ING and then moved back to Hartford when I was running the set of businesses. The next step for me in terms of career would have been, in all likelihood, a role in headquarters in Amsterdam, and my husband did not have much interest in that. Again, I loved what I did but it’s like, “I’m in my mid-40s. Is this the last stop on the whistle tour?” I wasn’t looking for a job and I had ruled out certain locations.

For me, with a young child, I did not want to work in New York City and have to do that long commute. At a different point in my life, yes but not then. Fidelity called. It was a very long date, I would say. Fidelity called me in February of ’08. Unlike most people that interviewed with Fidelity, I had very few interviews. I interviewed with just two or three people and we were in the middle of negotiating to buy City Street, which was at the front of the distribution plan.

Once we made the decision to buy City Street, I called Fidelity back and said, “I can’t in good conscience do this. I’ve got to see this merger through. You guys are competitors. We’re just going to have to call it off.” That was like in April or May. The merger went very quickly and a senior executive at Fidelity called me back and said, “Let’s just have dinner,” and one led to another. By the end of the year, I said yes. I will be forever grateful that AI ended up at Fidelity and we ended up in Boston. Both things turned out beautifully for my family.

It’s a great city. It’s home for us. Although I’m in London mostly now, but I remember that City Street thing. We were looking at Fidelity. That was the first time I put on a due diligence effort when I was in the corporate world and ultimately, they decided not to bid for it. It went in a different direction as you know. It was an interesting experience just being part of that process. I’ve done it multiple times since then but that was the first time that I had an opportunity to get some exposure to the M&A world.

It’s a fun area, isn’t it?

It is. It’s intense. You’re operating with limited time and with imperfect information. They’ve got an obligation to be truthful but they also aren’t going to tell you anything you don’t ask about. That’s the thing that makes those situations hard. You’ve got to decide how much risk to take, especially if it’s a competitive situation. You’re going to have to make a bid that is the one that gets accepted. If you don’t have a competitive offer, it probably means you didn’t take enough risk in the deal. That’s what makes the situations very time consuming and nerve-racking for the companies that do them.

There’s always integration.

Joining Fidelity & The Great Recession

Everybody celebrates. They get their little tombstone of getting the deal done. A bad name for those little plexi glass or whatever the heck they’re made of. It’s a bad name for them, but the bankers all think the work’s done. The real work is just beginning. How did you find Fidelity when you joined? It was right after the crisis. You came in 2009, so it was not too long after the markets tanked.

I came on January 2nd of ‘09. We’re still very much in the midst of the great recession. I would say, first of all, why did I go to Fidelity? I worked at Fidelity for three principal reasons. One is and the most important was they did put the customer first. It just oozed out of the pores. I met with Ned Johnston and Abby Johnson and every senior leader. It was important to me to be values-based in how you run your business. It was clear that they did. That was number one.

Board Leadership: I joined Fidelity for three reasons: they truly put customers first; they lead in everything they do; and they hold strong positions in the businesses that matter most for the future—because demographics is destiny.

Number two, they’re a leader in everything they focus on. It’s just an incredible playground in terms of opportunity. The third together with the second is demographics is destiny. Not only did they have leading market positions. They have leading market positions in all the businesses that matter demographically for the next two decades at least.

It was a huge opportunity. The other one was, I had been a competitor of Fidelity. I’d been an institutional client of Fidelity and been a vendor to Fidelity because of our insurance business. I got to see a lot of the people from Fidelity. I was always impressed with the people. That gave me a lot of comfort that I wasn’t taking a huge risk.

As we were talking, I loved working there. I wish the stint had been longer. It wasn’t for a variety of reasons and I moved on to State Street from there. It was such a high-class firm with great people and collegial. They were just a lot of things to like about. It’s a phenomenal business. As you say, they were well positioned in pretty much every category that mattered for things that were going to be important for a very long time. That’s certainly played out in the ’15 or ‘20 or since then.

I will also tell you in case you don’t ask because this is important. I had only been at public companies before I went to Fidelity Aetna and ING. Only two. They were public international companies. Fidelity was a private company. That was a big question mark for me like, “How does this work?” I remember early in my tenure at Fidelity. I had the great privilege of meeting with Ned Johnson every month, so you go to school.

I remember the one thing that Ned Johnson would get annoyed about. It’s if your operating margins were too high. That meant you weren’t either in sharing our success with the customer and in terms of reduced prices, increased services, some value, values sharing or you weren’t investing enough back into the business. I always reflected on that in terms of, there’s no accident that Fidelity has grown the way it has and that philosophy. Those two things. Fidelity went hand in glove.

They did. That was something he was always doing. He was investing in the core business. He was taking risks. He was investing in some very different things like telecom, tomatoes and car service companies and quick serve retail, launch restaurants, and all sorts of things that made up his private equity portfolio, if you want to think about it that way.

It was just a fascinating business that continues to do well. You must have had to balance in the early months like stabilizing the situation. You were running the retail brokerage business and personal investments. You’re trying to drive growth but we were also in the middle of this market crisis. How did you balance that in the early days?

First of all, it was important for me to never forget why it came there. I came there because I had tremendous respect for Fidelity. I wasn’t going to come to Fidelity to be the hero and you turn things around. It was a great company in the personal investing business. They gave me tons of documents before I arrived just to get grounded in the business. I used to say we were in the seventh year of a five-year growth plan. Everything was blowing down.

It’s like, I got to get underneath why it’s slowing down. What are the drivers? I will tell you. I went against type. As you know, I’m a very action-oriented person and I decided to not do that and instead hit the road. I visited every one of our regional centers where we have thousands of people. I visited a ton of branches across the country trying to get underneath from an associate perspective and a client perspective. What were the challenges? Where were the opportunities?

As the world around us was changing in financial services, where were the strategic opportunities? One of the great gifts I got early in my tenure was, one of the leaders of our regional centers in February, so a month in. Abby and I went to visit the regional center and he gave me a green iPod. Remember those iPods way back when? It had twenty hours of customer calls on it. He said to me, “I thought this might be useful to you as somebody new to Fidelity to understand our clients and our business.” I said, “This is awesome.”

By the way, it was a huge deal that he was able to do that because compliance was so concerned about me, anybody hearing these recordings. They erased any client specific information. I never knew who the associate was or who the client was. That wasn’t the point. The point was to listen to our clients. As I drove to and from work every day, instead of listening to the radio, I just listened to calls. I did that every month for the entire time I was at Fidelity. It was so grounding to me. I’m taking a long time to answer your question.

Pivoting To An Advice-Based Business Model

One of the early things that was clear to me and listening to all these calls was people in early 2009, when the world was pretty dark in terms of financial services. Remember GE’s stock price was $6 or something. No one quite knew that people were turning to Fidelity for advice. Fidelity’s business model was not to give advice at that time. That was one of the early questions. It was, “This is what clients need. How do we meet that need?” We pivoted the whole business model to reorient it more around advice, help and guidance. Not just the brokerage business but a gigantic advisory business with, by the way, just hit a trillion dollars in advisory assets.

People may be wondering why you wouldn’t give advice. It’s because there’s a different regulatory framework to go with it that you and I know. I’ll tell you. I used to listen to the 401(K) calls when I worked in the workplace business. This was before you joined. That had a lasting impression on me because it makes you realize on the other end of every one of these accounts is a real person. Our industry spends probably too much energy thinking about, how much money can I make? Did I beat my benchmark? Did I beat my peers?

It’s about the individual saver. Fidelity more than any other company just given the sheer size of the retail business that you know and dealing with people on their workplace plans 401(K) or pension, dealing with people and their retail brokerage accounts. It’s got an unmatched ability to hear what’s going on with individual retail investors. You listen to enough of those calls and you realize for the risk of stating the obvious, it matters to those people in a different way than it may matter to a portfolio manager.

I will tell you. A lot of those calls were very humbling for me. I’ll give you one quick call that has stuck with me and I repeated to our associates over and over to underscore the importance of taking our clients’ issues as personally as they do. You don’t know who’s calling, but a fellow called. He had a young sounding voice and he said he was on long term disability. I’m like, “I wonder what’s going on here.” You get invested in the whole story.

In any event, to make the story short, he had multiple sclerosis. He had daughters that were 12 and 13 years old. He said to the person he was talking to, “I could manage this money myself if it was for me, but I’m giving it to you because I’m counting on you to get my daughters through college with this money. I’m counting on you.” That’s a big obligation. We have to take that very seriously. It’s one of the biggest benefits of working in the financial services industry as you can make that difference in people’s lives.

I can remember listening to calls. People who are taking loans against their 401(K) which is generally a terrible thing to do but they were desperate. They were out of a job. They needed to be able to pay the bills. We have people call in who are preparing to retire or in a pension plan. It was proving longer and more difficult to figure out how much they were going to get every month because of the complexities of their company plan. They would express concern about the fact that like, “I’m leaving the company at the end of the month. I need my pension check after that.”

You just realize there’s a lot of people that live with a very high dependence on a very small amount of savings and as you say, they are entrusting you with it. That’s a huge deal. We will switch topics. Talk about some of the big things that you did after the crisis. You talked a little bit about getting into the advice business, which is a standalone line. What are some of the other big things that happened in the years that you were there?

Embracing Digital Transformation & Agile

The advice business was a microcosm of a broader strategy, which we call the relationship strategy. That was stepping back. Our clients wanted to have a relationship with us. Too often, people view Fidelity or Schwab as more narrowly a brokerage business, transactional brokerage business. In fact, we had a very broad business. We had to reorient ourselves particularly after the great recession to say, “How can we have meaningful relationships with our clients?”

The easiest example is, if you go to a branch and you have an advisor. Yes, but everyone deserves a relationship. It’s a matter of what relationship. The relationship strategy ended up within six months being 50 different workstreams. We just kept peeling the onion back on how to run the business differently. That was one. Part of that also, we put our customers first but we didn’t always think of it from the customer in. I say that because this is relevant in any business. You have to start with where the customer is and work your way back. One of the things we did was, we did a lot of data analytics and established personas for our clients so that we could understand by personality type how we could better serve them based on what we could predict about them.

That was reorienting the business that way. In the early days, we didn’t know it at the time. Fidelity was a private company. I remember we were able to lean in and invest a lot in data warehouses and just building up data as an important source of business equity in terms of understanding our clients. That data eventually gave us a big head start on AI. We went from data analytics to machine learning to AI. That was another big area of focus for us.

Another one that I’d say, there were two others that became very important. One is the client experience, beyond the personas but basically getting rid of the rocks. We call the customer rocks program. Getting rid of the rocks that get in the way of the customer’s journey with us. All the pain points and hassles we unintentionally put in the process and the forms we had and all that. A lot of that was, how do we use digital technology to enable better customer service? Again, reorienting the whole business as more and more capabilities became available.

The last one was, and we did this with the wind at our back. I’m glad we did it with the wind at our back because it was hard. We transform the business from running it in a functional way to running the entire business with a digital mindset. We embraced agile in a big way and the reason we did that was to speak to value. How do we get more value to more clients more quickly? Basically, it was more of the mindset of a startup and how we deliver services and other value and not have these big lumbering functions that take forever to get things done.

I remember Kevin Barry talking about that as well. Another Fidelity colleague from my era who went on to run the workplace business, so a peer of yours for a number of years. How do you feel like that shift to more of an agile approach? What did it unlock that the functional model wasn’t able to unlock?

There were a couple of things and it only works well if you stick with it. Everyone’s tempted to make compromises along the way because it’s comfortable. If you make compromises, you’re never going to get the full value of it. What I would say is, the speech of value is the key. We measured how long it took to get something from the idea stage all the way through to a client or an associate using it. How many different groups and people had a touch of the decision in a functional organization? We had marketing, finance, products, etc.

How long did it take to make management decisions with getting people in a room together and all that stuff? On average, it took more than six months. Let’s just say. I’m forgetting the specifics. When you put all the people that had to be involved in it on the same team, we reduced the time by like 75%. It’s huge. At that point, we were also having some trouble attracting digital talent, young younger people because they want to go with companies that thought the way they did. Once we moved to the actual model, we had such an uptick in digital talent wanting to come to Fidelity because it was an empowering model for them.

It was an enormous shift particularly for mid and upper-level management. It required them to change the most. It’s so funny because the front-line employees were like, “We know what the issues are. We see all you people having the slowness in decision-making, politics and territory and all that. We’re just waiting for you guys to get out of the way so we can get the work done.”

This is one of the arguments people make to reduce layers in an organization because you just cut out the bureaucracy, if you want to call it that, that exists in the middle of many organizations. It’s not like people are showing up wanting to get in the way. It’s just the system. It collectively works against the interests of everybody.

One of the reasons we did it is because we were starting to see all these startup financial services companies that we’re led to. They were getting things done quickly and it looked pretty cool. That was another thing, by the way. The user design, how you design for your customers. Digital companies had a much better intuitive feel for it. That’s partly because of the way they’re organized. It was important competitively to make that shift before our backs were against the wall.

I’m just thinking back to that era. This was when the fintech boom started, I would imagine. Right around the 2013, ’14 or ‘15 timeframe. Is that roughly when this is going on?

It started in that time frame and then we got busy in 2016 to say, “We got to think an act differently.”

You mentioned AI a few minutes ago. I’m curious. You left Fidelity before the Gen AI thing came into the public view and the way that it has over the years. What were you doing with AI prior to that?

We had set up and I forgot which year it was. Maybe 2018 or ’19 or somewhere in there and AI center of excellence. There was a consumer insights group that reported into personal investing. Abby asked me to run this AI center of excellence. It was the early days of how do you use machine learning and predictive analysis to take the next step up in terms of true artificial intelligence.

There were mistakes along the way but getting lots of data scientists to work for us and to run not just the customer service operations. Even the portfolio managers back then started using it to help them round out or inform their research. As you know, Fidelity is an experimental company. We tried a lot of different ways to experiment with where it could drive added value. It was, by the way, during COVID. We had to constantly challenge ourselves on how to get more and more efficient to be able to serve customers well when so much money was coming at us.

You talked earlier about data, just the emphasis that the company put on data. Clearly, again, millions of people have retail brokerage accounts with Fidelity and millions of people have 401(K)s and pension accounts with Fidelity. There’s just a treasure trove of data there to be able to do the analytics that you’re describing. I would imagine that was the focus. It’s, how do you use those to better predict the customers going to want or need at any given point in time.

It dovetails perfectly with the personality-based personas that we were doing because all of that was fueled by data as well.

If you build those personas right, there’s statistical significance to them. It’s not just random things that somebody cooked up to put a made up face and name with people. If you do it right, it describes differences in the way that people behave on things and then you can build your business around those segments. It was something I remember from my time there, too.

In another area with our client facing associates. We wanted to free them up to do as many value-added things as possible. Anything that can be done in the background with machine learning and predictive analysis that frees them up to just keep talking to clients all day long. Basically, we were using the early days of AI to say, “We got your back. We can figure out lots of different decisions for you that you can trust while you go talk to the client.”

Let’s shift gears a little bit and talk about just how you approach leadership. Give me three words that would epitomize your leadership style.

Leadership Style & Empowering Associates

You can check me on this because you work with me for a while. I would say driven, empowering and committed.

How did you make empowerment a reality in the way that you ran the organization?

By the way, it wasn’t always true in the early days of my management. I like doing things. Being empowering doesn’t mean you don’t focus on the details, by the way. I had a pretty good command of the business. I finally got to the place in my career as a leader saying, “The most important role of a leader is to create an environment where associates can achieve their highest potential. If they do, the business will perform at its highest level.” Think about that.

If every single person was performing to their highest potential, the magnitude of change in a business. What does that translate into? It’s not just like career pathing and all that. It’s day-to-day, allowing people to basically remove the obstacles to them doing their jobs well. I used to always say to my management team, “We’re in Boston.” The Patriots were pretty successful at the time, Tom Brady. I say, “I’m not the quarterback of this team. I’m the offensive guard. I’m just trying to move down the field so that you guys can do what you do very well.”

My job was to remove obstacles and that’s what it was all about too, remove obstacles to quick decision-making. Remove obstacles to internal bureaucracy. Make the tough calls in terms of refereeing fights. Embrace constructive candor so we can just get on with it. Again, at the front, I’m passionate about it. At the front lines, they just want to do a good job. Make it easier for them to do that. I came to learn that my value wasn’t in doing things in terms of the actual tasks. It was creating an environment where other people could do it very well.

The Critical Importance Of Perfect Execution

Since you’ve brought up football. I know you have quoted Vince Lombardi in the past, particularly around the idea of perfect execution. How did you make perfect execution a reality in the way that you led the personal investments group of Fidelity?

I decided early on that that was going to be one of the challenges for the personal investing business. We had a lot of smart people. A lot of smart people like to talk about the issues and debate them. We’re not making progress until something happens here. We got off to dive and got moving. It’s end-to-end execution and the details do matter. You have to understand every phase of the journey and say, “Are we executing well at every phase?”

I was determined to break the back of that issue in personal investing. I used to say Vince Lombardi was the patron saint of personal investing and they say, “What do you mean by that?” I’d say, “You run the play and run the play. When you’re sick and tired of running the play, run it again.” We have got to get better at execution and so much of success in business is by basic execution. That’s where that’s where so many businesses don’t achieve the big marginal difference. Once it gets easier to execute because you do it well, then you can move on to the harder stuff that’s more interesting. The digital transformation agile was hard. Execution is just hard work. There’s a difference.

What takes discipline? Anybody who’s reading probably does not want to hear us talk about the New England Patriots. Certainly, they had a reputation in that era for being a very disciplined football team. Guys would come on to the team having played in another pro sports team, obviously playing at a high caliber in the NFL. They would go, “It’s different here. You guys are much more serious about this than we were.” The level of discipline is higher and it does make a difference. Maybe Belichick took it too far but it does make a difference when you get people zeroed in on sweating the details.

Also, driving accountability. When everyone’s in charge, nobody is. When everything in a group grows, things don’t move fast.

Cultivating A High-Performing, Integrated Team

What did you look for in your team?

First, you want them to be capable in a discipline, but we embrace mobility, so you move people around. I’d say a very underrated value is a positive attitude and team orientation. I remember in my first business job, I ended up letting go of one of my key leaders because it was clear to me that this person wasn’t a team player. There’s toxic energy there. I was asking each one of them to do a lot of hard things. The value of our business is in the intersections between the various areas. You’ve got to come together as an integrated team in order to achieve big things.

You could run a functional organization and hit your plan but hitting your plans is not winning. Winning is outdoing the competition and thinking differently than the rest of the industry. In terms of my management team, the greatest pride I probably have is in the one team approach we ultimately took. It took a while to get there. People don’t necessarily always trust each other and it wasn’t perfect. People take a lot of pride in saying, “I’m part of a real team.” People aren’t fighting with each other about everything. It is in a sense more candor, which is so critical to speed.

It just cuts through a lot of the politeness. A lot of companies have that. Some companies are overly blunt and most companies are probably too polite. They don’t say what needs to be said.

Candor with respect. That’s part of that team orientation. When you trust your teammates, there’s respect there too.

I think you’re quoting Patrick Lencioni and Kim Scott. Both talking about teams and trusting candor.

By the way, it’s important to have fun too. I was 1of 6 kids. I played a lot of sports. The team has always been very important to me.

What are some of the other things that you did to foster that sense of team and spirit of collaboration?

One of the things I did and this was a lesson learned from a mistake I had made earlier as a leader. As an example, when we were moving to the digital way of running the business with an agile mindset. I knew that we all had to be all-in. I was very focused on that because I had made a mistake earlier in my career, where I thought people were all-in but they were just being polite and it didn’t go well. On this one, it’s like, “We’re going to have all stations we need to have,” because they were two camps in terms of a poach.

We’re wrestling this one all the way to the ground. I remember we went to Amsterdam as a group. I met with my prior company, ING because ING was an early leader in all things agile. In a conference room, a leader in particular, the first one to do it, said, “Badge in the middle of the table. I’m in. I don’t know what my job will be after this is over or whether I’ll have a job but we need to do this.” Basically, everyone put the badge in the middle of the table. It was empowering and energizing. It set the tone because there were a lot of hard decisions to come and hard moments. It’s at the tone for we are all in this together.

Getting people to that point is one of the most difficult things you have to do as a leader because it’s a lot harder to create a routine that is just to manage a team as a group of individuals. Thinking back on my own career. I’ve been part of a lot of teams that probably were not much more than a collection of individuals because the team just didn’t come together in a way that it should have.

I think it’s very fulfilling as a leader. You feel more committed and more supported. It’s fun.

Balancing Ambition With Humility & Customer Focus

You’re leading a big organization. You have a fairly public persona. You’re in a key role at one of the industry leaders. You’ve got to bring your A game, but you also have to bring a sense of humility. How did you balance ambition?

Fidelity was a great place to practice because the culture of the places is never about you. It’s always about the customer, the associate and the service of the customer. I don’t mean client service. In anything we do, it’s to make a great customer experience. Again, it doesn’t always go well but that’s the mantra. I remember like I would be on CNBC or whatever. I would do it whenever I was asked, but I didn’t seek it out because that wasn’t the highest value I had. It wasn’t about me.

Board Leadership: At Fidelity, the culture is never about you—it’s always about the customer and the service of the customer. Everything we do is to create a great customer experience.

The Fidelity leaders at Fidelity that were more challenged were the ones that wanted to blaze their trail as opposed to blaze Fidelity’s trail. The combination of listening to these customer calls, meeting so regularly with associates and walking in their shoes. That keeps you humble, because there’s so much. Every day, it’s like, “We got to fix this too? I can’t believe we’re getting in the way. The associate is doing better.” I’m not sure I can explain it better than that, but if you embrace the content of your job as opposed to the stature and all that. You can’t help would be humble because it’s a hard job.

I can’t remember the woman’s name. She took over Xerox, and basically said, “For the first six months, I’m not going to do any interviews. I’m not going to do any of that outside stuff because I got to get on the covers of this business and understand what we need to do to improve our operating performance.” It was very countercultural to what some other people were doing at around that same time. They’d show up with their own PR firm into a CEO role. It was all about them, reputation and brand building.

It stuck with me over the years, just the contrast and styles between the people who are much more interested in the visible part of the whole thing and the people who just wanted to focus on the substance of the job. They do the external stuff, particularly the media things only as they felt like they needed to.

Your head has to be in service of. Media appearances were in service of our agenda. When we announced zero theme mutual funds or brokerage trading fees or whatever. Happy to do it, but do I Squawk Box every week? No.

If you’re a small business, it probably helps you to go on Squawk Box when you’re Fidelity. Not necessarily the hugest deal.

By the way, there are people with Fidelity that it is important for them to be on it and it’s good that they’re doing it and they are doing it in service of. For me, it was like, “I’m happy to do it when I need to.”

Let’s talk a little bit about your board work. You left Fidelity a few years ago. How did the board roles emerge? How did you think about preparing yourself to be a board member?

You get a lot of calls, everyone does, in terms of board opportunities. There were a couple of things that were important to me and still are in terms of factors for my decision-making. I have passed this on to other people that have retired after me. It all boiled down to what I call return on my time. I have zero interest in being on boards to collect a fee, sit in the room and be managed. Life is too sure. I can do a lot of other things and have some fun. I want to make an impact with companies that want to make an impact and want help from a board in doing that.

Number one, is the company and the board wired to embrace the role of directors and what they can contribute to management in the discussion? The other thing for me was, I live outside of Charleston, South Carolina. Everything except if you go to places like New York, Boston, and a few other places. Everything is two airplanes together. That’s a return on my time too in terms of, how much time do I want to spend at an airport and in the air and all that? I tried to optimize my time.

The BlackRock board, how did that one come about? I’ve gotten a lot of recruiter calls with boards with management I don’t know. You also can get a lot of calls with management that does know you or knows your reputation. In the case of BlackRock, because of the Fidelity partnership with BlackRock on ETFs. I knew the senior leadership there and had gotten a very good sense of their culture and where they were headed. I had a lot of comfort that I thought it’s a place I could be comfortable with but also where I could add some value.

I know that wasn’t your first board role. How did you prepare yourself for your first role?

I’m on two boards. One’s a public board and one that was not. I decided to do a pre-IPO cybersecurity tech firm and be on the board. I talked about this whole running company digitally and all that. It was interesting. One of the things they wanted me on the board for was because they were growing and they needed to operationalize things at scale. They wanted somebody from a very different headset to help with that. It’s also cybersecurity I thought was a fascinating space pre-IPO. It’s small. I had been in big companies.

That was just such a contrast to what I had done before. The second one I did was Prudential, which was my insurance roots. They were a company that when I met with them, they were trying to transform how they worked and step into much bigger strategic opportunities and reorient the company. It was a time of change which I find very fascinating. BlackRock on a bigger stage right there like demographic destiny for them, too.

It’s a marquee name to be sure. What do you think it takes to be a successful board member? Where do people go wrong?

Having enough conversations with management to understand if you’re interested in personalities aligned. What are their expectations? Does that mean your expectations of how you want to spend your time? Secondly, it’s important, particularly in early days. You’re not management. You have to check yourself in terms of what you asked about the conversations at the board level, how you can help management as opposed to being managed by management because you’re a pain.

That’s a tricky business. The culture of the company matters a lot in terms of not just how the board is run, but how management shows up to the board, what the level of the dialogue is and how the dialogue is. All of that. Having a sense of that ahead of getting in there, you are never going to have perfect information but you figure out whether you can add value in that situation.

Particularly in a board role, you’ve got this need to make sure that you’re providing the right governance. The standards have gotten a lot tougher. The situations have gotten a lot messier. It used to have a very clubby atmosphere. It’s very far from that these days. How do you think about making sure that you’re finding the right balance in terms of not managing but also holding management accountable and thinking about your obligations to the shareholders?

That is your principal job. It’s to represent the shareholders. I’ve said these words a lot in this conversation but I do think it’s important. Having constructively candid conversations is important. Being too polite just means trouble’s brewing somewhere. You need to have a transparent relationship with management, particularly the C-Suite. If you don’t feel good about that, you have to check yourself in terms of the nature of that relationship.

Board Leadership: It’s important to have candid, constructive conversations. Being too polite only means trouble is brewing. You need a transparent relationship with management—especially the C-suite—and if you don’t feel good about that, it’s time to reassess the relationship.

A good acid test of that is, inevitably something’s going to go wrong at every company. How management approaches those issues with the board will tell you a lot about what your governance responsibilities are because it can be easier and it can be hard. If management is doing the duck and weave and trying to explain away all the issues. It’s like, “We’re digging in here. This is going to get uncomfortable. You got to do it.”

Clear accountability and having a sense for that is important. Asking direct and detailed questions from time to time is important, too. It used to drive me crazy as management when you had like eighteen versions of a presentation to the board or whatever and sand off all the rough edges and make sure it’s pretty so no one asks any questions. It doesn’t challenge you. That’s another indicator that things aren’t completely healthy. Let’s have real conversations.

Embracing Continuous Learning & Adaptability

Generally, the best way to do that is to cut down on the presentation length. Last question, I know you care a lot about bringing the next generation on. What advice would you have for younger people who are reading who are thinking about their own career and what they can do to have the best success possible?

My son just graduated from college, so I’ll channel him as well. The velocity of change in the world is so great. The advances that are going to be made in lots of different technological capabilities, not to mention AI specifically. Our careers will be transformed before your very eyes and more than once in your working career. Be extremely open to new opportunities, new ways of doing business and lots of different ongoing education and certifications.

All of that is going to be critical because the jobs are going to keep changing. We talked about in the early days of our digital journey, how do you allow associates to add more value? You take away the utility type work but that means you have to keep learning. Learning in essence becomes a new career. If you’re not curious, change oriented, it’s going to be difficult for you. I don’t know if I could have kept up a little but you get used to it but it is a lot.

My kids are a little bit older than your son. I just think about what they’re going to encounter in the remainder of their careers, particularly with AI. Not exclusively but particularly with AI. It’s got the potential to be one of these hugely disruptive things that people look back on in their careers like the internet was and the PC before that, and all the other things that have come in between.

Also, geopolitical considerations. The world now is much more chaotic and talks about agility. The agility in how you manage your day-to-day life and the unplanned circumstances. Learning and adaptability to change are the key focus areas going forward.

Thank you. It’s been great. It’s been phenomenal to catch up. Hopefully, we didn’t do too much going down memory lane to bore the audience. Some good lessons in there about how to transform a business and operate as an executive level leader and participate at the board level as well. Thank you.

One thing I forgot to say that is very important and maybe a good thing to leave with is. There is no substitute for caring about people. The greatest joy but also the most important gift you can give is caring. You’re all in it together at the management level. All the way down. In a world that is changing and is disruptive as this is, that empathy becomes even more important.

Very true. Again, thanks.

It was great to see you and spend some time with you.

You as well. Thanks again.

—

I want to thank Kathy for joining me. It was nice to catch up with her and to discuss the things that happened in her career journey after our past cross back. It’s interesting to hear her thoughts on what it takes to be a successful board member and her thoughts on leadership and career growth as well. As a reminder, this episode is brought to you by PathWise.io. If you’re ready to take control of your career, join the PathWise Community. Basic membership is free. You can also sign up on the website for our newsletter and follow us on LinkedIn, Facebook, YouTube, Instagram, and TikTok. Thanks.

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About Kathy Murphy

Kathy Murphy is a seasoned financial services executive and corporate board leader with a distinguished career spanning legal, business, and governance roles. She most recently served as President of Fidelity Personal Investing, where she grew assets under management to $4 trillion and spearheaded major innovations in digital advice and zero-fee investing. Previously, she held executive positions at ING and Aetna.

Kathy currently serves on the boards of BlackRock, Snyk, and several non-profit boards. She is recognized for her strategic vision, integrity, and commitment to financial empowerment, and is a sought-after advisor on leadership, corporate governance, and developing the next generation of talent.