Abigail Johnson, 50, will continue to report to her 82-year-old father, Edward C. Johnson III, Boston-based Fidelity's chairman and chief executive since taking over from his father in 1977.

The promotion likely means Abigail Johnson will eventually replace her father as Fidelity's chairman, ending years of speculation about who would run the firm next, said John Bonnanzio, who edits a newsletter for Fidelity investors. Bonnanzio said he was only surprised she had not been given more responsibilities already.

With $1.58 trillion of assets, Fidelity is the second-largest U.S. mutual fund company, behind only Vanguard Group, and one of the world's biggest money managers. But some of the firm's signature funds, like the Magellan Fund once run by Peter Lynch, have fallen on hard times. Fidelity customers have withdrawn more money than they have added over the past few years.

Johnson's appointment comes as Fidelity faces stiff competition, investors' lack of confidence in the stock market as well as the emergence of low-cost, index-based exchange-traded funds (ETFs).

Even if the global economy was more stable, Abigail Johnson still would face a significant challenge expanding a company the size of Fidelity, according to Jim Lowell, chief investment officer of Adviser Investments, which has $2.4 billion mostly invested in Fidelity and Vanguard mutual funds.

"It's a fairly hostile environment," Lowell said. "There are product issues. Fidelity is still trying to figure out how to get market share with ETFs without getting into a price war."

Lowell said Johnson is up to the task: "She's well schooled in every spoke of Fidelity's wheel."

In 2011, Fidelity's customer outflows - including funds and managed products - totaled $36.2 billion, largely driven by $46.1 billion in equity outflows and $16.1 billion in money market outflows.

BROADER ROLE

As president of Fidelity Financial Services, Abigail Johnson will oversee all of the firm's major businesses including asset management, retail and institutional brokers and retirement and benefit services.

She had been overseeing only Fidelity's personal, workplace and institutional services organization, which includes the retail and institutional brokerage divisions, as well as retirement and benefits services.

The latest move means that Ronald O'Hanley, who oversaw all asset management and corporate services and reported directly to Edward Johnson, will now report to Abigail Johnson.

Edward Johnson has no plans to step down as chairman and CEO, Fidelity spokeswoman Anne Crowley said. "But there's no question this a broader role for Abby."

In April, during a rare public appearance, the elder Johnson appeared frail when he and his family accepted congratulations during their induction into the Greater Boston Chamber of Commerce's Academy of Distinguished Bostonians.

During her 24-year career at Fidelity, Abigail Johnson has continued to gain important assignments, though it has not always been a direct path to the top.

Johnson, who had worked summers at her family's firm before college, graduated from Hobart and William Smith Colleges in Geneva, New York, with a degree in art history. She worked for two years after graduation at consulting firm Booz Allen where she met her husband, Christopher McKown.

Abigail Johnson then obtained an MBA from Harvard Business School before joining Fidelity as an analyst in 1988. In the 1990s, she ran three different stock funds before moving into management. In 2001, she was named president of the fund division and in 2005 she switched jobs to take charge of Fidelity's benefits and retirement plans unit.

Some outside Fidelity saw the 2005 shift as her demotion away from the firm's core strength in mutual funds. The perception only grew later that year when the family altered ownership stakes in the firm and shifted some of Abigail Johnson's holdings to family trusts. Fidelity is controlled by the Johnson family along with outside shareholders, mainly employees of the firm.

At the Boston Chamber of Commerce event in April, Abigail Johnson recounted how her training in learning the family business first began in the 1970s at the family dinner table.

"The telephone would ring and someone would leap to get it," Abigail Johnson said at the occasion. "The call would invariably be for my father."

From her seat at the dinner table, she said she would listen to how her father handled a customer's issue.