UPDATE 2-Fidelity's No. 2 exec to step down; no replacement

* Management decisions to be made by committee for now

* Latest churn at top of family-controlled business

* Lawson: firm could turn to insiders or break up (Adds performance, history, further quotes)

By Ross Kerber

BOSTON, Jan 20 (Reuters) - Fidelity Investments President Rodger Lawson will step down at the end of March, creating a possible leadership void at the largest U.S. mutual fund firm.

A replacement would not be named right away for the company's number-two position, Lawson said in an interview on Wednesday, adding that he would stay on as an adviser.

Boston-based Fidelity is the largest manager of 401(k) retirement plans, money market funds and mutual funds in the United States.

Lawson, 63, cast his departure in terms of good timing as Fidelity and the rest of the financial sector recover from the tumultuous and years-long credit crisis.

"We're doing extremely well. This is the perfect time" to step aside, he said, speaking at the company's headquarters.

Still, the move comes less than three years after Lawson, who lead Fidelity's retail operation in the late 1980s, returned to the family controlled business and began a management shake-up that leaves few obvious candidates to replace him.

For now, management decisions will be made by Fidelity's nine-member executive board, reporting to Edward C. "Ned" Johnson III, the company's 79-year-old chairman, Lawson said.

A decision on who, if anyone, will fill the president's job will be made by the six-member board of Fidelity's parent company, FMR LLC, which includes Ned Johnson, his daughter Abigail, and her brother Edward C. Johnson IV.

Asked if Fidelity might pick another outsider to replace him, Lawson said "It's more likely we'll have an internal solution."

It is also possible that two or three executives could emerge to lead different parts of Fidelity, he said.

Fidelity "may be multiple companies," Lawson said.

A spokeswoman said Johnson family members wouldn't comment on the latest shake-up.

John Bonnanzio, editor of a newsletter for Fidelity investors, said he was not surprised by Lawson's news, but wondered why it was not delayed until a replacement was named.

"They could have had a plan in place, and they didn't," he said.

Bonnanzio speculated that perhaps Johnson was not yet ready to cede control of the company to his daughter, despite her position as vice-chairman.

REVOLVING DOOR?

Few outside top executives seem to last long at Fidelity and Lawson's departure makes him another transitory figure in the storied firm's history.

Lawson leaves a mixed record, but one that could still be considered a success given the carnage at many rival firms.

Fidelity's long-term funds have shrunk by more than $146 billion during Lawson's tenure, to $695 billion at the end of November, according to Financial Research Corp. During the same period, competitors like Vanguard Group and Pimco grew.

But Fidelity weathered the financial crisis better than its rivals, with operating income down 7 percent to $1.4 billion in the first nine months of 2009.

Among Fidelity's largest competitors, BlackRock Inc. (BLK.N) saw its operating income drop 29 percent to $889 million for the first nine months of 2009.

In a presentation on Wednesday Lawson and top financial officer Robert Chersi said Fidelity now counts $3.2 trillion in assets under administration, up from $2.6 trillion at the end of 2008.

The growth shows Fidelity's emphasis on areas like running retirement plans has paid off, Lawson said, while job cuts kept it competitive.

"We are in an era of huge excess capacity in financial services," Lawson said. "It is the efficient who will survive in this world."

Lawson will remain a Fidelity employee and adviser, and said he planned to spend more time in New York, where he kept a home, and in Washington, working on policy issues.

And it was incorrect to say he pushed aside all the company's veteran talent.

"Not all of them. I kept Abby," he said. (Reporting by Ross Kerber; additional reporting by Aaron Pressman; editing by Ros Krasny, Leslie Gevirtz)