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Penny Pennington on Wealth Management (Podcast) · Masters in Business

0:02
Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.
0:07
Speaker 1: This week on the podcast, I have an extra special guest.
0:10
Speaker 1: Penny Pennington is the head of investment Giant ed Jones.
0:15
Speaker 1: Technically her title is managing partner. She is the sixth
0:19
Speaker 1: such partner in the eight year old firm, and the
0:23
Speaker 1: first one not to be part of the founding family.
0:26
Speaker 1: She was originally a financial advisor who just came up
0:30
Speaker 1: through the ranks. If you are at all interested in
0:34
Speaker 1: things like asset management, financial planning, what it's like to
0:39
Speaker 1: run a giant firm with fifty employees and seventeen thousand
0:43
Speaker 1: financial advisors, who better than Penny Pennington. This is really
0:47
Speaker 1: just an absolutely fascinating conversation. There's a little bit of
0:52
Speaker 1: it that's kind of inside baseball, and and I'll let
0:55
Speaker 1: you guys in a secret. I treat these conversations as
0:59
Speaker 1: if it's a one on one and I just asked
1:02
Speaker 1: the questions that I'm genuinely interested in. I learned a
1:05
Speaker 1: lot and I think you will too. So, with no
1:08
Speaker 1: further ado, my conversation with Edward Jones, Penny Pennington's This
1:14
Speaker 1: is Master's in Business with Barry Ridholts on Bloomberg Radio.
1:19
Speaker 1: My extra special guest this week is Penny Pennington. She
1:22
Speaker 1: is the managing partner of Edward Jones, a year old
1:27
Speaker 1: Fortune five hundred company. They have seven million clients and
1:31
Speaker 1: about one point three trillion in assets managed by forty
1:36
Speaker 1: nine thousand associates. She is the first non family member
1:40
Speaker 1: to manage the firm, and she was ranked number thirty
1:44
Speaker 1: three in Fortune's Most Powerful Women in Business list. Penny Pennington,
1:50
Speaker 1: Welcome to Master's in Business. Thank you, Barry. It's great
1:53
Speaker 1: to be with you. Great to be with your listeners today,
1:56
Speaker 1: Really nice having you. You have both an interesting back
2:00
Speaker 1: round and an interesting career path. But I'm gonna jump
2:03
Speaker 1: a little bit towards the ends. Tell us what was
2:06
Speaker 1: going on, oh eight oh nine, What was happening in
2:09
Speaker 1: the firm? How did you respond, How did clients react
2:14
Speaker 1: to suddenly you know, lots of people were pooh poohing
2:17
Speaker 1: the oh, it's no big deal, it's contained until it
2:21
Speaker 1: wasn't tell us what the great financial crisis was like,
2:24
Speaker 1: what were clients calling and worrying about? And then how
2:28
Speaker 1: does this version compare? It seemed people sort of learn
2:32
Speaker 1: their lesson not to panic in O eight oh nine. Uh,
2:36
Speaker 1: that's that seems to be what at least the lesson
2:38
Speaker 1: was in. But what was your experience. Yeah, well, as
2:42
Speaker 1: it relates to clients and what they were experiencing. If
2:45
Speaker 1: you go back to eight oh nine, UM, the catalyst
2:50
Speaker 1: for the ignission switch, for that market volatility, what happened
2:56
Speaker 1: in the global markets was a financial ignition switch. It
3:01
Speaker 1: was a meltdown in certain aspects of the financial markets,
3:06
Speaker 1: and as a result, the stock market, as we certainly
3:10
Speaker 1: remember UM did a deep dive and remained deep and
3:16
Speaker 1: volatile for some period of time. While the financial markets
3:22
Speaker 1: UM were to some degree rebuilt. Regulation was a part
3:26
Speaker 1: of that. UM new entrance and new new partnerships among
3:32
Speaker 1: financial services companies were part of that. But the investing
3:36
Speaker 1: public UM got a got got UM a reminder of
3:42
Speaker 1: what significant volatility and a deep um reduction in the
3:48
Speaker 1: stock market felt like. And uh it took ten years
3:52
Speaker 1: to rebuild from that. The difference with the the effects
3:57
Speaker 1: of what I've called a triple pandemic over the past
4:01
Speaker 1: eight months or so is that the ignition switch had
4:04
Speaker 1: nothing to do with the economy or the financial markets.
4:08
Speaker 1: It was a health crisis that was the ignition switch
4:12
Speaker 1: for a period of market volatility that was actually pretty
4:16
Speaker 1: short in February and March. We have had some more
4:20
Speaker 1: recent market volatility and we expect that that will continue.
4:23
Speaker 1: But the markets because for for a lot of reasons
4:26
Speaker 1: that we could talk about, the markets actually recovered pretty significantly. However,
4:32
Speaker 1: the anxiety in the marketplace is still there, and anxiety
4:37
Speaker 1: for investors sometimes means that they question, uh, the way
4:43
Speaker 1: their portfolios are built, um, they become more risk averse,
4:48
Speaker 1: and very importantly, they turned to a financial advisor to
4:54
Speaker 1: help them make sense of all of that. So that
4:57
Speaker 1: was a common feature of oh eight oh nine for
5:00
Speaker 1: for investors and how they responded. The common feature for
5:05
Speaker 1: us and our financial advisors and how we respond is
5:09
Speaker 1: to keep people focused on their long term goals and
5:12
Speaker 1: help relieve as much as we can um the anxiety
5:15
Speaker 1: that people are facing with market volatility, but this time
5:19
Speaker 1: with things like health crisis, loss of jobs, their kids
5:23
Speaker 1: and grandkids who are going through through significant changes in
5:27
Speaker 1: their lives. So sometimes I asked questions that I just
5:30
Speaker 1: want to know the answer to, Hey, how do you
5:32
Speaker 1: create a consistent experience from advisor? Advisor even if they're
5:37
Speaker 1: in different offices. The portfolios might look similar, but how
5:41
Speaker 1: do you maintain that corporate culture. It's a really challenging
5:45
Speaker 1: question because it's you know, it's not an easy thing
5:48
Speaker 1: to do, especially during working from home. Our financial advisors
5:54
Speaker 1: and our branch office administrators are client service professionals. They
5:57
Speaker 1: have been in the branch the whole town on. Our
6:01
Speaker 1: branches are very safe and we closed them to the public.
6:05
Speaker 1: So we've been meeting with clients, investors, and prospects by
6:09
Speaker 1: zoom and virtual means. But the financial advisors are in
6:13
Speaker 1: our branches and that really has helped. It's been a
6:16
Speaker 1: centering mechanism for them in a way. That's that's kept
6:20
Speaker 1: us all together. So that raises a really interesting question
6:24
Speaker 1: which I was going to ask later, but let me
6:25
Speaker 1: ask now. Edward Jones has something like thirteen thousand branches,
6:30
Speaker 1: Is that right? They were all branches fifteen thousand, so
6:35
Speaker 1: I'm looking at old data. So all fifteen thousand branches
6:39
Speaker 1: were open and actually operating lights on during during the
6:46
Speaker 1: entire m during work from home during pandemic lockdowns. It
6:51
Speaker 1: wasn't open to the public, but you had people going
6:53
Speaker 1: into those offices and turning on the lights. Absolutely. Most
6:57
Speaker 1: of our branches we have two to three people in
7:01
Speaker 1: the branch, so they are by their nature safe places.
7:06
Speaker 1: We could differ o our colleagues could be distanced from
7:09
Speaker 1: each other UM and we were deemed in essential services.
7:14
Speaker 1: So because of that, even during state by state lockdown,
7:18
Speaker 1: and boy, I remember the night that we got the
7:21
Speaker 1: news that Pennsylvania was locking down. That was the first state.
7:25
Speaker 1: You know, just just a wave of emotion and a
7:30
Speaker 1: bit of oh my gosh, this is really happening, and
7:32
Speaker 1: this is going to happen across the entire country. And
7:35
Speaker 1: so we got set up very quickly, within a matter
7:39
Speaker 1: of hours and days UM to ensure that our branches
7:43
Speaker 1: could remain open, but also to ensure that our financial
7:47
Speaker 1: advisors and our b O as branch office administrator, the
7:50
Speaker 1: client service professional in each of our branches could work
7:54
Speaker 1: remotely if they needed to or wanted to. So within
7:58
Speaker 1: a matter of about ten days days, we went from
8:01
Speaker 1: fifteen thousand remote connections available across our firm to fifty
8:07
Speaker 1: thousand remote connections. So while every single one of our
8:11
Speaker 1: branches has remained open, our colleagues can work flexibly and
8:17
Speaker 1: through through all kinds of virtual means like Zoom and
8:20
Speaker 1: Skype and webbex with with clients, investors, in prospects, and
8:24
Speaker 1: with each other. So what do you think the impact
8:28
Speaker 1: of keeping fifteen thousand branches open has been, and let's
8:34
Speaker 1: talk about all of your essential communities. What do you
8:37
Speaker 1: think it's been on the local community, the employees, the clients,
8:40
Speaker 1: and and any perspective clients of seeing the lights on? Yeah, um, well,
8:47
Speaker 1: I believe and I've got evidence that proves um that
8:52
Speaker 1: that our clients and our perspective clients have seen those
8:56
Speaker 1: lights on and recognize that we are purpose riven to
9:01
Speaker 1: be there for their well being. You know what what
9:06
Speaker 1: has been going on with clients and investors, the anxiety
9:10
Speaker 1: that that this pandemic, the economic downturn, and the social
9:14
Speaker 1: unrest have caused across our communities. That anxiety has impacted
9:20
Speaker 1: clients and investors. It's also impacted every single one of
9:25
Speaker 1: us who serves them. And so we've been going through
9:29
Speaker 1: the same things that they have. But what being in
9:33
Speaker 1: the branch is, what being on the job at work
9:37
Speaker 1: for their benefit, for their well being has meant to us,
9:42
Speaker 1: is that we're doing something bigger than ourselves, despite our
9:46
Speaker 1: own personal anxiety. All of us have had to deal
9:50
Speaker 1: with all kinds of disruptions in our own lives, but
9:54
Speaker 1: we get out of bed every morning thinking about our
9:56
Speaker 1: clients and helping them reduce the anxiety in their lives.
10:01
Speaker 1: I'll tell you a real quick story, um and and
10:03
Speaker 1: it's and it really is. An image it was sent
10:06
Speaker 1: to sent to me back the beginning of April from
10:10
Speaker 1: a branch in Florida where the branches were closed to
10:13
Speaker 1: the public, but our financial advisors and boas are in
10:16
Speaker 1: the branch. And the image that was sent to me
10:20
Speaker 1: was a client standing outside the branch with their hand
10:25
Speaker 1: pressed up against the window of the branch and one
10:29
Speaker 1: of our Edward Jones colleagues on the other side of
10:33
Speaker 1: that window, hand to hand with their client, just passing
10:38
Speaker 1: back and forth. Good energy, Thank you for being there.
10:43
Speaker 1: We know you're there for us. And words didn't have
10:47
Speaker 1: to have to go back and forth, papers didn't have
10:50
Speaker 1: to go back and forth. That that was not the
10:53
Speaker 1: ethos that was being expressed. It was this, Uh. It
10:56
Speaker 1: was a convergence of love, of taking care of each other,
11:01
Speaker 1: of being in it together, of knowing why we're here,
11:06
Speaker 1: and that is to relieve the anxiety of our clients
11:09
Speaker 1: and keep them focused on the long term. It sounds
11:13
Speaker 1: as if there are certain key values and certain key
11:17
Speaker 1: ideas you want to make sure every Edward Jones customer
11:21
Speaker 1: experiences or or am I putting words in your mouth? Should?
11:25
Speaker 1: Is it more variable from office to office, advisor to advisor? Yeah?
11:31
Speaker 1: I like the way that you said that, UM, the
11:34
Speaker 1: experience they have UM may be different in terms of
11:38
Speaker 1: the products, the services, the tools UM that they are
11:43
Speaker 1: exposed to or that they're utilizing. That what is common
11:47
Speaker 1: is the outcome UM, that they achieve financially, whatever it
11:53
Speaker 1: is that's most important to them, and that they have
11:56
Speaker 1: the have this sense of well being as as we
12:00
Speaker 1: are helping them achieve that. So you raised a number
12:03
Speaker 1: of interesting points that I want to unpack one by one.
12:08
Speaker 1: Let's start with why you believe this particular cycle was
12:13
Speaker 1: so tight. Why was the downturn in February and March
12:18
Speaker 1: six weeks as opposed to oh eight or nine where
12:21
Speaker 1: it was eighteen months, which by itself was relatively short. Yeah. Well,
12:27
Speaker 1: in large part it has to do with what the
12:30
Speaker 1: ignition switch was. UM. The the economy before the pandemic
12:37
Speaker 1: was fundamentally quite strong, a period of low interest rates,
12:42
Speaker 1: a period of very high employment, a period that fundamentally,
12:50
Speaker 1: UM was very healthy for the economy. Lots of people working,
12:54
Speaker 1: and in our country, lots of people spending money. And
12:57
Speaker 1: since two thirds of our economy as driven by consumer
13:01
Speaker 1: spending in demand, when people spend money, UM, stocks are
13:05
Speaker 1: doing well and UH, and the market is fairly sanguine.
13:09
Speaker 1: That was the environment that we had before the pandemic.
13:13
Speaker 1: The environment that we had an O eight oh nine UH,
13:16
Speaker 1: we discovered was a little more fragile in terms of
13:19
Speaker 1: the fundamentals of the economy as well as the fundamentals
13:24
Speaker 1: of the financial services industry. UM that caused a ripple
13:27
Speaker 1: when when it began to come apart, caused a ripple
13:30
Speaker 1: effect that we know now is global. So that really
13:33
Speaker 1: is the distinguishing difference. Now, UM, why UM, why we
13:38
Speaker 1: had relatively little volatility. Then at the beginning of the pandemic,
13:44
Speaker 1: we do have to look at the broad stock market
13:47
Speaker 1: indexes and realize that a few growth companies have performed
13:54
Speaker 1: exceedingly well, in large part because of the way that
13:58
Speaker 1: they have served the consuming public and businesses during the pandemic. UM.
14:04
Speaker 1: I think the five or six highest growth stocks are up,
14:08
Speaker 1: you know, over the past six months or so, and
14:12
Speaker 1: the rest of the S and P five hundred is
14:15
Speaker 1: up far less and in some and on some weeks
14:19
Speaker 1: is down. So it's a pretty narrow market that is
14:23
Speaker 1: driving those, uh, those those broad benchmarks. So a lot
14:28
Speaker 1: of moving parts with how the contraction came about, how
14:34
Speaker 1: the economy recovered, what sectors are doing well. But I
14:38
Speaker 1: want to focus on what you brought up earlier. You
14:41
Speaker 1: have over sevent financial advisors. How do you make sure
14:46
Speaker 1: everybody has the same client experience, whether it's portfolio management
14:51
Speaker 1: or customer service. How do you translate that army of
14:55
Speaker 1: advisors into one I don't want to call it uniform warm,
15:00
Speaker 1: but a consistent experience, a consistent interaction with Edward Jones,
15:06
Speaker 1: no matter where your office is, where your advisor is. Yeah, um,
15:12
Speaker 1: what what a what a great conversation that we can
15:15
Speaker 1: have about that. So um, we have nineteen and a
15:18
Speaker 1: half thousand financial advisors. We were the largest firm in
15:22
Speaker 1: terms of number of financial advisors in our industry. Those
15:26
Speaker 1: financial advisors are spread across the United States and in Canada.
15:32
Speaker 1: We have forty nine thousand colleagues all together Um, so
15:36
Speaker 1: we are all pulling in the same direction in terms
15:40
Speaker 1: of what drives us Barry, our purpose, what gets us
15:45
Speaker 1: up in the morning is making a meaningful difference in
15:48
Speaker 1: the lives of the clients that we serve, the seven
15:51
Speaker 1: million that we serve today and the tens of millions
15:55
Speaker 1: of more that that look like serious, long term individual
15:59
Speaker 1: investors that we would like to serve. Now, you said,
16:03
Speaker 1: how do we ensure that every client is having the
16:06
Speaker 1: same experience, Well, actually we don't, because we we really
16:12
Speaker 1: focus on the humanity of each of our clients and
16:18
Speaker 1: discovering what it is that's most important to them, tailoring
16:23
Speaker 1: the experience to what they need, um providing to them
16:29
Speaker 1: as completely as we can a an experience that improves
16:34
Speaker 1: their financial well being, thereby their entire well being, and
16:40
Speaker 1: the experiences that that that is rooted in that the
16:44
Speaker 1: emotions that that those experience are rooted in is a
16:49
Speaker 1: common factor in terms of what we're seeking to deliver.
16:53
Speaker 1: We know that our clients want to feel understood about
16:57
Speaker 1: what's most important to them, in full about how to
17:02
Speaker 1: achieve that financially uh and how they're progressing toward that
17:06
Speaker 1: in control. They want to feel like they've got some agency.
17:11
Speaker 1: Albeit no one's got control over the market, but some
17:14
Speaker 1: some control and agency in their own lives. And we
17:18
Speaker 1: know when they feel those things that there's a sense
17:21
Speaker 1: of security and confidence about their long term path. So
17:26
Speaker 1: the experiences that we seek to deliver, family by family,
17:30
Speaker 1: individual by individual are all focused on helping individual clients
17:35
Speaker 1: and investors feel those emotions and and how that's achieved
17:40
Speaker 1: is through a deep trusted personal relationship with a financial advisor.
17:46
Speaker 1: We don't have call centers, Um, we have financial advisors
17:50
Speaker 1: in in communities, working face to face, one on one
17:54
Speaker 1: with clients and their families. Huh. Quite interesting. So Penny,
17:59
Speaker 1: let's talk a little little bit about financial advisors. What
18:02
Speaker 1: what makes for a good financial advisor? And is that
18:06
Speaker 1: something that can be taught or is it you know
18:09
Speaker 1: you either are or aren't. What makes for a good
18:12
Speaker 1: financial advisor is someone who recognizes that what we do
18:19
Speaker 1: is a balance of e Q emotional quotient emotional intelligence
18:26
Speaker 1: and i Q so knowledge that can be learned, expertise
18:32
Speaker 1: around the financial markets, around building a portfolio, around balancing
18:39
Speaker 1: complex trade offs between among a client's goals. That's the
18:47
Speaker 1: EQ part of what we do, and there is Boy,
18:51
Speaker 1: there's lifelong learning associated with with the I'm sorry, with
18:56
Speaker 1: the i Q part, with the intelligence quota, there is
18:58
Speaker 1: lifelong learning a sciating with that, and UM bear your
19:02
Speaker 1: organization helps financial advisors and and folks in the financial
19:07
Speaker 1: marketplace with that lifelong learning and insight and perspective. The
19:12
Speaker 1: EQ part is now more than ever and will continue
19:17
Speaker 1: to be a hallmark of what really great financial advisors do.
19:25
Speaker 1: The EQ part is being empathetic, recognizing that listening to
19:33
Speaker 1: another human being about what their hopes are, about what
19:37
Speaker 1: their fears are, and how those are changing over time,
19:40
Speaker 1: how they're impacted, especially now by current events. Really generously
19:46
Speaker 1: listening UM to that on the part of another human being,
19:51
Speaker 1: and UM with with with that kind of empathy and
19:56
Speaker 1: with that sort of expertise, building up not only a plan,
20:02
Speaker 1: a financial plan, but building a plan based on relationship
20:09
Speaker 1: to keep people focused on their long term goals, notwithstanding
20:14
Speaker 1: the short term ups and downs that are part of
20:16
Speaker 1: that UM to keep people focused on the long term.
20:20
Speaker 1: So empathy, generous listening, UM the process of of of
20:28
Speaker 1: thinking a short term to long term, All of those
20:33
Speaker 1: things make for make for the strength of a financial
20:36
Speaker 1: advisor and back to my earlier point about the i
20:39
Speaker 1: Q part of this, A lifelong learner someone who is
20:43
Speaker 1: really interested in continuing to dial up their own skills
20:48
Speaker 1: from an expertise standpoint, but also from from from an
20:52
Speaker 1: empathy and EQ standpoint. So let's stick with the concept
20:56
Speaker 1: of advisors. You guys are coming up on your hun
21:00
Speaker 1: birthday not too far off in the future. You began
21:04
Speaker 1: as a brokerage firm, and in the early days most
21:07
Speaker 1: of your employees who were client facing were brokers. How
21:13
Speaker 1: has over the past century, how has that changed to
21:17
Speaker 1: what Edward Jones is today. Yeah, Well, it's a fascinating
21:22
Speaker 1: history and it's really one that's rooted in um recognizing
21:27
Speaker 1: what was scarce in the marketplace and boldly and sometimes
21:33
Speaker 1: of admittedly in a in a very unusual way, going
21:40
Speaker 1: after serving that underserved market. So back in the fifties
21:45
Speaker 1: and sixties when Ted Jones are founder's son, recognized that
21:51
Speaker 1: the brokerage companies were all congregated in the large cities,
21:56
Speaker 1: but there was there were significant numbers of both with
22:01
Speaker 1: wealth and uh with with businesses and jobs where they
22:05
Speaker 1: were creating wealth who really deserved access to financial information,
22:11
Speaker 1: to products and services, to the ability to open an
22:15
Speaker 1: account and do a transaction in the financial markets, uh,
22:19
Speaker 1: in a really seamless and person to person way. Ted
22:23
Speaker 1: Jones recognized that that was scarce. It was scarce in
22:26
Speaker 1: more rural communities, and so he went about building a
22:30
Speaker 1: distribution system that spoke to to those clients. Now fast
22:35
Speaker 1: forward to today. You know, as I say opening an
22:38
Speaker 1: account and doing a transaction with scarce, then it certainly
22:42
Speaker 1: is not. Today. That's not what's scarce, and that is
22:46
Speaker 1: not what what is is the definition of value today.
22:50
Speaker 1: In fact, the ability to do a transaction in the
22:52
Speaker 1: financial markets is nearly a free good today, um, with
22:57
Speaker 1: zero commissions on trading and that sort of thing. Today,
23:01
Speaker 1: what is scarce is that hyper personalized, human centered relationship
23:09
Speaker 1: for tens of millions of people whereby they can get
23:14
Speaker 1: good advice in achieving what's most important to them. And
23:18
Speaker 1: that is across the arc of generations as well as
23:21
Speaker 1: across the arc of complexity of needs. And so we
23:25
Speaker 1: don't have account minimums and we don't have account maximums. Um.
23:29
Speaker 1: We work with clients who are serious long term individual investors.
23:35
Speaker 1: That means UM, they value relationship, they want advice, and
23:41
Speaker 1: they're focused on the long term in their lives. Quite interesting.
23:46
Speaker 1: You followed Jim Wettle, who was the managing partner at
23:50
Speaker 1: ed Jones for thirteen years. He oversaw a giant rise
23:55
Speaker 1: in both clients and assets. Edward Jones is now one
23:58
Speaker 1: of the nation's biggest wealth management company. Those are some
24:02
Speaker 1: pretty big shoes to fill. Yes, they are, and I
24:05
Speaker 1: feel it every day. If if you were in my office,
24:09
Speaker 1: uh and on the floor where where a number of
24:11
Speaker 1: our offices are there, there's some paintings down the hall
24:15
Speaker 1: and there are five paintings of our former managing partners.
24:20
Speaker 1: Are five former managing partners, including two whose last names
24:24
Speaker 1: were Jones uh then Doug Hill, John Bachman, Jim Wettle
24:29
Speaker 1: and um. Right across the hallway from those those paintings
24:34
Speaker 1: is a picture of Ted Jones, who was our founder's son,
24:39
Speaker 1: our second managing partner, And it's a picture of Ted
24:42
Speaker 1: with his horse and a couple of dogs out on
24:45
Speaker 1: his farm and he's talking about what he loves and
24:50
Speaker 1: what he's grateful for. And those those uh, those paintings
24:56
Speaker 1: and that picture of Ted remind me every day that
24:59
Speaker 1: I'm in the office of what our roots are, what
25:02
Speaker 1: our values are, who we came from. Importantly, all of
25:06
Speaker 1: our former managing partners were financial advisors. They sat with clients,
25:13
Speaker 1: building trust with clients. Albeit all the way back to
25:16
Speaker 1: nineteen two, there's a lot that changed about that, but
25:19
Speaker 1: what's fundamentally the same is building trust with clients. And
25:24
Speaker 1: as you said, UM, my immediate predecessor, Jim wettele Um
25:29
Speaker 1: was the leader of tremendous growth and growth and impact
25:34
Speaker 1: and our firm that took us from a few thousand
25:37
Speaker 1: financial advisors to today, um, nineteen thousand financial advisors in
25:43
Speaker 1: every nook and cranny, every large city and suburb in
25:47
Speaker 1: North America, in Canada and the United States. So following
25:52
Speaker 1: in those footsteps is it is an incredible responsibility, a
25:55
Speaker 1: great opportunity because what I learned from studying those former
25:59
Speaker 1: managing partners, they all looked forward boldly to the needs
26:05
Speaker 1: of millions of investors who we weren't serving yet, uh
26:09
Speaker 1: and took some some some pretty distinctive steps in order
26:13
Speaker 1: to serve them differentially. And perhaps we'll we'll talk some
26:17
Speaker 1: about some of that as week as we go along today.
26:19
Speaker 1: That is definitely on my list to get to. Did
26:22
Speaker 1: you get to work directly with Wettell. Did you pick
26:25
Speaker 1: up anything from him? Oh? Yeah, but well picked up
26:28
Speaker 1: tons from him. So I was part of the management
26:32
Speaker 1: committee and executive committee while Jim was managing partner. Interesting story.
26:38
Speaker 1: I was a financial advisor in Michigan from two thousand
26:41
Speaker 1: to two thousand and six. Jim was the managing partner
26:46
Speaker 1: who came in in two thousand and six and that
26:50
Speaker 1: year invited me to become a general partner in our
26:54
Speaker 1: firm and moved to St. Louis UH into home office leadership.
26:58
Speaker 1: And so had a ring side seat UM too Jim's
27:03
Speaker 1: tenure as managing partner, how he made decisions, how he
27:07
Speaker 1: thought about opportunity. I also had a ringside seat to
27:11
Speaker 1: UH to our leadership team working through the Great Recession
27:16
Speaker 1: and the impacts of two thousand eight two thousand and
27:20
Speaker 1: nine on clients, on our industry, and on our firm.
27:24
Speaker 1: And boy taught me a lot about about decision making
27:29
Speaker 1: during crisis. And I've while we haven't had a playbook
27:33
Speaker 1: for what has occurred over the last eight months, I
27:35
Speaker 1: have drawn on those experiences UH to know how to
27:39
Speaker 1: move forward. So full disclosure, we're recording this a few
27:45
Speaker 1: days after the election, but before the outcome is announced,
27:50
Speaker 1: so we have an inkling as to what might happens,
27:53
Speaker 1: but we really don't know for sure what the outcome
27:57
Speaker 1: is going to be. But let me ask you a
28:00
Speaker 1: couple of questions sort of in that in that area
28:04
Speaker 1: in my office before the election, that's all any client asked,
28:09
Speaker 1: what's going to happen? What does this mean for my portfolio?
28:13
Speaker 1: What does it mean for my taxes? On and on
28:16
Speaker 1: down the road. What what sort of questions have you
28:19
Speaker 1: been getting from clients about the election? Is it an
28:23
Speaker 1: issue they care about or is it, you know, just
28:25
Speaker 1: another element that occasionally comes up. Oh sure, our experience
28:31
Speaker 1: has been the same as yours bury. You know, we've
28:33
Speaker 1: we've been around for ninety eight years, so through the
28:36
Speaker 1: the change of many many many administrations during that period
28:41
Speaker 1: of time. And fundamentally, what's what's the same about those
28:45
Speaker 1: conversations is clients wondering, um, what what a potential change
28:51
Speaker 1: in and policy might mean for them, just as you describe,
28:55
Speaker 1: what we know over the long term is that very
28:59
Speaker 1: broadly White House policies are gonna help shape the economic terrain.
29:05
Speaker 1: History shows that the broader path has been pretty similar.
29:10
Speaker 1: Why is that because the nature of the US economy
29:14
Speaker 1: because it is broad based, it is diversified. It relies
29:20
Speaker 1: on consumer spending and business investment, and while White House
29:24
Speaker 1: policy is going to affect those things, it doesn't dramatically
29:29
Speaker 1: swing those things one direction or another every four years.
29:33
Speaker 1: So again, we keep focused on the long term, recognizing
29:37
Speaker 1: that um that that policies may change with a new president,
29:43
Speaker 1: and policies may change if we if we continue with
29:47
Speaker 1: the president that we've had for the past four years.
29:49
Speaker 1: Who knows what's going to happen in the in the
29:51
Speaker 1: coming days and weeks. Um, what we do expect is
29:55
Speaker 1: that the economy will continue to rebound. We have begun
30:00
Speaker 1: a rebound. We're not post pandemic. I'm not saying that,
30:04
Speaker 1: but we have begun a rebound in the economy, and
30:07
Speaker 1: we believe that that's going to continue. We do believe
30:11
Speaker 1: that we're not going to see a rapid snap back
30:15
Speaker 1: in to where the economy was pre pandemic. We do
30:19
Speaker 1: believe that we're going to see more fiscal stimulus. We'll
30:22
Speaker 1: see the size or or or focus of that, depending
30:28
Speaker 1: on the administration. And then finally, we we know that
30:33
Speaker 1: that monetary policy will continue to be exceptionally accommodative. That
30:39
Speaker 1: means interest rates are going to be very low for
30:42
Speaker 1: quite some sometime. The Federal Reserve has has not only
30:46
Speaker 1: telegraphed that, they've been very explicit about that. M quite interesting.
30:52
Speaker 1: One of the changes we did see with this administration
30:56
Speaker 1: was the possibility of the fiduciary rule being more aggressively
31:02
Speaker 1: imposed on things like qualified accounts for one case, and
31:07
Speaker 1: anything like that. If there is a change in administration,
31:11
Speaker 1: what are your thoughts as to what might change? What
31:14
Speaker 1: are your thoughts on the fugitial rule generally, well broadly,
31:19
Speaker 1: what I would say, Barry is that retirement security and
31:25
Speaker 1: helping investors have an experience that is that is more
31:30
Speaker 1: helpful to them is a nonpartisan topic. It is one
31:37
Speaker 1: where we have seen a great deal of reaching across
31:41
Speaker 1: the aisles in the past couple of administrations. So we
31:46
Speaker 1: welcome an environment where we are partnering with our regulators
31:51
Speaker 1: and policy makers to help Americans have more retirement security
31:57
Speaker 1: and so access to retirements, say evings, vehicles, um. Regulation
32:03
Speaker 1: that that helps clients have more confidence that our industry
32:08
Speaker 1: is operating in their best interests. All of those things,
32:12
Speaker 1: in one way or another, have been been dialed up
32:16
Speaker 1: over the past two administrations. I think that will continue
32:20
Speaker 1: to be a hallmark of the investing public's experience. There
32:24
Speaker 1: are different ways to get to that, and there are
32:28
Speaker 1: different types of regulations, UM, some much more specific, some
32:32
Speaker 1: much more prudential or principle based in nature. UM. But
32:37
Speaker 1: I have no doubt that our policymakers, legislators, and regulators
32:42
Speaker 1: are going to continue to be focused there. Huh. Quite
32:45
Speaker 1: quite interesting. I know you've been pretty involved in trying
32:49
Speaker 1: to recruit a greater degree of diversity in in the workforce.
32:54
Speaker 1: At Edward Jones, I am the median financial advisor. I'm
32:59
Speaker 1: a white in my fifties. That's the vast majority of
33:03
Speaker 1: the industry. What should we in the industry be doing
33:08
Speaker 1: to try and bring about more gender diversity, more people
33:11
Speaker 1: of color, just making less of of what's been dominating
33:16
Speaker 1: the industry, bringing a little diversity of thought and and
33:19
Speaker 1: a little bit of change. Yeah, well, UM, I think
33:23
Speaker 1: we've got to ask why is that important to do? UM?
33:27
Speaker 1: Let me let me share with you what our statistics
33:29
Speaker 1: are are. The average age of our financial advisors is
33:32
Speaker 1: forty five years old. Of our financial advisors are women.
33:39
Speaker 1: A couple of percentage points higher than on average in
33:42
Speaker 1: our industry, and about nine of our financial advisors are
33:46
Speaker 1: people of color. Again maybe a point or so higher
33:51
Speaker 1: than than the average in the industry. But the reason
33:54
Speaker 1: that I share that is really to say that, um,
33:57
Speaker 1: two things. We we have been focused on this and
34:01
Speaker 1: on a path toward greater diversity for for a couple
34:05
Speaker 1: of decades. Um, we are not where we want to be.
34:10
Speaker 1: There is so much more opportunity, and so that gets
34:13
Speaker 1: to the question of why is this important? Well, this
34:17
Speaker 1: is important because it is critical for the investing public
34:23
Speaker 1: to have choices about who who they are advised by,
34:29
Speaker 1: and to have a sense that the companies that that
34:32
Speaker 1: they are doing business with, reflect the environment around them,
34:36
Speaker 1: reflect who they are, that that investors and clients also
34:40
Speaker 1: have a sense of belonging belonging at that firm, with
34:45
Speaker 1: that group of financial advisors. Now I am not saying
34:48
Speaker 1: that if you're a woman investor you always want to
34:51
Speaker 1: be served by a woman financial advisor, or if you're
34:56
Speaker 1: a black investor or client, that you want a black
35:00
Speaker 1: financial advisor or a white financial advisor. What my point
35:04
Speaker 1: is that that you have a choice, uh that you
35:08
Speaker 1: look at the faith literally of the organization that you
35:13
Speaker 1: are working with and say, you know that that place
35:16
Speaker 1: is open to all. UM is eager to serve a
35:20
Speaker 1: diversified marketplace, and are the marketplace is becoming more and
35:24
Speaker 1: more diversified less homogeneous every single day. Uh. And so
35:30
Speaker 1: that's the big why why why diversity is such such
35:35
Speaker 1: a driver for our industry. And just as you said,
35:38
Speaker 1: our industry for too long has been more homogeneous in
35:43
Speaker 1: its makeup, and UM that that it will it will
35:47
Speaker 1: do us good. It is doing us good by looking
35:50
Speaker 1: at the marketplace we serve and reflecting the needs and
35:54
Speaker 1: desires of that marketplace. So let's talk about a couple
35:57
Speaker 1: of more recent investing sings that have come along. Obviously,
36:02
Speaker 1: robo advisors were a big thing. They made a big
36:05
Speaker 1: splash pretty much around the financial crisis era, and they've
36:11
Speaker 1: expanded pretty rapidly over the past decade. What are your
36:16
Speaker 1: thoughts on automated investing and those sort of software driven advisors. Yeah, well,
36:25
Speaker 1: you know, you could go back to nineteen night in
36:29
Speaker 1: the nineteen nineties and look at online trading and the
36:32
Speaker 1: advent of online trading during that period of time. As
36:35
Speaker 1: kind of the first robo advisor It wasn't exactly an
36:38
Speaker 1: advisor per se, but it was the ability UM to
36:42
Speaker 1: trade online. Goes back to Ted Jones saying, you know
36:45
Speaker 1: what what is where is the underserved market or what
36:50
Speaker 1: is the new innovation in the marketplace? And online trading
36:54
Speaker 1: came about, UM, it has proliferated and now UM you
36:59
Speaker 1: know through areas robot advisors includes more advice associated with
37:07
Speaker 1: that trading because that's what investors are demanding. As I
37:11
Speaker 1: said earlier, the trade itself. Executing a trade in the
37:16
Speaker 1: marketplaces is nearly a free good, UH, and there's much
37:20
Speaker 1: more value to be delivered in providing advice. So the
37:25
Speaker 1: robot advisor as a way to do that. We know
37:28
Speaker 1: UM is appropriate for some investors. We believe that fifteen
37:33
Speaker 1: of the marketplace is appropriately self advised, and so robo advisors, UH,
37:42
Speaker 1: those that that have very little human interaction associated with
37:47
Speaker 1: them are are appropriate for some clients. UM. Where where
37:53
Speaker 1: that begins to break down is when markets are sanguine,
37:59
Speaker 1: when things or seem easy, and when goals are straightforward
38:04
Speaker 1: in terms of the tradeoffs between and among goals, it's
38:08
Speaker 1: a little bit easier to take a hands off approach
38:11
Speaker 1: or to have that done in a in a mechanical way.
38:15
Speaker 1: It's when markets become volatile, which happens unexpectedly when folks
38:21
Speaker 1: are are dealing with emotional and complex tradeoffs amongst things
38:26
Speaker 1: like you know, how do I say for for college
38:30
Speaker 1: for my child or grandchild and have a comfortable retirement
38:35
Speaker 1: at the same time. That's not just a mathematical question equation. Actually,
38:40
Speaker 1: it's a very emotional conversation about where where values go,
38:47
Speaker 1: about what those tradeoffs are going to mean to a
38:49
Speaker 1: particular individual or a family. And that's where humanity is
38:54
Speaker 1: really important in terms of how we interact between financial
38:59
Speaker 1: advisor and client. H really interesting. So the nineties we
39:04
Speaker 1: had all that crazy online trading. You mentioned the transition
39:08
Speaker 1: to practically free. The modern era, we have apps like
39:12
Speaker 1: robin Hood, which supposedly millennials and other young people really
39:18
Speaker 1: are liking and engaging in a lot of active day trading.
39:22
Speaker 1: Given that everybody's board and stuck at home. Um, what
39:27
Speaker 1: do you do when you have a client who is
39:30
Speaker 1: enthusiastically swinging cash around because they're bored? How do you
39:35
Speaker 1: manage that from from the perspective of Hey, everything we've
39:39
Speaker 1: talked about is long term, but but you're in and
39:43
Speaker 1: out of stocks every other day. Let's isn't that a
39:45
Speaker 1: risky behavior? How do you, as the long term advisor
39:49
Speaker 1: manage that? Yeah, well, we go back to UM to
39:54
Speaker 1: what a serious long term individual investor is that someone
39:59
Speaker 1: who's values advice, who appreciates relationship, and who has a
40:04
Speaker 1: long term orientation. The valuing advice is Where that's going
40:10
Speaker 1: to come in is UM is sharing with clients and
40:14
Speaker 1: investors that beating the market. UM trading in a rapid
40:20
Speaker 1: way in order to time the market or time particular
40:25
Speaker 1: investment sectors. UM is not a not a particularly good
40:31
Speaker 1: way to build wealth reliably over time. That can be proven.
40:37
Speaker 1: Uh and in fact, here's here's here's part of that proof.
40:40
Speaker 1: Clients who are advised by financial advisors on average have
40:48
Speaker 1: more assets than those who are not advised, and financial
40:52
Speaker 1: advisors share this kind of investment philosophy with clients. Diversification
40:59
Speaker 1: is important. You can't beat and time the market on
41:03
Speaker 1: a on a daily or weekly basis, and you need
41:06
Speaker 1: to be focused on the long term putting money away,
41:09
Speaker 1: investing wisely and high quality investments, albeit rotating them and
41:14
Speaker 1: reallocating them as markets change. So UM, you know you
41:19
Speaker 1: know Verry you you probably have had this experience. Um,
41:23
Speaker 1: you have to say that over and over and over again.
41:26
Speaker 1: That is part of the relationship and is part of
41:29
Speaker 1: the goodness of having a financial advisor, is that as
41:33
Speaker 1: a as a client, you are going to hear that
41:36
Speaker 1: advice again and again and again. Take the emotion out
41:40
Speaker 1: of it, stick to quality and to the long term. Huh.
41:44
Speaker 1: Quite interesting. So we were talking earlier about robin hood
41:48
Speaker 1: and people trading at home. Most of the data I've
41:53
Speaker 1: seen about what happens when a client passes away and
41:58
Speaker 1: the next generation inherits the wealth is that they tend
42:02
Speaker 1: not to stick with the existing advisor. How do you
42:07
Speaker 1: manage that? What should advisors be doing so that when
42:12
Speaker 1: there is a generational wealth transfer, the next generation sticks
42:17
Speaker 1: with the company or the advisor they're working with. We
42:21
Speaker 1: have to be relevant to the next generation. We have
42:24
Speaker 1: to have built a relationship with them where mom and
42:28
Speaker 1: dad or grandma and grandpa have a particular set of values,
42:33
Speaker 1: a particular set of goals, a particular type of portfolio
42:38
Speaker 1: that we know from working with multiple generations of clients
42:43
Speaker 1: that what that generation, what that that grandmother, grandfather, mother,
42:48
Speaker 1: father are really interested in is passing on their values
42:53
Speaker 1: to their children and their grandchildren. Now those values can
42:58
Speaker 1: pass through the wealth. UM. But but it's it's more
43:03
Speaker 1: than that, isn't it. It's Uh, it's recognizing what that
43:08
Speaker 1: family desires to accomplish together and what that next generation
43:14
Speaker 1: is motivated by. And frankly, the millennials, that Gen xers
43:19
Speaker 1: are motivated differently than their parents and their grandparents. And
43:23
Speaker 1: the goodness of the human relationship financial advisor to client
43:29
Speaker 1: in perspective client is it's the financial advisor's job to
43:33
Speaker 1: understand that, to find out what's important to that next generation,
43:38
Speaker 1: what their values are, what motivates them, and UM to
43:43
Speaker 1: help form a bridge between the values of the of
43:47
Speaker 1: the previous generation and the next generation. There's some really
43:51
Speaker 1: important things happening. UH. And this this typically happens. Actually
43:55
Speaker 1: it's through research you can show it happens with the
43:59
Speaker 1: next generation quote unquote when there has been a significant
44:03
Speaker 1: and traumatic event in the marketplace, in the economy, uh,
44:08
Speaker 1: in society, and there's a significant impact on the risk
44:13
Speaker 1: appetite of of generations younger folks whose whose points of
44:19
Speaker 1: view about the world and society are being formed in
44:24
Speaker 1: in that crucible um, their risk appetite is affected, their
44:28
Speaker 1: trust and institutions is affected, and their reflection on what's
44:34
Speaker 1: going to be important to them and going to be
44:36
Speaker 1: driving them for the rest of their life is affected.
44:40
Speaker 1: You know, the really classic one is folks who grew
44:43
Speaker 1: up during the Great Depression and our parents and grandparents
44:47
Speaker 1: who who we know and can can see from them
44:50
Speaker 1: how they live the rest of their lives based on
44:53
Speaker 1: those experiences. Uh that that's really the one that many
44:56
Speaker 1: people point to. But people who are coming of age
44:59
Speaker 1: dur in the Great Recession and people who are who
45:03
Speaker 1: are being impacted today during their working lives, this is
45:08
Speaker 1: going to have a lasting impact on them, and so
45:11
Speaker 1: as financial advisors recognizing that digging deep into that with
45:16
Speaker 1: the next generation is going to help us help them
45:20
Speaker 1: be better investors and prepare for a very long life,
45:26
Speaker 1: probably much longer than their parents or grandparents had. Quite interesting,
45:31
Speaker 1: whenever we see surveys of millennials, there is a very
45:36
Speaker 1: enthusiastic embrace of E s G investing or impact investing
45:41
Speaker 1: or socially responsible investing. I'm not so sure I've seen
45:46
Speaker 1: the dollar flows match that investing enthusiasm just yet, but
45:52
Speaker 1: it certainly seems like it's a trend that's developing, a
45:56
Speaker 1: work in progress. What are your thoughts on environmental, social
46:01
Speaker 1: and governments investing E s G investing. Is this something
46:05
Speaker 1: that's going to have a lasting impact or the jury
46:09
Speaker 1: is still out? Yeah, it's such a rich topic of
46:13
Speaker 1: conversation in one that there's so much focus on in
46:16
Speaker 1: our industry and with investors right now. And fundamentally, what
46:20
Speaker 1: we're talking about is having our investment portfolios reflect our
46:27
Speaker 1: values as as individuals, whatever those maybe, UM, but lining
46:32
Speaker 1: up our our portfolios with our values UM. I think
46:37
Speaker 1: in individuals, consumers are doing this broadly, aren't we. I
46:41
Speaker 1: mean you you you read a lot and see a
46:43
Speaker 1: lot and maybe it's your own personal experience that you're
46:47
Speaker 1: buying today according to your values. What research says that
46:52
Speaker 1: UM consumers are focused on brands that they see as
46:57
Speaker 1: being helpful during this pandemic UM, where they see local helpfulness,
47:05
Speaker 1: where they seem organizations that are are trying to be
47:09
Speaker 1: part of solutions that that is driving consumers to buy differently.
47:14
Speaker 1: So you can expect that that's going to happen in
47:16
Speaker 1: the investment markets as well. When when you talk about
47:19
Speaker 1: E s G Investing. I do. I do want to
47:23
Speaker 1: note that sound Investing has always focused on companies and
47:29
Speaker 1: management teams that were uh there, that we're focused on
47:34
Speaker 1: the durability of their firms, that we're focused on on
47:39
Speaker 1: a wide array of stakeholders. Because if you don't do
47:43
Speaker 1: that as a company, um, you're probably not going to
47:46
Speaker 1: be around for a long, long time. And so there
47:49
Speaker 1: are new labels that are put on at E. S. G.
47:52
Speaker 1: Green Investing, all kinds of things, UM that label this
47:56
Speaker 1: this type of fundamental orientation to multiple stakeholders and to
48:01
Speaker 1: the long term. But it is, I believe Mary, to
48:04
Speaker 1: your point, it is going to become an ever greater
48:09
Speaker 1: h point of emphasis for for younger generations as they
48:16
Speaker 1: as they grow into their investing lives. You mentioned earlier
48:21
Speaker 1: that we're in a low yield environment and probably lower
48:25
Speaker 1: for longer. What does that do to people who are
48:29
Speaker 1: looking for income from bonds? What does that mean for
48:32
Speaker 1: the traditional sixty forty portfolio? Yeah, um, well, what it
48:38
Speaker 1: means is that a bond that you that you bought
48:43
Speaker 1: a decade ago in a very different interest rate environment
48:47
Speaker 1: was yielding to you a higher rate of income and
48:51
Speaker 1: very classically the sixty forty portfolio UM enabled you to
48:57
Speaker 1: live off of that income from that fixed income differently
49:03
Speaker 1: a few years ago than you would be able to today.
49:06
Speaker 1: And so while the split of the portfolio may still
49:10
Speaker 1: be seventy thirty or sixty forty, and I don't want
49:13
Speaker 1: to get hung up on that split, those rules of
49:15
Speaker 1: thumb can sometimes be dangerous. The point is that fixed
49:19
Speaker 1: income and stocks, equities and bonds um form the basis
49:27
Speaker 1: of a diversified portfolio, and nobody has repealed the the
49:34
Speaker 1: fact that where you invest in non correlated assets, you
49:40
Speaker 1: are likelier to have a smoother ride during a volatile market.
49:45
Speaker 1: And so fixed income or bonds and equities or stocks
49:50
Speaker 1: in the right measure for your risk appetite and your
49:53
Speaker 1: time horizon continues to be very important. However, living off
49:58
Speaker 1: the income of those bond onnes is gonna be a
50:01
Speaker 1: little more challenging than it was several years ago. Diversification
50:06
Speaker 1: remains very very important now. The flip side of a
50:09
Speaker 1: low interest rate environment is that a low interest rate
50:13
Speaker 1: environment generally correlates with a fundamentally strong stock market. Uh
50:19
Speaker 1: and and we we've seen that over the past ten years. UM,
50:24
Speaker 1: So you don't don't don't despair completely in a low
50:28
Speaker 1: interest rate environment. There's some counter veiling benefits to that
50:33
Speaker 1: that kind of environment. So let's talk about some other
50:37
Speaker 1: non correlated assets. What do you think about alternatives such
50:41
Speaker 1: as private equity or venture capital. Well, that's getting a
50:45
Speaker 1: lot of press these days because there is a significant portion,
50:49
Speaker 1: of a more significant portion of of businesses and capital
50:54
Speaker 1: formation that is happening outside of the public Mark our
51:00
Speaker 1: get and public companies um for the vitality of our economy,
51:06
Speaker 1: for the different ways that capital can be created and
51:09
Speaker 1: companies can be formed and scaled and grown. I think
51:13
Speaker 1: that that's a very healthy thing. Um. What I think
51:17
Speaker 1: we have to be really thoughtful about is long term investors,
51:21
Speaker 1: is that the public market affords a kind of transparency
51:27
Speaker 1: into companies and access to to those companies and owning
51:32
Speaker 1: shares in those companies. That results in liquidity, that results
51:38
Speaker 1: in ways to verify the financials of those companies. That
51:44
Speaker 1: all results in a kind of transparency and reliability. That
51:48
Speaker 1: is a really important part of capitalism and about the
51:53
Speaker 1: public nature of our stock markets. So flip that over
51:56
Speaker 1: and say that venture capital and private equity UM, while
52:00
Speaker 1: a really important part of capital formation, and our economy.
52:04
Speaker 1: When when an investor gets all whipped up about returns
52:09
Speaker 1: that they see or read about or hear about in
52:13
Speaker 1: those markets, they have to recognize that that comes with
52:16
Speaker 1: a tradeoff, tradeoff of risk, a tradeoff of less transparency,
52:22
Speaker 1: different kinds of risks I liquidity, uh, different kind of
52:27
Speaker 1: risks than they see in the public markets, and so
52:30
Speaker 1: everything in moderation um and recognizing that broad diversification, asset
52:37
Speaker 1: allocation across a number of asset classes is what has
52:41
Speaker 1: reliably grown wealth over time. So I know the data
52:46
Speaker 1: I'm about, the reference is old, but let me uh,
52:50
Speaker 1: let me play with it a little bit and tell
52:52
Speaker 1: me how far off I am. Your revenue has more
52:56
Speaker 1: than doubled from three point five billion to over seven
53:00
Speaker 1: point five billion not too long ago. It raises the question,
53:04
Speaker 1: what sort of practice areas are there left for you
53:08
Speaker 1: to expand into. Where is the room for growth at
53:12
Speaker 1: Edward Jones. Yeah, we talk about growth very in terms
53:16
Speaker 1: of growth of impact. The impact that we want to
53:21
Speaker 1: have is driven by our purpose. Our purpose is to
53:24
Speaker 1: make a meaningful difference in the lives of more people
53:28
Speaker 1: in North America and the part of the marketplace that
53:33
Speaker 1: we serve our serious long term individual investors um and
53:39
Speaker 1: I've said a couple of times what that means is
53:42
Speaker 1: folks who value relationship, who want advice, and who have
53:46
Speaker 1: a long term orientation. Today we work with about seven
53:51
Speaker 1: million clients. Our research shows that there are forty million
53:57
Speaker 1: investors in North America who look like serious long term
54:02
Speaker 1: individual investors. Now they are across multiple generations, across various demographics,
54:08
Speaker 1: and spread all over North America. So our addressable market
54:14
Speaker 1: is is significantly larger than the marketplace that we serve today.
54:21
Speaker 1: So we believe our opportunity remains rooted in what makes
54:25
Speaker 1: us unique, the human settered nous of what we do
54:29
Speaker 1: and the locality of what we do. And so we
54:32
Speaker 1: intend to to continue to focus there, focus on on
54:36
Speaker 1: the relationship that we have with clients, focus on a
54:41
Speaker 1: kind of smart consistency and serving them, but also the
54:45
Speaker 1: ability to hyper personalize to them. That takes greater technology,
54:50
Speaker 1: It takes frankly, being more relevant to younger generations, because
54:56
Speaker 1: it really suits our purpose to make a meaningful difference
54:59
Speaker 1: in more lives. If we get emerging investors started as
55:03
Speaker 1: serious long term investors, if we get them started towards
55:08
Speaker 1: their goals sooner. Frankly, they're going to live a whole
55:11
Speaker 1: lot longer than their parents or grandparents. They got to
55:14
Speaker 1: build up more investment over time in order to achieve
55:18
Speaker 1: what's most important to them. So let's talk a little
55:21
Speaker 1: bit about practice areas. I know you guys do financial
55:25
Speaker 1: planning as well as asset management. Do you also have
55:29
Speaker 1: other practice areas like trust in the States, tax planning, insurance,
55:34
Speaker 1: anything along those lines. Yeah, you bet so. Our financial
55:39
Speaker 1: advisors are licensed, uh in a number of different areas.
55:43
Speaker 1: We are duly registered as a firm, so we are
55:46
Speaker 1: a brokerage firm as well as having investment advisory fee
55:50
Speaker 1: based platforms to help our clients and achieve their asset
55:55
Speaker 1: management goals over time. We are also like sens in insurance,
56:01
Speaker 1: so we help our clients protect their goals um against
56:06
Speaker 1: all kinds of things that might happen. You know, the
56:09
Speaker 1: the worst thing in the world is to build a
56:11
Speaker 1: really solid plan um planning on everything going right and
56:16
Speaker 1: then having things go wrong unexpectedly. So things like long
56:21
Speaker 1: term care needs. Um. You know, this is an area
56:24
Speaker 1: verywhere where people are becoming more attuned to the fact
56:29
Speaker 1: that they are going to need significant investment to pay
56:33
Speaker 1: for their health needs and potential long term care needs
56:37
Speaker 1: later or maybe even earlier in life as well as
56:40
Speaker 1: life insurance. And so we represent and and help our
56:44
Speaker 1: clients protect their goals as well. UM. We have we
56:49
Speaker 1: have products and services that are tax efficient, UM that
56:54
Speaker 1: help our clients manage in that kind of situation. UM.
56:58
Speaker 1: We also help our clients with charitable planning. UM. This
57:02
Speaker 1: is something that that really aligns with folks values, with
57:06
Speaker 1: their goals, with the values that they want to pass
57:09
Speaker 1: on to the next generation, is their charitable mindedness. And
57:12
Speaker 1: so we help our clients with that as well. And
57:15
Speaker 1: then we work with with a significant number of businesses
57:20
Speaker 1: and business owners, so helping them with their employee retirement plans. Therefore,
57:25
Speaker 1: oh one K there, simple step, I raise all the
57:29
Speaker 1: different ways that they can support their employees for their
57:33
Speaker 1: retirement planning. We do that for businesses and business owners.
57:38
Speaker 1: Quite interesting. Before I get to my favorite questions that
57:42
Speaker 1: I ask all my guests, let me throw a curveball
57:46
Speaker 1: at you dancing with the stars. What was what was that? Oh, Barry,
57:52
Speaker 1: you've been doing too much research. I think that's on
57:55
Speaker 1: the third page of my of of the Internet search
57:58
Speaker 1: so ding from Google. Yeah, we have a local organization,
58:04
Speaker 1: a tremendous organization called the Independent Center, and they provide UM.
58:10
Speaker 1: They provide support services, full lifestyle support services for adults
58:16
Speaker 1: with mental illness UM, and they surround those people with
58:20
Speaker 1: UH with with the services they need to live lives
58:23
Speaker 1: of meaning and well being. Well. They also have one
58:26
Speaker 1: of the most unusual fundraisers every year, and that's called
58:31
Speaker 1: Dancing with the St. Louis Stars, and so UM executives
58:35
Speaker 1: and and community leaders here in town agree to work
58:39
Speaker 1: with a professional dancer, get eight lessons and then do
58:44
Speaker 1: that dance in front of seven people. And so I
58:46
Speaker 1: did that a few years ago. I learned how to tango.
58:49
Speaker 1: And I tell you it was I have a mantra
58:52
Speaker 1: do something every day that that terrifies you just a
58:55
Speaker 1: little bit. Well, I had my dose the day that
58:57
Speaker 1: I did that. But the point wash was not the dancing.
59:01
Speaker 1: It was it was raising support for that incredible organization.
59:05
Speaker 1: Quite amusing. All right, So let's jump to our favorite questions.
59:09
Speaker 1: We asked these of all of our guests, and and
59:12
Speaker 1: let's start with the first one. What are you watching
59:15
Speaker 1: and streaming these days? What what's keeping you busy under lockdown,
59:20
Speaker 1: either Netflix or Amazon or or any podcast you're watching,
59:24
Speaker 1: tell us what's entertaining you during this era. Yeah, well
59:29
Speaker 1: it's a little bit different than Netflix or podcasts, but
59:32
Speaker 1: but it's art I love and appreciate, in particular contemporary art.
59:38
Speaker 1: And what I find is that as I study and
59:42
Speaker 1: watch all kinds of virtual tours of museums all over
59:47
Speaker 1: the world, which has been a real silver lining of
59:50
Speaker 1: the lockdown. Haven't been able to go see it in person,
59:53
Speaker 1: but but digitally, I'm able to experience all kinds of
59:56
Speaker 1: different art and artists and what's inspiring to me about
1:00:00
Speaker 1: that is them making sense of the world during times
1:00:04
Speaker 1: of tumult, during times of high anxiety, and getting that
1:00:09
Speaker 1: out and putting it on canvas or in performance or
1:00:13
Speaker 1: in music. Um is is another way to think about
1:00:19
Speaker 1: how to serve, how to relieve anxiety, uh and and
1:00:24
Speaker 1: and how to make sense of the world around us.
1:00:27
Speaker 1: You know, my wife teaches art, and I've been dragged
1:00:30
Speaker 1: to museums all around the world and one of the
1:00:34
Speaker 1: documentaries we stream not too long ago was on Mark Rothko.
1:00:39
Speaker 1: And if you're if you like contemporary art, that's I'm
1:00:42
Speaker 1: gonna make that recommendation because it was pretty fascinating discussion
1:00:46
Speaker 1: of how his art evolved into what it eventually became. Yes,
1:00:51
Speaker 1: thank you for that suggestion. He's one of my favorites. Yeah,
1:00:54
Speaker 1: me too. And it wasn't twenty years ago. I sort
1:00:57
Speaker 1: of did a one eighty on Rothco and I have
1:01:00
Speaker 1: no explanation for why other than I hit a certain
1:01:04
Speaker 1: age and suddenly, oh, that's not just a splotch of color.
1:01:08
Speaker 1: That's a lot of really interesting things going on. Um,
1:01:11
Speaker 1: maybe maybe she shepherded me along. Let's talk about your mentors.
1:01:15
Speaker 1: Tell us about the folks who helped shape your career. Yeah, um,
1:01:21
Speaker 1: you know the folks who helped shape my life most fundamentally,
1:01:24
Speaker 1: or my parents. Um, my father who was an executive
1:01:28
Speaker 1: at a publicly traded firm in Nashville. Um, who started
1:01:33
Speaker 1: in on the factory floor quite literally, and retired as
1:01:38
Speaker 1: the CEO of that organization. So the daddy daughter CEO
1:01:43
Speaker 1: thing is is kind of a fun story. But um.
1:01:46
Speaker 1: But but more importantly, the way that he thought about business,
1:01:51
Speaker 1: about leadership, about integrity and trustworthiness in the business world,
1:01:56
Speaker 1: about relationship building shaped me. My mother was an executive
1:02:01
Speaker 1: with Tennessee Valley authority, and she was an executive during
1:02:06
Speaker 1: a time and in a place that there weren't quite
1:02:09
Speaker 1: there weren't quite as many women as there were men.
1:02:12
Speaker 1: And so watching her operate UM and learn and UH
1:02:18
Speaker 1: and put up with stuff UH during that time across
1:02:22
Speaker 1: a very long career, was when it was inspiring and
1:02:27
Speaker 1: instructive to me UM in business UH as as part
1:02:31
Speaker 1: of my journey at Edward Jones, we have a very
1:02:35
Speaker 1: widely dispersed UM leadership structure in each of our regions
1:02:40
Speaker 1: across North America. And so my regional leaders, those who
1:02:43
Speaker 1: showed me the way as a new financial advisor UM
1:02:47
Speaker 1: talked to me about values about service UM. They were
1:02:53
Speaker 1: very inspiring to me. And then then my predecessors as
1:02:57
Speaker 1: UM as managing partners here, I'm a student of them.
1:03:00
Speaker 1: Some of them I know and worked with directly. Others
1:03:04
Speaker 1: of I never met Mr Jones Senior and Ted Jones,
1:03:08
Speaker 1: the founders of our firm. I am the first managing
1:03:10
Speaker 1: partner who never met them, So becoming a student of
1:03:14
Speaker 1: their values, of their strategy, about how they thought about
1:03:20
Speaker 1: being differentiated in the marketplace. UM. Those have all have
1:03:24
Speaker 1: all taught me great lessons, very interesting let's go to
1:03:28
Speaker 1: everybody's favorite question books. Tell us what you're reading now,
1:03:31
Speaker 1: and perhaps give us a few titles of some of
1:03:34
Speaker 1: your favorite books. Yeah. So I'm reading a book called
1:03:39
Speaker 1: um uh Agile Transformation Without Chaos. Its focuses on the
1:03:46
Speaker 1: way that companies are organized to create better experiences for
1:03:52
Speaker 1: consumers and clients, organized in an agile way to meet
1:03:56
Speaker 1: the marketplace more quickly, uh and in a more experimental way.
1:04:02
Speaker 1: So I'm reading that. I have several art books stacked
1:04:06
Speaker 1: up on my table, and I'm reading a book by
1:04:09
Speaker 1: David Brooks. It's a new book, it's a It's a
1:04:12
Speaker 1: compilation of interviews that he had done over time with
1:04:17
Speaker 1: some of the world's leading u the spinkers, community builders leaders,
1:04:23
Speaker 1: uh and so just getting their their quick interviews and
1:04:26
Speaker 1: getting a window into those folks. I read one of
1:04:29
Speaker 1: those interviews tonight. Is is really inspiring as well, very interesting.
1:04:34
Speaker 1: What sort of advice would you give to a recent
1:04:37
Speaker 1: college graduate who was interested in a career in finance?
1:04:42
Speaker 1: Very broadly, the advice that I give to everyone as
1:04:44
Speaker 1: they think about their career is ensure that what you're
1:04:49
Speaker 1: doing is lined up with your own personal and professional
1:04:53
Speaker 1: Why I say, what are you really doing when you're
1:04:57
Speaker 1: doing what you're doing every day? I'll say again, what
1:05:00
Speaker 1: are you really doing when you're doing what you're doing
1:05:03
Speaker 1: every day? What is it ladder up to in terms
1:05:08
Speaker 1: of the mark that you want to make on the world.
1:05:10
Speaker 1: Not not the position that you want to have, or
1:05:14
Speaker 1: the role that you want to attain, or the income
1:05:17
Speaker 1: that you desire to have over time, That's not what
1:05:19
Speaker 1: I'm talking about. I'm talking about the mark that you
1:05:22
Speaker 1: want to leave on the world. And so whatever you're doing,
1:05:26
Speaker 1: if it is in financial services, um really reflect on
1:05:30
Speaker 1: how it ladders up to to the person that you
1:05:33
Speaker 1: want to be in the mark that you want to leave.
1:05:36
Speaker 1: I will say very enthusiastically that the financial markets, financial
1:05:42
Speaker 1: services makes a meaningful and positive difference in the world,
1:05:48
Speaker 1: on our country. It can have a much more influential
1:05:52
Speaker 1: impact on society, on communities, on human beings and society.
1:05:57
Speaker 1: And I think that financial services is very much focused
1:06:01
Speaker 1: there today. And so the advice that I would give
1:06:04
Speaker 1: to to those recent college graduates is look at this
1:06:08
Speaker 1: industry as one um that has and will continue to
1:06:11
Speaker 1: be very meaningful in our country and in society. That
1:06:15
Speaker 1: it can intersect with who you are as a person.
1:06:19
Speaker 1: It is not all math and numbers. That's a common
1:06:23
Speaker 1: misconception about the financial services industry. There's certainly parts of
1:06:27
Speaker 1: it that are UM, but there's a vast part of
1:06:30
Speaker 1: this industry UM that that is that is all about
1:06:33
Speaker 1: making connection with human beings and understanding what they value
1:06:38
Speaker 1: in helping them achieve that. And our final question, what
1:06:42
Speaker 1: do you know about the world of financial services today
1:06:46
Speaker 1: that you wish you knew twenty five or so years
1:06:48
Speaker 1: ago when you were first starting out. Well, what I
1:06:52
Speaker 1: probably didn't appreciate UM as I was first starting out,
1:06:58
Speaker 1: was how intersect the financial services industry and world is
1:07:03
Speaker 1: with the trajectory of history, UM, the history of our economy,
1:07:09
Speaker 1: the history of formation of communities and society, UM, the
1:07:15
Speaker 1: history of achievement by individuals, families, and businesses, and so
1:07:22
Speaker 1: charting the course of history being really having a front
1:07:26
Speaker 1: row seat too. You know when I started in nineteen
1:07:29
Speaker 1: eighty five at a bank night seven and the market
1:07:32
Speaker 1: melt down there, UM, the technology evolution revolution in the
1:07:39
Speaker 1: nineteen nineties, UM, the great recession that we had talked
1:07:42
Speaker 1: about earlier, uh, and currently what we're facing in our
1:07:46
Speaker 1: economy I'm a student of history, and so just having
1:07:51
Speaker 1: a front row seat to how the how the economy,
1:07:55
Speaker 1: financial industry, and society intersect has and fascinating and I
1:08:01
Speaker 1: and I guess when I'm in my armchair after all
1:08:05
Speaker 1: of this is over and look back on it, um,
1:08:08
Speaker 1: I'll really be able to see something about the arc
1:08:11
Speaker 1: of history UM from a from a ground level view.
1:08:15
Speaker 1: Thanks Penny for being so generous with your time. We
1:08:17
Speaker 1: have been speaking with Penny Pennington, managing partner at Investment
1:08:22
Speaker 1: Giant ed Jones. If you enjoy this conversation, well, be
1:08:26
Speaker 1: sure and check out all of the hundreds of previous
1:08:28
Speaker 1: such conversations we've had. You can find them at iTunes
1:08:32
Speaker 1: and pretty much wherever you usually find your podcasts. We
1:08:36
Speaker 1: love your comments, feedback and suggestions right to us at
1:08:41
Speaker 1: m IB podcast at Bloomberg dot net. Give us a
1:08:44
Speaker 1: review at Apple iTunes. You can check out my weekly
1:08:49
Speaker 1: column on Bloomberg dot com slash Opinion. Sign up for
1:08:53
Speaker 1: our daily reads at Hults dot com. Follow me on
1:08:56
Speaker 1: Twitter at rid Halts. I would be remiss if I
1:08:59
Speaker 1: did not thank the crack staff that helps put these
1:09:02
Speaker 1: conversations together each week. Nick Falco is my audio engineer.
1:09:07
Speaker 1: Michael Boyle is my producer. Slash booker A Tico. Valbrunn
1:09:11
Speaker 1: is our project manager. Michael Batnick is our head of research.
1:09:16
Speaker 1: I'm Barry Results. You've been listening to Masters in Business
1:09:19
Speaker 1: on Bloomberg Radio