Name: Edward Jones CEO Advice: 'Take Emotion Out of Decision-Making'
Uploaded: 2022-03-22
Duration: 9 min 49 s
Description: CEO Penny Pennington says investors should 'get prepared for a period of volatility'

CEO Penny Pennington says investors should "get prepared for a period of volatility"

Edward Jones CEO Advice: "Take Emotion Out of Decision-Making"

Penny Pennington - CEO, Edward Jones Investments

Leadership

Edward Jones CEO: "Take Emotion Out of Decision-Making"

penny, thank you so much for coming in to talk to us about Edward jones. I imagine your company must be getting lots of calls these days now that the markets so volatile. Big sell offs, big rallies, rising interest rates. What are your financial advisors telling them? Well the baseline advice at a time like this is take emotion out of our decision making. This is one of the one of the ways that financial advisors really earn their keep right now because making emotional decisions into a volatile market like this is often going to be a bad decision. And so that's why we, we answer questions what's going on with inflation, what's going on with supply chain? Um, we don't have too many answers about what's going on geopolitically and the tragedy that's happening there. But what we do focus our clients on is their long term goals and any action that needs to be taken right now, given ups and downs of the stock market. Reallocating a portfolio to get back into alignment with one's risk tolerance is a level headed, very rational decision to be making right now. Well you've been quoted for saying many times that my job is to help relieve anxiety and there's certainly a lot of anxiety going on right now, given the news about the war between Russia and Ukraine and all the risk factors that are related to that. And as you say, people are very concerned about how to protect their financial assets, their retirement money, their savings for other things. What's the key message from your firm about how to relieve that anxiety and take the emotion out of it? I will give you a couple of data points. We just did a study with morning consult just a couple of months ago before, before Russia had invaded Ukraine and what people said was working with a financial advisor resulted in a 25% reduction in their overall stress. So if I could say to you, can I reduce your stress by 25%? Would would would you, would you like to take that? Absolute. And then they say 70% of them say there's their anxiety about financial decisions is far less in working with a financial advisor before you became Ceo, you worked for many years as a financial advisor at um Edward jones. And you were very successful in helping your clients navigate through these big crisis, whether it was 9 11 or the great recession, the tech bubble, uh from all your experience in crisis management, what would you say are the smart moves that if you were in that seat today that you would tell your clients to do right now? Well the moves having to do with the investments themselves have to do with looking at the portfolio and given the run up that we've had a really amazing run in the equity markets, um do we need to rebalance some things there? Have we gotten over weighted in equities and need to move some of that back into more risk off kind of assets? The one of the, one of the things that we would be talking about right now is how to move into fixed income? Um, what kinds of ballast do we need in the portfolio against those equities in order to even things out during a volatile market? And what about for your firm, Edward jones manages $1.7 trillion dollars in assets. Has your investment approach changed given this environment of geopolitical, um, tensions, persistent supply shortages, inflation? There is one way of answering that susie by saying, we're not doing anything differently than we've ever done. Well. We've been in business for 100 years. We've been through 17 presidential administrations. We've helped clients five generations of clients through every recession and boom time. There's so many things about this period that we're in that it's really no different than any other period. And so we look at the particular situation and the effects of a flow of inflation and rising interest rates. But we've been there before as well. Right. Um, the one of the issues is that not too many people remember those times. And so what we do is take that experience, take the sense that we made of it then. Uh, now we know the end story, right? We know how those those effects ended and how our economy and investors got through them. We take all of that built up experience and advise our clients in the same ways that we always have. When people ask you, is this a short term thing? Or is this something longer term that we're going through right now, is this the beginning of a bear market? What do you tell them? A significant downturn in our markets happens on a sustained basis about one out of every five years? We're overdue for that and one never knows what the shock is that might lead us into a more sustained downturn. Are we there now? I do not have a crystal ball. Um, there's no way for me to say that, However, we probably should get prepared for a period of more volatility. Penny. Your company is celebrating its 100 year anniversary. And you know, these milestone events tend to bring big picture thinking. So as you look to the future, what's the next big thing for your company? 100 years. Very few companies get to celebrate that we're really proud of it, but we know that we've got to continue to grow and innovate to be relevant to 40 million families that we'd like to serve. You know, Susie, the last couple of years has been a real inflection point, haven't they? And during the past couple of years we've studied investors and we found that they depend on financial advisors for more than just their finances. They want to talk to us about their health, their family, their purpose, and their financial plan. And so what that means for us, the inflection point for us, we need to expand our products services and experiences across more generations. We need to add more technology to the experience. We need to shift our advice and guidance. We need to have teams of people that surround our clients so that we can help them with this myriad of challenges that they have. It's probably too soon to ask you this. But what do you want people to say about your legacy as they look at the history of the company, What do you want to be your stamp on the company That a place was provided where people could do things that blew their own minds. Um we served seven million clients today. There are 40 million families that we could serve. It's mind blowing. I want to be a leader, purpose driven, human centered, courageous leader That helps foster the conditions where people's minds are blown about the lives they get to have your one of the most powerful women in finance here, the chief executive of a Fortune 500 company. And there are very, very few women on the 500 who are running a big brokerage firm. And yet you say we need more women to get into financial services. What can you do to make that happen? Well, we need more women in financial services because we need the woman's perspective, we need how how women are living today and what they're concerned about today. We need that as financial advisors and we need that as senior decision makers to make the best decisions for the advice and guidance, the products and services that we want to build And and share with our clients today. 22% of our financial advisors are women by 2025, we want that to be 30%. Why do you think that women don't gravitate to financial services right now? And uh what is the advice you have for them so that they move forward? You know, there are many women who who say, you know, stocks, bonds and mutual funds and math, not not my thing. Um, what I talked to them about is what fundamentally this industry is about, which is knowledge and empathy and helping families have possibilities in their lives building these relationships, helping more people have these kinds of possibilities. That's when deep empathetic people of all genders and many walks of life say, you know, that's something I want to be a part of. Well you're certainly a great role model for many of those would be women financial advisors. And I'm sure you've had mentors in your career. What would you say was the best advice that you've ever received that propelled you to where you are today. The piece of advice that I try to live into every day that I got years ago was every day do something that terrifies you and and why is that? I mean why do I want to be afraid every day? The first is when someone invited me into a new role to a new table to think about something that I hadn't thought about before. I learned not to say no. I learned not to demure and say no, I'm not ready for that yet. And the second thing that it did for me is it invited me to raise my own hand from time to time to say to my sponsors and to my mentors. You know, I've never been at that table before, but I've got something to say. I think I've got a perspective that needs to be there as we make that decision. I'd like to be there to raise my own hand.