Penny Pennington: Change Is Afoot at Edward Jones

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Edward Jones, the nation’s largest brokerage firm advisor headcount, is famously slow to change. The 100-year-old business operates as a private partnership long after most of its rivals have gone public. At a time when the team model has swept the industry, almost all of Edward Jones’ nearly 19,000 advisors operate as solo practitioners in single-practice offices. And its core investment approach hasn’t shifted much in decades—no commodity trading, no Bitcoin, no direct indexing.

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But change is unmistakably in the air at Edward Jones. In the measured words of Penny Pennington, who became managing partner at the start of 2019, the St. The Louis-based firm is “experimenting,” “evolving,” and “leaning forward” on a number of fronts. Speaking with Barron’s Advisor, Pennington talks shared office space, teaming options and—on the heels of an investment in a small Arizona RIA—a potential new distribution channel.

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Illustration by Kate Copeland

Human-centered advice is at the center of the Edward Jones value proposition. Postpandemic, how will that affect your calculus as far as virtual versus in-person meetings? We set up Zoom technology for every one of our branches, our financial advisors, and our branch staff within about 10 days of the initial shutdowns mid-March of 2020. We stayed connected. And we know that because client attraction, client retention, client engagement remained very high through those two years. We were doing what we were built to do, which is to help clients relieve anxiety and stay on their plan.

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The most poignant soundbite I’ve heard about that was from a financial advisor, who said, “Penny, my clients love the efficiency of being on Zoom, and I do too. And I know when I need to hold their hand, literally.” So we are going to be together for moments like that matter. But now we’ve got the choice, clients have the choice, the branch team has the choice. We frankly would not have had that kind of ease with this choice going forward if we had not had the urgency of the pandemic.

I know that Edward Jones, long the home of solo-practitioner offices, has been experimenting with shared office space. Have you been pleased with the results? We have been. We are developing all kinds of different ways to locate. [That includes] multiple-financial-advisor branches, which is newer to us than it is to other parts of the industry, especially wireshouses. We are inviting multiple financial advisors to come together. It’s their choice about whether they do that.

Clients really appreciate it. And our financial advisors and branch teams appreciate the collegiality that is such a hallmark of Edward Jones, peer-to-peer sharing and learning, just the enthusiasm of being together, encouraging one another. And then clients really like the energy in a multiple-financial-advisor branch. I’ve been into several of them recently, and they’re beautiful. They are very contemporary in the way that we’ve set up client spaces and financial advisor spaces. I’m really appreciating the learning journey that we’re on here. What we’re saying about real estate and a number of different things is that we are moving from one good way to serve our clients that has served so well over generations now, to many possible ways.

Do those possible ways include teaming? Would Edward Jones, or is it already, revisiting its traditional solo-advisor model? We already have, and are leaning forward on a number of different teaming options. Those teaming options include a senior financial advisor and more traditional unlicensed branch staff. Those models also include a senior financial adviser and less-veteran financial advisors, all with their own practices, who are sharing real estate.

We are also experimenting with a number of licensed and nonlicensed branch roles. And these really have to do with career pathing for that branch staff as well as increasing capacity for that team to serve more clients more deeply and multiple generations of clients. And then we are experimenting with what we call an associate financial advisor, a financial advisor who is operating under the auspices of a more senior financial adviser in a more permanent kind of arrangement. We’re experimenting with all of those.

And what we’re finding that is the financial advisor, when they have more autonomy and flexibility about how they vision their practice, and then are able to team together to bring to life that vision for their clients and for the successful practice that they are so excited about, the energy there is tremendous. We just got back from a meeting with our top 400 financial advisors, and another 75 of our top financial advisors and branch teams will be coming together next week. And the enthusiasm for these different models is off the charts.

Something else that’s gotten the industry’s attention is the fact that Edward Jones recently took a stake in a smallish RIA firm, Public Safety Financial, in Mesa, Arizona. What’s going on there? What’s going on there is that Edward Jones is evolving. We’re testing and learning different ways to serve different segments of the marketplace. And we’re testing and learning different types of affiliations for our financial advisors in order to have more flexibility, more autonomy, more choice for who they serve and how they serve them. What we love about Public Safety is that it is so true to Edward Jones. This is an organization that serves first responders. They are experts at the needs, the mentality, the concerns of those families, and they have deep skills and a great history and brand in being able to do that. We believe that this lines up so well with…

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Credit: www.barrons.com /

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