A Conversation with Penny Pennington, Managing Partner of Edward Jones

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In this episode, we explore some of the hottest topics in wealth management today with Penny Pennington, Managing Partner of Edward Jones and its 18,500 Financial Advisors.

Penny Pennington

Penny Pennington

Penny shares her unique perspective and experience on:

  • Technology and innovation, and how Edward Jones will handle the commoditization risk of Fintech, and enable Advisors to meet the future.
  • Growth of Edward Jones – how they hire advisors one at a time. 
  • How to understand what’s most important to clients – how to help them build a strategy and then partner up with them for life to help keep them on track.
  • What financial advisors need to do to provide value today to compete successfully, and serve their clients.

Penny talks extensively about the future of wealth management, the alarming decline in number of advisors, and how to start and grow a business in the future.

It’s an episode that covers a great deal of ground solid information for any advisor who is looking to gather insight on the changes in the landscape and use that knowledge to take their business to the next level.


 
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ABOUT PENNY PENNINGTON

Penny Pennington is the Managing Partner of Edward Jones, a Fortune 500 financial services firm. As sixth managing partner in the firm’s 97-year history, Penny is responsible for the firm’s strategic direction, working together with more than 47,000 associates across North America to make a meaningful difference in the lives of more than 7 million clients by helping them financially achieve their most important goals. She was recently named No. 45 in her first appearance on the Fortune Most Powerful Women in Business list.

Penny began her Edward Jones career in 2000 as a financial advisor in Livonia, Mich. In 2006, she was named a principal and relocated to the firm’s St. Louis headquarters where she held leadership roles in New Financial Advisor Training, Branch Office Administrator Development and Branch and Region Development before leading the Client Strategies Group in 2015. Penny is a senior executive sponsor of the firm’s LGBT+ & Allies Business Resource Group.

Penny earned a bachelor’s degree in commerce with a concentration in finance from the University of Virginia and an MBA from Kellogg School of Management at Northwestern University. She is a graduate of Wharton’s Securities Industry Institute and holds the Chartered Financial Analyst® designation.

A native of Nashville, Tenn., Penny now calls St. Louis home after relocating from Livonia 13 years ago with her husband, Mike Fidler, and two children. She is an active member of the St. Louis community serving on the boards of the Shakespeare Festival St. Louis, Donald Danforth Plant Science Center, Saint Louis Fashion Fund, and Whitaker Foundation, serves on the Catalyst board of directors and actively champions Edward Jones’ national presenting sponsorship with the Alzheimer’s Association.

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Comments (15)
  • A couple questions for you, Penny: In the past four years, have any Edward Jones clients been moved from long-held, low-cost, class-A shares of great long-term funds such as American Funds into either the Guided Solutions or Advisory Solutions accounts, thereby quadrupling or even quintupling EJ’s recurring revenue while simultaneously doubling or even tripling the client’s annual costs? If any of that money was in American Funds A-shares, did it end up in American Funds F-shares? If this did happen, were any of the clients who were moved into advisory models buy-and-hold investors who didn’t trade (and who had free-exchange privileges, anyway)? Were clients, if any, who were moved to the advisory models given a customized piece of paper that said something like “Over the next 20-30 years, the additional fees in your sparkly new advisory accounts, and the opportunity cost you’ll bear by paying those much higher fees, could potentially equate to ‘X’ dollars more than if you just keep the class-A shares that are being mulched”?

    • What a lame response to a great interview. I was blown away by the amount of respect and culture of caring that Penny is bringing to the table. We need more of that in this business. Great to hear from both her and Tony that theres still a lot of love in this biz for Advisors working hard every day.

      • JoJo….I didn’t listen to it. But as a 34-year veteran who doesn’t have a single advisory account in his entire book of business (and it’s a big book), I can honestly say that I am disgusted by so much of what I see these days in this industry. I do not have a single client who should be moved from their A-shares INTO an advisory account. That’s right…not one. I’ve run thousands of historical, hypothetical illustrations of class-A vs class-F2 + advisory fee, and the difference in the end result for the CLIENT can be mind-blowing…simply due to the pricing model. Advisor comp skyrockets, client costs jump dramatically, and the client’s ending balance after a 20-30 year retirement plummets as compared to the A-shares. Which brings me to the reverse-churning that many colleagues and I have seen for ourselves, and to the questions in my first post……did EJ move money from existing class-A shares, with expenses of about .60 inclusive of the trail fee, into F-2 shares or Bridge Builder funds with a 1.25-1.35% advisory fee tacked on? My clients come first, and I will NEVER recommend that they sign a form that quadruples or quintuples my recurring revenue at their grievous expense…..what client is that ever good for? I wonder where that class action ‘reverse churning’ lawsuit against EJ stands…..

        • Makes total sense, Paul.

          You didn’t listen to one second of the interview, yet you felt the need to comment regarding a subject that has zero to do with the actual content of what Ms. Pennington was talking about.

          • Dallas CFP, The reverse-churning lawsuit that EJ faces echoes what I’ve seen with my own two eyes. The source of my disdain is simple math, and here’s an illustration: If a client with $500k bought class-A shares of AWSHX thirty years ago on 11/1/1989, paid the rep a 2% commission, took an initial 5% income withdrawal and then boosted that income by 3% per year, then as of 10/31/2019 they’d have withdrawn $1,184,476 of income and their ending balance in the account was $3,349,937. [Full disclosure: I love American Funds, I have used them for over thirty years, and clients have prospered because of Capital Group’s reliability, strength, and low costs]. The rep’s trails grew as the account increased, and it was a great result for everyone involved. If the rep recommended F-2 shares with a 1% advisory fee (instead of the A-shares that I believe EJ had espoused for decades), then that same client had an ending balance of $2,243,783…..over $1.1 MILLION less than the A-shares of the same fund. I have many 7-figure clients, and the math gets even worse on larger accounts. That ending difference is the result of the extra expense of the advisory account, and virtually all of that extra expense flowed straight to the rep/firm in the form of a quarterly debit from the client’s account. For 34 years, I have built a wonderful business….the core of my income is a 0.25% trail fee on class-A shares (I keep 90% of it, by the way), and I have many clients who have owned them for 20-30 years….I know the power of keeping costs low, I make an incredible living, and my income would EXPLODE higher if I moved clients from class-A shares to class F-2 with a 1% (or more!) advisory fee. My anger at what is happening in this industry is based purely on my belief that millions of investors across this great nation are now paying a whole lot more in fees than they used to…to their detriment and to the industry’s massive benefit. But that’s just me…….

  • Now come on Paul. You know that’s not just a couple of questions. You got on your soapbox, got on a roll, and punched out four of them.

    Do you feel better now?

    Looks like someone is just a tad bit jaded or for some reason has an ax to grind with the mothership in St. Louis.

    EJ is no different than any wirehouse or regional who gets the majority of revenues from fees in lieu of commissions. Nothing to see here.

    • Really. A huge beside the point. I compete daily with the two EJ offices in my town, and those folks are tough competitors because they are hands on with the clients like me, not ivory tower type brokers who sort of care. Very much feel this caring thing needs to be what were about going forward regardless of firm.

      • On that caring thing…if you ever had to deal with EJ complaince, you would find out that EJ has less than zero caring in them. They, just like a lot of the other large name firms, will attempt to end your career just to keep accounts. They don’t give a rat’s rear about the amount of sacrifice you gave to the firm to build a book under their roof. I respect most of the EJ advisors and THEY do care. But to say the entity of EJ is caring of anything other than profits is Pollyannaish. And yes, I was butt-hurt for the first couple years. Now I thank them for my firing me, it’s so much better being off the koolaid.

  • I think Penny was great and as the most powerful woman on Wall street she is an inspiration!

    • I’m still worried about zerocom. I hear from Penny and others that advice is king but still not sure how to convert that into revenue from a commission business.

      • Best Penny quote from podcast for you “If you dont give better advice than a robot, you deserve to paid like a machine” or something like that

  • Typical of our industry for people with axes to vent in inappropriate spaces. Great podcast, very down to earth convo, not as much corporate speak as I expected. Good to know what the bosses are thinking, who knows, given time she may move the cultural needle for all, we need it.

  • people with axes to grind–especially if they dont even know the context of or listen to the podcast should find another space to rant. It is good to hear from the bosses. In this case there was not too much corporate speak and these podcasts are obviously not rehearsed. Its the most powerful leader of advisors in the western world with a prety caring message–nothing funny about peace love and understanding!

    • According to the big cheese advice is the future which I think most can agree with other than the exception above, and that may become mandated with a left leaning anti wall street government to come that will think all commissions are bad. What will the biggest firms do to accommodate what might be a sea change? Not sure I heard an answer for that, other than this leader is a former advisor and understands the biz from the ground level and obviously supports her advisors, how will that translate for all firms when the tide turns.

  • Great conversation, good takeaways, real leadership!

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