crypto strategy

Edward Jones CEO steers customers away from ‘fads’ like crypto

If you’re interested in investing your hard-earned savings in speculative investments like crypto or any other vehicle where you can lose “play money”, please don’t come to the Edward Jones brokerage firm help. The recent crypto meltdown has validated the company’s longstanding focus on proven investments, while also attracting the current digital currency craze.

“There are aspects of this market and these investments that are quite speculative right now that have not been proven,” Edward Jones Penny Pennington, Managing Partner, says Fortune. “Our investment philosophy says that crypto is a little more likely to disappoint customers than to delight them.”

For decades, the firm has based its investment philosophy on a long-term buy-and-hold approach. Avoiding speculative instruments such as penny stocks or commodities, considered too risky, is a source of pride.

This strategy seems to have served Edward Jones well. Revenue increased by 22% in 2021, and the company now serves 8 million people. Pennington, leader of Edward Jones since January 2019, has experienced countless fads and says the real business differentiator is designing investment strategies that reflect a client’s life stage. She dismisses any suggestion that young people today are fundamentally different in their approach to investing from their parents and grandparents. “We can call it ‘young investors’, but each of them is different in terms of risk appetite and goals,” says Pennington.

Edward Jones has an army of 19,000 advisers, largest of all american brokerages. Even at the time of Google research, this massive cohort, and the one-on-one advice they give to clients is key to appealing to people just starting out in their financial lives and securing the future of the business. “For younger generations, the stakes are very high, and we have to be there and be relevant in their lives,” says Pennington.

This interview has been edited and condensed for clarity.

Fortune: How do Gen Z and Millennial clients differ from their parents in their investment philosophies and tastes? How do you respond to that?

One thing that we generationally think about for investors is their likely needs at this stage of their life. Do they have more complex needs as they develop their careers, raise their families, go through the stages associated with buying a home, and perhaps earn more money? We can talk about young investors, but everyone is different in terms of their risk appetite, their goals and what they face today.

But young adults in any sphere are now more accustomed to doing their own research as digital native consumers. So why continue to use Edward Jones?

The widespread use of technology means that customers are more likely to be informed today than they would have been decades ago when information was not so ubiquitous. Sometimes the self-diagnosis that happens in the medical world – people going online before seeing their doctor – also happens in the financial world. This could mean someone walks up to an advisor saying, “Hey, I heard about this particular stock or asset” or “Don’t I need this? People come with information and some understanding of how to put that information together, but some things need to be clarified by a professional.

Is it because many investors have FOMO, the “fear of missing out,” when they see the investment trend of the day, like crypto?

Of course, some fashions go as far as tulip bulbs in 17th century Holland. We’ve always had it, and what’s happening today is no different than it’s ever been.

Your company has made it a point to exclude crypto from vehicles in which clients can invest. Do you feel vindicated by the recent crypto meltdown?

The last thing I’ll ever say is, ‘See, I told you so.’ Our investment philosophy has always been to get to know the person or family we are trying to help. What is their risk tolerance and what are their goals? Then we put together a set of high quality investments that are well diversified and can be held, allocated and well managed over the long term and make sure those things are the least likely to disappoint someone.

Crypto’s recent performance has disappointed many, to put it mildly.

When we think of crypto, some aspects of this speculative market and investment are not yet proven. So our investment philosophy says that crypto is a little more likely to disappoint customers than to delight them.

What do you say to customers who are willing to risk having some of their money evaporate?

When I was a financial advisor, I used to tell my clients that “gambling” and “money” don’t go together in the same sentence. If you want to talk to me about fictitious money, I won’t quite understand. We are here to talk about medium and long-term goals, to achieve them in a sustainable and sustainable way so that we can manage the ups and downs of the market. What are you trying to accomplish? Are you just trying to keep up with the times in terms of stocks and online trading? If so, buy an Oculus and play some games.

The wealth gap has widened in society. What can your industry do to help?

Everyone deserves the opportunity to thrive, no matter where or what station in life they started. Getting sound financial advice and building financial knowledge is a great place to start for anyone. We are working on this through our financial literacy and wellbeing program to bring financial literacy and resilience tools to one million people.

And you said it was essential to diversify your army of advisors. Why?

Demography shows that our society is becoming much less homogeneous and much more diverse. This means that consumers’ and investors’ needs are becoming more diverse, they want more choice about who gives advice, and they want to work for companies that offer that choice. I’m not saying every investor of color wants to work with a black financial advisor. When I was a financial advisor, it didn’t mean that all of my clients were women, but it did mean that to be contemporary and relevant in the consulting business, you need to be more like your community.

Your father was the CEO of a shoe retailer Genesco and influenced you enormously. What lessons from him still serve you as the head of a national brokerage?

He was constantly learning as he moved into new roles and positions. If something new to learn was a little uncomfortable, he would say, ‘My God, this is brand new to me. I have to find a solution. He once talked about taking a new position and going on the road alone to prepare for a fairly high position. He said, “I didn’t take anyone with me. I didn’t want anyone trying to set my agenda for me. I went out and met people, and learned a lot from them. So it’s this culture of learning.

Get to know Pennington:

  • She’s a cancer survivor. She fought breast cancer 20 years ago alongside her mother.
  • She is an adventurer and has slept on the floor of the Grand Canyon and in an arctic igloo.
  • Prior to joining Edward Jones in January 2000, Pennington worked in investment banking at Comedy and in Wachovia.

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