Edward Jones’ David Chubak on the Golden Age of Advice

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GREG: Hey, everybody. Welcome to another episode of Accrued Interest PIMCO podcast dedicated to financial advisors and the wealth management community. This is a really special episode. I'm excited. I am in the great city of St. Louis, Missouri.

I'm at the headquarters of Edward Jones, and I'm sitting with my good friend David Chubak to talk about his journey and the journey here at Edward Jones. Dave, thanks for joining us in the program. Thanks for hosting us.

DAVID CHUBAK: First of all, great to be here in St. Louis with you. What a cool program, Accrued Interest. Love it. Really excited to be here, and it should be a great day.

GREG: So we were talking, and we'll get into serious stuff in a minute. But, we both watched some tennis this weekend, back up in New York. I came in last night to get ready for this, but you went the full blast of Alcaraz and Shelton last night.

DAVID CHUBAK: Not the full blast. Not the full blast. I got to say, I cut it a little early, but we were there with some great people. A very good patriotic crowd. And what just great tennis all the way from cutting in at the end and getting to see Tiafoe finish up his match, which was wonderful. So two five setters with some tiebreaks at the end. I mean, pretty cool.

GREG: And big night for the American men. And they'll meet in the next round.

DAVID CHUBAK: All right it's been a while. It's been a while. Let's see if we can get an American men's winner in tennis. That'd be great.

GREG: Okay, this is not a tennis podcast. We could go down that rabbit hole, and we have been in the prep here. St. Louis looks good.

DAVID CHUBAK: It's a wonderful town. There's so much investment going into the town. And I'm actually really proud that Edward Jones has been behind a lot of the investment in so many different parts of the community. There's a new greenway that's being built out to help revitalize parts of downtown and connect the park. Penny and our leadership team have been behind so many of the efforts.

GREG: Penny, your managing partner.

DAVID CHUBAK: Penny Pennington, our managing partner. Thank you.

GREG: We will get to introductions.

DAVID CHUBAK: Absolutely. Penny Pennington can sell our head of external affairs. There's so much engagement. And St. Louis has been great to our firm. And we're looking to give back and being part of the town.

GREG: Yeah. So I'm here to do this, but when my wife found out that I was coming to St. Louis, she said, okay, well, Charlotte, our 16 year old daughter, we need to come with you because she started looking at schools. So she's literally on the campus of Washington University right now, sending me pictures of how beautiful it is, how green it is.

And I do think Charlotte's going to pick her school based primarily on its esthetic appeal. So that's been exciting for us to.

DAVID CHUBAK: Well, if it is on that appeal to Wash U., will win. My daughter Lindsey Charlotte is a first-year freshman over at Wash U. We got to do the convocation and the walk. And I got to say they did such a great job welcoming. And that campus is stunning. And Penny Pennington, our managing partner, just stepped in a couple of weeks ago to actually be the chair of the Board for Wash U. Another great connection between St. Louis great institutions and Edward Jones.

GREG: How's your transition going? Is this your first?

DAVID CHUBAK: It's my first. My oldest. Yeah.

GREG: Four kids, right?

DAVID CHUBAK: Four kids. Lindsey, is our oldest. She took a gap year between high school and college and traveled the world and did some really cool programs across, really across the globe. And she is loving her first few weeks. Great people, great school, education quality is terrific. And just the feeling of warmth you get when you get on that campus.

And I'm not talking about the 100 degree temperatures, which yes, you feel that too, but no, it's just a sense of community. It's a really special place and we've grown to really enjoy it just a couple weeks in.

GREG: Yeah, you sense my joke comment about the 100 degree temperatures.

DAVID CHUBAK: I can't miss that in August and September in St. Louis.

GREG: Yeah, or New York to be to be clear about that. All right. This is a great kind of point to jump off. I've been looking forward to this conversation for some time. I think we reached out to you back in the spring and just needed to figure out when we could get this scheduled. But, you know, in addition to you being, I think, a very thoughtful and keen observer of financial services generally, I think your story here is very interesting, and I'll let you get into your background.

But, you know, coming from sort of the epitome of international banking in a money center city, like New York City   to the heartland of America, and a firm that is so steeped in St. Louis and Missouri and, you know, the bread basket of the country.

I think that's very interesting. I wanna talk about that. And then maybe, more importantly, with all respect to you, is just the journey that Edward Jones is on, which I think people who listen to this podcast are quite aware of what's going on in the wealth world.

But the details and the nuances of everything you guys are going through is, I think, of general interest, and we want to shine a light on that. So, maybe we can start with you. Talk about where you've been, how you got here?

DAVID CHUBAK: That I'm here today is pretty remarkable. And when people ask what a, you know, a guy who was built and born in Brooklyn and raised in New York and worked at Citibank, most global bank. At Edward Jones, they sometimes scratch their heads. And actually, it's in some ways a really wonderful lucky but linear progression towards a career and purpose. I grew up in Brooklyn.

I grew up with my grandparents, my parents, we all lived together. My grandmother was a bank greeter. She physically helped doors open to people who came over in Brooklyn, which back in the fifties was Ellis Island.

And people would come over after immigrating largely from Europe. And because she came over and spoke six languages and learned English fairly quickly when she came over, she would sit there and open a door, four foot seven.

She would open doors for people. And when she'd figure out what language they speak, and she would help them start their American dream, literally.

GREG: That's remarkable.

DAVID CHUBAK: I opened their first bank account. I found my career through law and consulting, and ultimately up to Citi with ultimately a sense of purpose of wanting to make my grandmother proud. And that's the question I ask in my decisions and my career choices, and how I'm trying to raise my family as well, you know what I make my grandmother proud. She put a lot, she sacrificed a lot and she is a toughest judge.

DAVID CHUBAK: I don't think I ever got above a D minus.

She passed me every once in a while, but not too often. But the toughest of judges with the warmest of hearts. And she always wanted you to live up to your full potential. That's what she always said, you're doing good, but are you living up to your full potential? And in finding my way to Edward Jones, I really ask myself three questions. I always say, career should be three things you look for. Number one is people.

Because you're gonna spend time in your career with people almost more than your family, or in some cases in some months and years more than your family. And if the people aren't the right ones, life's too short to work with people you don't. Really appreciate, admire and respect. The second is purpose.

And if you're lucky enough to find purpose in your work, someone told me, cling to it. And I found purpose in my career as a consulting, even Citi, helping Citi through the financial crisis and beyond. Citi was my first bank account. It was my first mortgage. It was my student loans for college and law school. Being a part of bringing that company back to not being a too big to fail, but to ultimately drive more value, did have purpose.

GREG: And you ran, as I recall, right? The retail bank. Which is,you know, I mean, that's an interesting background in the wealth world, right? Very human focused on the pragmatism and practicality of day-to-day life.

DAVID CHUBAK: Yeah. I say, when I was at McKinsey, I spent most of my time on the institutional side. So, when I joined Citi and Mike Corbett, the then CEO, was my boss, was talking to me about career growth and the spiral staircase of how you grow and learn new skills to grow. And he said, Hey, it's time to go into the business side.

After working for a couple years, I thought I'd be shipped off to Southeast Asia, something like that. And he's like, retail bank. I was like, retail bank? And I loved the business, but I wasn't a consumer banker. But getting a chance to be in there with the mortgage business, especially in the late 2010s, as the interest rate environment changed, being there with the bank and the deposit business.

But really it was, I'd say the most meaningful part of the career was the Paycheck Protection Program, which was a beast.  And the pandemic assistance programs, keeping branches open. Our branch in New Rochelle was the first US branch that got hit with a COVID case.

And remember back to March of 2020, what we were doing and figuring and learning, it's a human business. And the impact that you feel to the business client who's just trying to make ends meet or survive a pandemic to the individual who's looking out for their family. It changed a lot of my perspective.

And it taught me a whole new sense of the purpose of what banking, what wealth management, what financial services done right can do to not just improve economic impacts, but frankly to change lives for people.  And that brought me to Edward Jones.

GREG: Yeah. I sense a through line developing here.

DAVID CHUBAK: Yeah, look, that aspect of purpose. I felt it in my previous careers. But when you walk into Edward Jones, when you meet any of the leadership, when you talk to Penny Pennington about why our firm is here, it's a firm built on purpose. I mean, Ted Jones really built this company on a singular idea of finding underserved clients and bringing Wall Street to Main Street.

GREG: Okay. I think I told you that I wanted to dwell maybe overly much because there's relatively, you know, few firms out there with such continuous, uninterrupted history of acting and serving in the capacity that Jones has. So, 1922, I believe that's the founding date, talk us through
the history. And then I really, I want to know also how you feel that the history influences the culture and vice versa?

DAVID CHUBAK: Absolutely. Actually, this week is a very special one, which I'll talk about and where the history and the culture really fused together. So, yeah. Edward D. Jones started the company in 1922, actually even a little earlier, but really created the company in 22.

And over time was really Ted, his son, who started to operate the business more and more, who really got into fighting with his father on the direction of the firm. And I share that because Ted used to walk around wearing boxing gloves. One said handshake meetings, and one said, you know, phone meetings. And he was really into the aspect of putting the client at the center of what we do.

Ted had a really principled approach towards building a business. And what Ted saw as an opportunity is to go from Mexico, Missouri, and he started moving out and looking at creating essentially lines of connectivity points in towns across the Midwest that essentially did not have access to investments.

And back then especially in the forties, fifties, and then really the sixties where we started to grow the firm more significantly. It was really around bringing investments to people and towns, communities that did not have access to them. There was no one having that conversation.

There may have been a local a bank, but there was no access to investments. And what Ted saw was an opportunity to bring a whole new opportunity set to people who were really being overlooked. In some cases, looked down on by the Wall Street banks who said that they just were not worthy…

GREG: These are small towns, agrarian communities, blue collar professionals, and yeah. And a firm founded in the roaring twenties that found itself, you know, a few decades later actually really making its place in the world outside of the big money centers.

DAVID CHUBAK: Exactly. Right.  And look, Edward Jones is a company that has not always been a pure wealth management firm. It had tested some other business lines. Ted made one of the boldest decisions back in the day to actually step out of some very profitable businesses like commodities.

On the basis that he didn't feel the client was doing well. And that's the only thing that mattered in making a decision in the end, is if the client wasn't being served and wasn't being successful, the business did not stay.

But he really leaned into this idea of building out the retail wealth management business. The retail back then investments business by putting an advisor in a small, shop front location, close in a community with the idea that that person would be central, centric to a community and help bring a whole new value offering to them.

I always like to say he thought about a value offering, but he also thought about the values of the firm together. Ted loved the rural communities. We joke a lot that Ted lived on a farm. He liked the farm more than anything. He and Pat, his wife, really tended to this with the care. They never had children, but the farm, the firm, and some extent Missouri were really what they invested in building behind.

But he loved those communities, and he wanted to see them grow and thrive. And because of the work he did, he not just has a firm that's in, you know, every client with every county in the country and every province in Canada.

But the investments he's made into the state of Missouri, into the Katy Trail, into the city of St. Louis, and to now, so many communities that have been touched by Edward Jones across the country. I wonder if he would've thought about what that impact would've been as he started this and got into the early fights with his father.

GREG: I won't say which but I was at a high school reunion. And, you know, we were running into people that he hadn't seen in 20, 25, 30 years. And I ran into a good old friend of mine somebody I'd spent a lot of time with in high school and just fallen out of touch. He married his high school sweetheart. Three of us are chitchatting. And I just sort of, Hey, Brian, what are you doing these days? Oh, I'm an Edward Jones financial advisor.

I think he was shocked at how much I knew about, you know, sort of what he does and the construct around him and the questions I had for him. But he did embody, I mean, he was one of the nicest people that was in the high school. He was phenomenally smart, deeply embedded in his community. And he came to this role kinda later in life in his career.

Maybe you could talk a little bit about how Ted initiated and how you guys have continued to recruit folks out in these communities   and also maybe the construct that you've used to do that, you know, the famous sort of one advisor per office setup that you've had.

DAVID CHUBAK: Yeah. So, Ted's focus was on putting someone in the community that really understood the community, that would be well known, respected in the community.

And so, Ted was a proud salesperson. He believed in the product, he believed in the service that we were offering, and so he looked for people who would ultimately get out there and be proud to knock on a door and introduce Edward Jones to them and what we can do to help improve their lives. Today, our model has shifted a little bit. But that aspect of entrepreneurship, that aspect of community focus still remains at the forefront.

And I always like to joke, if you put 10 financial advisors in a lineup, I pick out the Edward Jones one blindfolded. You can sense it, you can feel it.  You just know it from how they talk. You know it from how what their focus is. And I think it's a wonderful thing. We hire in over 1500 advisors every year. I'm so proud of that. I'm also really disappointed that we're one of very few firms left that really invests in building out new financial advisors and not just poaching each other's successful financial advisors.

And I'm not bemoaning a competitive pressure. I get why people; I understand that fully. But we're in a country where the number of advisors is shrinking significantly and expect it to shrink even faster in the coming years ahead. Our firm has always been about helping solve the advice gap, that advice gap Ted saw was back in the day, an urban rural advice gap.

Today. There's still some, and we're gonna continue to grow in rural markets, but as much of the challenge today is in urban versus rural, it's served underserved. It's clients that are seeking and finding financial fulfillment and frankly, significant numbers of Americans and Canadians who are telling us they want advice and are not finding financial fulfillment. So, the idea of what Ted saw of underserved still in the forefront of what we do.

How we recruit, how we train, how we teach, how we get people to think about advice and not just investments, that's changing. And by the way, with the world of AI, it's gonna change even faster. The velocity of this business is only gonna speed up. But the value of, again, putting an advisor in a community to support a local community, to support the businesses, the individuals, the families, the next generations grow, those values haven't changed.

GREG: Part of your transition to this world and something I really respect about you, and we've talked about it a couple of times, but you know, you don't just hang out in the headquarters or your office in New York City. You've walked the walk. You have been out in a couple of branches.

I'd love to talk about that experience and what you learned from it. You told me some interesting, I think, enlightening stories from your own perspective. Feel free to share, you know…

DAVID CHUBAK: yeah. Look, someone wise one said, don't judge someone till you walk in their shoes.  Well, don't judge a financial advisor or a branch office administrator till you spend a couple weeks trying to do their job. And let me tell you the job of being an advisor, or if supporting our advisors as a client support team member or branch office administrator, I will tell you that is work that I try to go do at least once a year for a couple weeks.

I've gone in done what we call an immersion out in Chesterfield, Missouri a few years ago. Last year as in Pendleton, Indiana. This year I did one down in Peachtree City, Georgia. And I just wrapped up a few weeks ago, being a branch office administrator, one of the office assistants out in New Jersey,

GREG: Probably the toughest job.

DAVID CHUBAK: I got to say, meaningfully the toughest job. But it's humbling. But sitting in their shoes, first of all, reinforces the nobility and the opportunity that I feel financial advisors have at this point in history.

We are the highest point of Americans having anxiety. We're in a world of FOMO 24/7 news cycles. There's no shortage of information and answers available through AI. And people are saying they don't know who to trust. Our business essentially is a business of trust, a business of advice and guidance.

And I think we're entering a golden age for the advice business, especially given that people have so many choices on getting answers, getting authentic.

And yes, algorithmic make advice, I think is gonna be the most important challenge of the next couple years ahead. But I'll tell you, when you get a chance to sit in the seat of the financial advisor, the technical side of the business, it's challenging. There's a highly regulated business, you gotta know what to do. But the stories that I remember the most of my experiences are the authentic ones.

It's a client out in Indiana last year, Maureen, who came in every other week because she lived on a very fixed income and was nervous about her control of her own money and needed help. And she was a small client. Some firms would say she wouldn't meet their minimums.

We have no minimums or maximums for that matter. But the purpose of getting to work with her and help her through her life and help her plan her RV trip around the country.

As she's thinking about what to do in her retirement. I just, there's something you feel in that experience that who cares what the money guide and the portfolio says. You feel the impact of how you help someone in their life. Last summer and then earlier this year too, I was out as a, my advisors here would tell you playing advisor what they would say because one, they look at my results. They also look at my numbers, and believe me, they look at my numbers. And I'll tell you…

GREG: I hope they treat you with a healthy irreverence, you know…

DAVID CHUBAK: A tremendous irreverence. Absolutely. Which is what I would expect them to.

GREG: I am very familiar with it. It is by far the best educational tool.

DAVID CHUBAK: It certainly is. And I love it. And if they're not gonna rib me, then I can't go back and challenge them back. So, but it's great. But I got to serve during last year when the US Air Force bombed the Iranian nuclear reactor, and then this year during the start of the Iranian military conflict. And last year, I remember sitting in a branch the Monday after the bomb was dropped. And I had a client who walked in without any…

GREG: I just, sorry to interrupt, but I think the circumstances, so you have taken over the branch and the person who has built this business
has given it unto you to manage while he presumably, or she presumably is often a life event or so, I mean, this is real stakes.

DAVID CHUBAK: Yeah. This isn't theatre. The FA is out on leave. And I'm there and I'm representing and covering, and thankfully I've got the branch office administrator. So, I had Robin in with me last summer. And believe me, you see the value very quickly. Living the life with them.

GREG: So, the headline hits and nervous clients.

DAVID CHUBAK: Headline hits. And I'm in a meeting with two clients, a lovely couple, and we're just doing an annual review.

And as we're wrapping up the meeting towards it, Robin
comes in like, I'm sorry, I have to end the meeting a little early. I've got a
client here who really just wants to talk to you. Got a bit of a situation. And
the couple's lovely, like, no worries. We're great. Just they walk out, welcome
out to the car, sweetest people in the world. And the client comes in and you
can see he's jittery.

He's like, he's shaking a little bit. And you can see from him quickly, like, he's got the military tattoo. He's got a good suntan, like you can tell he's likely a farmer, clearly military. And he comes in and he sits down, and we're having just like a staring contest with each other because like, I'm not sure whether you can see something's up.

And eventually I'm like, all right, so listen, Hey, something's going on. Please just gimme a little bit of a sense of what's going on in your mind. And he is like, listen, Gulf War I've seen this before, and I see the bomber dropping. This is gonna be bad. I just see it's a world war, and I want out. I wanna take the whole portfolio and just gimme a check. Okay.

Well, that training on how to do that situation that wasn't in the short version I went through. Yeah. And instinct kicks in and a little bit you learn, but what really comes in is you get infused from the culture of the firm and how you don't focus on the portfolio, focus on the person.

And we're talking through it. And I don't remember what I said for 20 minutes other than I listened, and I just tried to understand. And the point where it hit is, I said, "Listen, if you want to check, my job is to write it for you. But before that, let's just take a look at your portfolio." Turned out, portfolio is doing great that day. He has defense stocks in his portfolio.

They went up a little bit. The market actually didn't really react to too much. I share it because the authentic experience of helping him not think about the portfolio, but really get at the sense of, what's the anxiety he's dealing with? And I'll tell you, the value of the advice, that authentic caring, personalized advice, I didn't realize how powerful it was.

And until you sit in that seat and try to understand what that's like, you don't realize the power of how it transforms families and communities. And if we do it the right way, the country. And it also reinforced one thing, which I knew but I didn't understand, which is, we always talk about the trust gap, national versus local.

People don't trust big institutions, but their local ones fully. And I totally could understand that sitting in the branch and recognizing that individual trust between the advisor, the branch office administrator, to the client, that's been built through 5, 6, 10 tough moments, and hopefully a dozen or a hundred wonderful ones is something that you don't manufacture. It's something you invest and build together. And I felt that, and that to me was the purpose.

But it also was my third P. It was people, purpose, the potential. The potential for us as a firm, for this business to transform people's lives in a bigger way, especially with the power of technology. I think we've barely gotten started.

GREG: It's such a wonderful reinforcement of the value of the human connection. And, you know, I almost hesitate to bring it up because it feels so cold and calculating relative to the story you just told, but we spent a lot of time with your folks around behavioral finance. Right? That so much of investing is a psychological exercise. And certainly, in your position to truly add value for the clients, it's handholding.

Staying to plan when that plan is tested and when fear enters into it. So, I'm sure you're the better for having had some of those experiences. It sounds like your clients are better too, which is good. You've acquitted yourself well in those roles. You mentioned that this is a special week for Edward Jones. For what, what's going on this week?

DAVID CHUBAK: So, this week we begin our process of doing our limited partnership offering. We announced earlier this year we are looking to raise one and a quarter billion dollars. It'll be the largest raise we've done as a firm. Our firm only at the partners of our firm are at Edward Jones, or we have a small group of retired former partners of our firm.

But as we look to grow our firm, and we see lots of opportunity to grow in more markets, to invest in new capabilities, to build new businesses, to bring businesses into Edward Jones, we are excited to do our largest raise. And so, this week our partners are calling close to 40,000 or so individuals who are gonna be invited to participate in our 2027 technically limited partnership offering.

And so yesterday I got to a call. My list is I think a hundred or so financial advisors, branch office administrators, and by the way, also home office associates. All get invited to participate, and we get to call them and welcome them into the process. And so, it's a historic reinforcement. We've been a partnership doing this for 50 years. Ted started the first partner raising, it's 50, maybe 51 years ago, depending on where we are in the year right now. But this is the continuity of the history.

It's a reinforcement of the values of our firm. And if you think of it, Ted could have sold the firm. And been one of the richest people in America. And when asked about it, instead of doing that, he actually wrote a little poem called The Richest Man in America, which talks about how money was never his God, and what gave him meaning in life, which was his family and his farm, and his dog, and his horse and his wife.

And that was what gave, and people he worked with. And we get to do a little bit of that ourselves now. And not only are we doing that, but we're doing it in a way that we're shifting the future of our partnerships to put more of the ownership and more the focus on the people on the front lines doing the work every day. So, it's a really historic moment. We call it the refounding of our partnership.

And I'll tell you, four years into the firm to have, this is my second chance participating now in our LP offering. It's hard to describe the emotion when you get to connect with someone who you may or may not know and talk to them about them owning more of this firm. And yesterday I got to talk to 30-year veterans. I got to talk to third-generation financial advisors. I got to talk to the first BOA who's ever, you know, in their career, got to be an owner in something. And it's a really remarkable and special week, and can't wait to do even more of these over the course of the next few days.

GREG: It's such an incredible capital model. And it's so true to kind of the nature of the organization and how you guys have sort of steered your own course and steered your own course, mind you, to nearly two and a half trillion dollars of assets under care. At this point 20,000 advisors out there in the field. And you've sort of invoked the future here. So, let's talk about it. This is kind of the crux of what I was hoping to speak to you about is everything's going great at Edward Jones.

And yet you and Penny and your colleagues here, I think have created a pretty ambitious agenda for this call of the next a hundred years of this firm. So, what is on your mind? What are you thinking about? We'll talk about some of the challenges too because it's not gonna be an easy task but let's lay out some of the priorities here.

DAVID CHUBAK: So yeah. Look, in some ways this is just a great environment. Firm is very successful. Thankfully, markets are doing well. Like, there's a lot to celebrate, and you look at it and say, just stay the course. And looking as a leadership team, and under Penny's leadership, we look at each other and say, no. Quite the contrary, this is a consequential moment for our clients and for our advisors, branch teams, for all of our people.

We're gonna go through, in the next few years, some of the most consequential changes in the economic landscape of America and Canada too. The first of which is we have the largest transfer of wealth. That's not gonna happen in a moment. To quote the Hamilton—it's a movement, not a moment, but it's already started to happen, but it's gonna pick up in the coming years ahead.

And with that means that more younger Americans, many of whom have never spoken to an advisor, who take out their phone to ask 14 apps questions, but don't think of the human connection. That's gonna happen. It's already started to, but it's gonna pick up steam. And to think that's not gonna change the nature of our business would be arrogant. At the same time, we also know that we're gonna see more businesses transition in America.

There's 33 million or so businesses in America, most of them are small. The average age is 56 or 57 now, means in the next decade or so, close to half of businesses are gonna transition. That's a lot of shifts, also a lot of value creation. You have to manage through. And by the way, while that's happening, the expectation is that the number of advisors is gonna be down by a hundred thousand who are gonna retire. And we're not hiring and training them nearly at that clip.

So, the McKinsey report that I saw last couple months ago says that we'll go from, was 320, by Cerulli standards, 320,000 advisors a few years ago. The number I saw from Cerulli earlier this year is 278,000. McKinsey says it'll be less than 250,000.

High anxiety, huge amount of wealth transition. Biggest business transition. Demand is gonna be high, yet the supply is shrinking. We as a firm look at that and say, we have always been part of solving that problem. Between 2013 and 2023 one of the largest bull run markets in America, the financial advisor, human advisor business, grew by 5,800 advisors’ net.

Edward Jones made up 6,300 of that, or 108% of the growth of the financial advice advisor business. In some ways, that's great for business. As an American who grew up in a Brooklyn house with someone who opened doors for people for their American dreams, we need more door openers. We need more financial advisors.

GREG: Now, the other phenomenon associated with that is not only is the advisor count shrinking, but the concentration of the assets is pretty severe at the upper end. And as families go through the transition of businesses, wealth creation, if that business has sold or gone, you know, at some kinds of monetization event, how do you think about staying with clients as their financial picture goes from maybe more modest to, you know, potentially, you know, quite wealthy? How does that work here?

DAVID CHUBAK: It works with actually real simplicity in that we put the client at the center. And we don't put the balance sheet or the portfolio at the center. We put the client and their life, and we see helping clients through the life transition as the preeminent focus. And, yeah, as to your examples, a lot of these life transitions we're talking about have significant financial consequences.

And in particular, for clients that have businesses, clients that have children, clients that are working through their purposes, the decisions they're gonna make involving their money are what create a lot of anxiety, but done the right way, actually create what we call financial fulfillment. Trust, confidence, security, and knowing that you can live your life without having to worry about the finances.

And to that end, we see our financial advisor's responsibility. We actually see their accountability as to improve that client's financial wellbeing. And so, in, as we think about that, the fulfillment side, we're shifting the business model of our advice business away from just alpha and portfolio returns towards— still doing that, because that is really important.

GREG: Of course. Yeah.

DAVID CHUBAK: But complimenting that with this aspect of how are we helping people lead better lives at the same time.

GREG: Do you worry that the bread-and-butter approach that has been so effective for Edward Jones for such a long time maybe doesn't keep up with some of the private market offerings and crypto and the full slate of banking capabilities that you've got, you know, as I've learned in my seat over, I've been doing this about the same time that you've been at Jones.

You've got some formidable competition out there, and incredibly smart people, some of your old McKinsey colleagues out there doing extraordinary things. And how do you think about, as, especially as you grow with your clients into more wealthier echelons, how do you think about keeping pace with what they've come to expect from their advice giver?

DAVID CHUBAK: Well, first thing I'll say is I love the competition. Nothing gets you up in the morning like knowing some of my buddies and friends who have tremendous respect for are coming for you. And we get along and can go to tennis or Knicks games, and you know, one's a godfather to my daughter. I mean, we got a lot of like close connection, but at the same time, we compete.  And we compete because we have different businesses and different focus areas.

But it is a competitive space. I would say over the last few years, we've put a significant investment, and I'm really grateful and proud that our partners have made a huge investment in our wealth management capability set. The old model, Edward Jones is an A share mutual funds firm, by the way. Yes. We're proud of that. We've got no objection to that. That's been part of our history.

GREG: Made a lot of people a lot of money.

DAVID CHUBAK: It certainly has. But we've diversified to create a complete wealth management franchise. We've invested in product, our product shelf, which has been growing at the fastest clip over the last two years than it has in our history and will continue to—has not been to stack a shelf. It's been because our clients, who have 78 net promoter score average, which means that there's a lot higher ones too, are telling us they love us, but they do want us to be broadening and earning their full wallet.

We went out, added conditional approval for our bank charter, which hopefully on January 4th next year, we will launch Edward Jones Bank to offer up more of the service and solutions that our competitors do to offer more holistic wealth management services. We've entered our new private markets offerings and our high net worth elite.

And now our Edward Jones Generations offer, which is focused on our high net worth and ultra-high-net-worth clients. And I'll tell you, the take-up has been exceptional and far above any of my expectations. And with partners like you and Pimco, like, it's been great that we've been able to add more to serve our clients more completely.

But I would say is the serving our clients more completely is not just having a product, it's being able to offer the advice and the experience by bringing the advice and execution together. And that's the part I think for the next few years that's gonna distinguish us. We will not be behind the competitive market on product.

And I like that they're gonna raise the bar, and we're gonna have to keep moving up our velocity to stay with that, but they're gonna have a hard time keeping up with us on how we bring that authentic advice experience with execution. And so, it's not an either-or world. It's not alpha or fulfillment. It's how do you create both at the same time? And I think we're really well positioned to be able to do that in a unique way.

GREG: It can't be without its challenges, right? I mean, I think, you know, firms with strong cultures, PIMCO's a firm with a very strong culture. Edward Jones is very strong culture and, you know, twice as old as PIMCO. And so really ingrained, really successful. It's gotta be difficult to initiate some of these changes.

And I'm sure you and Penny, you faced your share of folks just saying, "Hey, it's worked so well for so long. Do we risk losing ourselves as we try to take this to the next step?" How do you think about that balance?

DAVID CHUBAK: Look, you have to ask that question every single time. And that's why I really enjoy serving alongside Edward Jones enterprise leadership team is. It's a team that asks that question every single time and challenges each other on making sure we get it right. It means we have the values discussion all the time.

And every one of those discussions, the question you go back to is our history and our roots on putting the client to the center, and is this going to ultimately make it better for them? An old conversation may have been is, oh, that product is risky. Well, sometimes there's a product that may seem inherently risky that actually when you put it in a portfolio, it actually reduces risk.

It mitigates risk. So, framing the discussion a little differently to focus on the client, putting them at the center. If you keep doing that, you get to the right outcomes. There are some things we do not offer today. I get the question at every town hall I mean, are we gonna do a prediction markets thing?

But I don't say never. I say, I need to see facts and I need to examine the value and the values of offering something. And the good news is I've got an independent product review that does not report to me.

So, I can be convinced whatever it is I want to, but they've got to understand it. But I also say is it's not just the product suitability, which obviously matters, it's also how are you gonna do an enable 20,000 financial advisors or increasingly segments of financial advisors to bring that to the right group of clients.

And so, the old model of a one size fits all is not how we work. We start with the client segmentation and the FA segmentation and start thinking, what is the way we can meet the needs of those clients and do it responsibly with our values in a way that will promote the growth for a client, their community, and for our country.

GREG: We debate this all the time because, you know, anytime a new product or market comes along, there's tends to be some period of excess return, call it excess excitement, sometimes outpaces the return potential. Finding that balance and maintaining perspective as to what's truly helping versus what is commercially appealing to the franchise at the time. It's very difficult. Those pressures can be immense. It's hard to sometimes keep your balance.

DAVID CHUBAK: Yeah. I think right now we're in a period of a couple years back, it was the SPACs and, you know, then we had the private equity and then now the private credit. Now there's the new IPOs coming to market. And so, the largest private companies alone, any individual, one of those you can say is terrific. And you can also find ones that aren't. So, I don't like to really look at a category at a whole and pass judgment on, it's like a yes or a no.

You have to get into the work and do the detailed review and understand again, some things may be suitable and right for some segments versus others. There are some things you look at it and say, not for us as a firm. Which doesn't mean you won't come back and look at it again at some point in the future. But today I feel really good that we've expanded our product shelf consistent with our firm's values.

I asked the test, which is our former managing partners, Doug Hill and Jim Weddle, they're still very actively engaged with our firm. Would I wanna go sit with one of them, explain to them what it is? And if the answer is, I wouldn't wanna do it, I can't ask anyone else to do

GREG: Yeah. That's incredibly helpful to have. I can't remember if we mentioned, but you know, PIMCO has really strong St. Louis roots and one of our founders, Bill Thompson…

DAVID CHUBAK: Oh, I got to know at Citi. So yeah, absolutely.

GREG: He has served in that capacity for our leadership team. And it's just, it's really good to know kind of where you've come from and from a value, I think perspective. Make sure you align with values, even if the business starts to look quite a bit different than it did.

DAVID CHUBAK: And it's funny, back at Citi, it was Bill Thompson, it was Jim Turley to really stalwart St. Louis that I would always think like, do I want to go to the boardroom and justify a business decision? Look in the two of them in the eye knowing they're gonna tear me apart if I have one flaw in the argument. And today I've got, again, between now Penny, but also Doug and Jim. Again, it's just an aspect of values. I don’t know if it's in the water or what it is, but those are the tests I give myself.

GREG: St. Louis is a real phenomenon. I mean, I've come down here to, see you guys, and I mean, you really get a sense of how strong this community is. The whole where you go to high school thing, you know, the kids who spread to the coasts for a little while and then inevitably come back in like a gravitational pull. It's a really wonderful place.

DAVID CHUBAK: It really is. And it’s pretty funny thinking about my career and how much of it has been here in St. Louis from Citi Mortgage and beyond. But there's something about, again, the values that, just that aspect of community that it’s clear that it exists here. And I'll tell you the other part that I really like is it's a happy place. When I go back to New York, people always gimme a little hard time. They're like, Chubak, you're smiling a lot. I'm like, is that a bad thing? Like, no, it's just a little weird.

GREG: It's a sign of vulnerability. You don't want to have somebody take advantage of smiling.

DAVID CHUBAK: I guess.

GREG: Or insanity. I mean, you know, if somebody smiles at you on the street.

DAVID CHUBAK: Maybe a little of both.

GREG: Maybe you and I can take a little bit of that, of the values and the sanity and the happiness of St. Louis back to New York with us.

DAVID CHUBAK: God could only hope so

GREG: Yeah. Absolutely. Alright. This has been fantastic. Thanks so much for the time.

DAVID CHUBAK: My pleasure.

GREG: Thanks for hosting us in your wonderful studio. Anybody listening to the podcast who enjoyed this conversation, please go ahead and visit us at pimco.com in the US. If you're listening overseas, visit your local website. If you would like to delve into some of the topics that we've discussed today, you will be taken to Advisor Forum.

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