On March 17, America recorded 6,135 COVID-19 cases and 112 deaths. The states were starting to shut down. On that day, Edward Jones closed its 15,356 branch offices in the U.S. and Canada to clients and prospects.
Now, three and a half months later, the firm, which serves 7 million clients, has reopened about 7,100 branches. But citing coronavirus concerns, about 25% of advisors who work in these offices are still restricting access to the public, Jones’ managing partner, Penny Pennington, tells ThinkAdvisor in an interview.
During the company-mandated shutdown, most FAs remained working in the branches — “safe places,” since only two to four people occupy each one, the space therefore hospitable to social distancing, Pennington maintains. Other Jones advisors had opted to work remotely from home.
For some 15 weeks now, Pennington, appointed to the firm’s top post in 2018 when longtime managing partner Jim Weddle retired, has led the company through what she calls a “triple pandemic”: “the coronavirus pandemic, the financial pandemic” and nationwide racial protests that began at the end of May, which she frames as “a social-unrest pandemic.”
Addressing racism, diversity and compensation inequity, Pennington on June 15 announced a five-point commitment to increase the firm’s efforts to employ a more diverse advisor and home office workforce.
At present, only 8% of Jones’ 19,161 FAs in the U.S. and Canada and 9% of senior leaders in the home office are people of color. The firm employs 49,000 associates: FAs, branch office administrators and home office staff. Industrywide, the proportion of FAs of color is 8% as well.
“We commit to continuing racial-equity training and anti-racism personnel policies” and to “continuing to work toward a meaningful increase in diversity among … financial advisors and senior leadership,” the Commitment states.
Further, the St. Louis-based firm, with $1.2 trillion in assets under management, has invested $1.2 million in the National Urban League and the St. Louis Urban League, according to the Commitment.
In the interview, Pennington argues that Jones “hire[s] more black financial advisors than other firms do.” She stresses that “the white majority that’s quote-unquote in power right now has to … co-create the future from the standpoint of people who have been living the reality of … inequity and racism.”
As for the present, the firm is in litigation defending a class action lawsuit alleging racial bias, which was brought by black advisor Wayne Bland and three other FAs in 2018.
Pennington declined to comment. A company spokesperson wrote in a statement: “Edward Jones has denied the allegations in the lawsuit … and in response … has filed motions that are pending before the court … Edward Jones does not discriminate against black financial advisors, nor does the culture of our firm condone racism in any form.”
In 2016, a Latino advisor, Emilio Lira, filed suit against Jones, alleging discrimination. The action was dismissed. In January 2020, the FA charged in another suit that he was fired because he previously sued the firm over discrimination.
“Mr. Lira’s employment was terminated for legitimate and lawful reasons that had nothing to do with his filing a lawsuit,” the spokesman wrote. “Edward Jones denies the claims of retaliation Mr. Lira makes … and has responded accordingly in court.”
Pennington started at Jones as a financial advisor in 2000 after a high-level career in bank management at Comerica and Wachovia. At Jones, she became a principal after six years and then continued to rise quickly through the ranks.
ThinkAdvisor interviewed her on June 29. She was speaking by phone from St. Louis. Some of the conversation was devoted to Pennington’s optimistic forecast for the economic recovery and a report that Jones advisors were prospecting hard even though knocking on neighborhood doors — long their traditional mode — is out of bounds because of social distancing. So, for now, Jones has joined the club with virtual prospecting, the wave of the present.
Here are highlights of our interview:
THINKADVISOR: Why does the industry have so few Black and brown financial advisors? Is it because clients prefer not to hire advisors of color?
PENNY PENNINGTON: The industry has a weak tradition of being more white than anything else and, apparently, not appearing as a place of belonging for talented folks who come from different backgrounds and experiences.
Any other reason?
There’s also a very real racial wealth gap in our country — inequality in terms of wealth distribution. Getting professional financial advice to folks with different means and opportunities is what our industry needs to be focused on. It’s that confluence of issues and opportunities that we have to take action on.
Only 8% of Edward Jones’ 19,161 financial advisors in the U.S. (18,221) and Canada (940) are Black and brown. It’s the same proportion industrywide. Is your firm on track for growing the amount of advisors of color?
We’ve grown that number over time. Are we on track? We believe that we have significantly more opportunity [room to grow]. We believe that we hire more Black financial advisors than other firms do. But we want to see more people of color, and women, become our advisors.
What prompted you to announce, on June 15, the firm’s five-point commitment addressing inclusion, diversity and equity?
It’s an actionable statement of what we intend to focus on as our next step and what we want to be held accountable to. We’ve been very actively focused on diversity and inclusion for well over a decade, seeking out diversity in our financial advisor population as well as in our home-office population. The five-point commitment is a dialing-up of that.
Some African American advisors I’ve interviewed say that the impetus and policies for advisor diversity must come from senior leadership. Do you agree?
It’s essential. If senior leadership isn’t focused on that, it won’t happen. I’m growing my understanding of racism, racial inequity and structural inequity just as I grew my understanding of the coronavirus [issues]. The white majority that’s quote-unquote in power right now, has to increase their understanding and co-create the future from the standpoint of people who have been living the reality of that inequity and racism. That’s what business leaders have to pledge.
What’s been the biggest challenge leading the firm since mid-March?
We’ve had the coming-together of a triple pandemic: a health pandemic, an economic pandemic and a social-unrest pandemic. That’s what’s been so different. The most challenging part — also the most exhilarating — is that there’s nowhere to look for validation about whether we’re doing it right in terms of our responses and how we’re handling things.