With female managing partner in the wings, Edward Jones emphasizes diversity

Penny Pennington, who's been named to succeed Jim Weddle at the start of next year, will join a handful of women in top positions at large financial firms

May 10, 2018 @ 4:32 pm

By Bruce Kelly

At a time when the financial advice industry is desperately attempting to become younger and more diverse, Edward Jones' move earlier this week to tap a woman as its next managing partner will only make the firm more attractive to potential female candidates seeking to work as an adviser, industry observers said.

On Monday, Edward Jones, with 16,095 financial advisers and brokers, announced that Penny Pennington will be its next managing partner, effective at the start of next year. She is replacing Jim Weddle, 64, who will retire at the end of December. Mr. Weddle has been managing partner at Edward Jones since 2006 and in that time, he has overseen tremendous growth at the firm. When he took the reins 12½ years ago, the firm had roughly 9,000 brokers and advisers.

Edward Jones is a private partnership and does not use the title CEO. Ms. Pennington, who will be the firm's sixth managing partner, has led Edward Jones' client strategies group since 2015.

Ms. Pennington, 54, started as financial adviser in 2000. Her rise to managing partner means the firm could be attractive to women recruits, whom many broker-dealers are seeking to attract to diversify the advisers selling financial services products.

Ms. Pennington will join a slim handful of women in top executive positions at large companies in the financial advice and securities industries. Valerie Brown is a long-time senior brokerage executive and currently executive chairman of the board of Advisor Group, a leading IBD network. Amy Webber is the president and CEO of Cambridge Investment Research Inc., a leading independent broker-dealer, and Shelley O'Connor is co-head of Morgan Stanley's wealth management group.

"I think two things are meaningful to advisers. First, that leadership comes from the rank and file, one of their own," said Barbara Herman, a senior vice president at Diamond Consultants, a recruiting firm for advisers. "She started as an FA and that resonates with advisers."

And it could be easier for Edward Jones to attract female advisers now that a woman is the leader, she said. "That's just common sense."

Another executive agreed.

"Any time a woman is in a leadership role, other women notice, especially in the millennial generation," said Kate Healy, managing director of generation next at TD Ameritrade Institutional. "Millennials are looking for diversity at the top. They see that in school, and if they don't see that in a firm, they think that the company is not attracting top talent and they don't want to work there."

Edward Jones currently counts about 3,000 female financial advisers, or 19% of its sales force, which puts it at the industry average, said Monica Giuseffi, the head of diversity at the firm and, like Ms. Pennington, a former financial adviser. Industry consultant Cerulli Associates reports that there are 47,118 female financial advisers, representing 15.1% of adviser head count. Other industry tallies are in that neighborhood or a few percentage points higher.

In September, Edward Jones said it was launching an internal network for female advisers, new and veteran, in an effort to bring more women to the firm. More than one-quarter of its recruits are women, but that number needs to be higher, Ms. Giuseffi said. And this year it is doubling the number of business and social events that focus on its current female advisers and recruits, events that are attended by senior management.

"The firm understands this tremendous shift in the market will dictate success in financial advice industry," Ms. Giuseffi said. "The business need and imperative is there."

Current research shows that $41 trillion in wealth will change hands in the coming years, with 70% of that landing in the hands of women, she said. And two–thirds of those women will want the choice of working with a female financial adviser.

On top of that, $5 trillion of wealth is held by women under 40 who are not working with a wealth manager, Ms. Giuseffi added.

"We must change the composition of the field [sales force] so potential advisers see us as the first choice of their career destination," she said. "We want their talent. We want them to relate to us."

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