The Industry Rundown with PIMCO Investment Management

Samantha Davison:

Hello, and thank you for tuning into this episode of the LPL Share-Cast series. I'm your host, Samantha Davison. Through this series, we're bringing you news and insights from LPL leaders and partners to help you run your business day in and day out. Today we're talking about the needs of investors and the expectations about financial advice and what advisors and institutions need to do to keep pace. Here to talk to us about. This is John Nersesian, Head of Advisor Education with PIMCO. John, thanks so much for being here.

John Nersesian:

Oh, it's my pleasure, Samantha. Thanks so much for having us.

Samantha Davison:

John, give people a little insight into your background and the work you do for PIMCO.

John Nersesian:

Yeah, sure. I spent 20 years as an advisor, so I have, I think, an appreciation for, what advisors do on a day-to-day basis and the really valuable advice that they're able to provide to their clients. I thought I understood this when I was an advisor Samantha, but I'll be very honest with you – I think I have an even greater appreciation for the relevance of financial advice now that I'm a client. Now that I'm one receiving advice as opposed to delivering it. In addition to the work I've done at PIMCO, I also spent a similar, role or career at Nuveen. I had some opportunities, of course, at Merrill Lynch Private Bank, and I'm very involved in the industry. I teach both the CIMA and the CPWA certifications at Yale and at University of Chicago. So I guess you can say that I've been around the block and I know maybe enough to be dangerous.

Samantha Davison:

Well, and it sounds like you're also very busy.

John Nersesian:

Yes.

Samantha Davison:

So we certainly appreciate you sharing your insights with us, and just as you do with advisors on a regular basis, educating them on what they need to know. Let's dig in there, what trends are you seeing in the financial advice industry that you could share with us today?

John Nersesian:

Yeah, there is a major evolution taking place right now, and maybe that's what's, you know, both challenging but also fun about our jobs. Imagine Samantha, if we did the same thing everyday for the same folks in the same manner. I'm not sure how exciting that would be. I think what's so stimulating about the world in which we all work is the idea that it is constantly evolving. The needs of our clients are changing. The markets, of course, are constantly changing as well, and that requires us, of course, to evolve our capabilities. I'm a big believer that before we can be a teacher, we have to be a great student. We have to learn, we have to develop capabilities that are important to our clients. Because those expectations, and I think you hit on this initially, those expectations of what an advisor does for their client.

John Nersesian:

I think they're changing. When I started at my career as an advisor 40 years ago, the role was very investment centric. That was it. A wealthy client called a financial advisor, and they had discussions about asset allocation or security selection. Now stop and think about all the great things that a competent advisor delivers today. From tax planning to estate guidance, to family governance, to charitable giving to retirement accumulation and distribution. The role of the advisor has changed. Now, there's two challenges here, Samantha. Number one is, have I developed as an advisor the capabilities to advise my clients on these issues? So I'm gonna refer to that as competency. That is absolutely critical. Most investors today demand that of their advisor, and I suspect that our friends at LPL are very up to the task of meeting that expectation. But there's a second requirement. You gotta be able to communicate the value of those competencies, the benefits that a client derives from those additional offerings that are going to be useful to that end investor.

Samantha Davison:

Yeah, John, I feel like it is means for a greater opportunity for advisors to grow their business and maybe meet, but maybe exceed the expectations of their existing clients or prospective clients. Talk to us a little bit about, the fact that advisors have to look at what's happening in the world with the industry, but also understand what clients expect. I mean, and take advantage of that opportunity.

John Nersesian:

Yeah, it is an opportunity. So I guess you could look at it two ways. If I'm not up to speed, if I'm not meeting these evolved expectations or demands of the client, well then of course, my business is at risk. I prefer to look at it maybe from a positive lens, which is the advisor that does understand the need. The advisor that does commit the time and the energy to develop those capabilities and to deliver them effectively to their client, they win. Great differentiator, great value. Listen, I wish I had the ability to predict or control market returns. I don't. I think what we do as advisors is try to use our very best guidance to help position client portfolios effectively for the returns that our clients seek. But at the end of the day, that's something we can't control.

John Nersesian:

But there are things in the financial landscape that are within the control of the advisor. I know that with my advisor's help, I can control risk very effectively in my portfolio through the strategies they develop and the diversification they helped me achieve. I know that my advisor can help me control taxes, I know that my advisor can help me control the costs of the various investments that I engage in. And maybe one of the most important things that my advisor can help me control where they have a direct influence over – are my behaviors, the emotional side of investing, which I think is a critically important component of the advisor's value proposition.

Samantha Davison:

I mean, it really has become a relationship with clients and their advisors, because clients look to their advisors, to your point, for all sorts of things from the beginning. Maybe they're just having babies to retirement. They expect the advisor to know everything, and whether they know everything or at least have access to information is so very important.

John Nersesian:

Yeah, I agree with you. And so one of the questions I think that's embedded in that is this idea of "John, how do I get there?" "How do I deliver these great capabilities that you're suggesting are important to a client?" And I've got a couple of ideas. So first things first, let's do a quick inventory of who the clients are that we serve, and the capabilities or services that are important to them. Now, if we're already providing those capabilities that are in demand, good news, we're up to speed and we're gonna meet those expectations. If we're not, if we're not currently providing them, there are some choices. There are some paths to success. Number one is I can learn it. And as I mentioned, I teach the CIMA and the CPWA certifications. CFA is great. CFP is great.

John Nersesian:

There are many different avenues and opportunities for advisors to learn or develop the competencies required. And by the way, shout out to my friends at LPL, Tom Zgliniec , and the advisor symposiums that I'm often speaking at. They are among the best in the industry. Your friends on the line should be very happy, very pleased that they work with a firm that is so committed to the advisor's education. The second opportunity is I can outsource it. So maybe I don't have trust in estate planning expertise, but I've developed a relationship with an outside entity that can fill that gap. And then maybe the third opportunity is, I bring it on board, I hire it. I expand my team to be able to offer the capabilities that don't currently exist within my structure.

Samantha Davison:

And is there any advice to advisors who say, I don't wanna focus on that. I wanna focus just on the clients? Well, you can't do one without the other, right? In order to focus on the clients, you have to make sure you, you know, your business or your practice is running efficiently.

John Nersesian:

Yeah, I'm with you on that. And I think you've identified one of the great advantages, one of the attributes that's so attractive to being a financial advisor. Samantha, I can put 10 fantastic LPL advisors together in a room, Those who've been exceptionally successful. And I can ask each of them how they did it. Tell me about your experiences and your path to success. And each and every one of them would probably describe a different journey that they probably do things a little bit differently than the others do. And I think that is actually a blessing. The fact that I can figure out as an advisor who I wanna work with, what those capabilities are, how I wanna manage my practice. Some advisors are great at capital markets. That's their calling card. That's their value proposition to their clients. Others are really good at financial planning. Others may be exceptionally great at relationship and servicing. So I guess the bottom line is that there is a choice there. My advice to the friends on the line, and this is advice I deliver to myself, by the way, is figure out what you wanna be when you grow up. What is it that you think you can offer to the world that is valuable. Both to them, but also fulfilling and stimulating to you personally as well.

Samantha Davison:

And that's where LPL can join in and help the advisor to look at their practice. How can we help you? And, I think that's what we always say is that advisors know, they know the business and LPL is here to support.

John Nersesian:

Yeah, I love that. The expression that I've heard used in defining the platform that you have, there is support without control, right? So I want support, I want access to resources and the ability to run a practice the way that I need to, but I don't necessarily want interference or control. And I think balancing those two is tremendously important and something that LPL has done a good job with.

Samantha Davison:

And any final words for those who are listening today?

John Nersesian:

Oh, gosh. Pay attention to...I've got a lot of final words. Pay attention to your clients, make sure that you meet their needs, make sure that you understand them. And let me explain that a little bit, Samantha. I think the tendency as an advisor is to focus on the client's capital, because that is, of course, a major function that we perform. How do I allocate capital, How I invest it, How do I manage it effectively to achieve the client's risk return attributes? But there is a second component to this equation that is critically important. The number one client complaint isn't about performance or fees or service. The number one opportunity for us to develop better and more meaningful relationships is to get to know the client personally. I feel like my advisor's interested in my money, but I'm not sure that my advisor understands me and the things that are important to me. So the challenge, the opportunity that I'll share with our friends on the line today, is think about your clients. What are their greatest concerns right now that you can help them with? What are the one or two things that are most important in their lives that you can help them realize? Advisors who go above and beyond just the financial aspect of this relationship and focus on those other issues are those who I think will be supremely successful in the future.

Samantha Davison:

This is great, John. Thank you so very much for joining us today, and we appreciate your time and your insights.

John Nersesian:

It's my pleasure, Samantha. Thank you for having me.

Samantha Davison:

And thank you for listening to this episode of Share Cast. Until next time, we encourage you to check out more Thought Leadership on the Newsroom. Have a great day.