Leadership Perspectives | 02.27.19
Candid Conversations with Jim Nonnengard: Part 2
This is part two of our Candid Conversations interview series with Jim Nonnengard, executive vice president of Regions Investment Services, Inc. and current BISA president. Find part one here or part three here.
I spent almost two-hours in an intriguing conversation with BISA President, Jim Nonnengard. I came away with the understanding that Nonnengard’s strong work ethic was ignited at a very early age, and that his father provided him a vivid example of the benefits of hard work. Another insight I gained: Nonnengard’s love of sports is palpable. Happy memories of spending his youth in Buffalo, playing backyard hockey, imagining himself as Bobby Orr and rooting for the Buffalo Braves basketball team came through in our conversation. I’m a Bostonian, of course, but until our conversation, I hadn’t realized that the Boston Celtics began as the Buffalo Braves! It’s easy for me to imagine Nonnengard as a professional sports announcer, a career he easily imagines he would have enjoyed.
Nonnengard entered the business through the life insurance door. That path typically imparts tremendous people skills. Those skills are palpable. I hope you enjoy the interview.
On how financial advising has changed over the years
Macchia: So, now you're running this program at Regions. How many financial advisors, bankers and sales managers?
Nonnengard: We have 260 FAs, a little more than 2,200 licensed bankers and 18 sales managers. I have a fantastic team. I’m blessed.
Macchia: When you think about today versus, say, 10 years ago, how do you asses the changes in financial advisors?
Nonnengard: Well, not to repeat what Mike Miroballi said, they're a lot better. I'm not going to say they're better people — it's the same people. There's just more tools, more skills today. I think the industry has done a lot more around training and development of those skills.
Financial advisors have always wanted to be successful, but it's not only that they're better with more skills. Because of the instantaneousness of everything, advisors today have to be thinking about more than just that transaction. I think advisors are a lot less transactional than they used to be and more advice planning. And I think advisors have gotten a lot better at meeting customers more often.
One of the things that financial advisors can do a lot better at is talking to the second generation. As a management team, we continue to talk to our advisors about this: Do they know who the beneficiaries are and the kids?
From an industry standpoint, we have to do better at getting to know the next generation of leaders. The current BISA leadership won’t be running this association five or 10 years down the road, but there are people within our association who will be future leaders of the industry. They have a much better handle on tools, technology, phones, robo, digital, all of that.
Macchia: Speaking of change, I’ve noticed the transition away from a product paradigm to more of a process or planning paradigm. How has that played out at Regions?
Nonnengard: It's gotten a lot better. A lot more advisory, a lot more what we call “assets under management,” where we're actually managing an asset versus just under administration. It continues to grow at double-digit compounding rates.
That tells me we're doing a lot more planning — and not even that — we track planning. Somebody does a hypothetical calculation for a customer and says, "Your $100,000 is going to be worth a $250,000 in 12 years if you invest in this product," and puts a nice little brochure in an envelope. Is that really a plan? I don't think so.
Those who plan and have a financial plan for a customer, the longer they're with them, the more assets together, and the better chance you're going to get to the next generation. It's just getting the advisors to do that. It takes time.
On recruiting the right people
Macchia: Recruiting advisors remains a big issue in firms. How do you approach this at Regions? Are you happy with the progress you're making in the recruiting? What could change? What could be better?
Nonnengard: There are millions of customers all over this country who are underserved. They don't have access to what I call a real advisor, so that's been our niche, and that's really where we've fit and done really well. Our average account is around $100,000. It's hardly a really wealthy customer, but to a 62-year-old electrician who’s getting ready to retire, that's a lot of money. They can't lose that money. We had to recruit advisors who understood that, were willing to serve that customer and understood that that customer had other assets and they would bring other customers to you.
A mistake I've seen other investment programs make is they didn’t understand how it was to work in a bank. They didn't want to work in a branch environment. They wanted to sit in a tower and wait for a referral. So, when we started the broker-dealer with Cetera, one of the first things our CEO asked was, "What are we not going to do?" And "What's the profile of our Regions financial advisor?" We wrote it down in bullet points the type of people we wanted to hire and put it out there.
We brought several people up through the bank environment, so they were already known in their communities. We weren't going to pay $1 million to get the top Merrill Lynch guy to come. We didn't want that person. We wanted somebody who was in the community and could have those conversations with the customer who was underserved. We’ve been able to recruit some really great quality people who understood what we're trying to accomplish. And we think we've turned a bunch of them to some really good advisors.
On being “the throat they want to choke” if things don’t go right
Macchia: When you talk about putting people first and treating them fairly, it means a lot to me. I got into the retirement income business because I felt that people weren't being treated well. They weren't being treated well because — not their own fault, but the economy shifted. We went from pensions that guaranteed a monthly income for people to plans that don't guarantee any income. People know how much they're putting in, but they're clueless about what's coming out.
Nonnengard: And if it's not enough money, there's not going to be somebody who's really going to go crazy to help them.
Macchia: Right, right. So, you're saying, "I'm willing to help you."
Nonnengard: Oh, absolutely. I want to.
Macchia: One of the things I've seen, having worked for almost 15 years in the retirement income space, is that when you are working with that customer who, coming into the meeting, had no idea what they had, what it meant, what it turned into in terms of income, now they leave the process with the feeling of confidence and comfort about their future.
Nonnengard: I've always felt when it came down to investments, life insurance, a mortgage — the biggest things in peoples’ lives — they'll read, go online, do stuff to a point, but at the end, they want a throat to choke. If something goes wrong, they want to see somebody. And I think we always have to be cognizant of that: We're the throat they want to choke if something doesn't go right. It doesn't always go right, but you can't hide. You have to be there for them.
On how technology is shaping the future of banking and insurance
Macchia: There's been a tremendous amount of investment placed in robo advisors in recent years, and banks have gotten on the bandwagon and introduced their own robo advisors. Are you aware of any that have worked?
Nonnengard: Not yet, but you've got your Chases, Wells Fargos, Fifth Thirds — they're going to make it work. The question is whether it’s an asset-gathering strategy or an account-gathering strategy. I look at it as a customer-acquisition strategy. I look at my own kids. I don't picture them ever going into a bank branch. You give them a check for Christmas, they snap a picture of it and tear it up. I think you’re blind if you ignore it, so you have to think about it.
We have to serve the customer how they want to be served. So, it will work. We'll gather customers. We'll gather assets. We will get customers to go in digitally, and we will put all these interstitial ads out to them. They'll eventually click something about a mortgage or a loan. What we're building will always have access to advice, whether it be in the branch or the banker or a financial advisor.
Our advisors are a little worried right now. Branches are shrinking across the industry. Everybody says, "Oh, we're going digital. How are we going to talk to our customers?" Well, digitally. We're still going to call them on the phone. We're going to mail to them. We're still going to have places for them to come meet us. A customer may want to be served like this, or just be served on Skype or the internet. We're going to innovate, but I do think digital will work. And I think the thing that's really starting to happen with digital that's kind of intriguing that's not quite developed yet is a life platform. It's one app for everything: from lending to checking, to your investments, and just moving money all over the place and rebalancing. It's going to be really cool.
Macchia: One of the skills you acquired in the insurance business was to be a really good communicator. Do you see bank programs communicating well enough with their potential customers using digital communication tools to reach more people conveniently in a way that they're used to being reached?
Nonnengard: Look at how busy everybody is these days. Your average 30–40-year-old, they're not coming into branches. They don't have time. Just looking something up on your phone, or having a push notification pop up on your phone — it’s definitely futuristic, but I think advisors have to get more on board with that. And I say the individual advisor, but also the bank brokerage, you can't sit in a bank and wait for a referral. And the banks have to do a better job at pulling them in.
Macchia: And that can't happen unless we get into digital communications.
Nonnengard: Yeah, because when AmSouth and Regions merged, we had close to 1,800 branches and now we’re down to 1,400 branches. But the bank's not going in the opposite direction: The bank's doing better than it's ever done in terms of assets and earnings. They're just doing business differently. Futuristically, if you look at any of our branches in the industry, they're going to look like Starbucks and Panera Breads eventually.
Macchia: A bit more like what Capital One is doing.
Nonnengard: Yeah, like how Amazon is opening up stores with no people working in them. There are branch sites that are like that right now. We have one that's all video teller, punch a button. Customers are adopting it.
Read part three of Candid Conversations with Jim Nonnengard.