Leadership Perspectives | 03.14.19
Candid Conversations with Jim Nonnengard: Part 3
This is part three of our Candid Conversations interview series with Jim Nonnengard, executive vice president of Regions Investment Services, Inc. and current BISA president. Click here to read part one and part two.
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 explaining the value of financial advising to a customer
Macchia: One of the things that’s concerning about our industry and other industries, in general, is there's a worldwide commoditization going on of almost everything. In financial services, we've seen the cost of investment advice come down to the point where in some places it's free.
Nonnengard: I don't agree with that trend, but it’s a fact.
Macchia: What do you see as potential implications for a bank, broker and advisory program?
Nonnengard: Free is good. I get how we got to this point, but I'm a big believer in the value of advice, the right advice, the planning. The customer should pay for it. You pay your attorney, you pay your doctor — but there's perceived value. You go to the doctor, you get medicine. You go to the attorney, you get a will.
I think we need to do a much better job at explaining to a customer the value they get with an advisor and why they should pay their advisor. I worry that banks just think, "Oh, we got to give it away because we have them in a bank." I don't think that's the right message. I know the customer thinks, "I'm coming in here and I'm getting an index fund for free." But no one's telling you your allocation. No one's telling you if it's even the right thing you should be in.
Macchia: What's the product mix look like among your advisors?
Nonnengard: We do a good bit of income, a lot of indexed and fixed — not much in the variable space. We do a lot of alternatives in the brokered CD area. We're not going to get into exotic products, we're not going to build out real estate and oil and gas and all of that. You're going to go mass market, mass affluent. Let's keep it to those types of products and strategies that are packaged for the most part that would be the most useful to clients and don't put the bank on the front page of the paper.
On what defines professional progress
Macchia: You made a lot of progress since 2012. If we were to meet here again three years from today, looking back over those three years, what would have had to happen for you to feel great about the progress you made?
Nonnengard: Your natural tendency is to think, "Oh, revenue growth," right? It's really not how I would measure it. More Regions customers doing business with our financial advisors. Financial advisors having more products and services with their clients that meet their needs, that are the right products and services, and we have more financial plans done for customers. We've measured all those metrics, all our managers are measured on those metrics. Revenue is one of them, but there are nine different types of metrics we measure success on, and three years from now, having those metrics all growing would be make me feel great about our progress. Also, maintaining our reputation in our communities and with our shareholders.
Macchia: Kind of a crazy question, but you get a magic wand. You can wave this wand and make any three changes you want to make. In the world of financial services, what would you change?
Nonnengard: I don't know if there'd be three things. In the bank environment, I wish we would serve more of the underserved. They are the backbone of our country, they're the people who need the help the most and I wish we could do it efficiently for our shareholders.
And I'd want people to understand the value of their financial advisor and seek out the services of their financial advisors. I also wish there was a lot less paperwork.
I do think that there's a lot of good stuff going on in the industry from a regulatory standpoint that no one's going to know about. I think our political environment is toxic right now, and it's not good for consumer or investing behavior. It's very vile right now, and I want consumers to trust banks more. I don't know that that equates to the political environment, but it's getting very divisive. I would love for the reputation of the industry to continue to get better.
On a glimpse into his alternative past — and the future of BISA
Macchia: If you could have done anything else, anything in the world, what would you have loved to do?
Nonnengard: I'm a huge Buffalo Bills, Buffalo Sabres and Notre Dame football fan. I've just always been a sport-aholic. My dad worked for the power company, so he was able to get power poles and plastic, and he built us our own hockey rink in the backyard when I was little. I was the most popular kid in the neighborhood. We always played Boston Bruins versus New York Rangers. I was always wanted to be Bobby Orr, but sometimes I had to be Brad Park. We always announced our own games and calls. I used to pretend I was a sports announcer, and I can do my great Howard Cosell impressions. I always thought it would have been really cool to announce and meet people and see the athletes.
Macchia: I relate to that. I've been a Boston sports fan all my life. I grew up idolizing the Celtics and listening with a transistor radio under my pillow to all of their games.
Nonnengard: I used to listen to Yankee games all the time going to bed at night with a little transistor radio. You had to dial it up to get it — always good stuff.
Macchia: Is there anything that I haven't asked you about that you think would be great to include?
Nonnengard: Several of us on the BISA board are really getting deeper into our base for future leaders and not just because we want them to sign up for the association, but some of the newer, younger advisors out there are experiencing this change, whereas some of us won't be here to experience that change. I think that's really going to be viable, and the diversity of our business has gotten better. It needs to continue to get better.
At last year’s annual convention, I had someone approach me at the last cocktail session, and she was very aggressive about how the board needs to have more diversity on it. I get that, it needs to get better and will.
Macchia: Right. It takes longer. The constituents must change.
Nonnengard: It takes longer to get more diverse, but there's a lot of work around it. We have a Diversity Committee and Rising Star Committee that have done phenomenal work.
We have a CEO retreat every year, and I've been an advocate among the board members that we can't just take the same 30 people every year and put them through a two-day exercise. These events feature great professors talking about strategic planning and how to work through specific problems.
Some people in my organization have never experienced something like that, and I'd like to send those people, so they can learn and have that experience. But also, for me, it's a way to tell this person, "Hey, you've got a future. You're somebody who I really believe in and somebody who I think can potentially do my job or other leadership jobs in the company."
Macchia: Has any thought been given to inviting people to the board who are not directly part of the bank or who are partners and participants?
Nonnengard: Yes. In fact, this year third-party marketers like LPL and Cetera are getting board seats as well as executive committee seats. I think that will help a lot. They have a lot of ideas and have access to so many banks. It's really the right strategy. And then you have guys like Marc Vosen, Dan Overbey, Mike Miroballi and the immediate past president, Dan McCormack — I give these guys a ton of credit for a lot of the changes that they made around transparency that are moving us in the right direction.
I look at myself more as a transitional president. I’m honored that I got chosen. How I got the chance to do this is really humbling. But I say I’m transitional because all those things I talk about, bringing people up who are going to be in this association for the next 10–20 years are the people who we need to really work on bringing through for the sustainability of the association.
Macchia: BISA's in good hands.
Nonnengard: I hope so. We have some great board members and great members. And this best interest rule that's coming, we're all in agreement it's the right thing. I don't know the exact total format on how it's going to look, but I don't know anybody who would argue against doing business in the customer's best interest. We've always done it, and it's going to be interesting getting through it the next 24 months to see what actually comes out of that gristmill in Washington.
Macchia: I can't thank you enough for spending time with me, Jim.
Nonnengard: Well, thank you, David. I enjoyed it.
Want to read parts one and two of Candid Conversations with Jim Nonnengard? Find part one here and part two here.