Yahoo Finance Presents: The Milken Institute Summer Series 2020: Lessons Learned: Mitigating the Next Crisis

After heeding the lessons from 2008-2009, leaders of the financial sector were equipped to step in as needed during the current crisis. As economies continue to lift restrictions and recover from one of the steepest declines on record, it's time to analyze the lessons to be learned and identify needed change. The next crisis--be it climate change, the inequality gap, or retirement systems--is undoubtedly in the making. As we prepare to meet it, we must address crucial questions: Will we be able to transform a system that many believe does not work for them anymore and build a more equitable society? And what role do money managers have beyond their investment mandate and allocating capital to companies that have a social contribution to global challenges? Moderator: Andy Serwer // Editor-in-Chief, Yahoo Finance Speakers: Tom Finke // Chairman and CEO, Barings Penny Pennington // Managing Partner, Edward Jones Emmanuel Roman // Managing Director and CEO, PIMCO

Video Transcript

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ANDY SERWER: All right, hello and welcome to The Milken Institute Summer Series virtual conference. I'm Andy Serwer, Editor in Chief of Yahoo Finance. I will be the moderator of this session, which is Lessons Learned, Mitigating the Next Crisis. And to help us delve into that subject, we have an all-star cast of leaders in the financial services industry. And I will introduce them to you now.

First, we have Penny Pennington, who is a mana-- the Managing Partner, I should say, at Edward Jones, joining us from St. Louis, Missouri, I believe. Is that right, Penny?

PENNY PENNINGTON: Good morning, Andy. Nice to be with you.

ANDY SERWER: Nice to be with you, too. Also, from California, not too far away from down the coast where we usually convene in Los Angeles, Manny Roman, who is the Managing Director and CEO of PIMCO. Manny, how are you doing?

EMMANUEL ROMAN: Good to see you. All good.

ANDY SERWER: Good to hear. And finally, Tom Finke, who is the Chief Executive Officer and Chairman of Barings. And Tom, I believe, is in Charlotte, North Carolina. Tom, good to see. You

TOM FINKE: I am. Good to see you, Andy.

ANDY SERWER: Great. Great to have you all here today. So this is an interesting panel in that we're talking about mitigating the risk of the next crisis. And, of course, we're still in the midst of a crisis right now, maybe getting ahead of ourselves a little bit. But you understand the conceit of this, which is already we're learning so much, and we have to have crises probably top of mind going forward, and maybe we always should be.

One thing that interested me when we were talking about the current situation right now is the thought that perhaps, because you guys were front and center in the 2008, 2009 financial crisis, that that might have prepared you all for this current crisis. And so I wanted to start off by getting your thinking on that subject. Penny, what about you to start off? Did 2008, 2009 in any way prepare you for what happened in 2020?

PENNY PENNINGTON: Sure, in some ways. And then-- and in other ways it has enabled our industry collectively to be really helpful during this time. So you go back to 2008, 2009, the financial services industry was right in the middle, and in some respects, one of the root causes for the-- the-- what occurred during that time. And so there were a lot-- there was a lot of shoring up that needed to happen in the financial services industry.

There was a lot of shoring up that needed to happen for individual investors as they thought about their risk appetite for the portfolios, the investment portfolios that we were helping them build, and the goals that they were trying to accomplish. So-- and really focusing on the risk of our own organizations, the resilience of our organizations. And this is the important point that I wanted to make here, placing our organizations in a place of helpfulness, in our case, to individual investors, which is where we've been for 98 years to help them accomplish what's most important to them, to really hone our focus on tailoring to their needs, understanding for us the goals of 7 million clients, and helping them attach their risk tolerance to their goals, to the portfolios that they were building, and the outcomes that they were looking to achieve.

We really dialed up our ability and our focus on doing that investor by investor. And we certainly dialed up the resilience of our own organization. We got rid of all of our debt. We've continued to ensure that our capital base is rock solid. And as a private company, we have some opportunities to really focus in the way that we utilize our capital for the benefit of our clients.

ANDY SERWER: Manny, let me throw the same question over to you, and ask you if 2008 and 2009 prepared you for what you had to go through this year. I understand maybe you had some emergency planning that ended up being fairly appropriate.

EMMANUEL ROMAN: So in a way-- let me answer in two ways-- in a way-- in a way, on March 15, 16 when the bond market froze, it clearly reminded us of 2008, 2009. And, you know, we can talk plenty about this. We can be thankful that the Fed came in and started buying bonds and announcing programs, but the reality is that it did remind us very much of 2008, 2009.

The one thing which did prepare us is the bird and pig flu in Asia that we had to counter, you know, 15 years ago, and what it had done to our Asian business. And also the preparation we have as a Californian company for what may be an earthquake in California. And so we split our trading floor between Newport Beach and Irvine, and use a disaster recovery site very early in March to move exactly half the people, so if there was an incident of COVID, we would be fully functioning between Irvine and Newport Beach.

ANDY SERWER: And let me just quickly follow up with that with you, Manny, before I get over to Tom. And that is, you know, I think it's a little under recognized, the duress that the markets were in in mid-March, maybe because we were so focused, also, on COVID, that it was a little lost on the public, as opposed to 2008, 2009 when the financial markets were so front and center. Do you think that's fair to say?

EMMANUEL ROMAN: I think it's very fair to say. I give this example, because we lived it. We asked for $100 million quote on treasuries on March 15 or 16 to 5 dealers to make it to market. And two refused to make it to market, and the best bid out there was 6 [? BPS. ?] This is the most liquid market in the world.

ANDY SERWER: Yeah, that's pretty scary. All right, Tom, over to you with--

EMMANUEL ROMAN: It is a little scary.

ANDY SERWER: Yeah. Tom, over to you with the same question about the preparation. And maybe you don't think about risk in the same way in North Carolina, but, in fact, you guys did have that on your minds.

TOM FINKE: Well, we certainly did in many respects. There's the physical preparation. So when we emerged four firms to create the new bearings in 2016, we also had to build an entirely new technology backbone that is a global being in 17 countries.

And so one of the things we did is we went to remote working as our primary business continuity plan. So when COVID did hit, it wasn't an issue of deploying laptops or the software to do it, it was already in place. The other advantage we had, and a number of firms had is you were dealing with-- since we have a big operation in Hong Kong-- we were dealing with disruption in the business, some remote working, you know, through 2019. So-- and as the COVID hit, and we were shutting down, Asia offices in Hong Kong, and Korea, Tokyo, et cetera, it was, sort of, you were prepared for this.

So when it came time to shut down all of Europe, and all of the US at once, we felt confident in our systems. So preparation was the key.

ANDY SERWER: Right. So that's a little bit of the rear-view mirror, I think, part of this conversation. And let's focus a little bit more front and center on today. Penny, it's such a big question. I mean, how would you sort of characterize the environment right now, and how are you all at Edward Jones responding to that?

PENNY PENNINGTON: Well, we're responding with and for each and every one of our individual clients. So 7 million clients that we have deep personal trusted relationships with. And one of the primary things that if we didn't know how to do really, really well before, we're learning how to do better now, and that's to listen to each other. One of the things that we found-- Andy, you mentioned that the markets weren't front and center this time-- it was fascinating to us that as the markets were selling off by 35% and 40%, our clients were asking us to cancel them first on their physical health, then on their emotional well being, and thirdly on their financial resilience.

So listening to each individual client about the things that they were newly concerned about. We talk about human-centered complete wealth management for our clients, helping and becoming more understanding of what the richness of what they were concerned about, and how it affects their outcomes in the future. So we are-- we're dealing with this, and thinking forward based on what's most important to each of our clients.

Now, we're also thinking broadly then for the enterprise. What might change, what's more true than it ever has been before, and what might fundamentally change. What we believe is more true than has ever been before is the power of human relationships. That's our differentiation. That's how we've built our firm, is on the power of individual relationships with our clients.

We also are learning very quickly about human-centered technology, and how the power of trusted relationships can actually be furthered by interactions like this. And we believe that that's likely to stay. So we are helping our clients understand that, our financial advisors understand that, and staying deeply rooted with our clients and the ability to connect their investment and financial portfolios with the outcomes that are most important to them, recognizing that a lot has changed about each of their lives with their families, their jobs, their income in the future, and, frankly, what their risk appetite is, and what they're concerned about.

ANDY SERWER: And for those client-facing employees, how do you begin to train them to accept, and process, and help clients in a different way when someone's asking a question about health care? Have you changed the processes that you're trying to put through the firm?

PENNY PENNINGTON: Yeah, we absolutely have. And as this began, really, in earnest, the middle of March, we have, on a weekly basis, been, in the marketplace with clients and investors, finding out what's on their minds. And from that vantage point as well as our financial advisors who are on the front lines, we learned very quickly about needing to dial up those resources for physical, emotional, and financial well-being. We put resources out on our client-facing website.

We attached to resources that were developed here at Edward Jones, but also brought in other trusted resources that we could share with our clients about their concerns. The other thing that's unique about Edward Jones in many respects is how local we are. So we have a physical location in 2,000 of the 3,000 counties in the United States, and all 10 provinces in Canada.

So really recognizing and understanding on the front lines what was happening community by community-- and it has been disparate across North America-- has really helped us bring in the resources, the empathy, the understanding, the expertise that our financial advisors needed to bring to their clients.

ANDY SERWER: So, Tom, in your case, I would imagine your footprint's even more far flung, and your workforce is even more heterogeneous in terms of the functions they perform. And so I'm wondering, how do you even begin to pivot and to reset in terms of working from home in this type of environment?

TOM FINKE: Well, I think with the pivot, it was so quick, and people, if you will-- you know, really, I think, in those first few weeks, especially, were probably just constantly working. In fact, our biggest concern was we started to remind people you need to put some boundaries around your work life, because just because you're home doesn't mean you're working 24/7. And so there was an adjustment here, and a lot of coaching with the people.

As far as, you know, the different functions, you know, it was different for traders than analysts, it is different for our operations in IT. Every job is unique. Yet, a big difference for myself, and our sales force, and a lot of our leadership was the fact that we can't go out and see the client. That was a big thing that we did. We like to get in front of our clients. We like to engage with them.

We have 130 relationship people around the world. And even though they're sitting in, you know, London, or Sydney, or Charlotte in New York, you can't go see anybody. So I think you had, depending on your role, you had to adapt. And certainly the technology is changing.

We've been fortunate to engage and win new clients despite the fact we have not yet physically been present with them. So for everybody it was different. And you just have to adjust and be mindful of people [? and ?] [? having ?] good work/life habits.

ANDY SERWER: And then now, Tom, as things start to shift, do you have, say, a committee that's in charge of, you know, getting people back to work? And how are you even, again, because you've got all these different offices, how are you beginning to manage that kind of a process?

TOM FINKE: Sure. So we have a global and then regional return-to-office task force led by our chief legal officer, and he's amassed a team of our risk people and others to look at every office individually. We actually have been back in the office in places like Hong Kong for a period time-- in Asia. Just this week in Charlotte, I'm coming to you from our office, our global headquarters in Charlotte. And this is the first week that we're allowing some people back in.

The reality is we're making it so in certain offices people who need to get in can get in and do a certain work. We are not requiring people to come back in the office. You know, we've said through the summer, and, you know, frankly, I struggle to think that you can fully come back to any office until this is contained and there's some period of dispersing the vaccine and cures.

ANDY SERWER: Right. Manny, over to you. I want to ask you about, you know, how you respond, and specifically how your work processes are going now. I think you've described this as a crisis, on a crisis, on a crisis. What does that mean? And how are you managing through it?

EMMANUEL ROMAN: Well, we did two things-- and we're a little different. The first thing we did in February is we hired the best possible expert on COVID, and try to understand for our investment and employee what it meant, and get as much data as possible in terms of infection, in terms of possible treatment, in terms of vaccine, and try to parameterize what the possible outcome were. So that's the first thing.

The second thing is, we, in Orange County, and our main offices in Newport Beach, and everything else being equal, it was a good place to be. [? Dan ?] [? Iverson ?] and I decided to empty the office. We kept the most senior people in the office. It was a very, very empty office. But we were at work every morning at 4:00 in the morning, had a risk meeting at 5:00, and thank God we could come to the office to manage the ship.

And I do think that we have overstated for financial institution the ability for large banks to work from home. You ask me about liquidity in the market, I think that part of the problem that we saw in March was due to the fact that people who were supposed to provide liquidity work from home sometimes in a fairly uncoordinated fashion, and we saw a big swing in prices due to liquidity. And that's a rich environment for other people.

ANDY SERWER: That's interesting--

EMMANUEL ROMAN: But the Newport Beach--

ANDY SERWER: Yeah, go ahead. I'm sorry. Go ahead, Manny.

EMMANUEL ROMAN: No, I said the Newport Beach situation was a good one. I would contrast this with New York where we have a substantial office, where we have a handful of people back at work, and public transit is going to be the main pivot in terms of bringing people safely back to work. And that's going to be much more tricky over the months and years to come.

ANDY SERWER: You know, I never considered market makers essential workers, but maybe we should. I mean, how critical is that for the functioning and well-being of our economy, right, Manny?

EMMANUEL ROMAN: That's the point I think we made very, very loudly in a sense that, you know, we often-- we often thought about a financial crisis where a financial tradition had capital problem, or losses, and so on. In this case, it was just quite different. It is the fact that in the bond market at least where it is a market where people act as principal for the most part, you need to be able to provide liquidity.

And we have endless example of poor liquidity in a period starting in March to essentially ending at the end of May. And I think that one of the points we would [? make ?] is we have, with a lot of help from the Fed, solved the liquidity problem. We have haven't solved the solvency problem and what may happen in terms of the top line of many companies in the US.

ANDY SERWER: Before I go back to the other panelists, I'm just curious, Manny, how spot on was your COVID expert? And what is he or she saying now?

EMMANUEL ROMAN: So I think that-- look, I think you have to be incredibly humble about these things, and, first and foremost, realize it's a tragedy, and the fact that many have died, and many families have been impacted. So I take no great pride in our expert being mostly right. The solution is obviously a vaccine. And when it comes, it's somewhere out between at the end of 2020 to the first half of 2021.

I think you can parameterize many different teams trying to get to the same place. Who's going to win? We don't know. Treatments are clearly getting better. I think you can look at the road map of how treatment for AIDS improved very dramatically in the mid-80s, and see that the virus-- off-the-shelf drugs actually reduced the fatality rate. But the last thing they want to give to people is a sense of false security, and it's not lost on that many states are ticking up in the US with young people getting infected.

ANDY SERWER: It is a difficult situation still, no doubt. Penny, I want to go back to you and talk to you a little bit about this other issue that we're wrestling with in our society here in the United States, which is racial equality, racial justice, systemic racism that our country is really grappling with right now in a way that we never have before. I'm wondering if this is something that is a part of your thinking right now. And, also, is it connected to COVID and the economic crisis that we're also going through?

PENNY PENNINGTON: Sure. I think it absolutely is connected. And I think is one of the reasons, because of the connection, is, as you said, we're galvanized, I believe, in a different way than we have been before. This is a triple pandemic, isn't it? It's a health pandemic that has manifested into an economic pandemic, and has catalyzed a racial and social unrest like we haven't seen for a long time, in large part because all three of those things have had disproportionate impact.

And those of us who are in positions of power, and authority, and influence-- I won't speak for the four of us on the Hollywood square screen right now, but I will speak for myself, and that what I've experienced in listening to my colleagues, my associates, community members, the conversations that we've had and the stories that I've heard have penetrated me in a very different way than in the past. And the Zoom calls that I'm on with other industry and community leaders, that seems to be the moment, the movement that we're in.

And so, Andy, you asked-- does it affect our thinking? Absolutely, it does. We've made promises and commitments as an organization for years to make a meaningfully positive difference in the lives of our clients, and the lives of individual investors. How we think about setting our going-forward strategy is about enlarging that impact for serious long-term individual investors, is about enabling more access to that by dialing up our intersection with financial literacy and resilience. And very importantly, as a five part commitment to racial diversity, equity, and inclusion, making our organization a place of belonging for a broader group of clients, who so many people feel a certain sense of financial fragility right now, a certain concern and anxiety about their own financial possibilities as a result of this triple pandemic.

And then what we know to be true is that systemically people have been locked out of that access for decades and decades. And as business leaders, who this has penetrated in a different way, I believe there is a coming together of stakeholders that is quite meaningful in terms of making a systemic difference.

ANDY SERWER: Good thinking there, Penny. Thank you. Tom, I want to ask you the same question about Black Lives Matter, the protests, and if your perspective or thinking is a little bit different because you're a global firm. I mean, you're in North Carolina, so there is that view, but then having these offices, and maybe employees around the world aren't aware as much, or maybe not at all, or aren't on the same page. How do you wrestle with that?

TOM FINKE: Well, you have to look at it, one, everybody is aware. And I think people are aware, not just that the tragedies that we've seen in the US, with the George Floyd murder and other heinous acts, but the fact that, you know, equality, and you may define that in different cultures differently, but equality, diversity, inclusivity matter everywhere. And so this isn't just a US issue. I think it's a global issue.

There are many parts of society in different parts of the world that are economically and socially disadvantaged. There is systemic social injustice going on in many parts of this world. So I think, you know, we do look at it from a global lens. And for us, in the reflections of the last few weeks, maybe the big thing for me was, as much as I thought we, as a firm, are doing the right things involved through social impact with organizations of financial literacy, economic mobility, and things like that, it's not enough.

And I think part of it is-- I know I had to listen more, and talk to more of my colleagues, and understand their side of it. And I think we have to open the dialogue a lot more. And maybe that's why a little bit this time is different, is we're maybe listening a little better this time, maybe because the world slowed down with COVID, our minds and our ears are open. And so we need to leverage that moment of clarity and certainly address systemic racism in the US, but also address these issues in all parts of the world, and whether it's in Europe, and in the UK, or across Asia, there is always an issue of social injustice that needs to be dealt with.

ANDY SERWER: Right. And Manny, from the capital market side, I'm wondering, how do you think about this issue? Maybe not the most diverse environment, you could probably argue. Is there an access to capital at this level that is something that should be discussed or thought about? What is your thinking here?

EMMANUEL ROMAN: Well, I'd like to come back on one thing, I think that we can talk about the financial industry, and the reality is there was a very ugly incident in Central Park where a woman who works for an asset management company, not that different from all of us, decided that she could get away calling the police because a black man asked her to put her dog on a leash. And I see that as an example of something which has been wired in the subconscious of generation of people that you can get away with it.

And if it's not embedded racism, I don't know what else it is. And that's a terrible, terrible, terrible story that all of us need to reflect on, have a sense of introspection, and think how we can do better. You know, I'm really thrilled that, you know, Penny runs a great organization, and that we have a woman as a CO. I'm thrilled to have Mary Barra run GM. I'm thrilled to have Meg Whitman having led many different companies. We've made-- I sense-- real progress with gender diversity.

The result for African-Americans in the US leaves a lot to be desired. And by no means do I claim to have done a better job than anyone. I think it's a sense of having many conversations, but also deeply reflecting on our shortcomings, and say, we've got to do better.

And I'm quite passionate about this issue. And no one-- no one has the high moral ground. I can go on for an hour about the shortcomings of France when I left in 1985 and the many issues, operation inequality in France, and, really, this is not a-- in no way, shape, and form a statement about America, but something that we collectively all need to deal with.

ANDY SERWER: Right. And it is still interesting. And there's a lot more to explore in terms of where we started with this, Penny. And not to delve back into it again necessarily, but how these things are all connected. And I think that's really where we need to do a lot of thinking as well, because I think it ultimately speaks to a degree-- to not only racism, which is the primary problem, but the inequality that is tied into it, and the financial inequality in particular, I think.

Getting back to the crises, or the myriad crises, I guess, that we're talking about, I guess I'd like to ask you, Penny, what have you really taken away, what are you going to do from now on, and what are you never going to do again? Those kinds of things.

PENNY PENNINGTON: Ohh, that's a big question, Andy. You know, I think, as leaders, a common thing that I hear here is what we're going to do more of, what I'm going to do more of is listen. If I had any illusion as a leader before all of this that I knew how the next three years or five years of a transformational journey that we're on as a firm was going to play out, I have been disabused of that illusion. So I can't-- I can't count how many leaders I've heard say, you know, we were transforming our firm, and we thought we had five years to do it, and we found out that what we thought was going to happen in five years has happened in six months.

So designing the organization and our own mindsets for agility, for client centricity, for putting our clients-- thinking not just about them but like them-- at the center of all of our decision-making. We've always-- we've always focused completely on doing what's in their best interest. What's in their best interest and the world that we're in today and going in is learning from them what is most important to them, what they're concerned and anxious about, helping put together a plan for them to achieve whatever it is that's most important to them. And all aspects of that are going through transformation right now.

So designing our organization for that kind of agility to stay out in front of our clients to answer to their needs much more quickly is really what we are most focused on. What products, or services, or experiences it is that they will value 18 months from now or three years from now, there is no amount of scenario planning that will tell us exactly what that is. So designing the organization in an agile way to be proactive and responsive to their needs, it is a fruitful endeavor for us right now.

ANDY SERWER: OK, so Manny, focusing on agility and flexibility to the max sounds like a pretty good plan to me, and I bet that's not lost on you or Tom. But my question to you is, gee, doesn't that just burn employees out? You know, when they hear, well, Manny says we're going to have to have, you know, sort of the crisis mentality going forward for the rest of our careers, wow, how do you convey that to your workforce?

EMMANUEL ROMAN: Well, that's not what I said. I said-- I said, you know, two things. One, we need-- we need to perform, you know, [? we ?] [? as ?] fiduciary does what clients entrust us to do, and first and foremost, we've got to do what is written on the box, and have predictable risk adjusted return, and that's what we need to do. And we're here to service people. We need to listen. We need to help. We need to be there in tough time.

The second thing I said is we have a massive investment in tech, and we didn't do it for COVID, but that's one more reason why we need to get that right, because the reality is the world is really, really changing. And the third thing I said is-- I said, listen, we've talked endlessly about ESG and how we rate every single bond we buy with an ESG framework. All of a sudden, well, maybe the next time I meet Tom, or I meet Penny, I do it on a Zoom call, and I don't have to fly to Charlotte, North Carolina, or St. Louis, and maybe I'm going to cut my CO2 emission, because it's a good thing.

I mean, PIMCO has-- you know, a lot of travel all over the place in terms of meeting, and in terms of getting together and so on. That's one of the lesson. Actually, it works pretty well. And maybe that's a good thing for kids, and our grandkids. And maybe that's actually something we can proactively do in terms of reducing our footprint. Now, it creates other problems, but that's something that is new.

ANDY SERWER: Right. Yeah. First of all, by the way, I didn't mean to put words in your mouth. That's why you're the CEO of PIMCO and I'm not, by the way.

EMMANUEL ROMAN: No, no, no, no. It's an interesting conversation, but--

ANDY SERWER: Right, right.

EMMANUEL ROMAN: You know, I think-- I think the question we ask to all panel is, when is the next time you're going to get into a plane?

ANDY SERWER: I think that's an amazing ques-- I mean, you know, I haven't-- I've taken one trip since this all began that was absolutely necessary, and that's sort of 1/10 of the traveling I usually do. And I'm wondering, what the heck was all that? What was I doing?

You know, I don't want to tell Ed Bastian that, and, you know, the people who run airlines and hotels, they may not want to hear it. To your point, Manny, that creates other problems. But maybe it creates other opportunities as well. So, Tom, I want to ask you, how are you pointing the firm forward in terms of your messaging? What are you changing? How are you preparing people for what invariably will become another crisis at some point down the road?

TOM FINKE: Well, I think a couple of things, and one I agree with that Manny and Penny said, it starts with the clients, and our simple mission is to serve our clients, serve our communities, and serve each other. And so what you have to look at is how do you continue to do that, not just now in the midst of COVID, but when COVID is over, and what will change. And I agree.

With Manny, we're not going to take as many plane trips. We're going to now be conditioned to be able to, frankly, engage more virtually, but we will travel again, and there's-- you know, there is a need for people to be able to engage at times, but maybe we just prioritize it differently. So I think when we point forward, you know, we're staying very focused on, you know, again, the client, the communities, and each other. So staying focused on your performance, staying focused on making sure you're supporting especially now those in the communities that are most affected by these multiple pandemics.

And I think a big part, and where I want to spend even more time now that I'm not traveling as much is more one on one with each other. While it's virtual, I've had some of the best conversations I've ever had with colleagues because we're seeing each other in our homes, they're seeing a different side of leadership, we're engaging, we're showing that we care about their health, their wellness. We did a lot of things to really focus on, you know, work from home and promote, you know, simple things like just saying, we expect everybody to take vacation.

Even if you're not going anywhere, you need to take your vacation, you need to shut these computers off for a week or two and be with your families. So I think focusing on our employees in a different way, and think about the little things is another way that we're going to change and be prepared for the future.

ANDY SERWER: And Tom, let's talk, I want to ask all of you this, what is your return to work plan specifically? How are you rolling that out?

TOM FINKE: Well, given we're in so many different places, we're taking it at, literally, location by location. So we have our global return to office task force led by the chief legal officer and regional ones in each region. And we're looking at each individual situation, and, you know, allowing for offices to open if we feel comfortable, and employees want to come in. They're not forced to come in to open back up.

And it's different in different places. You know, I think it'll be a slow process. And one where, you know, I was talking to a CEO of another company in the financial industry yesterday, and we both said, we may never ever get back to five days in the office as a normal routine, we may more adjust our schedules to be in part of the time and then work from home part of the time even as executives. So, you know, right now in terms of a plan, we're going to prioritize the health and safety of our employees first. No one-- who-- is required to go to work if they don't feel comfortable doing it. And then we're going put in the protocols to ensure it's a safe environment.

ANDY SERWER: Penny, I want to ask you about that, the 2,000 counties, the 10 provinces in Canada, I don't even know what's going on in Canada right now with that, but I bet you do. How is the return to work going? And how are you managing that?

PENNY PENNINGTON: Well, our branch teams, our financial advisors and branch office administrators, the client service professional in each of our branches, they have been in their branches for the most part through this entire thing. We are deemed essential, and our branches are safe places because they're generally two to four people in those branches. At the very beginning of this, we set up the means for all of our branch team members to work from home and work flexibly if they needed to do that, if they felt anxious about being in the branch. And we had a number of people who did that.

Very early on we closed the branch to our clients, to face to face in-person meetings with our clients, which is really a hallmark of the relationships that we have. And that's what now we are beginning the process of reopening, the branches have been open the whole time, just not physically to our clients. So we're taking a very data driven approach.

We are looking at data in each of the communities. We're working with public health officials. We're listening to the CDC. And importantly, and this has been a theme through our whole hour, we're listening to the needs of our colleagues. Those who are anxious about opening the branch to the clients for whom this is working really, really well, they've got the opportunity to make that decision for their branch and their locale.

But we're taking it community by community, county by county, very much what Tom's approach in our larger concentrations, our three home office cities of St. Louis, Mississauga, and Tempe. Those will be a slow return to work, starting with 5% or 10% of the folks over the next month or so, ramping up to maybe a 1/3 of our folks later on in the year. And like Tom, it's going to be a long time before we have 100% of our folks working five days a week as we were before all of this.

ANDY SERWER: Manny, I want to ask you the same question. And I know you said-- I think that you didn't leave a few people-- the top executives stayed in the office.

EMMANUEL ROMAN: Right.

ANDY SERWER: But you've got New York City that you mentioned. And that's going to be rough. What's your thinking on getting people back?

EMMANUEL ROMAN: So I could give the exact same answers than Tom and Penny. I'm going to-- I'm going to just give you numbers, so to give you a sense of where we're going. I think Asia we're going to be very soon at 75%. I contrast this with Brazil where I don't even know when we can reopen, because the situation is terrible.

Europe, I think, we'll be at 50 in the not too distant future. I can see Texas and Newport Beach being at 50 by the end of the year. New York is much harder to tell, because I don't know when people are going to feel comfortable taking the train and taking the subway. There are elevator problems that all big buildings have in New York City. So we're going to have to stagger working hours.

So it's going to be-- it's going to be a slower ride. And I want to-- I want to be incredibly sensitive to people's fear, and people need. And New York is going to be the most complicated place as far as I can tell.

ANDY SERWER: Yeah. I want to switch over to the questions that we have from the audience, because we've got a bunch here and they're pretty good. First question is, do you think that large bustling trading floors are a thing of the past? What are your long-term plans for accommodating employees who may wish to work from home permanently? How will it vary by job function and seniority?

Some of that you guys have touched on, but I guess the trading floor thing is probably relevant. Who wants to take that one?

TOM FINKE: I'll take it since I'm sitting on a trading floor right now. That was our protocol in our design. We for years opened up, and done away with the offices, and leaned into the trends, more engagement, and people sitting side by side. Without a doubt, we have to step back, and we're researching and talking to experts. And there's a lot of analysis being done by experts out there of what the floor plate of the future looks like.

And I'd love to say we have that answer today. We don't. In the near-term in our current footprint, it's every other desk. If I was going to bring a group together, you'd have to stagger it. So floors that were designed for 150 people maybe only have 75. It's one of those-- I don't know if we'll need half as much space or twice as much when it's all said and done.

And that ties into the fact that, yes, I do think there are roles that will either more permanently have the opportunity to work from home or you'll increase the flexibility. As I said, some people come together part of the week in the office and then work the rest of the week from their home offices.

ANDY SERWER: Right. Penny, do you want to jump in there at all and talk about it? I don't know if you have the same trading floor thing per se, but certainly in terms of the part of the question which talked about job function, and seniority, and working from home permanently, does that mean you pay for office furniture at home now? Have you made those kinds of decisions? That's money.

PENNY PENNINGTON: Well, I'll leave that one for a little bit in the future as we as we work through that. I will connect the flexibility to our previous conversation about diversity, inclusion, and a place of belonging. Increasing the flexibility of our organizations and what may have been over the years a hide bound point of view of we've all got to be in the same airspace during the same hours in order to ensure that we're productive, that's a thing of the past. And the greater level of flexibility-- we were talking about before the call about young families who are really tested right now with orienting their family schedules and hours that they need to be working.

Increasing our own empathy as leaders, as strategists, about what the future holds for great talent, and what they want their lives to look like means making sure that we have organizations with a tremendous purpose that they want to be associated with, and a way for them to pursue a career of success and significance, marrying the flexibility of their lives, all the things that-- the richness of their lives that they want intersected with their professional lives. All of that comes together to help our organizations be places of belonging and attractive to a much wider array of talent than what we might have said before, which was if you live somewhere else, we need you to move to St. Louis in order to have this great opportunity. That's a thing of the past. This kind of flexibility opens up all kinds of opportunities for talent.

ANDY SERWER: All right. Well, let's leave it on that note. And it certainly will be interesting intellectually and otherwise. I thought that was just a fascinating conversation. And I really want to thank our terrific panelists, Penny Pennington from Edward Jones, Tom Finke from Barings, and Manny Roman from PIMCO. Thank you all so much for your time and your insight. Again, great job. And thank you for participating. And thanks to the Milken Institute.

EMMANUEL ROMAN: Thank you, Andy.

TOM FINKE: Thanks, Andy.

PENNY PENNINGTON: Thank you, Andy.