Find episode transcript below.
ANNOUNCER:
00:00:02:00 Welcome to PwC Pulse, a podcast to provide insights to help you solve today's business challenges.
KATHRYN KAMINSKY:
00:00:09:20 Hi, I'm Kathryn Kaminsky, Vice Chair and US Trust Solutions Co-Leader at PwC. On today's episode of our PwC Pulse podcast, I'm excited to be joined by Mary Erdoes, CEO of JPMorgan's Asset and Wealth Management Line of Business. Mary has led a client-centric career focused on delivering value. Since becoming the CEO of the AWM business, she has contributed to the growth in assets under management.
00:00:36:13 When she started in 2009, it was at 1.7 trillion. As of 2022, they're up to $4 trillion. Today we're going to talk about what it takes to navigate the evolving needs of diverse stakeholders, diverse technologies, and what areas of investments are important for companies to remain relevant and achieve their growth goals. We're also going to talk about her views on what it means to listen.
00:01:03:10 Listen not only to our clients but listen to the expertise that surrounds us. Mary, thanks so much for joining us.
MARY CALLAHAN ERDOES:
00:01:11:28 Oh, thank you.
KATHRYN KAMINSKY:
00:01:13:10 So, Mary, we can't do anything till we start with a little bit of fun. So people get to know you just a little bit better. I'm going to do my rapid-fire questions. Favorite vacation spot?
MARY CALLAHAN ERDOES:
00:01:23:23 Anywhere where there's a beach and preferably no Wi-Fi.
KATHRYN KAMINSKY:
00:01:28:23 When you walk to a meeting, do you listen to music?
MARY CALLAHAN ERDOES:
00:01:32:15 No. That's my quiet time. Actually, when I run, I don't even listen to music.
KATHRYN KAMINSKY:
00:01:37:13 What book are you reading?
MARY CALLAHAN ERDOES:
00:01:39:06 I actually just finished Henry Kissinger and Eric Schmidt's most recent AI book.
KATHRYN KAMINSKY:
00:01:44:09 And then my last one is: dishes or laundry? If you had a choice.
MARY CALLAHAN ERDOES:
00:01:48:06 Oh, neither. Thank you.
KATHRYN KAMINSKY:
00:01:51:07 So I'm going to do a quick intro of you, just more around the fact, I've talked a lot about having many different careers in one job. You've been at JPMorgan for 25 years. Can you talk a little bit about the different roles you've had, but you've been at your job now for quite a while. What has kept you so happy in the AWM space?
MARY CALLAHAN ERDOES:
00:02:11:15 Such a great question. I feel like I've had so many different jobs, even within the same line of business, the industry has changed. I started in the mailroom equivalent, which was the room that used to print off the portfolio management documents and deliver them to the portfolio managers, researcher, trader, portfolio manager. And then on and on and on.
00:02:32:29 And I think the most exciting part about being at JPMorgan Chase is the ability to have gone through so much growth, deal with different clients all around the world. The markets change every day, so there's nothing dull about it. The more complexity, the better for us. And most importantly, the people that I get to work with. And every day it's a blessing.
KATHRYN KAMINSKY:
00:02:54:05 I love that. And I think the thing that's really interesting about your tenure in the role you started in AWM with 1.7 trillion under management and you're at 4 trillion. It's pretty amazing if you just take a step back, right?
MARY CALLAHAN ERDOES:
00:03:07:10 It's very exciting. Yes. And it's really a testament to the clients and trusting the people that work for us and work so hard. And it's a great privilege and an honor to be able to work so hard. But that's what keeps us going every day. We wake up every morning trying to make sure we've outsmarted whatever that we can to figure out how to make the most for our clients.
KATHYRN KAMINSKY:
00:03:24:29 So when you talk about your clients, sometimes I don't think people fully realize the breadth and spread of your clients. When people talk to me about it, I say, you start with the retail investor that sits in your portfolio and that responsibility is massive and you go all the way through to the ultra-high net worth and you are so client centric. How do you think about clients with such a wide array of clients?
MARY CALLAHAN ERDOES:
00:03:49:06 Yes, in many ways it's super complex to think about. Would you do the same thing for a sovereign wealth fund as you would do for a first-time saver who's walking into the branch and asking for their first bit of financial advice? And the answer is of course not. Although at the heart of it, you want the same brains thinking about all of those complexities.
00:04:09:22 And then as you grow through the ability to add less liquid things in your portfolio, the ability to add more complex structures, the ability to have wealth that you have accumulated either for a pension fund where the time period is much longer, or a foundation or endowment or someone that needs the cash today. Those give you different liquidity issues and constraints and they allow you to think about different instruments that you put together.
00:04:34:24 And as the world has evolved and financial services become more sophisticated, it allows us to do much better things for all of those clients. But at the end of every day when you are a client of JPMorgan Chase, whether you're the retiree inside of a pension fund or an individual who has the wherewithal to have a separate account with us, we're giving you the same best advice that we have.
00:04:57:00 And I think that's what I'm so proud of. And also, just think about the millions of constituents we work for every day. It's something that makes you work super, super hard.
KATHRYN KAMINSKY:
00:05:06:20 And the one thing you've always said as you talk about clients and then you talk about your other asset, which is actually another off-balance sheet asset is your people and how your people work with your clients. Can you spend a few minutes thinking and talking about what you do with talent and how you raise talent and how you think about talent?
MARY CALLAHAN ERDOES:
00:05:24:24 Yes. At JPMorgan Chase, the numbers are quite staggering of the nearly 300,000 employees that work for the firm just this summer alone, just for Asset and Wealth Management. We had 40,000 applicants from college applying for 400 slots.
00:05:44:24 And so the talent pool is immense. Finding those people that are going to do first class business in a first-class way, which is the model that we stand for, and understanding the seriousness of the work that we do and understanding that the gravity of the decisions you make each and every day affects the compounding or not of what you're doing for a client.
00:06:06:01 And so finding that talent and sniffing out the second that they aren't first class business in a first-class way is perhaps the most important thing. And so you can fail fast at some of those decisions and then you move on. But the breadth of the talent that we have, and it comes from all over the world and the diversity of it is really something that we feel quite spoiled.
KATHRYN KAMINSKY:
00:06:27:11 And I also have seen you with your team and your expectation of your team around talent and development of talent. It's sort of in your DNA and how you've done things. Is that the right way to think about it?
MARY CALLAHAN ERDOES:
00:06:37:17 Yes, it starts from the first day they walk in. Actually, now, we think that technology, you know, has always been a very important component, but ever more so today. You can't get through our analyst training program without being Python trained.
00:06:52:17 And I tell everybody I don't actually need you to be a technologist inside of JPMorgan, but you certainly need to be able to talk to a technologist, which means you need to speak their language, which means you need to understand where they're coming from, which means everybody has to have the same basic understanding.
KATHRYN KAMINSKY:
00:07:09:10 That's really great. The other thing, when I think about the way you work with teams and you work with your clients is you're an incredible listener. You don't push. You listen in terms of how you work with your client base. It's a skill. How do you think about that?
MARY CALLAHAN ERDOES:
00:07:27:25 The blessing is our client base. And if you think about it, we get the ability to listen to the smartest, most successful CFOs, CEOs, entrepreneurs, philanthropists, government workers, all of these people that we get access to each and every day.
00:07:47:25 The more we talk, the less we learn, the more we listen, the smarter we get. And if you have that amalgamation of all of those learnings with all of our employees and then collectively pull that back each and every day and reabsorb it into the system, you just get collectively smarter and smarter.
00:08:05:07 And by the way, that's where I think AI really comes into play when you start pulling those conversations and discussions in a way that you can have, the learnings help each and every one of us. If you have one great conversation with you about your family and what are the questions on your mind and where are you in your stage of life and what do you care about for your boys
00:08:26:25 and how do you think about that? And I get those answers from one of the smartest experts inside of our firm. And then I can take that, and I can replay it to somebody who just wants to inquire on a website of JPMorgan's in the future, where you can get those learnings in a very intelligent way, and then you keep augmenting those lessons.
00:08:46:15 So I think it's a super exciting time to think about all of that. But yes, the collective experience, I mean, we have clients that we celebrate hundred-year anniversaries with. That means we had to have been successful of sustaining, maintaining and growing that wealth for over a century that we've had all of those lessons learned, that we've seen all the dynamics of things that work and don't work
00:09:08:03 and we have all those lessons learned. Multiply that by the millions of clients that we have around the world and the constituents. And I think that you get a pretty powerful set of things that you can give back to your next new client.
KATHRYN KAMINSKY:
00:09:19:28 If you think about AI and everything, we're hearing about it, it sounds like you want to jump in. You're not worried about AI taking over your jobs to manage your portfolios. It sounds like you're thinking about it and how it can work in a positive way.
MARY CALLAHAN ERDOES:
00:09:33:07 Well, there's always things to worry about with AI, and we're all learning together on that front. And we don't know what we don't know because we don't even know how some of the learning has come about in these large language models the way that it has. And so there's those unknowns. But I would say just the opposite. The culture inside of our firm is just the opposite.
00:09:50:24 If you're afraid of AI taking over your job, then it's a job that AI can take over. You don't necessarily want to do that. You want to do something higher added value.
00:10:00:24 The most exciting place I have been in the last 30 days is to our two offices in India, where the teams there are moving so much faster than other places around the world to embed AI in the day to day stuff that they do that is either rote or repeatable, or that if they can get AI embedded into what they do, they can start to do the higher added value things that are so much more powerful for them, for our clients, for everybody.
00:10:27:15 And so I just think it's a really exciting time and if you embrace it in the right way and you're not afraid of it, it can do wonders for you, the company, the morale, the people, the whole equation.
KATHRYN KAMINSKY:
00:10:36:25 It ties back to actually the first question, that's why your career has been so exciting because you've gotten to do things, right? I agree with you. When you think about AI, I also think about resilience, because there is an element of you have to be resilient, you have to focus. So I'm going to move to resiliency about the market, right?
00:10:51:22 In terms of you see the market, you spend a lot of time in the market. What does resiliency look like in the market today?
MARY CALLAHAN ERDOES:
00:11:00:04 Let's say at the basis of it, it's how do I make sure you have thought about resiliency for your business, right? Have you thought about these? Let me tell you the things I've learned from other clients. Let me help you think through this. Are you ready? From a market standpoint, then you overlay where we are, and interest rates are the basis of everything that we do.
00:11:17:28 And most people have not been in a world where we are into interest rate rises, quantitative tightening all at the same time and all around the world at the same time. So these are unprecedented time periods. We had a flooding of money into the system for many, many years. And pulling that back out, I say it's like a hose that was raining and now you have a vacuum cleaner and when you rained with the hose, you hit things,
00:11:45:03 you didn't necessarily need extra money, but they got it. And when you take the vacuum cleaner, you might pull up things that you might necessarily not have wanted to take away. We just don't know. And so you have to stress test your portfolio. You have to make sure if interest rates do go much higher than anyone is predicting, can I afford it?
00:12:04:14 Am I over levered? Can my family handle it? Can my company handle it? Have I right-sized? Have I gone over my SKIs? And all of that are basic stress testing, but they have to be done today ever more so than they were in the past because we are in absolutely unprecedented territory.
KATHYRN KAMINSKY:
00:12:20:13 Yeah, it's definitely unprecedented, and I think there's that part of it. And then there's also the talent part has never dealt with this type of environment. And so, I'm sure when you talk to your teams are also focused on all the areas that they may not have thought about that have interest rate impact. And we're seeing that right?
MARY CALLAHAN ERDOES:
00:12:37:26 That's exactly right. And so if you haven't lived in an inflationary environment, it's just hard to compute that the whole world is based off of interest rates that every present value of everything you want to buy, you discount it back at an interest rate that is higher than it was before and it may also be rising, is a really hard thing to just sort of mentally get your head around.
00:12:59:09 And once you do, then you can make assessments and there's a whole bunch of things out there in the world that are exciting, opportunistic. We think about all the opportunities that we have just having come back from Asia and Europe just in the past several weeks.
00:13:13:09 I mean, there's companies everywhere every day that… startups that make new ways of approaching things, new services, new health care opportunities. And so the opportunities are out there. It's just a matter of wading through to figure out which ones are going to survive. If there are bumps, which ones have the super edge to them that they can make a difference.
KATHYRN KAMINSKY:
00:13:35:27 When you talk about the pulling up of the vacuum cleaner, I like that. The one thing I see a lot in the market is the worry around investments and where to invest for growth. And I think that's sometimes where the vacuum cleaner is coming up on. How do you think about that when you talk to clients, like you can't stop investing
00:13:54:09 and I know JPMorgan's not stopping investing, how are you finding that with the discussions? Are you finding that the vacuum cleaners pulling up growth areas that it shouldn't?
MARY CALLAHAN ERDOES:
00:14:03:09 Yes and no. I mean, there are valuations, as we've seen just in the large cap stock market that we have, the S&P 500 today. If you haven’t invested in the top tech leaders, you've missed out. But the flip side of that is that those companies haven't kept up with the valuations. And so, one might be right and the other might be wrong, or there could be a huge amount of companies that have valuations that can continue to go up.
00:14:25:22 And so when the world gets through adjusting to higher interest rates, there's also a very positive side to that, which is that growth can continue. Higher wages across the board, much lower unemployment that we've had in many years past.
00:14:41:22 All of those things are very positive for a growth economy and those growth economies are also showing themselves up around the rest of the world.
00:14:47:21 And so you have to find those pockets. You have to figure out which companies you can lean into that are going to be able to profit and benefit from that. And the hardest part today is that cash, which for many years has been at zero or even negative in some places around the world, is now an attractive asset class.
00:15:04:24 So people are getting a little bit overly comfortable with sitting in cash and feeling like, well, that's okay because I'm still earning X percent on that. But really when you're in an inflationary environment, cash can be a confiscator of your assets given the inflationary pressures, so you have to keep up with the markets, which makes you even more need to think about the long-term ramifications.
00:15:24:24 Therefore stress testing, even more to be able to make sure that your portfolio is diversified enough to weather the storm, but that you're staying invested and the staying invested is one of the hardest conversations that we have.
00:15:35:27 But when you look back and you say seven years ago, I'm really glad I you know sat out the markets in March and didn't invest until May is just like not a thing. And so you have to have that perspective to be able to say, I am a long term investor. I believe in the long-term markets and there's great growth opportunities and we are living in a time period right now where technology is changing absolutely everything.
00:15:57:16 It's a super exciting time. How can I get involved and find those companies that are going to make a difference?
KATHYRN KAMINSKY:
00:16:03:02 So, Mary, the one other thing that you in your role have to handle a lot is you have many different stakeholders. You have your clients, you have your people, you have the regulators, you have a board. How do you as a leader think about that many stakeholders and how you manage it?
MARY CALLAHAN ERDOES:
00:16:19:24 Yes, I think it's actually easiest for me in my line of business, in asset management and managing of people's money. Our first and foremost job is to be a fiduciary. We are a fiduciary of other people's money. It is our North star. It's where we wake up in the morning and also end our days and everything is focused around that, everything else is secondary to that.
00:16:44:04 And once you keep that in the right order, you will always make the right decisions. And it's a cultural thing and it's a deep cultural thing which thankfully JPMorgan Chase has had for almost 200 years. It's not something you just, like, practice or wake up and think that you're going to start a fiduciary culture in any firm.
00:17:04:15 It's a very, very serious and important thing. But all those constituents, they all generally have the same long-term goals and from time to time you can get sidetracked by somebody's short term needs. And if you stay focused on what is the right long-term thing for the clients, which will end up being the right long-term thing for the shareholders, the right long-term thing for any employees and certainly for the regulators. I think you'll find your way always to the right answer.
KATHYRN KAMINSKY:
00:17:31:13 Yeah. That North star is a really important North star. When you think about your role, It's global, right? A lot of times people forget your business is a very global business and with everything happening in the world today, can you do a little bit of a country dance and our region dance as to the strengths and weaknesses in different regions that you're focused on?
MARY CALLAHAN ERDOES:
00:17:51:24 Fortunately, I just actually did go all the way around the world, so I have a little bit of a flavor for each of the different developed and developing nations. You come out of a visit in China, then followed immediately by a visit in India, stop in Europe on the way back. There's opportunities everywhere. There are certainly challenges everywhere.
00:18:12:04 There are countries that are taking their constituents from a poverty level of X up through to something much better Y. That's a much different equation than a developed nation that starts somewhere else, and that then manifests itself in - what are my priorities? How do I think about different issues? How do I think about what's most important to me?
00:18:34:23 Is it to get money to grow the population or is it to think about different things? I think for us, the most important thing is listening to our clients and reflecting what they want and what they need. I don't think it's anyone's role inside of JPMorgan Chase to say, I think that you should care about this and not invest in that sector.
00:18:54:00 That sector may be very important to you in the country that you are in, and it's the wherewithal with how you're going to get constituency out of poverty as a for instance.
00:19:03:00 But I think that understanding these global dynamics is maybe the most important of the answer to your question. We now have the full ownership of the research in China for hundreds of companies that we get better insights to that can then feed into the rest of the researchers around JPMorgan Chase.
00:19:20:29 Why is that important? You don't actually need to ever invest a dime of your money inside China, but I actually think it is irresponsible to make an investment anywhere else in this world if you don't understand what's happening in China. It's so important to the costs of goods sold, to how things are evolving. The EV market in China is completely different than the EV market in the United States of America as a for instance.
00:19:50:20 And if you don't understand one, you're not going to understand the other. And again, it doesn't mean you have to invest there, but it means you need to understand it. And that's why I think having the global scope of what we do helps us tremendously and how we think about even those local opportunities. But the other final answer to your question is, you know, companies are not just local anymore, right?
00:20:13:02 You could be headquartered in Switzerland, but you can have more than 50% of your sales in a whole other part of the world. And so how do I think about that company? Do I think it's an Indian company or do I think it's a European company, right? So how do you think about those things is more complex, which is why you need to look through in portfolios to think about do I have the right diversification and am I getting the right growth dynamics from developed nations, developing nations, and how have I balanced that?
KATHYRN KAMINSKY:
00:20:38:27 It's really interesting. There's a big overall theme. It's listening. It's also expertise matters, right? You don't use the word expertise, but you sit in this great role. But listening to you, you listen a lot to experts because you know you don't know it all, right? And that's part of your leadership style.
MARY CALLAHAN ERDOES:
00:20:57:10 Exactly. And the minute you do think you know it all is probably the beginning of the end.
KATHYRN KAMINSKY:
00:21:03:07 Yeah. I want to move to one last constituent that you serve, which are Treasurers, Treasurers that sit in companies and in institutional investors. I think it's a hard job being a Treasurer today. What would be a piece of advice you'd give to a Treasurer today?
MARY CALLAHAN ERDOES:
00:21:18:08 I would say having just come off the heels of the spring of 2023’s banking issues, it tells you even more important role that a Treasurer has, which is understanding each and every nuance of where the dollars go, what entity they're sitting in, what the stress test on that is. What's the difference between a money market fund and a deposit?
00:21:43:17 What's the difference between a segregated account and a general depository account? How do all of those basics all the way through to the ticking and tying of the business that you're responsible for, and all of the sudden that function that someone who's not understanding of the importance of it would think, well, that's maybe not as important as, you know, this role or that role has taken on totally new proportions today.
00:22:09:21 And I think that it's one of those things where, I was in Silicon Valley just immediately after some of the early issues happened, and you could just see that that person took a totally different seat at the table and it was right at the head of the table. And it's a pretty important spot. But I think sometimes we forget that, or we take for granted that those things are going to function.
00:22:30:00 And then you see when the tide goes out who the strongest ones are. And, you know, if you think about who do I want to have manage my money, they certainly need to have lived through the great financial crisis of 2008. They have all those lessons learned. Who do I want as my Treasurer? I'd like them to have lived through the spring of 2023 to understand.
00:22:47:16 And all of those things are the lessons learned that those people have priceless talents and lessons learned inside that I want on my team.
KATHYRN KAMINSKY:
00:22:56:00 Well, with that, I so appreciate you being with us today and bringing your knowledge and also your fun.
MARY CALLAHAN ERDOES:
00:23:02:08 Thank you.
KATHYRN KAMINSKY:
00:23:03:07 Mary. Thank you for joining us today. At a time when leaders are questioning whether their organizations will be viable a decade from now, it's important to know that resilience is possible if you prioritize transformation. And as a leader, your authenticity is so paramount.
00:23:21:07 To our listeners. Thank you for joining us on this episode of PwC Pulse. For more information on these topics visit PwC.com.
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