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Focus on Funds: Fresh Thinking for New Investors
Focus on Funds
Fresh Thinking for New Investors
The May 22, 2015, edition of Focus on Funds includes insights from PepsiCo Chairman and CEO Indra Nooyi on how to deliver both purpose and performance, as well as key takeaways from a panel of fund industry experts on how best to reach investors from the Millennial Generation.
Transcript
Stephanie Ortbals-Tibbs, ICI Director, Media Relations: Welcome to Focus on Funds, the Investment Company Institute’s weekly roundup of industry news, ICI activities, and research findings. And this is the second of two special reports we’re bringing you from ICI’s General Membership Meeting in Washington, DC. In this week’s edition, we focus on some less-than-usual thinking on funds and their investors, beginning with some insights on how to potentially reach investors from PepsiCo head Indra Nooyi.
Indra Nooyi, PepsiCo Chairman and CEO: To attract and retain the best and the brightest of the Millennial Generation and beyond required us to demonstrate that as a company we had a soul, real soul…
What if we said that purpose was integral to the performance? If we didn’t deliver purpose, we couldn’t deliver performance. If we didn’t transform our portfolio, we couldn’t deliver our topline. If we were not environmentally sustainable, it would cost the company reputationally and in hard bucks…
Do what’s right for all shareholders. For all those pensioners who want to buy the PepsiCo stock, [who want to] put it away knowing they’re going to get a great dividend, this company is going to get a bond-like return with an equity kicker.
Ortbals-Tibbs: Thinking different is key to reaching the next generation of investors, and that was a major focus of discussion at the panel ICI held on Millennials and investing.
Adam Nash, CEO, Wealthfront: For the first time in decades the industry has to accept the fact that there’s not one, but two very important generations moving through the system.
The Baby Boom Generation has been the story for decades and with their retirement coming up, they will be the story for decades more. But the Millennial Generation is the largest cohort in American history, and more and more their economic weight will be felt. And the problem is that the same products and services that Baby Boomers are looking for aren’t necessarily the same that Millennials are looking for.
Andy Sieg, Head of Global Wealth and Retirement Solutions, Bank of American Merrill Lynch: The first thing all of our firms need to realize is that we ignore the Millennial Generation at our peril. If there’s a trend out there that is turning on the Millennials, it’s going to turn on the world before long. And Millennials are so focused on innovation and technology in particular; they’re focused on how experiences can be more intuitive and understood. And they’re pushing us to think about impact, how their investment activities relate to the impact they’re having in in the broader world. I think we should all be thinking about impact investing—environmental, social, governance factors in investing—a multiple of how frequently we think about it today. The Millennials are telling us they’re not going to sacrifice return, but they’re going to expect us to think about how their investment portfolios and investment behaviors relate to the broader world.
Ortbals-Tibbs: When it comes to reaching investors, there are many different regulatory issues in play for the funds industry. And SEC Chairman Mary Jo White spoke to many of them when she appeared at ICI’s GMM.
Mary Jo White, Chair, U.S. Securities and Exchange Commission: I think the success of the regulatory regime really has been quite remarkable. The Investment Company Act—and Investment Advisers Act, for that matter, as well—are tremendously powerful and adaptable tools to really do the kind of regulation that protects investors, our markets as well, and also allows for innovation and growth.
I think the most important thing is that none of us get complacent about that. I mean, clearly, things change all the time. One of the strengths of the SEC’s regulatory regime is that it’s evolved as things on the ground in the industry have evolved in a very good way. And as you know we’re in another phase of that, which I sort of described in this speech in December, and embarking on some additional proactive rulemaking that will strengthen the industry even more.
Ortbals-Tibbs: That’s this week in funds. See you next week.