Head of Distribution Jon Mackay shares actionable strategies for leading through disruption and turning industry shifts into opportunities.

I'm John.

And I'm Julie.

We're the hosts of the Hartford Fund's human-centric investing podcast.

Every other week we're talking with inspiring thought leaders to hear their best ideas for how you can transform your relationships with your clients.

Let's go!

John, welcome to the Human Centric Investing Podcast. It's so nice to have you here today.

It's great to be here, Julie.

And for our listeners, it may look a little bit different, we're really excited to be recording in our studio here at Hartford Funds. And JD, it's nice to be with you as well.

Well, thanks. Nice to be with you guys as well. And Jon, I'm excited for today's podcast. So the one thing that we all know is the only constant in life is change. And our industry, our company, really are not immune to that. And so on today's broadcast, we really wanted to talk to you about the pace of change, whether it's in markets and investment vehicles, whether it is in things that Hartford funds are doing, Just to help. Our listeners kind of find their own place in the world, if you will, in terms of these changes. So I guess, initially, just some comments from you on you've been in your role now for a little while, I guess over a year, a little bit right around a year. What have you seen at Hartford Funds in terms the pace of change and some of the significant changes that you've had to manage since you've at the helm?

JD, thanks for having me. It's great to be here. First time in the studio and it looks delightful. So it's a great question. I think I'll avoid the industry part of it. I think everyone's very aware that there's been massive change happening either at a rapid clip or at a slower clip within the industry. And I'm sure we'll get into some of those factors. When I joined a little over a year ago, as you said, in December of 2024, One of the things that we talked about in terms of changes to the way we operate at Hartford Funds was being more reliant on data. There's plenty of data in this industry. You see it in fund flows data, you see it and performance of certain strategies. The firms that we work with, the Morgan Stanley's, the Edward Jones, the Ameriprises, they will share data with us as a partner in terms what they're trying to achieve. And so it was trying to pull all of that information into a usable set of data that we could go to market with to make us better business partners with the advisors that we're working with. And so, I think some people are resistant to change. Change can be hard, but what we tried to do to help them through that was be as transparent as possible. Here's why we're changing some aspect of your job. Here's, why we using this data in a different way. Here's why we need you to pay more attention to the data in your daily job so that you can understand it and you can use it to be more effective. And that's not easy, by the way. And sometimes you need to say things, not once, not twice, but multiple times to get the message across. But I think we've come through a big period of change. We've hired a lot of people. We've changed the way people operate. And we're on a pretty good path now that obviously will involve more changes as we go forward. But I think the bulk of the change we experienced over the last year hopefully is behind us.

Jon, I had the fortune of sitting in on a leader chat that you did here at Hartford funds a few months ago. And I thought it was really interesting during that chat. You talked about having tactical empathy, especially during periods of change. And I immediately thought of financial professional and their team and navigating the humans on their team during constantly changing environments. And it's hard. And it's the human element that can sometimes be unpredictable. Will you share with our listeners a little bit about your thoughts on tactical empathy, what that is and how you've employed that, especially in this new role here?

Yep. So for anyone out there that has children, maybe even teenage children, you might be familiar with sort of the irrational teenage brain, right? They tend to think in the here and now, well, I want this or I want to do this. Why aren't you letting me do this? And one of the best pieces of advice I ever got from someone in dealing with children in general, especially teenagers, is just be empathetic. You don't have to be sympathetic, be empathic. Tell them that you understand why they feel that way. And so I'm not suggesting at all that the people we work with are teenagers, but trying to put yourself in their shoes, understand why might be upset, resistant to something you're asking them to do, and then helping them to understand why you need them to change. It works more often than it doesn't. And I think it helps those people understand that you're on the same page as them. You understand why. This might be difficult for them to do, or they might need additional help to implement some of the changes you're asking them to do and you're not just telling them to do because you don't care. You should always try to put yourself in a position where you can understand where they're coming from and if you can't ask why are you upset? Why isn't this working for you? How can we see eye to eye on the issue?

So Jon, a question I have for you. You mentioned it a moment ago. I'm sure many of the financial professionals and maybe some of the teams that are listening to our podcast today are engaging some of the same issues with data and some of the same changes to doing the way we always did things. Or so you mentioned communication. So I wanted to ask you specifically about that. Is there such a thing as over communication during times of change like this? How do you think about the need to frequently communicate with members of your team?

So I think you can feel that way sometimes, JD. Like, I've already said this three or four times. I'm becoming redundant, repetitive. Are my teammates gonna get annoyed with me? Are my employees gonna get annoying with me, but I don't think there's any harm in over communication during a period of change. What I try to do and what I would advise like anyone out there that's going through a period change, whether they're a financial advisor on a team or. Anyone else that is, as a group of employees, that you're trying to move through a period of change, is try and explain the business reason. Work on it yourself. Literally, I've done this. I've sat down and written down why are we doing this, and tried to elucidate for myself. Does it make sense? And if it doesn't make sense or I can't get it, maybe we need to rethink what we're doing. And I think if you can do that, if you get people to understand the business reason for it. Generally speaking, maybe not the first time, maybe not second time, but they will eventually understand it and they'll embrace it. They'll think of it as like, oh, now I understand why we need to do this. It's gonna make our team more efficient. We're gonna be more impactful with our clients. If you're a financial advisor or as a business, like we are, it's gonna put us on a path to future growth.

Let's shift gears into the investment landscape and I won't ask you for the crystal ball at this point.

I lost my crystal ball.

Oh, well then there we go. Perfect. But if you think about all of the different investment vehicles that financial professionals are evaluating, passive ETFs, SMAs, how would you guide a financial professional to really evaluate all of these options and think about them in context to their client portfolios, given where we are right now?

Yeah, it's a really good question. And I think one of the things we've seen more recently is the rise of active ETFs. SMAs have been around for quite some time. There's benefits to active ETF, there's benefits to SMA, there are benefits to passive, and there's benefit to mutual funds. And I do think if you think about the markets broadly, it's not one size fits all. And what worries me is sometimes you run into financial advisors that will say, I only do passive. Right, or I only do SMAs, or only do this. And in some cases, it might make sense depending on the client type. SMA's tend to be more tax efficient. You can use index overlay options to customize the SMA to provide tax efficiency to them. ETFs are more tax-efficient than mutual funds. But what if you're using a qualified account, then it doesn't really matter, right? You get transparency, maybe you want transparency. And so I think it's taking into account what you're trying to achieve for your client. What are their growth goals? What are they income goals? What are the risk tolerances? And then how do you fill in that puzzle with the right vehicles that give you access to, at the end of the day, you're looking for access to fixed income markets, international equities, domestic equities and in some cases alternatives. And what is the best way to do it? So the benefit of being in today's market and being a financial advisor or a firm like ours is there are so many options. I think part of the issue a lot of advisors face is how do you narrow it down to one of the best set of options for me and my clients to achieve their goals in a tax-efficient way and obviously trying to achieve there growth goals as well as their income goals.

So Jon, we talked about the use of data, we talked the expansion of products, all of which I think are maybe facilitated by technological innovation that we've seen in the markets. But I think that same technological innovation is also impacting behavior of investors. And as a financial professional, thinking about, you know, hey, my book might be getting a little bit older, or I'm concerned about the next generation. I think some financial professionals have expressed some concern about the short term minded mindedness of future investors and maybe some current investors. I mean, we all read about the meme stocks and we, you know, we know that there's been an explosion of online gambling. There's now these new markets that are popping up that like everything seems to be like I want to pay off now. And I think technology. Given some of the platforms that allow rapid trading all this kind of thing They've kind of facilitated that as well. What would you say to the how does the financial professional that's looking at long-term objectives? How do they make sense in this world of short-term? Expectations

It's a great question JD, and I sort of struggle with this a little bit myself, but what gives me some comfort is that none of this is new. So the way it's displayed, the way the information gets to you is new, but there were meme stocks a hundred years ago, right? And maybe you heard about a meme stock because you were at the grocery store and someone was talking about it, or you read it about it in a newspaper. So the information was delayed, it wasn't efficient, but there are meme stocks 100 years ago. That traded at crazy valuations. Today, obviously, to your point, it's all around you, it's everywhere. Zero day options. Cryptocurrencies trading 24 hours a day. Prediction markets. So you can, it sort of gamified the investment landscape to some degree. And I think there probably is a place for that. People that want to be able to get in, get out of things. They want to make They wanna make an investment, I'll call it an investment on something that's not a company or not a bond or not currency. Fine, let them do it. I think that's okay, but I think at the end of the day, what everyone's gonna be drawn back to is that is all temporary, it's all ephemeral, and at the of the end what you're looking to do, I think even younger people will eventually realize this is that gonna get me to a number that's gonna provide for my family? Yeah, in 10 years or 15 years, let alone my retirement in 2030 or 40 years. And so there's still a huge need for long-term financial planning and advice. And I'm sure we'll get to this, but I struggle to believe that technology or the gamification of the markets that we're seeing now is ever going to replace sitting down across kneecap to kneecap with a financial advisor and saying, I made X amount of money in my career. I want to retire over the next five or 10 years. Do I have enough? And can you help me plan for that next 10, 15, 30 years of retirement? So it's interesting. It's certainly, I'm glad I'm not a market strategist anymore. So making sense of some of the market moves is really tough. But I think at the end of the day, markets still will move in cycles. It'll still be driven by productivity and employment and profitability of companies. And maybe some of those cycles will be shorter. That hasn't happened. They tend to have been longer. But I still strongly believe that economic fundamentals and corporate profitability at the end of the day will drive markets in the long run.

We just touched on the next generation investor. Let's maybe shift gears into the next-generation financial professional. Obviously, as the industry ages and the average age of our financial professionals continues to increase, what are your thoughts on succession and how financial professionals should be thinking about building out their team for the longevity of their practice and ultimately the welfare of their clients?

So, you know, this has been happening for a very long time. This is not a today phenomenon. This is the last five years from this has been happening to the last 20 plus years. I think the way the industry has changed, moving more moving away from brokerage oriented advice to manage money oriented advice where you're building a portfolio and charging a fee for building the portfolio and managing the changes within it. As well as the advice you're giving on your retirement planning and estate planning, etc. Sort of caters to a team of professionals that are good at one or more things, right? Not someone who's just good at picking stocks or picking bonds. And so what that's led to is two things. One is you tend to get bigger teams being built at a lot of the bigger firms that we work with. It's very hard to be a standalone financial advisor these days. You would tend to want someone on your team that is good at estate planning, knows something. They might not be a tax specialist, but they know enough about tax. They know something about markets. They can work with younger generations as well as older generations. And so what we're seeing is the more successful teams tend to be built up between, I'm making these numbers up a little bit, somewhere between four to seven people. And that helps the firms and the advisors who might be nearing the end of their career. Or see it in the next five or seven years, and now they can start building out a team. Someone eventually takes over the book, but it's built up components, versus everyone's good at picking stocks. You're kind of not, you know, you become a one trick pony in that sense.

Is that how you're thinking about building out the leadership team here at Hartford funds? How do you think about succession in your current role?

I'm not going anywhere.

No, so, yeah, you've got to think about people on your team that have a broader set of capabilities than the desire to take that next step in their career. So I have a team of 10, and I think there's definitely people on that team that could do more than they're currently doing today. I used to work at Morgan Stanley, and there was sort of a McKinsey mindset there because the CEO of Morgan Stanley used to have worked for McKinzie. And what they would do is they would rotate. Who people who they thought could be a candidate for CEO into different businesses. You'd be the head of investment banking, then the head investment management, then the Head of Wealth, then the the head of something else. And it was sort of a proving ground to see if you could run different aspects of the business. So if the chance for you to become the CEO was ever presented to you, you had all the requisite background and capabilities to do that. I'm not gonna do that with my team, but I think there is a benefit to putting people in a position where. If someone left tomorrow would you be able to step in and take their job or if I left tomorrow who would be able step up quickly and take the job without having to go through a year plus of training. And so I think about it as you've got to build a team of people that in some cases are really good at one thing and that's all they want to do and that is very necessary I think. And then you need some other people in the team that may want to more and you're trying to set them up for that next step in their career. Which could be my role, it could be another role within the firm. But that creates a fun team, creates a competitive team. They wanna win, they wanna learn, they wanna work with each other. Yeah, a solid team isn't a team, right? So, yeah, at the end of the day, that's what we're trying to do here.

Well, Jon, while we have you on the podcast, we I don't think we can leave this topic of change without talking about AI, artificial intelligence. I mean, just the change we've seen in investment, just the change, we've seen in just the beginning stages of impact. And, you know, you read things every day. AI is going to be the worst thing that ever happened to mankind. AI is gonna be the best thing that every happened to mankind. How do you view it in your role? And maybe not only professionally, but personally, what are your thoughts on artificial intelligence?

Yeah, so I fall somewhere in the middle. I don't think it's going to replace, I've heard some quotes, that it's going to place 30% to 40% of the US labor force. I think that is way out of whack. I've heard your point around it's going to be the end of humanity. I'm not a doomsday or an AI whatsoever. It is definitely a productivity enhancer. And I'm sure most of the audience has heard stories about law firms or accounting firms or you know, client service models where you can use an AI agent to replace a human being who's gotten on the phone with someone or a junior lawyer who's going through old cases. Now an AI can do that. We've seen that in investment with research, right? It doesn't replace the analyst, but it enhances the time the analyst can use to pull together an earnings estimate for a company, let's say. But I think what what hasn't what maybe what has surprised me a little bit human, like the human need for human contact. And if you think about our business, we work with financial advisors. And I sort of view that as a very similar to being a doctor. You go to a doctor for advice on an ailment or health or a parent who's sick, like help me help your mother or father who's going through an ailments. You could type all of that into a computer today and say, my foot hurts and turning this color, whatever it is, and AI will probably give you a pretty good diagnosis of what it is. But God, that doesn't feel good. I'd much prefer to have a doctor sit across from me and say it's this, and here's the medicine or here's treatment, go get it. And I think money and finance is the same way. And so I think AI will make teams that utilize it and utilize it effectively much more productive, much more efficient. Maybe even more impactful to their clients. But at the end of the day, the client is gonna wanna talk to them versus a chat bot about retirement or planning or how do they deal with their kids and what does their estate look like and tax consequences and things like that. So I'm a skeptic that AI will dramatically change the financial industry. I still think it'll be financial advisors 30, 40, 50 years from now. The way those financial advisors function, I think will be enhanced by AI, the way we work as a distribution company, the way our partners at Wellington Schrodes invest will be enhance by it. But I'd be very surprised if there's an AI financial advisor out there that beats the best financial advisors out there. That would be a bit of a shocker.

Jon, one thing that, and I'm certainly not an expert, but one thing I read recently, which made a lot of sense to me, is thinking about AI not as a glorified search engine, but when you can use it to examine your processes. How have the team and I done things for, even if you're in a very creative kind of a setting, you're trying to think of new things or new ideas? Just the suggestions that I've found that can come from it have been very, very helpful. So again, not just using it to search out information as a glorified search engine, but really thinking about how could I have it look at what we're doing and suggest improvements or maybe gaps in what we are doing today. So just a thought for our listeners if that's available to them. Think a little more broadly about it.

Yeah, and it's always worth the shot, right? It's costless. Exactly. So you can type it into chat GPT or Copilot and if it doesn't give you the answer you want or it's not helpful, you just wasted five minutes. Who cares? And I agree with you, JD. I think it's worth experimenting with it. It is change, so change is hard, but get used to using it. I'd be willing to bet that most people that experiment with it at least a little bit will find some usage for it within their business. That makes them more efficient.

How are you encouraging your team here at Hartford Funds to utilize it in their roles and ultimately for advisor consultants to strengthen their relationships with financial professionals?

Yeah, so we touched on this at the beginning of the podcast about data. So data can be overwhelming. And I think you can drown in data. And it could be analysis paralysis a little bit. And so I think thinking about, I like the way JD talked about processes, right? Being a good wholesaler means that you have very repeatable and easy-to-understand processes. As you understand them, but. You know, someone else who sat in your seat may not quickly understand them. But AI can help you with those processes, right? How much data do I need to make myself the most effective salesperson I can be with my top 50 clients? Put in a couple of queries into AI, and you might get back some suggestions on how you run your week, your month, how you interact with those advisors. And at the end of the day, our best wholesalers are trying to be business partners. They're trying to add value to those advisors they work with. And so I think using AI in that way can be really, really effective. From a management perspective, I ask all my people to use it at least weekly, right? Just go in there and try it. Use it to help you edit an email, help you with your business plan, help you your goal setting, communicating to your ACs, et cetera, helping you with your schedule. They travel a lot. So what makes the most sense over the next three months? And I'd readily admit to varying degrees of success and feedback. But I think, you know, we're slowly moving towards a world where it should become fairly natural. I'm going to use AI to help me with this. Not everything, but with certain parts of what they do day in, day out.

Well, Jon, I'm gonna go back to a statement you made a few minutes ago before we started talking about AI, where you said there's always a place for empathetic face-to-face human connection. And that's what Julie and I want to experience with you right now for all of our listeners. We do this thing called the lightning round. And look, no AI engine is gonna be able to give us the answers to the questions we're about to ask you, but here's what we do. We're gonna fire some questions at you. We want kind of top-of-mind answers to them and maybe just a sentence or two about why you think that way. It always brings out a few laughs. So if you're a game, we'll start. Let's go. I can't wait. Julie, why don't you start.

So for our listeners, by your accent, it's probably no mystery that you're from Australia. I'm curious to know what are some of your favorite Aussie words that we don't necessarily have that weave into conversation whenever you can.

Crikey is a good one. Sort of an exclamation of surprise or respect. Boot, that's the trunk of a car. Maccas, McDonald's. I'm not a big McDonald's fan, but you know, driving down the road, I say to my kids, there's a Maccas and they still look at me like I'm crazy. I'll leave it at that.

Okay, perfect. I learned something new.

Jon, what's the first concert that you ever attended?

So INXS, back in, I'm trying to remember the year, 1986 or 87, I believe, with my older sister, who was a huge INXS fan, and for those of you that remember INXS, they had a very handsome male lead singer. So I tagged along with her, great concert, thoroughly enjoyed the show. But if I went back in a time machine, I'm not sure I'd pick INXS as my first concert.

What's your go-to karaoke song?

Wow, I got to go with Down Under. It's an easy one. I know all the words, you know, it fits the bill. So yeah, that one, or Hell's Bells.

Jon, are you a podcast guy, a book guy, a little of both? And I've got a part B to that question, depending how you answer it. What are some of your favorites that are either a book you're reading now or have recently read or a podcast that you're a regular listener of?

Yeah, so I do a lot of audio listening, both podcasts as well as books. I struggle, give my travel schedule, and maybe it's just because I'm getting old. If I open up a book and read two pages, I'm generally asleep. So listening, whether it's in the car or working out or on a plane is generally how I absorb material like that. So on the podcast front, I'll give you two. There's one from Bloomberg called Odd Lots. Financial podcast. I think it's really good. And they sort of explore niche boutique areas of the market. Sometimes they go big picture and talk about the economy. But it might be the business of chickens in the US, for example, like something you'd never really thought about. But once you start listening, you get hooked. And you're like, Oh, my god, I have no idea. That's how the chicken industry worked. Another podcast I love listening to is the Bill Simmons podcast. And huge basketball fan. He's a huge basketball fan. So Generally, you get a lot of sports stuff on there. On the book front, I'll give you two books. So one book is called Rogue Heroes. So it's about the history of, or the beginnings of, the SAS, which is the British basically elite special forces in World War II that led to the rise of MI6, as well as the CIA. Fascinating story. It's hard to believe that. There were human beings alive that lived the way some of these soldiers did at that time. But it's told like an adventure story through diary entries and letters and things like that. It's really good. And then the one I'm reading right now is called The Ascent of Money, which takes you through the history of currency, stock markets, and bond markets. Sounds a little dry, but it's also told in story format. So, you get into sort of... The rise of the debt markets, which happened in Italy in the 1400s. And so I don't know, I view history as very important context for understanding financial markets. As I said earlier, meme stocks were around 100 years ago, which is hard to believe, but they weren't called meme stocks. They were called whatever they were back then. But it is amazing how much similarity there is, and this would sound shocking, between things like notes of collateral. Back in the 1400s. And it wasn't collateral like you would think about today, not a business, not a house, not piece of property, it might have been vases of wine, or cattle, or things like that. So, I don't know, I love stuff like that, I love history about our industry, I love the history about the financial markets, and you know, occasionally a little military history.

Outside of the podcast app, what is your favorite app on your phone?

It's a tough one, probably the weather app.

I hear you.

Probably because of the time of year. I'm checking it multiple times a day to see if just in case there's a 60-degree day around the corner.

John: What's your favorite way to spend a Sunday morning?

Jon: Oh. Probably taking my dogs to the beach. So we live down by the beach. I have two boxers they’re big dogs They need to run and in the winter time you can take them to the Beach and there's no one there because it's freezing Cold and they love to run but it's a beautiful spot I love seeing the dogs happy. And probably because you might have expected, oh, I was spending time with my kids. My kids are teenagers, so they sleep in until they don't want to spend time with you. So I spend afternoon with the kids, morning with the dogs.

Perfect.

At least the dog's happy to see you.

Oh, exactly. I could go down and get the mail and the dog is happy to come back in.

What's one thing you always pack with you when you travel?

Uh, one thing I always pack with me when I travel, um, I, it's a boring answer, but iPad cord, so yeah, it to work. It's, you know, communicating with the family, things like that. I don't have a good luck charm. There's no, you

Clorox wipes?

No clocks, wipes, nothing like that. I'm a big believer in get your hands dirty and that's how you stay healthy.

My last question is if you had a time machine and you could take it for one trip, when and where would you go?

That is a really good question. So I'll try and shorten this answer up. So my grandfather on my dad's side spent his entire career in the military. He served in World War II, the Korean War, and the Vietnam War. And had, as a kid growing up and spending time with, had some of the most interesting stories you've ever heard. But one of the parts of his life that he didn't talk about much was Part of World War II, he was stationed in Papua New Guinea. And after, when he retired in the late 60s, early 70s, he spent time in Papua New Guinea with the natives that he'd gotten to know when he was in the military. And I've seen some photos and he's dressed in not quite traditional native garb, but he's gone on hunting trips with the Natives. And I asked him when I was a kid, why did you do it? And he said, because they became my friends. And I would love to go in a time machine and put some bug spray on and spend a week with him when he was doing that.

That's a great answer.

You know, probably a unique one, but that's.

My final question is, what is something that our listeners would be surprised to learn about you?

Ah, surprised to learn about me. I don't know, I can give you any answer. I'm a terrible golfer. I'm an mediocre tennis player. I grew up surfing, but I can barely stand up on a surfboard anymore, because I've got old man hips. I love spicy food. And, yeah, I love art movies. That might surprise you. Love a good foreign film. I need the subtitles, but.

Excellent. Well, thank you so much for joining us today on the Human Centric Investing Podcast. We're so excited to have you and we're so excited to have you in your new role here at Hartford Funds and to be in this special new studio space.

J.D., we miss you in the studio.

We'll have you there soon enough. Thank you both. Thanks, John. Talk to you soon. All right. Thank you.

Thanks for listening to the Hartford Funds human-centric investing podcast. If you'd like to tune in for more episodes, don't forget to subscribe wherever you get your podcasts and follow us on LinkedIn, Twitter, or YouTube.

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