Tom Hackett on the Truist Securities approach

Lynn Norris:

Welcome to Navigating Beyond the Expected, a new podcast from Truist Securities. I'm your host, Lynn Norris, and today, I'm talking to Tom Hackett, the CEO of Truist Securities. Hi, Tom.

Tom Hackett:

Hi, Lynn. How are you?

Lynn Norris:

I'm great, and I'm so glad you're here. Tom, it's so great to have you as the first guest on the podcast. So, tell us a little bit about yourself. You're the CEO of Truist Securities, of course, but what's your favorite part of that role?

Tom Hackett:

That's a good question. It's funny when you've been doing this as long as I've been doing it, sometimes the individual transactions run together. That's not really the part that you think about the most. I think what you think about the most is the people and whether those are clients or whether those are our team or other people in the community. I think the real memorable moments in this business and maybe the thing I'm the most proud of is really, as our business has evolved and we've created some opportunity for our clients, we've created some opportunity for our teammates. When I think about the time that I've been in this seat, that's probably the thing that's really front of mind for me.

Lynn Norris:

Well, your position gives you a unique vantage point on everything going on in the world of corporate and investment banking, topics that we're going to talk about on this podcast. So, what's the biggest shift you're seeing in what business leaders need from their financial partners right now versus, say, three or four years ago?

Tom Hackett:

Yeah, it really has changed dramatically. Access to information at depth is everywhere, and on the surface, that sounds like it'd be a really positive thing. In a lot of ways, I think it is, but I would tell you the how to interpret all that data and how to interpret all of that information really is advice. So, I think advice is more valuable today than ever before. If you go back in our industry 5, 10, 15, 20 years ago, there was much less access for our clients to get at market information that now is really readily accessible, but all of that information is very easily misconstrued and misunderstood. So, having an advisor next to you helping you navigate through this sea of information and data that's out there, I really think that's not just the theme today, but it's going to be the theme going forward.

As new tools like AI and other things come into the market in a more prevalent way, having someone next to you who understands your goals and objectives, is really taking the time to understand you as a person can then help you navigate what sometimes can become almost an overwhelming amount of information.

Lynn Norris:

Well, our new podcast is called Navigating Beyond the Expected, and there's a series of informational videos, articles, and other content on the Truist website around that “beyond the expected” theme that our listeners should check out. But what does the phrase “beyond the expected” mean to you? How does Truist Securities live up to it?

Tom Hackett:

I really think it starts with understanding, and understanding from my perspective, step one of that is listening. So, to be able to deliver beyond someone's expectation, it requires a fundamental understanding, not just about the outcome that they're trying to drive in a particular situation, but really where they want the journey to take them or their company or their family or their area of responsibility. So, I think to be able to really deliver beyond the expected, it starts with a fundamental understanding of really what our clients want to achieve long-term and then we create that together and there will be twists and turns and surprises and positives and negatives along the way.

But if our relationship is grounded in that understanding, we'll work through all of those things together. We may have thought that we were going to go down a certain path and we decide together to go down a slightly different path, but that's okay as long as that path gets us to where our client wants to get to. I think that's really how you delight clients and go beyond what they expected from their financial partner.

Lynn Norris:

Well, on this podcast, we're going to be talking to a lot of Truist Securities' senior executives about their particular areas of expertise. What do you hope the business leaders who listen will be able to take away from those conversations?

Tom Hackett:

The first would be confidence. In all fairness, when you ask us to execute something on your behalf that we show up with the industry expertise, the product expertise, the technical expertise to drive outcomes that you're going to be really proud of and that your board or others that are inside your organization are going to be really proud of. I'd say that's number one. I think the second takeaway from my perspective is that it really is a team here and that when you say something to one of us, it's reasonable for you to expect that the full team understands what you've shared with us. We have this little expression internally that when you hang up with the client, who needs to know what you just learned?

So we try to keep that and reinforce that message with all of our people because it's not our client's job to communicate to all the members of our team. That's our job. So, when we share that information well, then all of a sudden you get more people thinking about an opportunity or a problem or what have you and then the answer really is well-grounded in multiple ways of thinking about the problem. So, I think we have the expertise to deliver on your behalf, but also, it's the collective effort of our full team that's well synchronized that helps you get there as quickly and as seamlessly as we can get you there.

Lynn Norris:

Let's talk a bit more about this, about how your team actually brings the beyond-the-expected mindset to life day to day. But first, put Truist Securities in context in the industry. Describe your firm for us and the kinds of clients that you work with.

Tom Hackett:

We serve all kinds of clients across the board from large public companies to privately owned, entrepreneurial businesses; from the biggest of the global big to the development stage company that's working on something that's never been seen before. It's corporations, it's private equity clients, it's municipalities. On our trading businesses, it's some of the world's largest investors in both on the equity side and the fixed income side, but also some of the smaller niche players that are out there. That interconnectivity with different types of clients in total fairness is really an important part of the...

I don't know if I should call it secret sauce, but one of the things that's really important to us, because every one of those conversations that we learn a little something and our point of view is more fully developed or rounded out. That puts us in a position to be better advisors and be better partners for our clients. So, we didn't build this place over the last 20 years or so to focus on a specific client type. What we do is we really try to seek out those clients that we think will benefit from the breadth of our capability and the breadth of our experience and then go super deep with them and, like I said at the beginning, really try to understand what they're trying to accomplish. I think in that approach lies the differentiation that we talk about.

Lynn Norris:

Well, with that mix of clients, I'm sure your team gets involved in a lot of complex deals and they're probably getting more complex all the time.

Tom Hackett:

That's true.

Lynn Norris:

What does that increasing level of complexity mean for your team in how they work with clients and with each other?

Tom Hackett:

It's a premium on teamwork, no question about it. There's just an element of humility that's needed in today's market where if you think you know all the answers to a particular challenge or problem, that makes me nervous in total fairness. So, with this level of not just complexity, but I would say the rate of change of these markets which are evolving and changing all the time, if we're not constantly talking to each other and constantly challenging each other and picking up the phone or going to see someone and saying, "Look, I'm working on this thing and I think I know where I'm going with this, but I'd really love your perspective. You've dealt with a different part of the market," and then consider, really honestly consider what comes back from that person.

Without that collaboration and without that creativity, I don't think we would be as good of an advisor as we could be for our clients. The complexity of the market, and again, the rapid changing nature of that market, it really puts a premium on that.

Lynn Norris:

You've said Truist is product agnostic. What do you mean by that and why does that matter?

Tom Hackett:

I think it matters a lot actually. So, as we've built this place over time, our clients have led us in where we develop new capabilities, and I hate to call them products. I guess they're called products, but they're really expertise and capabilities. So, as they have led us by them engaging with us and us trying to address the needs that they have, we've developed a broad set of solutions, I think, is probably a better word than products for this.

It's really important for us to not be so dead set on a particular solution, but really present our clients a range of options because there's always more than one way to do these things. So, through that process of talking about the different options and the positives and the negatives, the pros and cons of all the different options, really two things happen that are important. The first is the client understands the full range of possibilities, which I think is important because that may change their way of thinking or their point of view. But secondly, we learn a whole lot more about that client.

Through that process of talking about alternatives, they are revealing to us what's important to them and maybe even in a slightly different way than an initial conversation that led up to that point. So, for really listening well, as we're talking about alternatives, we come out of that conversation knowing a whole lot more about them and they know a little bit more about us and the options that are out there. It'd be really hard to do that if you really specialized in one thing. While I certainly appreciate the benefit of specialization and inside our groups and inside our solutions, we have that specialization.

But when you can deliver a team that is truly expert across a broad range of alternatives, that's the right way to really think about the art of the possible. That's when creativity finds its way into the process.

Lynn Norris:

That's great. We talked earlier about the senior level access that is important for Truist clients. How do you make that work, especially at scale?

Tom Hackett:

Yeah, that's a really good question. I do think it's really important for us and the commitment that we have made to our clients is that the senior individuals that you've engaged with in the design part of the process are also present and playing a leading role in the execution of whatever solution we decide is the best in any given situation. That's not always the case in our industry, but we have really focused on that and made a commitment, a promise in fairness to our clients that our senior people will lead the full transaction. Your question about scale is a really good one, right? Well, that's great if you do two deals a year, but you do 5,000 deals a year. So, how do you really make that happen? So part of that is the team underneath those senior people.

So, we have unbelievable VPs, associates, analysts that are so willing to give whatever it takes, and that operating leverage that comes from really putting a team underneath the senior person allows us to scale what that senior person is able to address and where they can spend their time. So, we're really thoughtful around how we staff these different deal teams because we have made a commitment and we have told our clients that those senior people will be there. So, I've got to make sure that I'm resourcing that deal team at a level that we can live up to that commitment and that promise. Clients understand that it's a team sport.

They understand that we're going to deliver a full team to work on their project, but a full team doesn't mean the senior person was there to sell you and then the junior people are there to execute. You're going to feel the benefit of that full team throughout the process.

Lynn Norris:

And then to that staffing point, Truist has a strong culture of internal promotion. So, why is that important to the client experience?

Tom Hackett):

Well, I think it's important to the client experience. I think it's also important to who we are as a firm and dare I say, as a family, because I think that's really how I think about our team. There are always going to be moments where we need a particular type of expertise or capability that for whatever reason we don't have in-house. So, we will try to attract the best of the best to be able to address that need, and we've done that. We will continue to do that. That's not a contradiction to what you just said.

To complement that, we have to make sure that the people that are working late nights and giving so much of themselves to make this business go, that they feel like they have a path to and that when they do all the right things for a number of years and really get to know their area of expertise and really get to know those clients and have really demonstrated a commitment to us that we provide them a path that's good for them and their families and give them the opportunity ultimately to run a practice or run a business or what have you. That's something that I stay very, very close to and it's really important to me because, similar to the commitment that I just talked about that we've made to our clients, I've made that commitment to our team too.

So, when I think about in a given year, our senior level position is called managing director. I'm very aware and thoughtful around, all right, let's say, I'm going to make a number up, 50 of those spots get created in any given year. I want to make sure a meaningful percentage of those spots. In most cases, the majority of those spots are giving our internal team an opportunity to grow and expand and I think I owe it back to them to make sure that that path exists.

Lynn Norris:

That's great. We're going to dive into some expertise in a second, but I wanted to hit on that point about advice. You once said that some of the more powerful moments in your career were when you advised a client not to do something. Tell me more about that mindset.

Tom Hackett:

I think that's one of the most obvious demonstration of putting the client's welfare first and ahead of our own. We are a success-based business and that is what our revenue model is, but that's secondary to delivering best advice all the time. I think about it even in my personal life, the folks that I really value in my personal life, whether that's an accountant or whether that's a lawyer or whether that's a real estate agent or what have you, some of the deepest levels of trust that I've arrived with people like that in my life has been when they've told me not to do something. But I know that that's a person who has my best interest and my family's best interest first in their mind.

So, as long as we lead with best advice, if we think it's a great idea, we're going to tell you that and then we're going to tell you how to make it happen. If we think it's an okay idea that if done really well might turn into what you want to, we're going to say that. Then if we think it's an idea that's going to represent a lot of challenges and we're going to do what we need to do to make sure you understand the size of the bet that you're making and the client may decide to still move forward, great.

We're going to support them in every which way we can. This isn't about us being right. This is about us giving good advice. If they decide that maybe it's not the project that they want to put their time and their energy and capital into, I have no doubt that the next time they think about doing something, they're going to think about us first.

Lynn Norris:

I love that concept. It's powerful of best advice. I'm sure your clients rely on you quite a bit for that. Let's talk a little bit more about how your team builds and applies their expertise. Industry specialization is common in the securities business, but Truist Securities has a very specific way of organizing your team. Can you describe that for us and give us insight on why you work this way? You've touched on it a little bit, but let's give a little more detail.

Tom Hackett:

Most people think about sectors, healthcare or industrials or media telecom or what have you, all the different industry sectors. In all honesty, we really don't think about it that way. We have those sectors and the reporting structure has those sectors in it, but at the client level, we're really thinking about subsectors. So, let's pick healthcare as an example. To me, it would be really hard to be expert in what hospitals are doing and if you're a bio, you're covering biotech clients. Those are two very different business models. Sure, they're both healthcare, but they couldn't be more different in terms of the opportunities and the challenges that are facing those different sectors.

So, how we want to be organized is really as narrowly as we can, because we want our folks to be able to go as deep as they possibly can to make sure that the advice they're giving their client is grounded on the most germane information and deepest set of information that that subsector can provide. So, we have a technology group, but we have healthcare information technology actually associated in healthcare because we think that the cross-section of those issues are the most relevant for that client set. The first step in that is really going deep and narrow. For that, that's a subsector approach for us. The second is really beyond just investment banking, which to your point is it's not uncommon in investment banking to see a sector orientation.

We take that sector orientation across the whole bank. So, we have specialization in commercial, we have industry specialization in corporate banking, we have industry specialization in our credit delivery areas, in our risk management areas. So, across the board we have people that are really deep, again in the issues, challenges, opportunities in each one of those sectors. So, when they put their heads together, you're now talking about a group of people who have thought about those opportunities and issues at great depth.

When we're executing on a client's behalf, we have specialization inside our markets area, whether that's research or whether that's equity sales or whether that's fixed income sales, because again, we want to make sure that we've got the highest probability of crafting that story and delivering that story in the most insightful way that maximizes the probability of success in all situations. For us, what we have learned over time is that the deeper you go in that sector orientation, it just increases that probability of success.

Lynn Norris:

Well, given all of that specialization, how do you recruit talent and how do teammates maintain that unique expertise in so much... It's such a changing world, so much goes on.

Tom Hackett:

For us, it's both recruiting and retaining, right? It is going outside where we need to, but then also developing folks internally. I don't want to suggest that in any way that because you have done one thing that you can't do other thing. I don't think that way, but I do think that if you're focused on one particular area and whether that's a product or whether that's an industry or what have you, it is our responsibility to put you in a situation where you have the capacity to go really deep and understand that sector. So, when we're recruiting people, it's really not that hard to test someone's sector knowledge when they're being interviewed by sector experts.

We have a built-in way to develop a point of view on whether or not this person will be additive to that conversation and is as experienced as they need to be, to be additive to the team. My role in a lot of the interviewing for new teammates is really about understanding their commitment to that model too, right? It's great that you've done it, but you've got to want to operate in that environment. So, when I'm talking to somebody about maybe joining the platform, it's about culture, it's about fit, it's about shared priorities and an alignment of principles.

It's all of those things, but it's also hey, let me describe for you how we do things, and I really want you to make sure that you're comfortable with that and you want to be part of that because we're pretty committed to it. You've got to want to be able to build your career inside that framework. The good news is that that's appealing to a lot of people.

Lynn Norris:

You mentioned earlier, but also I've heard you talk about the value of creativity in securities banking. How is creativity connected to expertise?

Tom Hackett:

If you walk down the street and ask five people, "What are the attributes that you associate with bankers?", creativity may not be on the top of that list, but I think there's lots of room for creativity. Part of it is, again, this product agnostic don't think you know the answer approach. Get the benefit of everybody's thinking, I think in their lies some creativity. Part of it is driven by the understanding that we talked about earlier. So, if you're not just thinking about solving today's problem, but you're thinking about how to get a client where they want to go on a long-term basis, sometimes the interim steps along the way, you take a different approach because you're thinking about the end game, not just this immediate transaction.

So, I think in there lies the opportunity to be creative and not just hammer the nail that's right in front of you. This firm, as we’ve built it together over the last couple of decades, we know that if we're not putting innovative ideas and innovative solutions in front of particularly new clients, potential clients, that it's going to be really hard, quite frankly, for them to have a reason to want to trust us and to give us an opportunity. This is probably true in every business. If you show up and say exactly what the incumbent is saying, you can pretty much bet that it's going to stay with the incumbent. I think that's just the way the world works. So, we know as we're building our business over time that if you show up with the obvious, the result is probably going to be obvious too.

So, we challenge ourselves before we engage with our client. Is this different? Is this the winning solution? Is this different than they're going to hear from some of our competitors? And really do our best to try to tackle these problems maybe in a way that's not anticipated.

Lynn Norris:

Well, you told me a good story about creative banking that involved connecting a data center developer and a renewable energy partner.

Tom Hackett:

Oh, right. Yeah.

Lynn Norris:

So explain that deal for our listeners and tell us what that matchmaking says about Truist's role with clients.

Tom Hackett:

It's a good example, and a lot of people are aware that the activity levels around data centers are really at all-time high. As the world changes, and whether it's AI or other reasons to create ability to store data, the need for data centers just exploded. So, we have a big practice and it's across wholesale. Our commercial real estate people are involved in it, our leverage. It's a big team that's all around. It's funny, when you're talking to the data center guys, they were talking about, "We can figure out how to get the data center built. We can figure out the zoning. We can work in partnership with different governments. We can do all those things," but one of the inputs that's really hard for us to really lock down is the energy source.

As we know, data centers are big users of energy and it's a complicated thing, right? Because when we're talking about incremental energy, there's lots of inputs in the right way and the most efficient way to do that. At the same time, we have a great set of clients in and around renewable energy that partner with local landowners and farmers and they create solar farms. There seemed to be an interesting match that could be made between a user, someone who needs access to incremental energy sources, and then a company that specializes in a renewable way to satisfy those needs. So, they both happen to be clients. They both happen to be friends. You two ought to be talking about these problems.

I don't know what's going to come out of it and maybe it's nothing, but we think that there may be an interesting conversation to be had and we're happy to facilitate that. So, the CEO of one company who has become a friend of mine over the years and the renewables company in a similar way, it was very easy for us to put those clients together. They've had a really interesting conversation about creative ways to solve those problems. Then the financing around that I think is also interesting because typically you would think about the financing of that power generation separate from the financing of the data center itself.

Where this has evolved and where we have taken it is really thinking about providing a solution for that entire continuum of need. I think that's interesting to the partnerships that form that ultimately provide these type of assets.

Lynn Norris:

That is quite creative. Okay. So, look ahead for us, Tom. The economy and business conditions are always changing, but when you think about the future, whether that's the next few months, a year, five years, how is Truist Securities going to have to evolve to continue to best serve your clients?

Tom Hackett:

That's a great question and one we're spending so much time on at the Truist Securities level and quite frankly, all the way to the top of the house of Truist. So, I really think that the moment that we sit at right now, this is our industrial revolution and the rate of change that is going to be driven by all forms of AI will fundamentally change not just how we run our business internally, but how we serve our clients. So, we are at the precipice of just fundamental change that's probably going to happen at a rate that's much greater than the other 30 whatever years I've been in this business. That's a little scary in some ways, but it's a massive opportunity.

So, we think about that in a lot of different forms. We think about that as how to create the most secure environment for our clients to interact with. We think about tools for our bankers and our analysts to leverage to be able to come up with the most creative advice and then package that and put that in a way that's the most digestible for our clients as quickly as possible.

Everything we thought we knew, we're going to have to rethink it and relearn it. Through that process, we can't lose who we are. We can't lose in any way. Our commitment to our guiding principles and who we are, those are not negotiable. But the set of alternatives around those will have to evolve, and they're going to have to evolve quickly. Thank goodness we've got a team of people around here that are heck of a lot smarter than I am thinking about these issues. They will help guide us to make sure that the advice and the access that we're giving our clients, whether those are issuing clients or investor clients, are on the cutting edge of what they need and help them transform their businesses.

Lynn Norris:

Awesome. Well, Tom, you've been so generous with your time to help us launch this new podcast, and we've got plenty of your colleagues lined up for future episodes. They're all going to have to try to match up to the CEO and it will not be easy, trust me.

Tom Hackett:

Thank you.

Lynn Norris:

But before we let you go, I've got just a few more questions for you here, and I want you to answer them rapid fire style.

Tom Hackett:

Okay.

Lynn Norris:

Okay. Are you ready?

Tom Hackett:

I'm ready.

Lynn Norris:

All right. What's one item you keep on your desk that might surprise people?

Tom Hackett:

I keep the manual from the Truist Leadership Institute on my desk because it was probably the most fundamental change in my approach to leadership that I've had in my career.

Lynn Norris:

Love it. What was your very first job?

Tom Hackett:

I washed dishes at the Ramada Inn at Delk Road when I was 14 years old, living in Marietta, Georgia. It was a glimpse into why I should study harder.

Lynn Norris:

Okay. What's one piece of good advice you've received?

Tom Hackett:

The best advice that I think I've received is when you think about your own performance in any given situation and I'm one of those people that I replay and replay what I said the day before all the time. Think about your own performance on two dimensions. Not just did you accomplish your goal, but did the people that you interacted with, are they more or less likely to want to interact with you again? If you think about your own performance on both dimensions, then in there your own leadership style will evolve.

Lynn Norris:

That is great advice. Okay. I have one more, and you can take a little more time with this one if you'd like. What's one way you try to go beyond the expected in work or in life?

Tom Hackett:

I really do think that my approach or style or whatever it is, is driven by deep gratitude. I did not grow up in a family that knew much about this world. I was given an opportunity at the beginning to test myself in this way. It has led to other challenges. I am deeply thankful for the role that I get to play and I value it in a very real way. So, for me, it's an honor to do what I do and it's an honor to work with the people that I work with every day, both clients and teammates. So, I think that mentality, for me, I hope anyway, that mentality for me allows me to put forth the effort and take the time to really understand and all of those things that we've talked about in this podcast that are important to how we run our business, it's also really important to how I run my life or at least how I try to.

I think approaching all of this with a sense of gratitude and understanding the opportunity that we've been given and understanding how lucky we are to get the opportunity to write a small part in our client's future. It is a gift and I recognize it as such. I think when you think about life that way, I think it puts you in an opportunity to perform beyond the expected.

Lynn Norris:

Yeah, gratitude is such a powerful mindset. Well, Tom, thank you so much for being here for the first episode of Navigating Beyond the Expected. I hope we'll get to have you back soon.

Tom Hackett:

That'd be great, Lynn. Thank you so much. It's been wonderful.

Lynn Norris:

And listeners, thanks to you as well for joining us on Navigating Beyond the Expected. We've got lots of guests from Truist Securities lined up, and we'll be discussing all kinds of subjects, ranging from healthcare to payments fraud to merger and IPO strategies and lots more. Subscribe today so you don't miss what's ahead. I'm Lynn Norris. We'll talk to you again soon.

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