gary: welcome to "wall street week." of 2000 eight, bank of america bought legendary investment bank merrill lynch. it was acquired on the catastrophic weekend that saw the demise of lehman brothers and the near collapse of aig. anthony: today's guest is responsible for maintaining the maryland's culture -- the merrill lynch culture. his strategies next. ♪ announcer: this show has never been solely about investments. we have talked about anything that affected people and their money. ♪

announcer: from times square in new york city, the new wall street week. anthony: i am happy to welcome john teal, the hallowed -- the head of wall street management. john: i grew up in maryland. gary: he went to college where? john: i went to green valley state. i learned quickly that football was not in my future. i was living with my brother, paying rent, and i decided i could be broke and warm. so i transferred to florida state. [laughter] gary: did you play at for the state -- at florida state? john: i was an accounting major.

lynch in at merrill 1995 as a financial advisor. i had a cpa. anthony: what was your strategy? john: it is 1989. i am an accountant, not a salesman. i had been sent to sales training in the insurance agency. mentioned they'll kornegay, a public speaking and sales course. you have to get up and speak in front of your fellow classmates. did those help you? -- i learned how to deal with people. i learned to accept people for who they were. it allowed me to really help understand people's point of use and that has made me successful,

not only has a salesman, but as a leader. anthony: how did you go from being a producer to being in management? john: they pestered me. -- they lookede at me as somewhat successful as an advisor. gary: the ceo of merrill lynch came from the producers. for us how important it is management to understand what it is like to be a producer and what that is all about. john: wealth management is a friend. i don't think -- is different. i don't think there is any substitute for the apathy you have to have for clients. your -- i think it would be harder to understand what advisors do for their clients. and: your firm's culture

the behavior you tried to instill in the organization. john: our values have been clear. it was declared that the customers interest must come first. .e are trying to operationalize that is why we have been in support of harmonious standard of care for the industry. it out.to build we want to demonstrate it to the clients. gary: there was a lot of internal training? john: and building the capability said, the technology to make it efficient. and using technology to create capacity. there has been some comments about your belief that a good advisor is a whole advisor. john: i may be older than you do, but at some point in your life, you start to talk about longevity and wellness. i had a job that requires a lot of me.

as a result of that, i need energy. it is really common sense. if you believe in employee engagement and in having a place that people want to work, caring about them is a good place to start. and being well as a way to demonstrate that. so what is that mean? the way you work is important. the science shows -- you can i go at something 14 hours a day and be productive. so you have to take rakes. view of got to make sure that you refresh. food is energy. it is like putting gasoline in your car. you want to put the best energy into your body. anthony: you are not mandating people have to eat certain things or do certain athletic activities. gary: you're going to quit the doritos? john: first of all, i don't do the readers. i do do hot yoga. the average age continues to creep up every year.

i want your thoughts on that, why it's happening, what the solution is and i want to talk about the overall advisor movement. john: let's look at demographics first. advisors are getting older. why is that happening? it's a great business. you actually get better and better with time and experience. and you can keep your mental faculties and you can do it physically for a long time. so we have advisors in their 60's who have a lot of wisdom from their experience and they want to stay involved in their practices. it is their practice. we see a lot of people extending -- gary: does merrill lynch have a mandatory retiring age? john: we don't. as long as advisors are serving saying there -- servicing their clients it's about the

and what the advisors are doing. i'm not ok with it in a vacuum. those clients who are looking at their advisor age along with them are wondering. anthony: what is the solution? john: we are building teams. really trying to do is focus on our development program. we want to hire, train and develop younger people. you have a generational opportunity with the kids of our clients. i will go to my parents and ask for advice. i will even consider the advisor if they treat me as my own self, as an individual, without my parents' agenda. anthony: the robo advisors are targeting your clients' children who are utilizing things like uber and airbnb. john: i'm saying i love the idea that automating investment advice can add capacity to our

advice.' it plays a very important role. we embrace the idea that technology can advance our offering to our clients. gary: what adjustments need to be made in this? low environment what are you suggesting to people? john: change of citations. announcer: like us on facebook and follow us on twitter and instagram. wall street week is sponsored in part by hightower, an unobstructed view.

anthony: one of the things you have to worry about is the different -- the difference between bonds and bond funds. john: you want to look at

several -- similar periods of rising rates. if you want to ensure yourself that you are not going to have to exit at a point where it is dangerous for you potentially, that is really where a portfolio of individual securities probably makes more sense. you get permanent and definition. with a bond, you can hold it to maturity. to fundis what you need your lifestyle, that is probably the better way. anthony: this is something that i think a lot of people will worry about. youou buy a bond at 100 and earn an interest rate of acts over a period of time, when the bond matures, let say in five years, you make the interest and the $500 back. maturity,l it before it depends on where interest rates are in terms of the price you ask again for the bond. that bondave gone up, will trade at a lower level.

since rates have gone down, bonds or training of previous -- or premiums. john: you'll get back less than the principal, but hopefully the long-term thinking of what you paid for that bond has been factored in. a bond fund, there is no terminal maturity. gary: you have gone out into the marketplace and explain to a lot of people who are self -- who are super focused on their careers, things that they need to be focused on in the world of investing. funds,tives, hedge private equity, things like that -- how do they fit into your portfolio recommendations for your clients in this type of a market? john: let's take them separately. they have different jobs to do in the portfolio. let's take hedge funds. typically, you see the name. a hedge fund will look to lower the volatility of the portfolio by producing non-correlated returns, returns that don't move in the same direction as the stock or the bond.

that is value to our clients. if anything, folks really struggle with volatility. if the hedge fund can play that role, that is an important role. gary: you tell your client you want to use hedge funds in your portfolio to lower the volatility but reach your actuarial grows -- goals. expect awe still return, we just expected to perform differently in different periods of stress. gary: how does private equity fit in? john: you are allowing a longer investment cycle time and allowing the management team a little bit longer term, less quarter to quarter focus on their performance and allow them to do what they need to do to build a business. gary: what adjustments need to be made in this low rate environment to generate real returns? john: change her expectations. that ourre saying is

job is to help deliver returns that the financial markets provide. if they don't provide adequate returns, we have to think about something else. we have got to save more. we have to think about extending your work life. we have to think potentially of a second act in retirement. they key is we really want to be really transparent about the progress you are making towards that retirement goal. a greatthink this is message. expectation management and dealing with a retail -- the reality of the world the way it is. john: advisors are invested in the same things that their clients are. it goes beyond advance -- investing. it is our process. i consume our process from beginning to end. i want to know whether my goals are funded or not. i want to use a capabilities in the organization. and vessel along -- i have his equity portfolio and a

few other separate accounts. but absolutely, 100% of my money is at merrill lynch. maybe that is obvious. but it is the way i engage, as a client and not the leader of this business. >> i am watching "wall street week." announcer: sign up for the weekly wall street week news leader where we recap the financial markets and dive deeper into the most decent -- most recent episode. go to wallstreetweek.com and sign up today.

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anthony: we are back with john also rob sechan and jon hirtle. jon you have defined the researchers officer. in business 47en years. we are managing families, endowments, foundations and pension funds nationwide. anthony: a client walks into your shop and you say you will do the investment folio. jon: we are copying ourselves against the leading chief investment officers in the world. gary: talk about where you think the world is in 2016.

rob: we think there is a lot to stay constructive on risk assets. we are at an inflection point where the fed has decided to higher rates. as such, we want to be more selective in how we identify and implement investments for clients. anthony: when more risk comes in, is one of the derivative effects rising rates? q en zero rates were all about taking fall out of the market. now we will introduce it back into the market. the obvious obligations of higher rates for emerging markets and the fed mandate or expanded mandate of global conditions and what is happening there, i think what you're going to see is the possibility that that spills over into the real and business confidence,

investor confidence, consumer confidence, lending, and ultimately could have an impact on our economic -- qe asy: you talked about an attempt to take volatility out of a market. the idea was that quantitative easing program's make things one directional. that was your point. going up,ne and rates the expectation of more volatility in the stock market. rob: why do i care so much about volatility? why am i afraid of volatility? it's an opportunity to buy. u.s. equities better than bonds. i like non-us equities, meaning develop marketings -- developing markets even better. so now volatility is my friend. john: there is value emergingpl. as i said in my state of the union address, ensuring the security of the united states

and the safety of our people demands a smart, patient, and disciplined approach to the world. and that includes our diplomacy with the islamic republic of iran. for decades our differences with iran meant that our governments almost never spoke to each other. ultimately that did not advance america's interests. over the years, iran moved closer and closer to having the ability to build a nuclear weapon. but from presidents franklin roosevelt to john f. kennedy to ronald reagan, the united states has never been afraid to pursue diplomacy with our adversaries. and as president, i decided that a strong, confident america could advance our national security by engaging directly with the iranian government. we have seen the results. under the nuclear deal that we, our allies and partners reached with iran last year, iran will not get a chance on a nuclear

bomb. the region, the united states, and the world will be more secure. as i said many times, the nuclear deal was never intended to resolve all of our differences with iran, but still engaging directly with the iranian government on a sustained basis for the first time in decades has created a unique opportunity, a window, to try to resolve important issues. iran moved ahead with the nuclear program and before the deal, it had installed nearly 20,000 centrifuges that could enrich uranium for a nuclear bomb. today iran removed more than two thirds of those machines. before the deal, iran was

increasing its stockpile of enriched uranium, enough for up to ten nuclear bombs. today more than 98% has been shipped out of iran, meaning iran doesn't have enough material for even one bomb. before iran was nearing completion of a reactor capable of producing plutonium for the bomb. the core of that reactor has been filled out and filled can concrete so it cannot be used again. before the deal, the world had relatively little visibility into iran's nuclear program. today inspectors are on the ground and iran is subjected to the most comprehensive and intrusive inspection regime ever negotiated to monitor a nuclear program. inspectors win monitor 24 hours a day, 365 days a year. for decades to come inspectors will have access to iran's

entire supply chain. if iran tries to cheat, we will catch them. the bottom line is this, where iran was expanding the nuclear program, we have now cut off every single path that iran could have used to build a bomb. it would have taken iran two to three months to break out with enough material to rush to a bomb, we have extended that breakout time to a year. and with the world's unprecedented inspections and access to iran's program we'll know if iran ever tries to break out. now that iran's actions have been verified, it can begin to receive relief from certain nuclear sanctions and gain access to its own money that had been frozen. and we have achieved this progress through diplomacy.

without resorting to another war. by working with eye reason on this nuclear deal. some folks in washington said it was the start of another hostage crisis. we work with the iranian government and secured the release of our sailors in less than 24 this brings me to a second major development. several americans unjustly detained by iran, are finally coming home. in some cases some of these americans faced years of -- i gave these families my word, i made a vow we would do everything i n loved ones.

we have been tireless. on the sidelines of the nuclear negotiations, our diplomats at the highest level, including secretary kerry used every meet to push iran to release our americans. i did so myself in my conversation with president rouhani. after the nuclear deal was completed, the discussions between our governments accelerated. yesterday these families finally got the news they had been waiting for. jason rezaian is coming home. a courageous journalist for "the washington post" who wrote about the daily lives and hopes of the iranian people, he's been held for a year and a half. he embodies the brave spirit that gives life to the freedom of the press. jason has already been reunited with his wife and mom. pastor saeed abedini is coming home. held for 3 1/2 years, his unyielding faith has inspired people around the world in the

global fight for uphold freedom of religion. now pastor abedini will return to his church and community in idaho. amir hekmati, he's been held for 3 1/2 years. his family are giving thanks. two others have also always been, nosratollas khosravi, and matthew trevithick. their cases were largely unknown to the world, but we can all celebrate their release. i want to thank my national security team, especially secretary kerry, susan rice, bret mcgirk. >> admiral baines, ben rhodes,

other whole team worked tirelessly to bring our americans home to get this work done, and i want to thank the swiss government, which represents or interests in iran for their critical assistance. meanwhile, iran has agreed to deepen or coordinate as we continue to locate robert levinson, missing for more than eight years. even as we rejoice in the safe return of others, we will never forget about bob. our hards are with the levinson family and we will not rest until their family is -- six iranian americans and others are being granted clemency. they were not charged with terrorism or any violent -- they're civilians, a one-time gesture to iran, given the unique opportunity by this mom and the larger circumstances at

play, and it reflects our willness to engage with iran, even as we secure the national security of the united states. so nuclear deal implemented. american families reunited p the third piece of this work that we got done this weekend involved the united states and iran resolving a financial dispute that dated back more than three decades. since 1981, ar our nation severed diplomatic relations, we worked through an international tribunal to resolve various claims to our countries. united states and iran are settles a long-standing claim against the united states government. iran will be returned its own funds, including appropriate interest, but much less than the amount iran sought. for the united states, this settlement could save us billions that could have been pursued by iran. there was no benefit to the united states in dragging this

out. with the nuclear deal done, prison vp prisoners released, the time was right to resolve this dispute as well. of course, even as we implement the nuclear deal and welcome our americans home we recognize there remains profound differences between america and iran. -- including the threats against israel and our gulf partners, and its support for violent proxies in places like syria and yemen. we still have sanctionis on ira for its violation of human rights, for its support of terrorism and for its ballistic mitch program. we will continue to enforce these sanctions vigorously. iran's recent missile test, for example, was a violation of its international obligations. as a result, the united states is imposing sanctions on individuals and companies working to advance iran's

ballistic mitch program, and we are going to remain vigilant will about it. we're not going to waver on the defense of our security or our alice and partners. i do once again want to speak directly to the iranian people. yours is a great civilization with a vibrant culture which has so much to contribute, in commerce, science, the arts. for decades your government's threats and actions to destabilize your region have isolated iran from much of the world. now our governments are talking with one another. following the nuclear deal, you, especially young iranians have the opportunity to begin building new ties with the world. we have a rare chance to pursue a new path, a different, better future that delivers progress for both our peoples and the wider world. that's the opportunity before the iranian people. we need to take advantage of that. and to my fellow americans,

today we're united in welcoming home sons, husbands and brothers who have endured an absolute nightmare, but they never gave in and they never gave up. at long last they can stand tall and breathe deep the fresh air of freedom. as a nation, we face real challenges around the world and here at home. many of them will not be resolved quickly or easily. but today's progress, americans coming home, an iran that has rolled back its nuclear programs and accepted unprecedented monitoring of that program, these things are a reminder of what we can achieve when we lead with strength and wisdom, with courage, resolve and patience. america can do -- and has done big things when we work together. we can lead this world and make it safer and more