Don Phillips: We’re All in the Behavior Modification Business


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Early influences
• The paper-boy years: Don’s early investing influences (1:40)
• The magic of mutual funds: “Sir John Templeton is my personal money manager” (2:45)
• “I had gotten married”: How an aspiring literature professor became Morningstar’s first mutual-fund analyst (4:00)

Building Fund Research
• “Dark days”: What it was like in the fund industry of the 1980s (5:20)
• Democratizing data: When the freshest fund stats were nine months old (7:10)
• Getting them to answer the phone: How Morningstar’s fund database was built (8:30)
• “Putnam wouldn’t talk to us”: How pull demand (i.e., a reporter’s background notes) changed that (9:45)
• “My first job was to read 777 mutual fund prospectuses” (11:20)
• Don’s “el-train” indoctrination to investing (12:10)
• “Not interested (click)”: Opening doors in the early days (13:00)
• “It’s who you surround yourself with”: How to build a team (14:20)
• “Their funds are better than some, not as good as others…”: Morningstar’s approach to serving the financial journalists that called on it (16:10)
• “They found us”: Connecting with our audiences, finding our voice (17:00)
Analyzing Funds, Finding Our Voice
• “Let’s add a gold fund”: Behind the development of the Morningstar Style Box (18:00)
• “You had to be an insider to know that Windsor was a value fund and Janus was a growth fund”: Turning the tables on fund-company marketers (19:05)
• “Lies, Damn Lies, and Fund Advertisements”: Facing down a fund company’s libel suit (21:45)

Achieving Better Outcomes
• Low-cost trend means “better and better deals for the investor” but beware unintended consequences (23:00)
• It’s not the only thing: “You can have a low-cost portfolio that’s wildly inappropriate for an investor that leads to a disastrous outcome” (25:00)
• “We’re all in the behavior-modification business”: Helping people chart a path to their goals (26:40)
• “I would have closed the (Vanguard) Growth Index Fund”: How the experience you create for investors determines your success in the fund industry (36:30)
• Avoiding the “arms-dealer mentality”: How fund companies can ensure investors have better experiences (39:30)
• “The best thing I can do for my clients…is to go on vacation”: On the wisdom of investing without tinkering, and the hazards of information overload (41:00)
Active vs. Passive Investing (and Remembering Jack Bogle)
• “Passive is getting more active every day”: Finding ways to evaluate algorithms and indexes (28:00)
• “Jack is very much with us today”: Remembering Jack Bogle and his impact on investors and Morningstar (29:10)
• “You can’t get away from arithmetic”: If cost is the enemy then investors probably aren’t overdoing it in fleeing active funds for passive (31:30)
• “To me it’s not an either/or battle”: Don on the mix of active and passive funds in his personal portfolio (32:50)
• Personalization as the new active: “The art of investing is matching investment to investor” (35:00)

The Future of Funds, Advice, and Research
• Imagining the fund industry in 10 years (and its similarity to the music business’s radical transformation): “It may be that the mutual fund is like the old LP” (42:20)
• “Investors have a right to know” the ESG consequences of where their money is going (45:00)
• “Digitizing process”: Using big data to assess the investment process (46:10)
• “When you’re reading literature, you’re seeing the world through different eyes”: The importance of diversity to decision-making and life (47:30)
• “Put it on a little piece of paper and put it in a drawer”: How investment committees can avoid knee-jerk reactions and make better decisions (48:30)
• “The art of investing is the match between investment and investor”: New frontiers in fund research (52:00)
• “There is fee pressure, but there’s also a lot of satisfaction”: How the advice industry evolves amid automation and declining prices (56:30)
• “Fiduciary standards in general are hard to enact”: The intentions are good, but beware bureaucracy, red tape, and unintended consequences (58:30)

• Don Phillips, recipient of 2016 Matthew R. McArthur Industry Pioneer Award
• Sir John Templeton
• Wall Street Week
• Joe Mansueto
• Don’s love of the liberal arts, literature, and business
• Don Phillips, “Reflections on Fund Management, Five Lessons from 25 Years”
• The Wiesenberger Books
• Morningstar Mutual Fund Sourcebook
• Charles Royce
• The Morningstar Style Box
• Vanguard Windsor Fund
• Court of Appeal, Second District, Division 7, California.; Morningstar, Inc., and Don Phillips, Petitioners, v. SUPERIOR COURT of the State of California, for the County of Los Angeles, Respondent. PILGRIM GROUP, INC., Real Party In Interest; No. B075691.
• ESG Investing
• Morningtar Blog: Sustainable Investing
• Janus Funds, Super Bowl XXXI (1997), “Eyes” ad
• “The Evolution of Robo-Advisors”, Morningstar blog (July 2018)
• “The Importance of Asset Allocation” by Roger G. Ibbotson, Financial Analysts Journal, May/June 2010
• “Why Diversity and Inclusion Matter to Investors” by Dan Lefkovitz, Morningstar blog, Dec. 18, 2018
• Cathy Odelbo
• John Rekenthaler
• Lori Lucas
• A Global Guide to Strategic-beta Exchange-Traded Products
• “Strategic-Beta Exchange-Traded Products Continue to Grow, but Show Signs of Maturity” by Ben Johnson, Morningstar blog, Mar. 27, 2019
• “Vanguard Founder Jack Bogle Passes Away” by Dan Culloton and Alec Lucas,
• Invesco QQQ Trust (which tracks the Nasdaq 100 Index)
• Jack Brennan, former Vanguard CEO [to find]
• Sheryl Garrett

12 episodes available. A new episode about every 0 hours averaging 50 mins duration .