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Rank #30 in Investing category

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The Long View

Updated 2 days ago

Rank #30 in Investing category

Business
Careers
Investing
Read more

Expand your investing horizons and look to the long term. Join hosts Christine Benz and Jeff Ptak as they talk to influential leaders in investing, advice, and personal finance about a wide-range of topics, such as asset allocation and balancing risk and return.

Read more

Expand your investing horizons and look to the long term. Join hosts Christine Benz and Jeff Ptak as they talk to influential leaders in investing, advice, and personal finance about a wide-range of topics, such as asset allocation and balancing risk and return.

iTunes Ratings

134 Ratings
Average Ratings
117
9
2
3
3

Empowering

By FundMel - Aug 24 2019
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This information helps so much. I feel empowered and know that I can invest affectively.

Fantastic interview/ James Montier

By Derivatives Trader - Jul 30 2019
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Really enjoyed your chat with James Montier. Really smart guest and fantastic questions.

iTunes Ratings

134 Ratings
Average Ratings
117
9
2
3
3

Empowering

By FundMel - Aug 24 2019
Read more
This information helps so much. I feel empowered and know that I can invest affectively.

Fantastic interview/ James Montier

By Derivatives Trader - Jul 30 2019
Read more
Really enjoyed your chat with James Montier. Really smart guest and fantastic questions.
Cover image of The Long View

The Long View

Updated 2 days ago

Rank #30 in Investing category

Read more

Expand your investing horizons and look to the long term. Join hosts Christine Benz and Jeff Ptak as they talk to influential leaders in investing, advice, and personal finance about a wide-range of topics, such as asset allocation and balancing risk and return.

Rank #1: Mark Miller: Less Investment Choice = Better Retirement Outcomes

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Our guest on the podcast today is Mark Miller, a nationally recognized expert on trends in retirement and aging. Miller's work considers retirement holistically, including healthcare and Medicare, Social Security, retirement investing, midlife careers, and housing. Miller is a regular contributor to Morningstar.com, and he also writes about retirement matters for Reuters, The New York Times, and WealthManagement.com. In addition, Miller has written several books, including The Hard Times Guide to Retirement Security and his most recent book, Jolt: Stories of Trauma and Transformation.

Background Information

Related Links

State of Retirement Preparedness in U.S.

The State of Work for Older Adults

Fixing Retirement at an Individual Level

Social Security

Healthcare for Retirees

Aug 14 2019
50 mins
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Rank #2: Maria Bruno and Joel Dickson: 'Building a Better Retirement'

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Our guests for the latest installment of "The Long View," Maria Bruno and Joel Dickson, are both veterans of investment behemoth Vanguard. 

Bruno is the head of U.S. wealth planning research at Vanguard, leading a team responsible for conducting research and analysis on a wide range of retirement, wealth planning, and portfolio construction topics. She also contributes to the oversight of the investment philosophy, methodology, and wealth management strategies supporting Vanguard's advisory products and services. Bruno is a Certified Financial Planner, and she's a fount of wisdom on many subjects, but especially retirement planning. 

Dickson has worn many hats at Vanguard during his long career there. In his current position as Vanguard's global head of advice methodology, he oversees all investment methodology development for Vanguard's advice programs whose end consumers are individual investors. 

The transcript for this podcast can be found here.

Background Information

How Retirement Savers Can Play Catch-Up
"It's the 'how much?' But then also how do you actually direct those savings?" (1:30-2:56)

"It's such an idiosyncratic or individual sort of consideration from a planning standpoint; there are plenty of people that have little wealth but high income." Whether traditional tax-deferred accounts are automatically better than Roth for people playing catch-up on retirement savings. (2:57-5:53)

"It's a little bit simpler when you're younger and accumulating." How basic savings and investing habits, combined with plan defaults, make the accumulation period much simpler than decumulation. (5:54-8:24)

'Off-Label Uses': Ways Supersavers Can Maximize Their Investments Aftertax
401(k): What it is and how heavy savers can take advantage of it. (10:41-12:55)

Backdoor Roth IRA: How it works, who should consider, and potential pitfalls to be aware of. (12:56-16:34)

"There's more and more focus on minimizing income taxes during one's life than there is about avoiding estate taxes." Using a 529 as an additional tax-advantaged savings vehicle. (16:35-21:26)

Decumulation
"How do I meet my goals today but then also make sure that I'm protecting myself down the road?" Why setting spending rates can be so tricky. (21:27-24:26)


"We're telling people to, on average, oversave and underspend." Balancing longevity, sequence risk with spending and quality of life. (24:27-28:35)

"At the end of the day you still kind of get to the same end result." How bucket portfolios may not look very different from traditionally allocated retirement portfolios. (28:36-31:30)

"Retirees could be overexposed to equity risk." Whether retirees aren't derisking their portfolios. (31:31-32:41)

"The rules of thumb just don't work as well." Why managing taxes during retirement is necessarily an individualized process. (32:42-36:24)

"Here you're actually looking at strategies that could accelerate income taxes." How the post-retirement/pre-RMD years are a prime time to control future tax bills. (36:25-39:41)
• "An IRA Conversion Sweet Spot," Morningstar.com video 
• "Age Is Just a Number: Start Thinking About RMDs Now," Vanguard blog post
• "Strategies for Annual Roth Conversions," Vanguard research
• "But What If I Don't Want My RMD?," Vanguard research
• "What to Do With RMDs You Don't Need," Morningstar.com article 

Building Portfolios
"You have human capital risk at the same time you have investment risk." How investors should think holistically about risk when building their portfolios. (39:42-44:37)

"Focus on the things that you can control." What to do if investment returns are muted in the future. (44:38-46:23)

ETF Landscape
"Investors that were more likely to trade chose the ETF." Are ETFs being used for long-term investing or trading? (46:24-49:28)

"98% of the DNA is the same." Whether the benefits of ETFs relative to traditional index funds been overstated. (49:29-51:27)

Vanguard's Personal Advisor Service
"The most important part of the financial planning process is the goal discovery." Why Vanguard's service offers a combination of human and automated advice. (51:28-56:17)

About the Podcast: The Long View is a podcast from Morningstar. Each week, hosts Christine Benz and Jeff Ptak conduct an in-depth discussion with a thought leader from the world of investing or personal finance. The podcast is produced by George Castady and Scott Halver.

About the Hosts: Christine Benz and Jeff Ptak have been analysts and commentators on investments and the investment industry for many years. Christine is Morningstar's director of personal finance and senior columnist for Morningstar.com. Jeff is head of global manager research for Morningstar Research Services, overseeing Morningstar's team of 120 manager research analysts in the U.S. and overseas.

To Share Feedback or a Guest Idea: Write us at TheLongView@morningstar.com

Jul 24 2019
58 mins
Play

Rank #3: Bill Nygren: 'A Stock That Doesn't Look Cheap on the Surface Might Be One of the Cheapest'

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Our guest on this week's installment of The Long View is noted portfolio manager Bill Nygren. Nygren joined Chicago-based Harris Associates as an analyst in 1983 and later served as the firm's director of research. He has managed Oakmark Select OAKLX since 1996 and Oakmark Fund OAKMX since 2000 and has comanaged Oakmark Global Select OAKWX since 2006. In addition to these duties, Nygren serves as Harris' chief investment officer for U.S. equities. For his investing achievements, Morningstar recognized Nygren as its Domestic-Stock Manager of the Year in 2001, and his funds remain highly rated by Morningstar's manager research analysts. A frequent and insightful commentator on investing and markets, Nygren's shareholder letters are a must-read on the Street and beyond. In this far-ranging conversation, he discusses how his team's competitive edge has evolved, how traditional value metrics won't cut it in today's evolving economy, and the lasting lessons of the financial crisis.

Background Information

Related Links

How Stock-Picking Has Changed and What Defines Value

Portfolio/Risk Management

Portfolio and Holdings

About the Podcast: The Long View is a podcast from Morningstar. Each week, hosts Christine Benz and Jeff Ptak conduct an in-depth discussion with a thought leader from the world of investing or personal finance. The podcast is produced by George Castady and Scott Halver.

About the Hosts: Christine Benz and Jeff Ptak have been analysts and commentators on investments and the investment industry for many years. Christine is Morningstar's director of personal finance and senior columnist for Morningstar.com. Jeff is head of global manager research for Morningstar Research Services, overseeing Morningstar's team of 120 manager research analysts in the U.S. and overseas.

To Share Feedback or a Guest Idea: Write us at TheLongView@morningstar.com

Aug 07 2019
57 mins
Play

Rank #4: Jonathan Clements: 'It's in Wall Street's Interest to Make Everyday Investors Think That They Are Stupid'

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Our guest on today's podcast is Jonathan Clements, the founder and editor of the website HumbleDollar. Clements has been a prolific and influential writer over his several-decade career. Prior to starting HumbleDollar, he was the longtime money and investing columnist for The Wall Street Journal, where he wrote more than 1,000 columns. After he left The Journal, Clements spent six years heading up investor education at Citi Personal Wealth Management. He has also authored seven investment books and a novel, including the Jonathan Clements Money Guide, How to Think about Money, and From Here to Financial Happiness.

Background Information

Related Links

Frugality and Setting Financial Goals

The Role of Advisors in Improving Outcomes

Whether Investors Undermine Their Results With Bad Behavior

Retirement Decumulation

Asset Allocation and Investing

Jul 31 2019
53 mins
Play

Rank #5: Josh Brown: 'Standardize the Process, Personalize the Advice'

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Our guest on this week's episode of the Long View is none other than Josh Brown, CEO of Ritholtz Wealth Management. Brown's story is unique and inspiring. He began his career as a broker but grew disillusioned with the industry's skewed incentives and practices, eventually pursuing a career as an independent Registered Investment Advisor. Along the way, Brown managed to author an acclaimed book, Backstage Wall Street, and build an enormous following around his blog, "The Reformed Broker," as well as his twitter handle, @reformedbroker. Now he oversees Ritholtz's day-to-day operations in addition to his other duties, which include serving as a regular contributor on CNBC, as a member of fintech firm BrightScope's advisory board, and most recently as a technical advisor on the Showtime hedge fund drama Billions.

Introduction and Background

Origin Story
"A personal crisis." Josh describes the epiphany he had in leaving the brokerage industry for the advice business after 10 years (1:20-3:41).

"It worked immediately." How the Reformed Broker blog was born and led to a chance meeting with Barry Ritholtz, which gave rise to an RIA (3:42-5:21). 

The Advice Business
"If they haven’t figured it out by now, they probably don’t want to." Observations on how the advice business has changed (5:22-7:29).

"Brokerages in name only." Why wirehouse clients aren't necessarily being ill-served by the system (7:30-8:09). 

Lending: The key difference between a fee-based account at a Wall Street wirehouse and a fee-based account at a traditional RIA (8:10-10:34).

How to Provide Financial Advice
Telling the client "no." The difference between pushing product and offering advice (10:35-12:16).

"It's recreation; it's not a necessity." Helping clients to scratch an itch without putting their financial plans at risk (12:17-14:53).

"Financial planning is the highest calling within our profession." Ensuring clients get past the firm's public persona and truly buy into its plan and approach (14:54-16:46).

An ensemble approach to delivering advice to clients: The anti "eat what you kill." (16:47-18:58).

How to Build an Advice Firm
"Barry and I don't spread out a map like Napoleon and start sticking thumb-tacks in it." How Brown thinks about strategically expanding the firm (19:04-20:45).

"If somebody comes to us in a rush, it's probably a bad situation, and we don't want anything to do with it." The advisor recruitment and weeding-out process (20:46-24:23).

Portfolio Construction and Asset Allocation
"You're going to lose money. It's gonna happen. There's no way around it." The firm's approach to allocating assets and setting client expectations (24:24-27:33).

Tactical asset allocation's role in their process: "We don't believe in investment alpha using tactical." (27:34-29:33) 

"What if you had a tactical model that almost never did anything?" How they built their tactical-asset-allocation overlay to help manage client behavior (29:34-33:13).

"I hope it underperforms, because most of our clients' money is not invested in tactical." (33:14-35:03)

"Every client is different, but their needs are not." Implementing a scalable asset allocation (35:04-37:08).

"You want to be wrong in such a way that it's not going to be catastrophic for the end client." How Ritholtz sets capital-markets expectations (37:09-38:41).

Managing Client Assets
How Ritholtz approaches assets that clients bring in with them: "You've got a human being with their own issues." (38:42-40:58) 

"The longer I'm doing this, the more stuff I want to take out, not add." Brown explains why they err on the side of excluding various types of investments from client portfolios (40:59-42:33).

"Our clients are here because they want us." Brown says fee pressure hasn't been an issue for the firm (42:34-44:22). 

The Future of Advice
"You're being judged on the portfolio, you should get paid on the portfolio you recommend." Brown is dubious of clients who aren't willing to pay for advice as a percentage of assets under advisement (44:23-46:50).

How a chocolatier's success reinforced the importance of consistency in client interactions: "Standardize the process, personalize the advice." (46:51-50:25) 

Jun 26 2019
53 mins
Play

Rank #6: James Montier: 'How Do I Get Paid for Owning This Asset?'

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Our guest on this week's installment of "The Long View" podcast is James Montier. Montier is a member of the asset-allocation team at Grantham, Mayo, Van Otterloo & Co. Before joining GMO in 2009, he was co-head of global strategy at Societe Generale. A prolific and incisive writer, Montier has authored several books, including Behavioural Investing: A Practitioner's Guide to Applying Behavioural Finance; Value Investing: Tools and Techniques for Intelligent Investment; and The Little Book of Behavioral Investing. He's also a regular contributor to GMO's library of white papers and research studies on topics ranging from productivity, strategic asset allocation, contrarianism, and more. In addition to his duties at GMO, Montier is also a visiting fellow at the University of Durham and a fellow of the Royal Society of Arts.

Background 
Grantham, Mayo, Van Otterloo & Co.

Behavioural Investing: A Practitioner's Guide to Applying Behavioural Finance by James Montier 

Value Investing: Tools and Techniques for Intelligent Investment by James Montier 

The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy by James Montier 

GMO's research library

Montier's articles in GMO's research library

Montier's Role at GMO
"My role is essentially to be difficult, and it turns out I'm quite good at that." Montier describes his role at GMO and how his contributions to the firm are measured. (1:10-3:11)

Fostering Debate at GMO
"We have never had a house view." Why debate and constructive devil's advocacy is welcome at GMO. (3:12-4:31)

"Investing is one of those fields where there is almost constant evidence that we are all wrong." How to foster humility and a diversity of views. (4:32-7:38)

Debating Jeremy Grantham on mean reversion: Montier gives an example of an issue the team has debated recently--how long it takes for markets to revert to their long-term averages. (7:39-9:36)

Forecasting and Portfolio Construction
How the debate over mean reversion informs GMO's asset-class forecasts. (9:37-10:09)

Corporate concentration and low interest rates: How GMO is reconsidering these variables and their impact on the asset-class forecasts it makes. (10:10-11:38)

"The Idolatry of Interest Rates, Part II: Financial Heresy and Potential Utility in an ERP Framework" by James Montier and Ben Inker (Aug. 11, 2015)

How GMO incorporates its asset-class forecasts into the multi-asset strategies it manages. (11:39-12:37)

  • GMO Benchmark-Free Allocation III GBMFX  

The appeal of a "robust" forecast that's meant to help portfolios withstand various potential outcomes. (12:38-14:15)

"Our portfolios look a little freakish." Montier explains why GMO is U.S.-stock-phobic and, conversely, why the firm is finding value in alternatives. (14:16-18:04)

Career risk: Where individual investors hold an edge over institutions. (18:05-18:55)

Alternatives
Montier defines "alternatives." Different ways of owning standard risks--depression risk, inflation risk, and liquidity. (18:56-21:49)

Montier presents two examples of alternative strategies that GMO employs--merger arbitrage and put-selling--to own standard risks in different ways. (21:50-25:49) 

"We should size them such that they cannot hurt the overall fund should we get something wrong." How GMO sizes its positions in alternative strategies. (25:50-27:33) 

Alpha, beta, and decay: How GMO assesses an alternative strategy's vulnerability to being arbitraged away. (27:34-29:57)

GMO's Bearish U.S. Equity Forecast
"How do I get paid for owning this asset?" Key inputs to GMO's U.S. equity forecast--multiple, margin, yield, and growth. (29:58-32:08)

"A behavioral self-defense mechanism." How GMO's approach to forecasting helps to structure its thinking and anchors decision-making. (32:09-34:54)

"It's really valuation where we've been most wrong." Where GMO's U.S. equity forecast erred in recent years. (34:55-36:01)

"We have to wear that. We have to own it." Montier on steps that GMO has taken to introspect on its forecasting error and how that expresses itself in the way it makes decisions and manages money. (36:02-39:45)

Planning Amid a Dearth of Value
"A reach for yield in any way, shape, or form." Explaining the dearth of value. (39:46-41:43)

"We have always been pretty bad at (forecasting), and it's unlikely we're going to get a lot better." (41:44-44:37)

How should investors and advisors forecast asset-class returns and plan for the future? (44:38-47:25)

Capital Allocation
Montier on the folly of firms borrowing to repurchase shares: "The more stable the environment, the easier it is to take on leverage, but the greater the danger that taking leverage creates further down the line when you get some random shock." (47:26-50:49)

Jul 10 2019
53 mins
Play

Rank #7: Rick Ferri: 'There Are No Average Investors'

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Our guest today on The Long View podcast is Rick Ferri. Ferri is an hourly fee-only investment consultant at Ferri Investment Solutions; he's also a CFA charterholder. Prior to starting his new firm in April 2019, he was the founder and head of investing at a $1.5 billion advisory firm that specialized in low-fee asset management using index funds and exchange-traded funds. Prior to that, he worked for a brokerage firm, where he was an early adopter of inexpensive index products for client portfolios. Ferri is a Marine Corps officer and retired fighter pilot.

Ferri has written several books on low-fee investing, including All About Asset Allocation, The ETF Book, All About Index Funds, and The Power of Passive Investing. He has also authored numerous investment-related articles and research papers, including a research paper on index investing that won S&P Dow Jones Indices' third-annual SPIVA Award.

Introduction and Background

"The conversation about asset allocation comes later, and the conversation about investments comes after that." Ferri discusses how his definition of value-add has changed over the past 10-15 years. (0:55-3:24)

"I've been through the whole gantlet." Transitioning from broker to Registered Investment Advisor. (3:25-5:14)

On clients who have needs that go beyond investment management. (5:15-5:56)

"You get the work done, you pay for the work." Why Ferri's new advisory practice charges clients by the hour, not by their assets under management. (5:57-9:44)

"Advisors talk about how they add value behaviorally; I think a lot of that is created by the advisor and not so much by the client." The role of advisors in managing client behavior. (9:45-11:12)

Asset Allocation

"There are no average investors." How investors of the same age can vary widely in their appetite for equity risk. (11:13-15:03)

"Those are the things that are going to add value to a client's portfolio." Focusing on keeping taxes and investment costs down, not trying to play factors. (15:03-18:21) 

"There seem to be a lot of factor renters, rather than factor owners." Ferri is skeptical that factor investing will outperform in the future. (18:23-20:44)

 "I don't use anything that doesn't have an expected real return." Why Ferri sticks with plain-vanilla asset classes. (20:45-21:56)

How to go about making return assumptions for the major asset classes. (21:57-24:14)

"It depends on how much money the client has." A total bond market index as a one-stop option for fixed-income exposure. (24:15-27:20)

International bonds as a core asset class. (27:21-28:46) 

"I don't think they're pivotal." REITs as a direct allocation.  (28:47-31:45)

Decumulation 
"The software doesn't seem to be very good at this." Decumulation is inherently more complicated and customized than accumulation. (31:46-34:19)

"There seem to be better ways of doing it than the classic way in which we've been taught." On whether the traditional declining equity glide path makes sense. (34:20-39:28)

Indexing and the Legacy of Jack Bogle
"It's been around forever." Direct indexing: the wave of the future? (39:29-42:09)

"I don't see it as big of a threat as other people do." Should investors be worried about concentration in very few ETFs, and do index funds and ETFs own too much of the market? (42:10-44:07)

"I was having a real moral dilemma." How influential Jack Bogle was in shaping Ferri's career path. (44:08-46:08)

Jul 03 2019
48 mins
Play

Rank #8: Harold Evensky: 'It's an Unmitigated Disaster'

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This week's guest on The Long View is financial advisor Harold Evensky, who Morningstar managing director Don Phillips has often called the "dean of financial planning."

Evensky is chairman of Evensky & Katz/Foldes Financial, and he's a retired professor of personal financial planning at Texas Tech University. Evensky has been extremely active in the planning community during his career. He's the past chairman of the International CFP Council, the CFP Board of Directors, the CFP Council on Examinations, and the Board of Appeals. Evensky is a frequent public speaker and has authored several books, including The New Wealth Management. During the course of this conversation, he weighed in on the SEC's newly approved Regulation Best Interest, calling it an "unmitigated disaster." He also discussed asset allocation leading up to and in retirement, his firm's application of a core/satellite approach, and different business models for financial advice. 

Show Notes and References

Background (0:18-0:57)
Harold Evensky bio
Evensky & Katz/Foldes Financial
Personal Financial Planning Department, Texas Tech University
Financial Planning Standards Board Council (formerly known as "International CFP Council") 
CFP Board of Directors (formerly "Board of Governors") 
CFP Council on Examinations (formerly "Board of Examiners") 
The New Wealth Management: The Financial Advisor's Guide to Managing and Investing Client Assets (CFA Institute Investment Series Book 28) by Harold Evensky 
Books by Harold Evensky

Evensky explains why his practice opted to charge clients a percentage of assets under advisement instead of an annual retainer: "An unmitigated disaster." (0:58-2:51)

How Evensky and his fellow practitioners spend their time: "It's all built around the planning." (2:52-4:02)

On the firm's receptiveness to younger clients with less assets to advise: "Absolutely yes." (4:03-4:40)

The future: Comprehensive, modular financial planning. (4:41-6:49)

On the commodification of financial advice: "To the general public … it pretty much looks like the same service." (6:50-7:37)

On robo-advice: "Our conclusion was ... it's dangerous." (7:38-11:15)

• "The Efficacy of Publicly Available Retirement Planning Tools" by Taft Dorman, Barry S. Mulholland, Qianwen Bi, and Harold Evensky (Oct. 9, 2018). 

Helping clients navigate turbulence: "Our goal is to call the client before they call us." (11:16-12:15)

The critical importance of communicating with clients: "Brokers and, much to my surprise, trust officers … hide under their desks." (12:16-13:02)

Where risk tolerance and client-specific circumstances come to the fore and human capital and age take a back seat: "Everything calls for a customized mix." (13:03-15:25)

Human Capital

"That's horribly inefficient." How Evensky came to embrace the simplicity of the core-and-satellite approach to portfolio construction. (15:26-19:27)

Evensky's construct for "explore" positions: "It can be most anything." (19:28-20:37)

Value's dry spell: "The basic concept of the value premium remains viable." (20:38-22:19)

Dimensional Fund Advisors

Permanent impermanence: How Evensky and his colleagues grapple with investing ephemera. (22:20-23:58)

Global diversification: "We've always believed in an international exposure." (23:59-25:45)

Home-bias definition
Market capitalization of listed companies in current prices

Risk tolerance and return needs drive strategic asset-allocation decisions: "Our maximum equity allocation is 80%." (25:46-27:53)

"Rebalancing is an immensely powerful tool, painful though it is in the short-term." (27:54-30:44)

Human capital's influence on the planning process: Car salesman versus tenured professor. (30:45-32:42)

Ramping up equity exposure through retirement: "Intellectually I think it's very sound research; but from a behavioral standpoint I don’t think it's realistic." (32:43-34:24)

• "Reducing Retirement Risk With a Rising Equity Glide Path" by Wade D. Pfau and Michael Kitces (Sept. 12, 2013) .

The simple two-bucket approach: "My experience is the relatively small opportunity costs (associated with the bucketing approach) are way outweighed by the behavioral benefits." (34:25-38:24)

Testimony of Deena Katz, CFP, on "Boomer Bust? Securing Retirement in a Volatile Economy" before the Senate Special Subcommittee on Aging, Feb. 25, 2009 (see Page 7 for "paycheck syndrome"). 

Time- and goals-based bucketing: "A great deal of appeal but they don't make any sense." (38:25-39:19)

How the complexion of retirement has changed: People will have to work longer. (39:20-41:32)

"Where's the protection of the investor?" Evensky takes a dim view of the SEC's just-finalized Regulation Best Interest measure. (41:33-43:34)

• "A New Rule Won’t Make Your Broker an Angel" by Jason Zweig, The Wall Street Journal, May 31, 2019. 

Competency standards: Professionalism subsumes competency. (43:35-46:57)

About the Podcast: The Long View is a podcast from Morningstar. Each week, hosts Christine Benz and Jeff Ptak conduct an in-depth discussion with a thought leader from the world of investing or personal finance. The podcast is produced by George Castady and Scott Halver.

About the Hosts: Christine Benz and Jeff Ptak have been analysts and commentators on investments and the investment industry for many years. Christine is Morningstar's director of personal finance and senior columnist for Morningstar.com. Jeff is head of global manager research for Morningstar Research Services, overseeing Morningstar's team of 120 manager research analysts in the U.S. and overseas.

To Share Feedback or a Guest Idea: Write us at TheLongView@morningstar.com

Jun 19 2019
49 mins
Play

Rank #9: Michael Kitces: The Model Has to Change Again

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Our guest on this week's podcast is Michael Kitces. Michael is a partner and the director of wealth management for Pinnacle Advisory Group, a Columbia, Maryland-based wealth management firm that advises on about $1.8 billion of assets. In addition, he is a co-founder of the XY Planning Network. As the host of the Financial Advisor Success podcast and the publisher of the popular financial planning industry blog Nerd's Eye View, Michael has established himself as one of the most prolific and insightful commentators on the financial advice business. A fixture on the speaking circuit and in the media, Michael often addresses key trends and innovations in the way advisors serve their clients; our interview with him focused on the future of the financial advice business. 

Show Notes and References

Background and Professional Development
Michael’s formative years: “The only thing I really think I figured out by the end of college was … that I didn’t want to do psychology, theater, or medicine” (0:59-2:51) 

Dad’s old life insurance policy: How a wedding gift led Michael down a path to a career in the financial services industry (2:52-4:21) 

“He was just a really different guy than everybody else”: Michael’s recounts his breakthrough realization that he wanted to be a financial planner (4:22-6:07) · 

How Michael used his pre-med training to overcome a crisis of confidence that he didn’t know what he was doing: “I probably shouldn’t be giving them advice; I’m going to hurt someone” (6:08-7:31) 

Going deep to differentiate: “I’m going to get really good at these annuity benefit riders” (7:32-8:45)

Persuasion: Using psychology and coaching to help clients overcome their biases (11:41-13:01)

“Most of us just don’t want to say that about ourselves”: Clients don’t hire us to save them from themselves, but to get on a better path and save time (13:02-16:37)

“Zoom the camera out a little bit”: The key to helping clients through difficult times is being available, clearly communicating, and setting context (16:38-18:18)

“There’s very little research at all about what you’re actually supposed to do about this stuff” (18:19-19:56)

Financial Advice: Evolution and Great Leaps
“Disturbingly like clockwork”: Technology’s role in propelling financial-advice from stock-brokering to the mutual-fund era to asset-allocation models (19:57-22:14)

Computers disrupted the stock-broker model and the internet disrupted the mutual-fund model. Michael on why he thinks software will disrupt the fee-based asset-allocation model (22:15-24:06)

An S&P 500 index fund just for you: “Technology is going to allow us to completely disintermediate not just mutual funds but most of the ETF complex as well” (24:07-25:36)

The Future of Advice
“If we can do that with medicine and we can do this with clothing, we can do this with at least large portion of financial advice as well”: Michael on delivering advice virtually (25:37-30:25)

“(Saying) ‘Oh no one’s ever going to want to work with an advisor virtually; it’s all in person’ … is like clothing stores insisting that Amazon was no threat to them 20 years ago” (30:26-32:56)

Technology leaps like robo-advice are less of a threat to the financial advisor than to the the back- and middle-office that supports them (32:57-33:54)

The great inversion: In the future, advisors will charge for financial-planning services and give away investment management for free (vs. today where the opposite often holds true) (33:55-35:36)

Best Practices for Delivering and Paying for Advice
“We still have a huge industry gap”: Not even 30% of financial advisors have achieved a baseline financial-planning designation—the CFP mark (35:37-39:20)

A question of when, not if, more exacting financial-advice standards will arrive: “The U.S. has become a laggard on fiduciary and competency standards” (39:21-43:21)

We can’t do financial advice for young people? Michael on why that’s ridiculous and how flat-fee or subscription-based advice will come to fill that void (43:22-46:51)

“I don’t … see anything wrong with the AUM model”: Why charging a percentage of assets-under-advisement makes sense for some clients, but will become less common in the future (46:52-48:56)

When it does and doesn’t makes sense to pay for financial advice by the hour (48:57:51:47)

About the Podcast: The Long View is a podcast from Morningstar. Each week, hosts Christine Benz and Jeff Ptak conduct an in-depth discussion with a thought leader from the world of investing or personal finance. The podcast is produced by George Castady and Scott Halver.

About the Hosts: Christine Benz and Jeff Ptak have been analysts and commentators on investments and the investment industry for many years. Christine is Morningstar's director of personal finance and senior columnist for Morningstar.com. Jeff is head of global manager research in Morningstar Research Services, overseeing Morningstar's team of 120 manager research analysts in the U.S. and overseas.

To Share Feedback or a Guest Idea: Write us at TheLongView@morningstar.com

Jun 05 2019
54 mins
Play

Rank #10: Sheryl Garrett: 'The Industry Thought I Was Nuts'

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Our guest this week on "The Long View" is Sheryl Garrett. Garrett is a legendary figure in financial-planning circles, having pioneered the concept of offering hourly financial-planning guidance. She's founder of the Garrett Planning Network, a national network of hourly, fee-only financial planners that she started in 2000. Garrett has authored, co-authored, or served as technical editor on many books, including Garrett's Guide to Financial Planning, Just Give Me the Answer$, and the Personal Finance Workbook for Dummies. She has worked with the U.S. House Committee on Financial Services regarding predatory lending regulation, financial literacy, and Social Security reform. She has also received numerous awards in the realm of financial planning during her career. Most recently, InvestmentNews named Garrett as its 2019 Icon.

Background Information

Advice Best Practices
"How would I want to receive advice?" How Garrett came to build an hourly, fee-only planning practice that eventually spawned a network of advisors. (1:03-3:58)

"The industry thought I was nuts." Why Garrett opted for an hourly fee-for-advice model. (3:59-7:53)

Advice Models
"The issue is bigger between the financial advisor's ears than it is between the client's ears." How to get clients over paying for advice out of pocket. (7:54-14:16)

"I see financial planning as a job and I see ongoing investment advice as a different job." How the advice model--and manner of charging fees--should adapt to clients' evolving needs over time. (14:17-22:30)

Subscription-based vs. hourly advice: What's the better model? (22:31-25:51)

Working With Clients
Hourly advice is most successful (and cost-effective) when the client participates. (25:52-32:54)

Temperament matters: What people should look for in a financial planner or advisor. (32:55-43:12)

Planning Business
"They look at me as their financial advisor." Are hourly financial planners constantly in customer-acquisition mode and might that attract those who are better at sales than planning? (43:13-46:06)

Commoditization: Given the popularity of planning and advice, could financial planning go the way of the Chartered Financial Analyst designation? (46:07-48:46)

Jul 17 2019
51 mins
Play

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