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Rekenthaler Report

Morningstar Investment Conference: Practical Advice for an Evolving World

Indexing, automated advice, and the new fiduciary standards.

The Wrong Battle
Yesterday, the 2016 Morningstar Investment Conference commenced, thunder-free. (If you attended the past few years’ events, you will understand.) The first panel addressed how investment advice is changing. Two financial advisors and authors, Blair duQuesnay and Bill Bernstein, joined Morningstar’s Don Phillips for the discussion. Christine Benz moderated.

Indexing, naturally, drew much attention. While praising the quality of the better (meaning, lower-cost) index funds, Phillips bemoaned the “civil war” that has taken place between those who advocate active investing and those who favor the passive approach. For Phillips, this is a faux debate because what really matters is cost. As he pointed out, even indexing pioneer Jack Bogle concedes that a low-expense active fund is superior to a high-cost passive fund.