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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: His name is Dave Butler, and he is the co

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Speaker 1: CEO of Dimensional Fund Advisors, which manages about six hundred

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Speaker 1: billion dollars UM. Dave has really a fascinating background UM,

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Speaker 1: not only academically but in the professional sports world UH,

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Speaker 1: and the arc of his career over the past let's

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Speaker 1: call it thirty years, very much tracks the development of

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Speaker 1: many of the dominant trends that have taken place today

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Speaker 1: in finance. So whether it's independent advice, or indexing or

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Speaker 1: multi factor investing, he has been a part of UM,

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Speaker 1: let's just cool it, the movement. Dimensional Funds UH is

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Speaker 1: very much a culture driven, philosophically driven firm that he's

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Speaker 1: been a large part of for a long time. Not

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Speaker 1: only does he work with his co CEO, GERARDA. Riley,

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Speaker 1: but he also works closely with Chairman David booth Um,

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Speaker 1: directing UH Dimensional Funds into the latest iteration of of

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Speaker 1: where finance is going UH. If you are at all

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Speaker 1: interested in independent advisory, asset management, factor based investing, UH,

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Speaker 1: sustainable based investing, I think you will find this conversation

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Speaker 1: to be absolutely fascinating. So, with no further ado, my

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Speaker 1: conversation with Dave Butler. My special guest this week is

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Speaker 1: David Butler. He is the co CEO and head of

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Speaker 1: Global Financial Advisor Services for Dimensional Fund Advice Serves, which

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Speaker 1: manages over six hundred billion dollars. Dave got his BS

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Speaker 1: from Berkeley and his NBA same place before he decided

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Speaker 1: to play around with round ball a little bit. Uh.

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Speaker 1: Dave Butler, welcome to Bloomberg. Thank you. So let's let's

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Speaker 1: talk a little bit about pre finance career. You played

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Speaker 1: basketball in college and you were drafted by the Celtics.

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Speaker 1: That's right. Yeah, So I was drafted by the Celtics

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Speaker 1: back in seven and uh. The year I got drafted,

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Speaker 1: oddly enough, they had a strike. An NBA player strikes.

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Speaker 1: So normally, as a player, you get a chance to

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Speaker 1: go try out and they can tell you whether you

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Speaker 1: have a shot to make it or not. Unfortunately, didn't

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Speaker 1: have a tryout that particular summer, so I made a

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Speaker 1: decision to go over to Turkey and and play my

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Speaker 1: first year in Turkey. Um, I had a I was

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Speaker 1: actually a young kid just sitting around the house in

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Speaker 1: the summer, and uh, you know, I know, I'll go

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Speaker 1: to the Middle East of my Calton said, hey, s

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Speaker 1: tam Bowl wants you to come over and try out.

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Speaker 1: And I had been in great shape. I was getting

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Speaker 1: ready for the Celtic camp. I went over to Turkey

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Speaker 1: and they offered me twice what I would have made

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Speaker 1: as a rookie in the NBA. And I thought to myself,

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Speaker 1: I wasn't sure when the NBA strike would end, so

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Speaker 1: I thought, well, I'll go over to Turkey, I'll work

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Speaker 1: on my game, I'll get better, I'll make my first

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Speaker 1: year's worth of money, and then I'll come back and

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Speaker 1: I'll make the NBA the next year and make the Celtics.

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Speaker 1: And but fate intervened, didn't it. Fate intervened, And I

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Speaker 1: think it was about halfway through my season in Istanbul.

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Speaker 1: I end up tearing a It was called a gas rock,

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Speaker 1: which is your gap your calf muscle, so the muscle

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Speaker 1: that connects your calf to your lower leg. And I

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Speaker 1: sat out for probably about a week. Um, when you're

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Speaker 1: the American player on a on a European team like

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Speaker 1: in Istanbul, there's one American per team. Is that by

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Speaker 1: rule or in instant in Turkey that was the rule.

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Speaker 1: Is that a minimum or a maximum minimum uh and

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Speaker 1: a maximum, it's the only number you can have. So

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Speaker 1: there's one player, one American per team. And the expectation,

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Speaker 1: of course, if you're that one player, is that you

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Speaker 1: need to lead the team in scoring, and the lead

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Speaker 1: team and rebound. You gotta you've got to be the

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Speaker 1: main person. So when I got back to the States

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Speaker 1: after my injury, my doctor said, you know, that was

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Speaker 1: probably a two to three month uh, sit out type

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Speaker 1: of nillary. And I was out for about a week. Uh,

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Speaker 1: they take me up, and I kind of faked my

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Speaker 1: way through the rest of the season. And that was

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Speaker 1: the downside is I did a little bit of permanent

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Speaker 1: damage to my calf and never really quite got back

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Speaker 1: to where I I thought I could actually make the NBA. Yeah,

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Speaker 1: normally at that age you're fairly immortal and recover pretty quickly.

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Speaker 1: This had to be Was this a practice injury or

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Speaker 1: an actual game injury? It was a actually a practice injury.

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Speaker 1: So it's kind of one of those up and back

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Speaker 1: drills and and I stopped and get ready to take off,

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Speaker 1: and I heard this big snap and heard it. Yeah,

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Speaker 1: other other people in the gym heard it too, And

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Speaker 1: I thought my achilles because you always here, I've watched

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Speaker 1: basketball games and you hear that pop. Someone from the

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Speaker 1: Knicks trying to remember who it was. Um tour there there,

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Speaker 1: Um was it? Maybe it was the A. C. L

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Speaker 1: heard it pop on television. It's a afying sound, which

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Speaker 1: exactly what it is. You know, right when it happens,

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Speaker 1: you know you're you're you're done. So uh, you know

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Speaker 1: that was it. That was That was the moment when

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Speaker 1: you know, my leg kind of just you know, was

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Speaker 1: limited my my potential. So I always thought I was

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Speaker 1: I was a good enough player. I played enough positions

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Speaker 1: and I and I did enough things. Well. I didn't

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Speaker 1: ever do anything super super well, but I was good

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Speaker 1: enough to I think at my peak, in my highest level,

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Speaker 1: I could I could be the kind of guy that

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Speaker 1: could collaborate and be on a team and you know

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Speaker 1: I could. I could tip and I could rebound, and

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Speaker 1: I could do that sort of dirty man kind of

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Speaker 1: work on the basketball court that coach appreciated. Charles Oakley,

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Speaker 1: Dennis Rodman roll Yeah about six nine, oh, so you

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Speaker 1: could a little bit more maybe a little bit more outside.

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Speaker 1: You know, I would had to score in Europe. I

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Speaker 1: had to be able to shoot from the outside, and

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Speaker 1: three point line had had just come into the existence

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Speaker 1: at that time, so the three point line wasn't part

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Speaker 1: of the game like it is now. Uh So I

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Speaker 1: didn't really shoot threes, but I but I could, you know,

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Speaker 1: have a good mid range score. I could rebound, I

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Speaker 1: could dunk, and I could I could jump pretty well.

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Speaker 1: People used to, um, you know, think of me as

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Speaker 1: a kind of a high flyer, kind of inside type

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Speaker 1: of person. So that was always a big part of

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Speaker 1: my game. And your brother played professionally as well. Yes,

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Speaker 1: my brother Greg is a bigger guy. He's about a

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Speaker 1: seven footer. So this is what I call my little brother.

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Speaker 1: But he's seven footer. He played at Stanford. I played

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Speaker 1: at cal and uh so, he and I actually played

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Speaker 1: against each other in college versus Stanford, so as UCLA

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Speaker 1: versus USC in the Bay area kind of thing. But

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Speaker 1: we actually guarded each other, so we we were on

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Speaker 1: the court playing against one another, which I imagine I

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Speaker 1: imagine you did that growing up anyway. Not not unfamiliar

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Speaker 1: with banging body. Yeah, we we played all day long.

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Speaker 1: We had a we had a uh you know, like

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Speaker 1: every other kid. We had on a driveway, front yard,

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Speaker 1: we had a we had a basket up on the

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Speaker 1: on the garage. We played. I had an old brother.

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Speaker 1: My I do have an older brother, Mike that he's

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Speaker 1: about six four or six five. So he's the run

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Speaker 1: to the letter. He used the run to the litter.

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Speaker 1: But you know, growing up, people used to laugh because

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Speaker 1: they look at the three of us, and growing up

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Speaker 1: we're all about a year and a half to two

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Speaker 1: years apart, but we're all the same size growing up,

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Speaker 1: so that people thought we were triplets. Possibly there's no

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Speaker 1: size difference, but he was. He was a tougher guy.

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Speaker 1: He was more physical. Uh So I used to play

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Speaker 1: against him quite a bit and played him in the

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Speaker 1: front yard all day long, and um we used to

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Speaker 1: go at it pretty well. Um So, so you had

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Speaker 1: to be thinking beyond a career in sports, because not

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Speaker 1: only do you go undergraduate at Berkeley, but you get

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Speaker 1: your m b a. Was it business or finance? What

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Speaker 1: what were you interested in when you were in school? Yeah, well,

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Speaker 1: my my dad was an accountant and he was always

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Speaker 1: a business finance guy. And he's six six three, a

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Speaker 1: decent size. Um, but he was always very focused on academics.

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Speaker 1: So he, you know, regardless of all the athletic accomplishments

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Speaker 1: or acknowledgements to he never really paid much attention to that.

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Speaker 1: He always talked about school and books and and all

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Speaker 1: what's going on in what are you doing in class

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Speaker 1: and so forth. So, um, So I was sort of

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Speaker 1: geared in that direction anyway. And I think when I

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Speaker 1: finally made my college decision, it came down to cal Stanford,

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Speaker 1: and Harvard. Those are my final three choices. So obviously

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Speaker 1: there was some academic aspect to to those three names

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Speaker 1: that uh clearly weren't basketball shops necessarily a really great

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Speaker 1: academic You got into Stanford, you got into Harvard, but

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Speaker 1: you chose Berkeley because of the basketball. Uh. You know,

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Speaker 1: I had a The story goes, I went on a

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Speaker 1: weekend visit to each one of those. I went, I'm

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Speaker 1: a California kids, southern California. I went to Harvard. It

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Speaker 1: was happened to be ten degrees and snowing, and I

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Speaker 1: just sort of scratched my head and I just couldn't

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Speaker 1: contemplate being out there in that in that weather. And

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Speaker 1: I thought I was gonna be back in California anyway.

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Speaker 1: So I came down to cal Stanford and UH. I

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Speaker 1: went up to Stanford and for the weekend, and when

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Speaker 1: I went to two movies and sat around a dorm

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Speaker 1: was super boring at the time for me. I went

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Speaker 1: to cal and uh first night there, I went to

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Speaker 1: toga party at a fraternity house that I thought was great.

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Speaker 1: I went to a football game the next morning with

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Speaker 1: you know, great son and and a lot of fun

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Speaker 1: people around. We went to San Francisco that night, and

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Speaker 1: I came back and I told my mom Dad, I

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Speaker 1: I think, I think this is where I want to be.

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Speaker 1: It's gonna be a great place to play basketball and

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Speaker 1: enjoy myself as a student. That's very funny. You have

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Speaker 1: a unique vantage point because not only were you an

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Speaker 1: athlete in college and professionally, but you work in finance.

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Speaker 1: And the question that I have to ask is, how

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Speaker 1: is it that there are so many horror stories about

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Speaker 1: athletes frittering away all their money. They have it stolen

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Speaker 1: from them, They haven't managers who don't really do what's

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Speaker 1: best for them. They are fairly reckless. What why is this?

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Speaker 1: You know, it's funny. David Booth, the founder of Dimensional

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Speaker 1: and I talked about this all the time because we're

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Speaker 1: both big basketball fans. I think it's um you know,

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Speaker 1: success comes really early to athletes, very young, young, very immature,

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Speaker 1: and oftentimes you, you and I will include myself, you

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Speaker 1: feel invincible so athletically, you're bigger, you're stronger, you're faster,

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Speaker 1: you can you know, the idea of being thirty or

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Speaker 1: forty or fifty years old, it doesn't even seem plausible,

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Speaker 1: you know, at the time. So the idea of actually

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Speaker 1: thinking into the future and then saving or trying to

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Speaker 1: be conservative about how you spend and so forth, it's

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Speaker 1: just not something that comes to mind at that time.

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Speaker 1: And Uh, I think that's part of the issue is

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Speaker 1: I just don't think the maturity level is there to

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Speaker 1: be able to differentiate how and why you would actually

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Speaker 1: make a plan from a financial perspective, you know, into

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Speaker 1: your future. There was there was a huge Sports Illustrated article,

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Speaker 1: I know, maybe ten years ago or and the numbers

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Speaker 1: about the NFL are horrifying, and the NBA and Major

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Speaker 1: League Baseball not all that much better. Uh has that

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Speaker 1: changed at all? Or athletes becoming a little smarter about

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Speaker 1: their money or is it still the same sets of

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Speaker 1: temptations and impulses. Well, I've been I've been doing this

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Speaker 1: for twenty five years now, dimensional and I've had the

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Speaker 1: same discussion I did twenty five years ago as I

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Speaker 1: did today, because people asked me that as an old athlete,

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Speaker 1: you know, how do you change the energy and the

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Speaker 1: momentum around athletes in their future in terms of finance,

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Speaker 1: And it's um it just I think it comes back

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Speaker 1: to there's a there's an ego aspect. Uh, there's a

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Speaker 1: mentality that you know that this this is never gonna end.

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Speaker 1: But to your point, you know, when you look at

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Speaker 1: the NFL, I think the average career is three years

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Speaker 1: and the NBA is something on the order of two

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Speaker 1: to three years. And when you think about how long

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Speaker 1: you know this these careers after the athletic career is

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Speaker 1: gonna last, it's it dwarfs anything athletically. But to get

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Speaker 1: that message across to a young kid, I think it's

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Speaker 1: really tough. My my personal perspective on it, and I've

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Speaker 1: talked to David Booth about this as well as I

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Speaker 1: think the n c A UH with college athletes ought

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Speaker 1: to put some sort of a trust fund together, you know,

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Speaker 1: with the money they're making off the n c A

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Speaker 1: tournament and so forth, put a trust fund together that's

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Speaker 1: not touchable, not available till till age um. And at

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Speaker 1: once a kid has had the chance to go through

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Speaker 1: the professional process, maybe they get injured like I did,

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Speaker 1: and they start looking around and they think, you know,

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Speaker 1: this athletic thing is not going to happen. Uh. Then

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Speaker 1: that's the moment when I think, and I, you know,

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Speaker 1: a trust that would allow them to go back to school,

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Speaker 1: go back to get a grad degree, etcetera, etcetera, would

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Speaker 1: be would be really really valuable. At one or twenty,

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Speaker 1: it just is not going to happen, because again, they're

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Speaker 1: invincible and they can't imagine that they're not the one

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Speaker 1: that's going to go play professional sports. I can tell

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Speaker 1: you every every player on my Cal basketball team, all

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Speaker 1: twelve guys, I thought for sure that they were the

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Speaker 1: one that was going to go play in the NBA.

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Speaker 1: And it's it's frankly because all of them were all

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Speaker 1: State and All American and all this and all that. Um,

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Speaker 1: So there's a lot of ego into it. There's a

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Speaker 1: lot of parental ego. I see that now with my kids.

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Speaker 1: The parents I think are so enamored with sport and

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Speaker 1: with the notoriety if you will, that comes from athletic success,

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Speaker 1: that they get involved and they get energized by the

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Speaker 1: whole thing, and I think that I think that's problematic

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Speaker 1: as well. So I, you know, with my kids, I

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Speaker 1: try to just say, look, you know, it's all about school,

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Speaker 1: just like my dad is all about academics. If you

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Speaker 1: happen to be a good basketball player, I happen to

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Speaker 1: be a good volleyball player, great, God bless you. That

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Speaker 1: might help you get into a better school. But it's

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Speaker 1: never gonna be about that. It's going to be all

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Speaker 1: about academics. You seem horrifically rational and reasonable. We mentioned

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Speaker 1: the length of careers. You've been doing this for twenty

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Speaker 1: five years. Tell us how you transition from sports into finance.

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Speaker 1: How did you end up on Wall Street? Well, you're

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Speaker 1: you're a New York guy, so I think you'll get

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Speaker 1: a kick out of this this story. So I I

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Speaker 1: had gone, um, I'll step back. I had started my

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Speaker 1: m b A as a as a basketball player in college.

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Speaker 1: So I happen to have a knee injury my junior

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Speaker 1: year of college. UH. And what that allowed me to

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Speaker 1: do was it allowed me to start taking grad classes

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Speaker 1: my last year while I had eligibility. So I started

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Speaker 1: my m b A. I had gone off and I

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Speaker 1: wanted to find out if I could play professionally. So

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Speaker 1: I had gone to Istanbul to Turkey. The following year,

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Speaker 1: I had gone to Japan. UM. But there's a window,

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Speaker 1: I think of five years to finish up your MBA

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Speaker 1: once you had started it. So I decided I would

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Speaker 1: go back because my caff injury, had go back and

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Speaker 1: finish up my NBA at Berkeley UM. And so I

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Speaker 1: did that, and uh, you know, like every athlete, I

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Speaker 1: still had the bug. I thought I could still do

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Speaker 1: a little something. So I end up going for my

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Speaker 1: last year. I went to UH to England to Birmingham

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Speaker 1: in the UK, and I was about I went for

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Speaker 1: about two months and I realized that my leg was

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Speaker 1: still as bad as it's ever been. I knew my

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Speaker 1: career was done. I had mentally pretty much checked out. UM.

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Speaker 1: I had actually interviewed with Mary lynch Um back in

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Speaker 1: my time at the doing my NBA at Berkeley, and

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Speaker 1: at the time they said, well, we don't have a

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Speaker 1: spot for you right now, but we love to keep

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Speaker 1: in touch. We think we have a spot for you.

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Speaker 1: Uh So, long story short. Two months into it, I'm

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Speaker 1: sitting in Birmingham, England, and my mom calls and said,

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Speaker 1: a gentleman from mary Lynch just called and wanted to

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Speaker 1: talk to you. So I got on the phone with

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Speaker 1: him and he said, we've got a spot for you

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Speaker 1: on the desk here in New York. We love to

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Speaker 1: have you join. When can you start? And this was

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Speaker 1: Saturday afternoon a month I see you Monday, So I

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Speaker 1: basically I got. I called my brother who has had

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Speaker 1: been with the Knicks, uh seven ft tall. I said, hey, Greg,

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Speaker 1: I'm gonna fly in Sunday. I said, I got to

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Speaker 1: borrow a suit because I don't have one. So I

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Speaker 1: borrowed a suit from my brother Greg. I showed up

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Speaker 1: in the office on Monday morning and that was my

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Speaker 1: quote unquote transition out of athletics and into into my career.

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Speaker 1: So a lot shorter than most people. How long did

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Speaker 1: you work in New York for what was here? I'd

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Speaker 1: say about seven years total, so about I think three

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Speaker 1: and a half years with Maryland and I came back

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Speaker 1: with Dementiel for another four years or so in New

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Speaker 1: York and New York. We actually had an office in Stanford, Connecticut.

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Speaker 1: And then when did you move to? Was the h

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Speaker 1: Q and Austin back then or no, it was in

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Speaker 1: Santa Monica, California. Yeah, oh really? And then now it's

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Speaker 1: I believe it's Austin. And isn't there a new office

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Speaker 1: opening up on the East coast. We're opening up in

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Speaker 1: Charlotte in February of next year, two nights. And is

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Speaker 1: that going to be the new headquarters. We'll have basically

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Speaker 1: two large headquarters. So so Austin will hold people, Charlotte

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Speaker 1: will hold about six or seven hundred. And we still

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Speaker 1: have an office in Santa Santa Monica in California. We

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Speaker 1: have about a hundred fifty people there. What was your

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Speaker 1: initial role at d f A and how did this

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Speaker 1: eventually become co CEO. Well, I was just a long

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Speaker 1: story short as I was at uh, you know, here

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Speaker 1: in New York, and I had um decided that I

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Speaker 1: was going to get out of financial services. I didn't

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Speaker 1: want to necessarily be in the industry. The from what

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Speaker 1: I kind of I saw and I felt and I

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Speaker 1: I just said I was gonna go be a teacher

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Speaker 1: and a coach in California. UM, so I mentally decided

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Speaker 1: I was gonna move back to California. I was sitting

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Speaker 1: on the desk one day, I was reading the Wall

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Speaker 1: Street Journal and I saw an ad that's aid money manager,

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Speaker 1: Santa Monica, California. And I thought, you know, why not,

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Speaker 1: I'll just send a resume out just in case, UM,

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Speaker 1: you have one more option. And UH turned out that

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Speaker 1: that Santa Monica California firm was Dimensional Fund Advisors. And

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Speaker 1: so I was on a Christmas break back in four

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Speaker 1: I flew out to California. I went to their offices

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Speaker 1: to do an interview and I met a gentleman named

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Speaker 1: Dan Wheeler. And Dan was the first UH financial advisor

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Speaker 1: to use Dimensional Funds in his practice. He was an

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Speaker 1: independent advisor working through Schwab at the time, and he

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Speaker 1: was running the practice the business foward Dimensional UH. And

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Speaker 1: Dan sent me down basically, and I had what I

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Speaker 1: what we we you know, UH we call a hab

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Speaker 1: moment um. He he just sat me down and said,

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Speaker 1: here's how the capital markets work, here's how we think,

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Speaker 1: here's what an independent advisor is here's how they act

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Speaker 1: as a fiducier to the client. You know, that combination

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Speaker 1: is one that we think is the right answer for

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Speaker 1: the end client and one that hasn't been delivered to clients.

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Speaker 1: Uh in in financial services space. And I remember I

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Speaker 1: walked out of that office and I thought to myself,

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Speaker 1: you know, I could, I could, I could be part

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Speaker 1: of this. This is something that's really interesting and exciting

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Speaker 1: to me. Uh and I Uh, I went up and

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Speaker 1: had lunch that day. Martin Miller was a Nobel Prize winner.

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Speaker 1: You know, Dan David Booth had another appointment to go to,

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Speaker 1: so he asked Dan to take Burton Miller to lunch

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Speaker 1: with him. And Dan said, sure, but I got this

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Speaker 1: this new guy here, Dave Butler that, uh, we'll have

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Speaker 1: to go with us. And David said that's fine. And

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Speaker 1: so I sat there at lunch with Nobel Prize winner

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Speaker 1: in finance, Martin Miller, and he he talked about all

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Speaker 1: those really simplistic, you know, financial concepts like you know,

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Speaker 1: he used to say, diversification as your buddy, you know,

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Speaker 1: cost matter, you know, markets, work, prices are fishing, etcetera, etcetera.

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Speaker 1: And I just had this kind of epiphany of of

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Speaker 1: what I thought the capital markets could deliver and should be,

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Speaker 1: and then how that coupled with the independent advice story

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Speaker 1: from Dan and I thought, man, this is a place

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Speaker 1: where I think I could I could spend some time fascinating.

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Speaker 1: The firm manages over six hundred billion dollars. And we

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Speaker 1: were talking about how you joined the firm and really

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Speaker 1: sort has a very different type of firm from the

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Speaker 1: bigger bulge bracket UH firms that you had been used

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Speaker 1: to in New York. How did that lead to your

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Speaker 1: arc of your career at Dimensional Funds? What did you

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Speaker 1: start doing and where did it take you? Well? I

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Speaker 1: started out as a what we call regional director, So

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Speaker 1: that's a person that works with advisors, um, you know,

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Speaker 1: out in the field. But you know, I think that

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Speaker 1: I think the key point for me is as I

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Speaker 1: mentioned earlier. We you know, on Monday morning, I walked

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Speaker 1: into Demential's offices and had this interview and UH and

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Speaker 1: Dan Wheeler was was terrific and he said, you know,

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Speaker 1: why don't you come back the following Monday and start

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Speaker 1: And you know, we didn't talk about any compensation, We

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Speaker 1: didn't talk about what my title would be. We didn't

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Speaker 1: talk about any detail other than the the idea that

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Speaker 1: this concept, this mission, this energy that he was putting towards,

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Speaker 1: this approach around clients was what he felt good about.

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Speaker 1: And basically over the following week, as I read and

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Speaker 1: thought more about it, I felt really good about as well.

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Speaker 1: So I really joined at what I would call, you know,

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Speaker 1: kind of a mission rather than a job. Um, and

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Speaker 1: it was a passion for all of us, and we

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Speaker 1: thought that we could change the way financial services were

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Speaker 1: delivered in the country. And that was sort of our

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Speaker 1: mantra and our energy in the early days and and um,

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Speaker 1: you know, people ask me, you know, why would you

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Speaker 1: start with without any detail around what were you going

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Speaker 1: to do? And I said, well, it was it was

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Speaker 1: that moment in my life in my career where I

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Speaker 1: wanted to do something that I felt really good about

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Speaker 1: and really passionate about. And I didn't really worry about

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Speaker 1: the monetary aspect or anything like that. Yogi Berra said,

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Speaker 1: when you come to a fork in the road, take it,

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Speaker 1: and it did. So we'll really helped create an fascinating

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Speaker 1: aspect of the way Dimensional Funds operates. And I want

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Speaker 1: to spend some time on that instead of going straight

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Speaker 1: to retail. The decision was made, and he really pushed

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Speaker 1: this from the outside in, Hey, why don't you have

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Speaker 1: the advisors be your advocates and deal directly with them?

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Speaker 1: And literally waged a door to door campaign starting in

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Speaker 1: I guess California? Right? Is that? Is that really where

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Speaker 1: he was operating? How did this go from an idea

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Speaker 1: to effectively the business model of dimension Well, you know

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Speaker 1: his and again all of it goes towards Dan's creativity

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Speaker 1: and imagination, but his view, he was a broker for many,

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Speaker 1: many years, and he felt that the industry in essence

430
00:21:19,880 --> 00:21:23,080
Speaker 1: was conflicted in the sense of product would be developed

431
00:21:23,080 --> 00:21:26,360
Speaker 1: and delivered by UH the industry, and then it would

432
00:21:26,400 --> 00:21:29,080
Speaker 1: push be pushed to commission salesman, and those commission salesman

433
00:21:29,080 --> 00:21:32,520
Speaker 1: would sell that product to clients. And he thought the better, asked,

434
00:21:32,560 --> 00:21:34,280
Speaker 1: better way to do that was to flip that around

435
00:21:34,280 --> 00:21:37,040
Speaker 1: and change that in the sense that UH as he

436
00:21:37,080 --> 00:21:39,800
Speaker 1: became an independent advisor, he worked for the clients. He

437
00:21:39,840 --> 00:21:41,920
Speaker 1: worked in their best interests, He worked on their behalf

438
00:21:42,640 --> 00:21:46,160
Speaker 1: UH and he um changed the model to say, hey

439
00:21:46,160 --> 00:21:48,639
Speaker 1: that this client, you know, would basically sit at the

440
00:21:48,760 --> 00:21:51,760
Speaker 1: top of the stack and then this advisor, this independent

441
00:21:51,760 --> 00:21:53,720
Speaker 1: advisor would be working for that client, and then the

442
00:21:53,760 --> 00:21:55,920
Speaker 1: advisor would make decisions as to what was the best

443
00:21:56,840 --> 00:22:01,439
Speaker 1: solution investment solution for the client. Um in again in

444
00:22:01,480 --> 00:22:03,840
Speaker 1: their behalf and in their best interest. So it was

445
00:22:03,840 --> 00:22:06,280
Speaker 1: a change in the model. This independent advice model was

446
00:22:06,320 --> 00:22:08,120
Speaker 1: something that was very, very different that nobody had ever

447
00:22:08,160 --> 00:22:11,119
Speaker 1: seen really in the financial services space where we were

448
00:22:11,160 --> 00:22:14,320
Speaker 1: really used to having product developed and being pushed as

449
00:22:14,080 --> 00:22:17,600
Speaker 1: a sold commission type products. So, um, that was a

450
00:22:17,600 --> 00:22:20,680
Speaker 1: big change. Dan had that idea. Uh. He also liked

451
00:22:20,680 --> 00:22:23,320
Speaker 1: the idea of indexing. Uh. We liked this idea of

452
00:22:23,359 --> 00:22:27,200
Speaker 1: low costs diversification, you know, tax efficiency, if he will.

453
00:22:27,760 --> 00:22:31,000
Speaker 1: And he was using a an SMP five hundred fund

454
00:22:31,040 --> 00:22:34,560
Speaker 1: in his practice, and he had come across dimensional small

455
00:22:34,600 --> 00:22:37,879
Speaker 1: cap fund which was called the microcap fund UM the

456
00:22:37,880 --> 00:22:41,440
Speaker 1: original fund Food put out the original fund. It was

457
00:22:41,440 --> 00:22:43,359
Speaker 1: called the nine ten fund at the time when I started,

458
00:22:43,359 --> 00:22:46,800
Speaker 1: but it was nine ten as in the ninth and

459
00:22:46,840 --> 00:22:50,920
Speaker 1: tenth deciles, so the bottom of stocks, if he will.

460
00:22:50,960 --> 00:22:53,800
Speaker 1: So that was the portfolio that he was interested. And

461
00:22:53,840 --> 00:22:56,280
Speaker 1: he came to David Booth into two rexing Field and

462
00:22:56,280 --> 00:22:58,680
Speaker 1: he said, you know, I'd like to use these portfolios

463
00:22:58,680 --> 00:23:01,399
Speaker 1: with my clients and to their credit, you know. David

464
00:23:01,400 --> 00:23:03,920
Speaker 1: and Rex said, well, you know, this is that's retail money.

465
00:23:04,480 --> 00:23:07,440
Speaker 1: Our expectation on retail money is it it's hot, meaning

466
00:23:07,440 --> 00:23:09,520
Speaker 1: that if Martin out markets were good, they'd come in,

467
00:23:09,560 --> 00:23:11,280
Speaker 1: and markets were bad, we go back out. We can't

468
00:23:11,320 --> 00:23:14,400
Speaker 1: have that kind of cash flow in the portfolio. So

469
00:23:15,520 --> 00:23:19,359
Speaker 1: because it's disruptive and expensive and trading closestructive expensive, we're

470
00:23:19,359 --> 00:23:20,840
Speaker 1: in the smallest part of the market. We can't have

471
00:23:20,920 --> 00:23:23,440
Speaker 1: that kind of trading. We have institutional clients in those

472
00:23:23,440 --> 00:23:26,480
Speaker 1: portfolios as well. So Dan came back and said, now, listen,

473
00:23:26,640 --> 00:23:29,920
Speaker 1: we we've got a different, uh type of a model here.

474
00:23:30,400 --> 00:23:33,040
Speaker 1: We're gonna go educate these advisors. We're gonna make sure

475
00:23:33,040 --> 00:23:35,040
Speaker 1: that their long term buy and hold advisors. We're gonna

476
00:23:35,040 --> 00:23:37,560
Speaker 1: go through a methodical process to get them engaged and

477
00:23:37,640 --> 00:23:40,439
Speaker 1: understand how we work and why we work, and that

478
00:23:40,480 --> 00:23:43,639
Speaker 1: money will be compatible to the money that's already in

479
00:23:43,680 --> 00:23:46,520
Speaker 1: the portfolio institutional portfolio. So that will make will make

480
00:23:46,600 --> 00:23:50,520
Speaker 1: retail look like it's institution exactly exactly, and so that

481
00:23:51,080 --> 00:23:54,800
Speaker 1: it worked out fabulously. Well, so, uh, you know when

482
00:23:54,800 --> 00:23:57,119
Speaker 1: I started, you know, we were about a billion and

483
00:23:57,160 --> 00:23:59,520
Speaker 1: a half from financial advisors. Today, I think we're three

484
00:23:59,720 --> 00:24:04,160
Speaker 1: D sixty five billion from financial advisors, well over half.

485
00:24:04,200 --> 00:24:06,640
Speaker 1: It's been a significant part of the business. And UM.

486
00:24:06,720 --> 00:24:09,480
Speaker 1: The the upside too is when you look at what

487
00:24:09,720 --> 00:24:13,520
Speaker 1: has actually transpired is that the the quote unquote retail assets,

488
00:24:13,520 --> 00:24:17,800
Speaker 1: the individual assets have have performed and acted and been

489
00:24:17,920 --> 00:24:20,679
Speaker 1: very compatible to the institutional assets in the funds. So

490
00:24:20,720 --> 00:24:23,920
Speaker 1: there there hasn't been a retail aspect to the kind

491
00:24:23,920 --> 00:24:25,439
Speaker 1: of the in and out of the markets based on

492
00:24:25,520 --> 00:24:29,439
Speaker 1: market performance. There's been a nice consistent cash flow. In

493
00:24:29,480 --> 00:24:31,800
Speaker 1: two thousand and eight, two thousand nine in particular, when

494
00:24:31,880 --> 00:24:34,320
Speaker 1: markets were you know, tanking and there's a lot of

495
00:24:34,359 --> 00:24:37,120
Speaker 1: fear and emotion in the market. UM. I think there

496
00:24:37,160 --> 00:24:39,520
Speaker 1: was five hundred billion dollars that went out of the

497
00:24:39,520 --> 00:24:42,000
Speaker 1: market UM over a couple of year period out of

498
00:24:42,040 --> 00:24:45,399
Speaker 1: equity mutual funds UH and in from dimensionals case, we

499
00:24:45,440 --> 00:24:48,760
Speaker 1: actually had positive net flows during that time period, positive

500
00:24:49,080 --> 00:24:51,520
Speaker 1: over that time period and over each quarter during that

501
00:24:51,560 --> 00:24:54,080
Speaker 1: time period. And that was because of the advisor's role

502
00:24:54,600 --> 00:24:56,879
Speaker 1: and the discipline that they provided to the client to

503
00:24:56,920 --> 00:24:59,800
Speaker 1: make sure that that client you know, understood why they're

504
00:24:59,800 --> 00:25:02,040
Speaker 1: asked as we're invested the way they were, and they

505
00:25:02,040 --> 00:25:04,240
Speaker 1: were able to keep the emotions in tact so that

506
00:25:04,240 --> 00:25:07,159
Speaker 1: people had a chance, um at the long term returns

507
00:25:07,200 --> 00:25:09,280
Speaker 1: that we always talk about of ten percent for the

508
00:25:09,280 --> 00:25:11,800
Speaker 1: equity markets. If you're not in the market full time,

509
00:25:11,840 --> 00:25:13,639
Speaker 1: you're gonna have a hard time getting those long term

510
00:25:13,720 --> 00:25:17,480
Speaker 1: rates of return. So the model was really different. Um,

511
00:25:17,520 --> 00:25:19,480
Speaker 1: it was brand new at that time. The idea of

512
00:25:19,480 --> 00:25:23,160
Speaker 1: a independent advisor wasn't was more an idea than actual reality.

513
00:25:23,720 --> 00:25:26,399
Speaker 1: And um, what we see now is we've seen a

514
00:25:26,440 --> 00:25:29,360
Speaker 1: real transition towards this model in a significant way. Quite

515
00:25:29,440 --> 00:25:33,280
Speaker 1: quite interesting. What is it that you have and the

516
00:25:33,280 --> 00:25:38,439
Speaker 1: firm has educated clients about that allowed them to think

517
00:25:38,480 --> 00:25:41,960
Speaker 1: about investing for the long term. And I know this

518
00:25:42,040 --> 00:25:44,840
Speaker 1: is hindsight, but I have to point out if you

519
00:25:44,880 --> 00:25:47,679
Speaker 1: were a buyer during the financial crisis, well markets have

520
00:25:47,760 --> 00:25:51,760
Speaker 1: since tripled. If you were a seller, probably didn't help

521
00:25:51,800 --> 00:25:56,000
Speaker 1: your returns. Yeah, I think the concept of meeting expectations

522
00:25:56,119 --> 00:25:59,320
Speaker 1: is important here. So when I think about why we

523
00:25:59,400 --> 00:26:02,199
Speaker 1: had the kind of inflows that we had and the

524
00:26:02,240 --> 00:26:05,200
Speaker 1: performance that that transpired of that time is I think

525
00:26:05,200 --> 00:26:09,680
Speaker 1: the advisors did a terrific job of educating their clients.

526
00:26:10,080 --> 00:26:12,840
Speaker 1: And when I say educating, I'm talking about what is

527
00:26:12,840 --> 00:26:16,000
Speaker 1: it that we expect from the capital markets. So long term,

528
00:26:16,000 --> 00:26:19,920
Speaker 1: if you look back to equities of return ten percent um,

529
00:26:19,960 --> 00:26:22,200
Speaker 1: but there's a lot of time periods where that ten

530
00:26:22,240 --> 00:26:24,840
Speaker 1: percent isn't realized and there might be markets that are

531
00:26:24,840 --> 00:26:29,360
Speaker 1: down for so at the front, what the independent advisor

532
00:26:29,480 --> 00:26:32,159
Speaker 1: does is they actually, you know, do train and they

533
00:26:32,280 --> 00:26:35,199
Speaker 1: educate the client as to the potential outcomes that they

534
00:26:35,280 --> 00:26:38,159
Speaker 1: might expect over time. So when it does happen, uh,

535
00:26:38,240 --> 00:26:41,440
Speaker 1: they're not happy about it, but they're not upset the

536
00:26:41,440 --> 00:26:43,480
Speaker 1: point where they actually pull their money and decided to

537
00:26:43,480 --> 00:26:46,240
Speaker 1: do something else. So there's a there's a real important

538
00:26:46,240 --> 00:26:48,600
Speaker 1: aspect here that I don't think there's ever been addressed

539
00:26:48,600 --> 00:26:51,360
Speaker 1: in a significant way, and that is trying to get

540
00:26:51,400 --> 00:26:55,040
Speaker 1: people to be more comfortable with the expectations longer term

541
00:26:55,080 --> 00:26:57,880
Speaker 1: around the capital markets and the expectations on returns. Wait,

542
00:26:58,119 --> 00:27:01,760
Speaker 1: are you suggesting markets go up and down? Is that

543
00:27:01,840 --> 00:27:05,480
Speaker 1: the implication that happens, Yes, So that that is shocking.

544
00:27:05,560 --> 00:27:07,560
Speaker 1: That is not what my broker, Hug used to tell

545
00:27:07,640 --> 00:27:10,399
Speaker 1: me back in the day. So let's let's talk a

546
00:27:10,400 --> 00:27:14,000
Speaker 1: little bit about You mentioned Martin Miller earlier, and um,

547
00:27:14,040 --> 00:27:17,120
Speaker 1: obviously gene Farma is a big part of the firm. Uh,

548
00:27:17,160 --> 00:27:20,040
Speaker 1: you work with a number of Nobel laureates and and

549
00:27:20,200 --> 00:27:25,360
Speaker 1: other people of equal intellectual heft. Ken French at Dartmouth

550
00:27:25,720 --> 00:27:29,080
Speaker 1: is another person who has certainly moved the needle when

551
00:27:29,119 --> 00:27:33,880
Speaker 1: it comes to how we think about where returns come from.

552
00:27:33,920 --> 00:27:37,960
Speaker 1: What do these various people, Um, what are the roles

553
00:27:37,960 --> 00:27:41,520
Speaker 1: at the firm and how do they affect portfolio construction? Well,

554
00:27:41,520 --> 00:27:44,080
Speaker 1: they're all fully engaged. So when you talk about all

555
00:27:44,119 --> 00:27:47,520
Speaker 1: those names, and it's so it's Martin Miller's farm, it's

556
00:27:47,560 --> 00:27:51,640
Speaker 1: Ken French, and um, it's Myron Schulz is on our board.

557
00:27:51,680 --> 00:27:54,919
Speaker 1: So we've got you know, three or four prizewinners that

558
00:27:55,000 --> 00:27:59,320
Speaker 1: that actually are participating in the firm in some respect. So, Um,

559
00:27:59,760 --> 00:28:02,280
Speaker 1: the great thing about it is is, um, they all

560
00:28:02,359 --> 00:28:06,840
Speaker 1: are are actively engaged in the business in some aspect,

561
00:28:06,840 --> 00:28:09,720
Speaker 1: particularly with Ken French and gene Fama there you know,

562
00:28:09,760 --> 00:28:12,720
Speaker 1: on the investment committee and they participate in all investment

563
00:28:12,760 --> 00:28:15,600
Speaker 1: discussions around the firm. So, uh, do is that a

564
00:28:15,600 --> 00:28:18,520
Speaker 1: little bit intimidating? You want to do something and a

565
00:28:18,600 --> 00:28:21,719
Speaker 1: Nobel laureate looks human goes No, that's a terrible idea.

566
00:28:22,080 --> 00:28:25,280
Speaker 1: How does that impact what the process is like? Uh?

567
00:28:25,480 --> 00:28:28,200
Speaker 1: Is it more nuanced than that? No, it's it's very

568
00:28:28,400 --> 00:28:30,399
Speaker 1: It's what I what I come back to is is

569
00:28:30,440 --> 00:28:31,960
Speaker 1: and we talk a lot about this at the firm.

570
00:28:32,200 --> 00:28:35,600
Speaker 1: We talk about models and models are not reality and

571
00:28:35,720 --> 00:28:39,520
Speaker 1: models are are used to get a sensible view about

572
00:28:39,560 --> 00:28:42,600
Speaker 1: way about a way the way things work. Um. So

573
00:28:42,680 --> 00:28:44,800
Speaker 1: what demension has always been about, and I think this

574
00:28:44,880 --> 00:28:47,920
Speaker 1: is why we have such a long term relationship with

575
00:28:47,920 --> 00:28:49,880
Speaker 1: our own clients is you know, we're not going to

576
00:28:50,000 --> 00:28:53,000
Speaker 1: come out with anything that's that's that's fancy or different

577
00:28:53,040 --> 00:28:55,000
Speaker 1: just to to do it for marketing reasons. We we

578
00:28:55,080 --> 00:28:57,880
Speaker 1: have this this group of people that look at the

579
00:28:57,920 --> 00:29:01,120
Speaker 1: capital markets, they're empiricists, they look at data all day long.

580
00:29:01,800 --> 00:29:03,200
Speaker 1: What they want to come out is they want to

581
00:29:03,240 --> 00:29:08,000
Speaker 1: come out with something that's that's sensible, that's reasonable, that's repeatable. Uh,

582
00:29:08,280 --> 00:29:11,000
Speaker 1: there's a there's an aspect to it that. Um from

583
00:29:11,000 --> 00:29:14,120
Speaker 1: my perspective for for advisors and then for their clients

584
00:29:14,120 --> 00:29:16,520
Speaker 1: is that there's an expectation that we are going to

585
00:29:16,600 --> 00:29:19,360
Speaker 1: deliver something that is going to be implemented in a

586
00:29:19,440 --> 00:29:22,440
Speaker 1: in a very very robust way. UM. And that's I

587
00:29:22,440 --> 00:29:26,320
Speaker 1: think a big differentiated for Dimensional. So let's let's talk

588
00:29:26,360 --> 00:29:30,200
Speaker 1: about some of the other popular investing trends, some of

589
00:29:30,240 --> 00:29:35,760
Speaker 1: which Dimensional has embraced. Others you've decided to issue. UM.

590
00:29:36,000 --> 00:29:39,880
Speaker 1: Smart beta is a marketing term. There's an ongoing debate

591
00:29:39,960 --> 00:29:44,000
Speaker 1: between rob or not of Research Affiliates and Cliff Fastness

592
00:29:44,040 --> 00:29:47,320
Speaker 1: of a q R. Cliff basically says smart beta is

593
00:29:47,400 --> 00:29:51,560
Speaker 1: just FAMA French factor investing in a different marketing wrapper.

594
00:29:51,760 --> 00:29:54,120
Speaker 1: How do you guys look at smart beta? Yeah, smart

595
00:29:54,120 --> 00:29:56,600
Speaker 1: beta is a is a catch all phrase for you know,

596
00:29:56,760 --> 00:30:00,240
Speaker 1: for multi factor investing in certain ways that you know,

597
00:30:00,280 --> 00:30:02,520
Speaker 1: the way I look at it, And I'm definitely not

598
00:30:02,720 --> 00:30:05,960
Speaker 1: in the academic circles like the Famas and Frenches and

599
00:30:06,040 --> 00:30:08,640
Speaker 1: so forth, but uh, you know, I look at demensials

600
00:30:08,680 --> 00:30:11,880
Speaker 1: existence in one We started with the first small cap

601
00:30:12,440 --> 00:30:15,760
Speaker 1: portfolio UM and that was a that was probably the

602
00:30:15,920 --> 00:30:19,520
Speaker 1: first multi factor portfolio that was out there. Uh ninety two,

603
00:30:19,560 --> 00:30:23,840
Speaker 1: FAM in French, you know, uh introduced the three factor

604
00:30:23,880 --> 00:30:26,360
Speaker 1: model UM and and that was when the value of

605
00:30:26,400 --> 00:30:29,680
Speaker 1: portfolios were launched back So what I would say is,

606
00:30:29,720 --> 00:30:32,280
Speaker 1: I think demential has always been you know, through our

607
00:30:32,320 --> 00:30:35,800
Speaker 1: connections with academics externally and even through our internal academic teams,

608
00:30:36,440 --> 00:30:39,360
Speaker 1: we've always been on the cutting edge of of multi

609
00:30:39,440 --> 00:30:42,680
Speaker 1: factor investing UM. But most importantly in David Booth will

610
00:30:42,720 --> 00:30:44,720
Speaker 1: point this out, is that you know, we've been able

611
00:30:44,800 --> 00:30:48,240
Speaker 1: not only to recognize that the data in the research

612
00:30:48,360 --> 00:30:50,320
Speaker 1: that is out there, but we've been able to implement

613
00:30:50,680 --> 00:30:52,800
Speaker 1: UH in a very very effective way. So when you

614
00:30:52,840 --> 00:30:55,800
Speaker 1: look at our returns and our quote unquote body of

615
00:30:55,800 --> 00:30:59,560
Speaker 1: work over thirty six years was the launch of the

616
00:30:59,560 --> 00:31:03,200
Speaker 1: micro app, we've not only been able to capture the

617
00:31:03,280 --> 00:31:06,360
Speaker 1: multi factor rate of return, but we've been actually been

618
00:31:06,360 --> 00:31:09,959
Speaker 1: able to add some value from an implementation perspective. So UM,

619
00:31:10,000 --> 00:31:13,160
Speaker 1: it's a it's a combination of I think those two parts.

620
00:31:13,160 --> 00:31:16,520
Speaker 1: One is is great portfolio management UH and great implementation,

621
00:31:16,520 --> 00:31:18,920
Speaker 1: but there's also the great research aspect as well. So

622
00:31:19,280 --> 00:31:21,160
Speaker 1: there's a lot of research out there in the public domain.

623
00:31:21,800 --> 00:31:25,360
Speaker 1: The question is can you implement on that on that

624
00:31:25,440 --> 00:31:28,040
Speaker 1: research in a in a very effective efficient way. So

625
00:31:28,240 --> 00:31:31,000
Speaker 1: we know the challenges with small cap because of the

626
00:31:31,040 --> 00:31:34,080
Speaker 1: liquidly issue when you have to really keep an eye

627
00:31:34,160 --> 00:31:38,160
Speaker 1: on outflows, otherwise it's very disruptive. Let's talk about one

628
00:31:38,160 --> 00:31:41,800
Speaker 1: of the other original FAMA French factors, which is value.

629
00:31:42,520 --> 00:31:46,239
Speaker 1: This has been a rough decade for value investing. We

630
00:31:46,360 --> 00:31:50,400
Speaker 1: know it tends to be cyclical, but how do we

631
00:31:50,480 --> 00:31:54,240
Speaker 1: deal with the fact that value has been under performing

632
00:31:54,280 --> 00:31:58,680
Speaker 1: growth for most of the period following the financial crisis.

633
00:31:58,960 --> 00:32:02,440
Speaker 1: During the at least the growth and expansionary period, growth

634
00:32:02,480 --> 00:32:05,840
Speaker 1: has done really well. I think there's always going to

635
00:32:05,880 --> 00:32:08,360
Speaker 1: be these big trends, if you will, or kind of

636
00:32:08,400 --> 00:32:12,600
Speaker 1: these uh these movements and markets that reflect well or

637
00:32:12,640 --> 00:32:15,200
Speaker 1: poorly on a specific area of the market asset class.

638
00:32:15,240 --> 00:32:18,840
Speaker 1: So UM, having been around this for twenty five years now,

639
00:32:19,400 --> 00:32:22,400
Speaker 1: you look back at every uh you know factor, if

640
00:32:22,400 --> 00:32:24,440
Speaker 1: you will, there's always gonna be moments in in periods

641
00:32:24,440 --> 00:32:26,640
Speaker 1: of time where they don't actually outperform or have the

642
00:32:26,680 --> 00:32:30,560
Speaker 1: premium that that we discussed earlier. UM. You know, equities

643
00:32:30,600 --> 00:32:33,440
Speaker 1: under perform T bills for sixteen years from nineteen sixty

644
00:32:33,480 --> 00:32:38,040
Speaker 1: six to two, Value underperform growth all through the nineties,

645
00:32:38,120 --> 00:32:41,280
Speaker 1: you know, until the tech bust uh in in in

646
00:32:41,400 --> 00:32:44,760
Speaker 1: March of two thousands. I recall hearing you know this

647
00:32:44,800 --> 00:32:48,080
Speaker 1: warm Buffett guy, this value investor, he's lost his touch.

648
00:32:48,480 --> 00:32:52,520
Speaker 1: I want to say late early, Yeah, Buffets washed up.

649
00:32:52,520 --> 00:32:55,640
Speaker 1: He'll never make any money again. So you you go

650
00:32:55,720 --> 00:33:00,280
Speaker 1: through these periods where a particular style or factor is

651
00:33:00,320 --> 00:33:04,440
Speaker 1: out of style. How do you counsel advisors and clients

652
00:33:04,520 --> 00:33:08,440
Speaker 1: to hey, this is a normal part of market cycles.

653
00:33:08,880 --> 00:33:11,080
Speaker 1: We have to stay. That's that's just it. It's counseling.

654
00:33:11,120 --> 00:33:14,440
Speaker 1: It's it's it's education beforehand, and then it's counseling during

655
00:33:14,480 --> 00:33:17,040
Speaker 1: and then it's you know, kind of a recognition after

656
00:33:17,040 --> 00:33:19,040
Speaker 1: the fact. So you know, you look back at that

657
00:33:19,960 --> 00:33:22,040
Speaker 1: period that you were just mentioning when Warren Buffett was

658
00:33:22,040 --> 00:33:24,400
Speaker 1: out of favor, of value was out of favor. I

659
00:33:24,440 --> 00:33:29,440
Speaker 1: think it was in like three months value actually turned

660
00:33:29,480 --> 00:33:32,480
Speaker 1: around so quickly, or actually growth throp through the floor.

661
00:33:33,240 --> 00:33:35,880
Speaker 1: Value came roaring back, and then some Yeah, the ten

662
00:33:35,960 --> 00:33:39,560
Speaker 1: year numbers on value versus growth. Value was ahead of

663
00:33:39,720 --> 00:33:42,600
Speaker 1: growth as of you know, did a two thousands, So

664
00:33:43,080 --> 00:33:44,960
Speaker 1: you had nine or nine and a a half years or

665
00:33:45,000 --> 00:33:47,520
Speaker 1: nine and three quarters years where growth was just pounding

666
00:33:47,600 --> 00:33:50,840
Speaker 1: value and then within a three month period, value over

667
00:33:50,880 --> 00:33:53,520
Speaker 1: that whole tenure period actually had a better performancing. So

668
00:33:53,840 --> 00:33:55,520
Speaker 1: I think, you know, there's a lot of stories like

669
00:33:55,560 --> 00:33:58,360
Speaker 1: that that people can need to recognizing and see. And

670
00:33:58,400 --> 00:34:00,160
Speaker 1: I think we spent quite a bit of time him,

671
00:34:00,800 --> 00:34:04,160
Speaker 1: you know, counseling and advisors counsel their clients to say, look,

672
00:34:04,200 --> 00:34:08,239
Speaker 1: we've built an investment plan, investment policy, We've allocated the

673
00:34:08,280 --> 00:34:12,759
Speaker 1: assets in this way. We've we've were confident that you're

674
00:34:12,760 --> 00:34:15,680
Speaker 1: in a position that you can withstand uh, you know,

675
00:34:15,760 --> 00:34:17,600
Speaker 1: ups and downs in the markets, or ups and downs

676
00:34:17,600 --> 00:34:20,680
Speaker 1: in particular parts of the market. Uh. And if you

677
00:34:20,719 --> 00:34:22,560
Speaker 1: can stay with that long term, you're gonna be we

678
00:34:22,560 --> 00:34:26,000
Speaker 1: gonna be highly and welly and well rewarded over that time.

679
00:34:26,239 --> 00:34:29,480
Speaker 1: So what is it that keeps a co CEO up

680
00:34:29,520 --> 00:34:31,560
Speaker 1: at night? What do you what do you think about?

681
00:34:31,640 --> 00:34:34,080
Speaker 1: And what are some of the concerns that you have

682
00:34:34,920 --> 00:34:39,480
Speaker 1: looking at everything going forward? Well, I think at a

683
00:34:39,480 --> 00:34:42,600
Speaker 1: dimensional level. I think for me, it's just our growth.

684
00:34:42,719 --> 00:34:44,880
Speaker 1: You know. So we've grown from fifty billion back in

685
00:34:45,080 --> 00:34:48,560
Speaker 1: two thousand three to six hundred billion today. That's quite

686
00:34:48,560 --> 00:34:50,360
Speaker 1: a growth rate, quite a growth rate. And if you

687
00:34:50,400 --> 00:34:52,319
Speaker 1: if you look at that growth rate and whether we'll

688
00:34:52,320 --> 00:34:54,440
Speaker 1: match that growth rate the next fifteen years or not.

689
00:34:55,080 --> 00:34:57,279
Speaker 1: Um you know, from a size perspective. You know, one

690
00:34:57,280 --> 00:34:59,759
Speaker 1: of the challenges that David Booth laid out to the

691
00:34:59,760 --> 00:35:02,279
Speaker 1: firm in two thousand three was, look, if we stay

692
00:35:02,280 --> 00:35:04,360
Speaker 1: on the same growth path that we've had been on

693
00:35:04,480 --> 00:35:06,080
Speaker 1: up to two thousand three, we're gonna be a five

694
00:35:06,160 --> 00:35:08,880
Speaker 1: hundred billion dollar firm by the end of two thousand eighteen.

695
00:35:09,400 --> 00:35:11,239
Speaker 1: And here we are. Here, we are at six center billion,

696
00:35:11,280 --> 00:35:14,279
Speaker 1: And that's a fantastic forecast. Yeah, And it wasn't uh,

697
00:35:14,480 --> 00:35:17,520
Speaker 1: it wasn't a here's the projection, and here's where we

698
00:35:17,560 --> 00:35:19,879
Speaker 1: want to be. It wasn't that. It was more of, look,

699
00:35:19,880 --> 00:35:23,560
Speaker 1: we're stewards of client assets. Where stewards of this business.

700
00:35:24,120 --> 00:35:25,920
Speaker 1: We need to make sure that we have the ability,

701
00:35:25,960 --> 00:35:29,400
Speaker 1: the infrastructure and so forth to service those assets in

702
00:35:29,440 --> 00:35:31,440
Speaker 1: the right way and do it in a in a

703
00:35:31,520 --> 00:35:33,719
Speaker 1: in a client centric way. And so it was a

704
00:35:33,840 --> 00:35:36,120
Speaker 1: challenge all the managers to make sure our infrastructure was

705
00:35:36,120 --> 00:35:37,600
Speaker 1: built out in a way that we would be able

706
00:35:37,600 --> 00:35:40,480
Speaker 1: to do that properly, whether it's portfolio management or research

707
00:35:40,600 --> 00:35:43,160
Speaker 1: or trading or sales or whatever it might be. So

708
00:35:43,280 --> 00:35:45,680
Speaker 1: I look at that from a dimensional perspective and say,

709
00:35:45,719 --> 00:35:48,520
Speaker 1: we actually have the same growth rate over the next Uh,

710
00:35:48,719 --> 00:35:52,040
Speaker 1: you know fifteen years. You know, we need to be

711
00:35:52,719 --> 00:35:55,680
Speaker 1: have a prepared work a team to be able to

712
00:35:55,800 --> 00:35:59,280
Speaker 1: handle that kind of change in the in the size

713
00:35:59,320 --> 00:36:02,560
Speaker 1: and growth of the So we're hoping that, um, you know,

714
00:36:02,600 --> 00:36:05,120
Speaker 1: from an education training perspective, hoping to build out quite

715
00:36:05,120 --> 00:36:08,160
Speaker 1: a few things around dimensional. Does does that growth rate

716
00:36:08,239 --> 00:36:10,919
Speaker 1: eventually have to plateau? Does the where does the law

717
00:36:11,000 --> 00:36:14,920
Speaker 1: of big numbers start to say, all right, you you

718
00:36:14,960 --> 00:36:17,759
Speaker 1: went up twelve x in in a dozen years. Don't

719
00:36:17,760 --> 00:36:21,160
Speaker 1: expect that going forward? Yeah, there's a natural I think plateau.

720
00:36:21,239 --> 00:36:23,000
Speaker 1: I'm sure at some point. I'm not sure when where

721
00:36:23,000 --> 00:36:27,319
Speaker 1: that is. UM, But we do know people consume their

722
00:36:27,360 --> 00:36:29,239
Speaker 1: retirements and so forth that you know, at four or

723
00:36:29,280 --> 00:36:31,880
Speaker 1: five or six percent per year. So the bigger the

724
00:36:31,880 --> 00:36:35,240
Speaker 1: asset base, the larger the outflow is going to naturally

725
00:36:35,280 --> 00:36:38,759
Speaker 1: be just from consumption. So UM, you know, we we

726
00:36:38,800 --> 00:36:41,759
Speaker 1: recognize that. UM. I think the big issues that I

727
00:36:41,840 --> 00:36:44,480
Speaker 1: think about on a on an industry basis is obviously

728
00:36:44,680 --> 00:36:47,480
Speaker 1: UM wealth wealth transfer. So that we're coming up on

729
00:36:47,520 --> 00:36:51,600
Speaker 1: this generational generational shift. UM. You know, advisors are thinking

730
00:36:51,640 --> 00:36:56,320
Speaker 1: about succession planning. Uh. Technology is becoming a big question,

731
00:36:56,440 --> 00:36:59,640
Speaker 1: you know, how to clients and how to advisors access

732
00:37:00,320 --> 00:37:02,400
Speaker 1: the capital markets and how do they how do they

733
00:37:02,440 --> 00:37:05,719
Speaker 1: interact with one another when they're thinking about this client relationship,

734
00:37:06,120 --> 00:37:07,840
Speaker 1: you know, going forward. So those are things that I

735
00:37:07,840 --> 00:37:09,960
Speaker 1: think Demensional wants to be involved in. We want to

736
00:37:10,000 --> 00:37:13,680
Speaker 1: support the advisor and make sure that they're as competent

737
00:37:13,719 --> 00:37:17,240
Speaker 1: and well positioned as they possibly can be to deliver

738
00:37:17,600 --> 00:37:22,239
Speaker 1: two clients the right solution over the next twenty or

739
00:37:22,280 --> 00:37:26,080
Speaker 1: thirty years. We have been speaking with Dave Butler. He

740
00:37:26,239 --> 00:37:30,440
Speaker 1: is co CEO of Dimensional Funds Advisor. If you enjoy

741
00:37:30,520 --> 00:37:33,480
Speaker 1: this conversation, be sure and come back for the podcast extras.

742
00:37:33,719 --> 00:37:37,479
Speaker 1: Will we keep the tape rolling and continue discussing all

743
00:37:37,600 --> 00:37:42,160
Speaker 1: things factor based investing. You can find those wherever Finder

744
00:37:42,200 --> 00:37:47,520
Speaker 1: podcasts are sold iTunes, Overcast, SoundCloud, and of course Bloomberg

745
00:37:47,600 --> 00:37:51,200
Speaker 1: dot com. We love your comments, feedback and suggestions right

746
00:37:51,320 --> 00:37:54,839
Speaker 1: to us at m IB podcast at Bloomberg dot net.

747
00:37:55,160 --> 00:37:57,879
Speaker 1: You can check out my daily column on Bloomberg dot

748
00:37:57,880 --> 00:38:01,359
Speaker 1: com or follow me on Twitter at Rid Halts. I'm

749
00:38:01,440 --> 00:38:05,440
Speaker 1: Barrier Halts. You're listening to Pastors in business called Bloomberg Radio.

750
00:38:19,160 --> 00:38:21,360
Speaker 1: Welcome to the podcast, Dave, Thank you so much for

751
00:38:21,400 --> 00:38:23,560
Speaker 1: doing this, I've been I've been looking forward to this

752
00:38:23,719 --> 00:38:26,480
Speaker 1: for a while. I have a ton of questions I

753
00:38:26,520 --> 00:38:29,759
Speaker 1: did not get to. So before I get to my

754
00:38:29,800 --> 00:38:32,960
Speaker 1: favorite questions, there are a few things I just have

755
00:38:33,160 --> 00:38:38,000
Speaker 1: to ask you about. Um, what's your daylike? What do

756
00:38:38,040 --> 00:38:40,239
Speaker 1: you spend most of your time on? Because I know

757
00:38:40,280 --> 00:38:43,120
Speaker 1: you wear a couple of different hats and I have

758
00:38:43,239 --> 00:38:47,759
Speaker 1: a hard time understanding what the day to day is

759
00:38:47,800 --> 00:38:50,680
Speaker 1: like for you. Well, I've been telling friends have asked

760
00:38:50,680 --> 00:38:53,440
Speaker 1: me about this co CEO role, you know, what's it like?

761
00:38:53,680 --> 00:38:55,040
Speaker 1: What do you do on a day to day basis?

762
00:38:55,080 --> 00:38:57,040
Speaker 1: I always tell them, you know, I've been in the

763
00:38:57,080 --> 00:39:00,960
Speaker 1: advisor business for twenty five years, so as a as

764
00:39:00,960 --> 00:39:03,640
Speaker 1: an old athlete is sort of like a basketball coach

765
00:39:03,719 --> 00:39:05,720
Speaker 1: who's been a coach for twenty five years now becoming

766
00:39:05,719 --> 00:39:08,160
Speaker 1: the athletic director and you got to know a little

767
00:39:08,160 --> 00:39:10,719
Speaker 1: bit about softball and water polo and so forth and

768
00:39:10,719 --> 00:39:13,600
Speaker 1: so on. So I'm in the stage of actually learning

769
00:39:13,800 --> 00:39:16,360
Speaker 1: about a lot of aspects of the business outside of

770
00:39:16,360 --> 00:39:20,000
Speaker 1: just financial advisor space. And that's been been a good

771
00:39:20,040 --> 00:39:22,640
Speaker 1: learning curve. And I think the bigger point for me

772
00:39:23,680 --> 00:39:26,680
Speaker 1: is that you know David Booth, you know founder, Um,

773
00:39:26,880 --> 00:39:30,560
Speaker 1: you know chairman who he's he's very involved in the firm.

774
00:39:30,600 --> 00:39:32,879
Speaker 1: So he and I and GERARDA. Riley, who's the other

775
00:39:32,920 --> 00:39:36,680
Speaker 1: co CEO, we spend significant amounts of time thinking about

776
00:39:36,840 --> 00:39:39,759
Speaker 1: the business and about where demensional needs to fit into

777
00:39:39,800 --> 00:39:42,360
Speaker 1: the business generally, and how we want to prepare ourselves

778
00:39:42,400 --> 00:39:46,200
Speaker 1: to be viable partners if he will, to the advisors

779
00:39:46,200 --> 00:39:48,279
Speaker 1: out there in the in the space. So let's let's

780
00:39:48,320 --> 00:39:51,160
Speaker 1: talk about you know, volleyball and water polo and everything

781
00:39:51,200 --> 00:39:55,680
Speaker 1: else you were running the advisor side. Does this mean

782
00:39:55,840 --> 00:40:02,359
Speaker 1: you spend time thinking about institutional and trading and accounting

783
00:40:02,560 --> 00:40:07,239
Speaker 1: and taxes and like where where does your line of

784
00:40:07,520 --> 00:40:12,120
Speaker 1: responsibility stop? How much are you responsible for? And and

785
00:40:12,160 --> 00:40:15,319
Speaker 1: what is Gerard responsible? How does is it divide and

786
00:40:15,320 --> 00:40:17,880
Speaker 1: conquer you sort of split up the fiefdom or do

787
00:40:17,920 --> 00:40:20,879
Speaker 1: you each work together on on different areas? Yeah, people

788
00:40:20,880 --> 00:40:24,319
Speaker 1: ask that often about co CEOs general general, a tough

789
00:40:24,320 --> 00:40:25,960
Speaker 1: gig to make work. I think I think you know,

790
00:40:25,960 --> 00:40:28,759
Speaker 1: if you look at Gerard's background, so he's he's c

791
00:40:28,920 --> 00:40:32,719
Speaker 1: I O. Uh, he's been a dimensional fourteen years. Uh,

792
00:40:32,760 --> 00:40:37,120
Speaker 1: he's a Caltech PhD. So he's a right rocket scientist.

793
00:40:37,360 --> 00:40:39,120
Speaker 1: So he's got the right pedigree, he's a he's an

794
00:40:39,160 --> 00:40:41,799
Speaker 1: investment guy. He can go toe to toe with the

795
00:40:41,840 --> 00:40:44,440
Speaker 1: Famas and the Frenches and talk about investment issues in

796
00:40:44,680 --> 00:40:47,799
Speaker 1: a significant way. I've then, you know, grew up more

797
00:40:47,840 --> 00:40:49,880
Speaker 1: on this on the sales side, the advisor side, and

798
00:40:49,920 --> 00:40:53,680
Speaker 1: so forth. So we're both involved in the entire aspect,

799
00:40:53,880 --> 00:40:57,520
Speaker 1: entire broad part of the firm, but we're also probably

800
00:40:57,520 --> 00:41:00,759
Speaker 1: more focused on our our individual areas. UM. The key

801
00:41:00,800 --> 00:41:02,920
Speaker 1: with co CEOs is you've got to be collaborative, you've

802
00:41:02,920 --> 00:41:05,920
Speaker 1: gotta be open, you've gotta be transparent, and and frankly,

803
00:41:06,160 --> 00:41:08,200
Speaker 1: you know, Gerard has been just a terrific partner in

804
00:41:08,280 --> 00:41:10,319
Speaker 1: terms of just, you know, how do we want to

805
00:41:10,320 --> 00:41:12,440
Speaker 1: go about the business. What do we see going forward?

806
00:41:12,800 --> 00:41:14,440
Speaker 1: You know, if we continue to grow and we're a

807
00:41:14,440 --> 00:41:17,399
Speaker 1: trillion dollar or two trillion dollar money management firm, what

808
00:41:17,400 --> 00:41:19,480
Speaker 1: do we need to do to be ready for that

809
00:41:19,600 --> 00:41:23,200
Speaker 1: kind of um stewardship around assets of that size. So

810
00:41:23,640 --> 00:41:26,279
Speaker 1: it's it's been a great collaboration co CEOs or co

811
00:41:26,400 --> 00:41:28,680
Speaker 1: anything could be problematic if you have people that are

812
00:41:29,080 --> 00:41:34,040
Speaker 1: are political or not really engaged in being transparent and collaborative.

813
00:41:34,080 --> 00:41:36,759
Speaker 1: But but Girard has been terrific with that and very

814
00:41:36,760 --> 00:41:39,080
Speaker 1: happy with how how that's worked out. When when we've

815
00:41:39,120 --> 00:41:42,360
Speaker 1: seen co C e O s at Fortune Companies, it

816
00:41:42,440 --> 00:41:45,400
Speaker 1: doesn't really seem to work. There's perhaps a little too

817
00:41:45,480 --> 00:41:48,400
Speaker 1: much testosterone in the room to make it work. You

818
00:41:48,440 --> 00:41:51,080
Speaker 1: guys seem to have found a good rhythm together. I

819
00:41:51,080 --> 00:41:53,080
Speaker 1: think that's right. We and we both grew up in

820
00:41:53,080 --> 00:41:55,120
Speaker 1: the firm. So I've been here twenty four years, he's

821
00:41:55,120 --> 00:41:57,279
Speaker 1: been here fourteen years. We know each other, We've known

822
00:41:57,280 --> 00:42:00,120
Speaker 1: each other well for for all that time. Uh, And

823
00:42:00,160 --> 00:42:03,080
Speaker 1: I don't think there's this I think maybe where Kocyov

824
00:42:03,520 --> 00:42:06,640
Speaker 1: go uh go south occasionally, as if if you've got

825
00:42:06,680 --> 00:42:09,120
Speaker 1: two people coming from different backgrounds or even different firms,

826
00:42:09,160 --> 00:42:11,680
Speaker 1: and they get squished together, and then there becomes sort

827
00:42:11,719 --> 00:42:14,160
Speaker 1: of a political question about who's going to be the lead,

828
00:42:14,239 --> 00:42:17,799
Speaker 1: who's gonna do the next guy or gal um and

829
00:42:17,840 --> 00:42:19,839
Speaker 1: we just don't have that at dimensional. And then that's

830
00:42:19,880 --> 00:42:22,840
Speaker 1: saying I give David Booth a lot of credit around culture.

831
00:42:22,880 --> 00:42:26,120
Speaker 1: I'm a big culture guy, being being an old athlete

832
00:42:26,160 --> 00:42:27,920
Speaker 1: and being on a bunch of good teams and a

833
00:42:27,960 --> 00:42:30,880
Speaker 1: bunch of bad teams. Um, you know, for me. It

834
00:42:30,960 --> 00:42:34,640
Speaker 1: strikes me that, you know, culture is the paramount issue

835
00:42:34,680 --> 00:42:38,360
Speaker 1: around around success. I'm glad. I'm glad you brought that

836
00:42:38,480 --> 00:42:41,600
Speaker 1: up so we could talk about sports, But it's really

837
00:42:41,640 --> 00:42:45,759
Speaker 1: just a giant metaphor for business. Our bad teams. Do

838
00:42:45,880 --> 00:42:49,480
Speaker 1: bad teams have bad culture because they lack talent? Or

839
00:42:49,640 --> 00:42:54,440
Speaker 1: does bad culture lead to talented teams becoming bad? I

840
00:42:54,440 --> 00:42:56,719
Speaker 1: think it's a it's a combination of both, but I

841
00:42:56,760 --> 00:43:01,279
Speaker 1: think it Culture starts with leadership. Culture starts with expectation. Uh.

842
00:43:01,440 --> 00:43:06,480
Speaker 1: Culture starts with a view that the leadership says, we

843
00:43:06,520 --> 00:43:08,239
Speaker 1: are going to be a team, and we're gonna be

844
00:43:08,239 --> 00:43:10,400
Speaker 1: a collaborative team, and we're gonna have success doing that.

845
00:43:10,520 --> 00:43:13,799
Speaker 1: So it's I think it's vision. I think it's um.

846
00:43:13,840 --> 00:43:15,560
Speaker 1: You know, we always talk about stories. You know, you

847
00:43:15,920 --> 00:43:18,600
Speaker 1: you you've listened to a particular story about a particular

848
00:43:18,600 --> 00:43:21,600
Speaker 1: team or about a particular company, and those stories go

849
00:43:21,640 --> 00:43:24,720
Speaker 1: a long way in terms of setting the culture around

850
00:43:24,719 --> 00:43:27,480
Speaker 1: how things work or don't work. I'll give you a

851
00:43:27,560 --> 00:43:30,200
Speaker 1: quick example. You know, David Booth did a video while back,

852
00:43:30,719 --> 00:43:33,280
Speaker 1: uh and just as a as a side kind of tossing,

853
00:43:33,440 --> 00:43:36,759
Speaker 1: somebody asked him about his childhood and how he what

854
00:43:36,840 --> 00:43:38,520
Speaker 1: his first job was and he and he basically told

855
00:43:38,560 --> 00:43:41,120
Speaker 1: the story about his first job being a shoe salesman

856
00:43:41,760 --> 00:43:44,799
Speaker 1: in a small town in Kansas, and he said, you know, uh,

857
00:43:44,920 --> 00:43:48,279
Speaker 1: he said, I used to sell shoes to women, and um,

858
00:43:48,800 --> 00:43:50,839
Speaker 1: you know, basically if the shoe didn't fit, I'd tell

859
00:43:50,920 --> 00:43:53,239
Speaker 1: him that it didn't fit and that they should come

860
00:43:53,280 --> 00:43:59,680
Speaker 1: back another time, and um, you know so. But but

861
00:43:59,840 --> 00:44:01,960
Speaker 1: it laid down it made a point, which is, you know,

862
00:44:02,080 --> 00:44:04,000
Speaker 1: it's it's about the client. It's about doing the right

863
00:44:04,040 --> 00:44:06,719
Speaker 1: thing for the client, doing what's best for them. And

864
00:44:06,800 --> 00:44:10,040
Speaker 1: when somebody says a story like that and people hear that,

865
00:44:10,640 --> 00:44:14,040
Speaker 1: it resonates culturally around the firm, and so I, you know,

866
00:44:14,080 --> 00:44:16,240
Speaker 1: I think Demential is very very unique in that respect.

867
00:44:16,480 --> 00:44:19,200
Speaker 1: You know, I can't imagine being somewhere for twenty four

868
00:44:19,280 --> 00:44:22,560
Speaker 1: years without feeling really good about what we're trying to accomplish.

869
00:44:22,600 --> 00:44:25,239
Speaker 1: And and back to my story meeting Dan the first time,

870
00:44:25,280 --> 00:44:26,800
Speaker 1: it's like, you know, I think we've been on a mission.

871
00:44:27,280 --> 00:44:29,640
Speaker 1: I think the mission has been about delivering the right

872
00:44:29,640 --> 00:44:32,560
Speaker 1: client experience and doing it in a good way. We've

873
00:44:32,600 --> 00:44:34,640
Speaker 1: never been worried about goals or getting it to a

874
00:44:34,680 --> 00:44:36,560
Speaker 1: certain size. It's always been about, hey, if we do

875
00:44:36,600 --> 00:44:40,120
Speaker 1: the right thing, do it well. Uh. The success or size,

876
00:44:40,200 --> 00:44:42,120
Speaker 1: whatever it might come from, it is going to happen

877
00:44:42,160 --> 00:44:44,439
Speaker 1: on its own. And it's sort of the the John

878
00:44:44,480 --> 00:44:47,480
Speaker 1: Wooden analogy, which is just you know, if you you

879
00:44:47,920 --> 00:44:50,319
Speaker 1: prepare yourself, you you tie your shoes, you work on

880
00:44:50,360 --> 00:44:52,040
Speaker 1: certain things, and then you go into the game and

881
00:44:52,520 --> 00:44:55,200
Speaker 1: the expectations you're gonna win. But if you don't win,

882
00:44:55,360 --> 00:44:57,959
Speaker 1: it's okay because you prepared yourself, You've done as best

883
00:44:57,960 --> 00:44:59,680
Speaker 1: you can and you worked hard at it, and uh,

884
00:44:59,680 --> 00:45:01,480
Speaker 1: and you've delivered what you what you said you were

885
00:45:01,480 --> 00:45:04,719
Speaker 1: gonna deliver. And I think somewhere along our interview, I

886
00:45:04,760 --> 00:45:08,920
Speaker 1: should disclose my firm UM manage his assets, and we

887
00:45:09,000 --> 00:45:12,319
Speaker 1: are also a dimensional client, So I'm very familiar with

888
00:45:12,360 --> 00:45:17,320
Speaker 1: both your process, your portfolios, and your culture. But I

889
00:45:17,320 --> 00:45:20,160
Speaker 1: I want to make sure that that UM is out

890
00:45:20,160 --> 00:45:23,920
Speaker 1: there so people understand this um. You mentioned David Booth

891
00:45:25,239 --> 00:45:29,440
Speaker 1: in public. He is a sort of quiet, reflective person.

892
00:45:30,040 --> 00:45:33,680
Speaker 1: But I've I've interviewed him, I've had lunch with him.

893
00:45:33,800 --> 00:45:37,520
Speaker 1: I get the sense that internally, indimensional, he's a little

894
00:45:37,560 --> 00:45:40,600
Speaker 1: more of a boisterous chairman. What what's it like working

895
00:45:40,640 --> 00:45:42,880
Speaker 1: with him? Oh, David's great. I've I've worked with him

896
00:45:42,880 --> 00:45:45,640
Speaker 1: now for twenty four years, and he's a he's a

897
00:45:45,760 --> 00:45:50,160
Speaker 1: super insightful guy. Um. You know, he's a very modest guy. Uh.

898
00:45:50,200 --> 00:45:51,959
Speaker 1: You know, even when we talk about even our body

899
00:45:52,000 --> 00:45:53,960
Speaker 1: of work and the fact that Demential has had this

900
00:45:54,040 --> 00:45:56,160
Speaker 1: portfolio out there for thirty six years and it's out

901
00:45:56,200 --> 00:45:59,759
Speaker 1: performed the benchmark by a hundred forty basis points for

902
00:46:00,239 --> 00:46:03,600
Speaker 1: thirty six years, you know, those are types of things

903
00:46:03,600 --> 00:46:07,359
Speaker 1: we haven't necessarily talked about quite often enough. In my view,

904
00:46:07,360 --> 00:46:09,319
Speaker 1: I think, you know, the idea of of of our

905
00:46:09,360 --> 00:46:12,319
Speaker 1: competence in our body work. I think those are things

906
00:46:12,360 --> 00:46:14,960
Speaker 1: that I think could be elevated from a dimensional perspective.

907
00:46:15,000 --> 00:46:17,719
Speaker 1: But David is a very modest guy. He's super insightful,

908
00:46:17,840 --> 00:46:22,720
Speaker 1: very strategic. Um, he's uh. He makes you know, great

909
00:46:22,840 --> 00:46:25,200
Speaker 1: business calls very very quickly. So I've been around him

910
00:46:25,239 --> 00:46:27,400
Speaker 1: long enough to know when you know, David makes a

911
00:46:27,440 --> 00:46:31,239
Speaker 1: comment about a particular business situation, his insights are are

912
00:46:31,360 --> 00:46:34,359
Speaker 1: are are very very good, um, and they usually are

913
00:46:34,440 --> 00:46:38,200
Speaker 1: very very right. So um, he's a great voice to have.

914
00:46:38,800 --> 00:46:41,560
Speaker 1: He's a he's a great person to have around. I'd

915
00:46:41,560 --> 00:46:44,239
Speaker 1: also give him credit. I used some of his kind

916
00:46:44,239 --> 00:46:47,879
Speaker 1: of views on management and how people react. He's he's

917
00:46:47,880 --> 00:46:51,600
Speaker 1: definitely a macro manager, so he's he's willing to give

918
00:46:51,600 --> 00:46:54,799
Speaker 1: people a chance. I eat Gerard and myself delegated to

919
00:46:54,800 --> 00:46:57,640
Speaker 1: you guys and let you carry the ball. He'll he'll participate,

920
00:46:57,680 --> 00:47:00,560
Speaker 1: He'll he's been a great chairman. He'll act, he'll participate

921
00:47:00,560 --> 00:47:04,279
Speaker 1: in big questions and big strategic issues. Um he'll keep

922
00:47:04,480 --> 00:47:06,719
Speaker 1: a close eye on what what's happening and make sure

923
00:47:06,760 --> 00:47:09,719
Speaker 1: that he uh sees things happening in the way he

924
00:47:09,760 --> 00:47:13,440
Speaker 1: thinks they should. But he also is very good about

925
00:47:13,560 --> 00:47:15,719
Speaker 1: giving somebody some space to run with an idea that

926
00:47:15,719 --> 00:47:17,719
Speaker 1: he thinks is pretty positive. And and going back to

927
00:47:17,719 --> 00:47:20,440
Speaker 1: the advisor of business. You know, Dan Wheeler was the

928
00:47:20,480 --> 00:47:23,200
Speaker 1: guy that came in with an idea, UH to use

929
00:47:23,239 --> 00:47:26,480
Speaker 1: these funds with with advisors I either retail business and

930
00:47:26,480 --> 00:47:30,640
Speaker 1: and David, to his credit, UM contemplated that concept and

931
00:47:30,680 --> 00:47:32,960
Speaker 1: thought about it thoroughly around it, you know, or these

932
00:47:32,960 --> 00:47:34,920
Speaker 1: assets gonna be compatible, and he made a decision to

933
00:47:34,960 --> 00:47:37,480
Speaker 1: allow Dan to go do that in a in a

934
00:47:37,520 --> 00:47:40,319
Speaker 1: methodical way that would be would be different than what's

935
00:47:40,320 --> 00:47:41,560
Speaker 1: been out there in the past. I give a lot

936
00:47:41,600 --> 00:47:46,040
Speaker 1: of credit for Dan was essentially an independent advisor outside

937
00:47:46,320 --> 00:47:49,920
Speaker 1: of Dimensional Funds, but it was pretty clear he was

938
00:47:50,040 --> 00:47:52,719
Speaker 1: raising a lot of money for the company. At what

939
00:47:52,880 --> 00:47:58,080
Speaker 1: point did that relationship become much more explicit, if that's

940
00:47:58,080 --> 00:48:00,400
Speaker 1: the right way, Yeah, I think he he became an emloyee,

941
00:48:00,400 --> 00:48:05,640
Speaker 1: I think a couple of years into it, so maybe. So,

942
00:48:05,800 --> 00:48:08,520
Speaker 1: you know, Dan is an interesting guy and he um.

943
00:48:08,600 --> 00:48:10,720
Speaker 1: You know, he was a broker in his prior life,

944
00:48:10,719 --> 00:48:13,080
Speaker 1: and you know, he would uh, he would say, he

945
00:48:13,080 --> 00:48:15,520
Speaker 1: would use a term the never having to say you're

946
00:48:15,520 --> 00:48:18,920
Speaker 1: sorry approach to investing. So he failed as a commissioned

947
00:48:19,040 --> 00:48:22,719
Speaker 1: broker or a stock broker that he felt there's a

948
00:48:22,719 --> 00:48:25,000
Speaker 1: lot of times when you know, he'd go and pitch

949
00:48:25,040 --> 00:48:28,240
Speaker 1: a stock to a client and then the stock wouldn't

950
00:48:28,239 --> 00:48:30,279
Speaker 1: do well, and he'd definitely go back and say, hey,

951
00:48:30,360 --> 00:48:32,480
Speaker 1: I'm sorry, it didn't work out the way we expected.

952
00:48:33,000 --> 00:48:34,799
Speaker 1: And so his view was if you if you could

953
00:48:34,880 --> 00:48:37,720
Speaker 1: move away from that, you could get a client educated

954
00:48:37,760 --> 00:48:41,040
Speaker 1: on the capital markets, get them very comfortable about the

955
00:48:41,080 --> 00:48:44,920
Speaker 1: expected returns in a market, um and educate them in

956
00:48:44,920 --> 00:48:46,480
Speaker 1: in a proper way that you wouldn't have to have

957
00:48:46,600 --> 00:48:50,040
Speaker 1: these oh I'm sorry type of conversations with your clients.

958
00:48:50,040 --> 00:48:52,880
Speaker 1: So it's a very unique way to view the investment space.

959
00:48:53,080 --> 00:49:00,000
Speaker 1: So you mentioned, Um, David Booth doesn't really discuss um

960
00:49:00,080 --> 00:49:04,239
Speaker 1: the company's achievements publicly all that much. The firm has

961
00:49:04,239 --> 00:49:08,200
Speaker 1: a reputation as a kind of private company that doesn't

962
00:49:08,680 --> 00:49:10,800
Speaker 1: do a lot of press. I mean, we don't see

963
00:49:11,160 --> 00:49:14,399
Speaker 1: your names out in the media all that much, which

964
00:49:14,440 --> 00:49:17,840
Speaker 1: I get the senses by design, but it leads to

965
00:49:17,920 --> 00:49:20,960
Speaker 1: lots of misconceptions. What what sort of misconceptions are out

966
00:49:21,000 --> 00:49:25,279
Speaker 1: there about Dimensional Funds? Well, I think we you know,

967
00:49:25,320 --> 00:49:27,520
Speaker 1: I don't know if it's purposely or not, but I

968
00:49:27,560 --> 00:49:30,920
Speaker 1: think we've always allowed our clients to talk for us.

969
00:49:30,920 --> 00:49:33,880
Speaker 1: So if if you or any other advisor or institutional

970
00:49:33,880 --> 00:49:36,160
Speaker 1: client thinks possibly what we've we've been able to do

971
00:49:36,280 --> 00:49:39,520
Speaker 1: for them and for their clients, then they're gonna speak

972
00:49:39,600 --> 00:49:42,399
Speaker 1: highly of us. And that's a that's a way, that's

973
00:49:42,400 --> 00:49:44,759
Speaker 1: a public presence kind of a concept as well. So

974
00:49:45,440 --> 00:49:49,000
Speaker 1: we've always uh sort of limited ourselves in the public

975
00:49:49,080 --> 00:49:54,080
Speaker 1: presence type of space. Uh, we're not advertisers. Um, We've

976
00:49:54,080 --> 00:49:56,160
Speaker 1: talked to clients in the past, they don't necessarily want

977
00:49:56,239 --> 00:49:59,920
Speaker 1: us to advertise. They don't mind having an elevated PubL

978
00:50:00,000 --> 00:50:03,600
Speaker 1: at presence. So when when you know, Bloomberg does an

979
00:50:03,719 --> 00:50:07,479
Speaker 1: article on Dimensional and advisors able a third party piece

980
00:50:07,520 --> 00:50:11,360
Speaker 1: and advisors able to hand that that article to a client, UM,

981
00:50:11,440 --> 00:50:13,359
Speaker 1: and the client says, Okay, I get a little bit

982
00:50:13,520 --> 00:50:16,720
Speaker 1: better sense of who Dimensional is. That's a positive for

983
00:50:16,719 --> 00:50:19,400
Speaker 1: for that client and for advisor and for the dimensional.

984
00:50:19,520 --> 00:50:22,480
Speaker 1: So we're we're in the business of of you know,

985
00:50:23,040 --> 00:50:25,480
Speaker 1: trying to do the right thing for the client, being

986
00:50:25,560 --> 00:50:28,719
Speaker 1: very robust from an academic perspective, in a research perspective,

987
00:50:29,320 --> 00:50:31,279
Speaker 1: working on the on the edges, if you will, from

988
00:50:31,320 --> 00:50:34,799
Speaker 1: an implementation perspective, and we think, you know, our implementation

989
00:50:34,880 --> 00:50:37,359
Speaker 1: and our delivery of the portfolios are as efficient as

990
00:50:37,480 --> 00:50:40,040
Speaker 1: as they can get. Uh. And that's probably a part

991
00:50:40,040 --> 00:50:43,080
Speaker 1: of the story that we don't we don't describe enough

992
00:50:43,400 --> 00:50:47,200
Speaker 1: UM differentiating ourselves versus competitors. So so let's talk about

993
00:50:47,239 --> 00:50:50,160
Speaker 1: some of those competitors. UM, if we look at the

994
00:50:50,239 --> 00:50:55,480
Speaker 1: big three in the world of indexing and ETFs, Vanguard,

995
00:50:55,640 --> 00:51:00,560
Speaker 1: State Street, black Rock, they have become fierce competitors in

996
00:51:00,640 --> 00:51:04,000
Speaker 1: the e t F space, which is growing very rapidly.

997
00:51:04,880 --> 00:51:07,359
Speaker 1: You guys have made the decision, No, we don't want

998
00:51:07,360 --> 00:51:09,959
Speaker 1: to be in the e t F space. It's it's

999
00:51:10,000 --> 00:51:13,239
Speaker 1: subject to inflows and outflows, and it's very retail and

1000
00:51:13,960 --> 00:51:18,080
Speaker 1: not necessarily our interest. Is that something that might be

1001
00:51:18,120 --> 00:51:21,120
Speaker 1: revisited in the future, or because it seems like so

1002
00:51:21,239 --> 00:51:24,120
Speaker 1: much of the business is moving in the direction of

1003
00:51:24,120 --> 00:51:27,399
Speaker 1: e t F s, how does df A think about that? Yeah,

1004
00:51:27,400 --> 00:51:29,560
Speaker 1: I think we're very client centric, So you know, we've

1005
00:51:29,560 --> 00:51:32,319
Speaker 1: had discussions about et F with with clients for for

1006
00:51:32,400 --> 00:51:34,200
Speaker 1: many years. A matter of fact, I think it's probably

1007
00:51:34,239 --> 00:51:36,319
Speaker 1: ten years ago where David Booth and I went out

1008
00:51:36,360 --> 00:51:39,160
Speaker 1: and talked to clients about their their interests in need

1009
00:51:39,239 --> 00:51:41,480
Speaker 1: for an e t F from Dimensional and at that

1010
00:51:41,520 --> 00:51:44,320
Speaker 1: point in time, there wasn't that high of an interest

1011
00:51:44,760 --> 00:51:48,239
Speaker 1: for that, and UM, you know, but that doesn't mean

1012
00:51:48,239 --> 00:51:50,799
Speaker 1: that we wouldn't review it again. If if if for

1013
00:51:50,840 --> 00:51:54,160
Speaker 1: whatever reason, Advisers for instance, came back and said, listen,

1014
00:51:54,200 --> 00:51:55,440
Speaker 1: it would be great to have an e t F

1015
00:51:55,520 --> 00:51:57,439
Speaker 1: for these reasons and we think you're the right firm

1016
00:51:57,520 --> 00:52:00,320
Speaker 1: to do that. Um, then obviously we we would we

1017
00:52:00,360 --> 00:52:03,200
Speaker 1: would listen to that and be approachable around that. So

1018
00:52:03,239 --> 00:52:06,200
Speaker 1: when when you look at our our orientation around our

1019
00:52:06,200 --> 00:52:08,520
Speaker 1: our verus funds, I mean we have sustainable funds and

1020
00:52:08,560 --> 00:52:11,439
Speaker 1: social funds. Next question in my mind that I wanted

1021
00:52:11,440 --> 00:52:14,320
Speaker 1: to go to. I mentioned the smart beta trends, and

1022
00:52:14,760 --> 00:52:17,840
Speaker 1: you guys have have really stepped stuck with just pure

1023
00:52:18,280 --> 00:52:21,680
Speaker 1: factor investing. How do you look at the rise of

1024
00:52:21,760 --> 00:52:26,400
Speaker 1: E s G, the desire for fill in the blank

1025
00:52:27,120 --> 00:52:32,480
Speaker 1: environmental sustainable, social governance, what have you? How does how

1026
00:52:32,480 --> 00:52:36,560
Speaker 1: does dimensional look at that trend and the desire for

1027
00:52:36,560 --> 00:52:40,920
Speaker 1: for that, especially from from women investors and from younger

1028
00:52:41,200 --> 00:52:44,160
Speaker 1: millennial investors. That seems to be where a lot of

1029
00:52:44,200 --> 00:52:46,319
Speaker 1: the demands is coming from. You know, that's a great,

1030
00:52:46,520 --> 00:52:48,640
Speaker 1: great question, and it's a great example of how we've

1031
00:52:48,640 --> 00:52:51,080
Speaker 1: worked with our clients in the past, and that basically

1032
00:52:51,120 --> 00:52:53,319
Speaker 1: a clients came to us and said, listen, when you

1033
00:52:53,320 --> 00:52:55,520
Speaker 1: look at those areas that you know E s G

1034
00:52:55,760 --> 00:53:00,680
Speaker 1: and so forth, the the uh the is out there

1035
00:53:00,680 --> 00:53:03,799
Speaker 1: for the advisor, weren't that great? So high expense, you know,

1036
00:53:04,480 --> 00:53:08,319
Speaker 1: highly concentrated, bad performance and so forth and so on.

1037
00:53:08,440 --> 00:53:12,960
Speaker 1: So that the question was could you demensional? Yeah, that's terrific.

1038
00:53:13,320 --> 00:53:17,560
Speaker 1: Could you demensional come to us with a solution that

1039
00:53:17,680 --> 00:53:21,360
Speaker 1: looked very much like what your solutions are today, but

1040
00:53:21,520 --> 00:53:26,200
Speaker 1: with a UH you know, a focus and UH detail

1041
00:53:26,239 --> 00:53:30,320
Speaker 1: around around the social and sustainable and so we UM

1042
00:53:30,480 --> 00:53:33,120
Speaker 1: we went back to the basically lab and we came

1043
00:53:33,120 --> 00:53:37,440
Speaker 1: back with portfolios that we're very highly diversified. There were

1044
00:53:37,480 --> 00:53:41,120
Speaker 1: low costs UH. They didn't recognize a lot of these

1045
00:53:41,320 --> 00:53:45,040
Speaker 1: E s G issues in terms of portfolio management UH,

1046
00:53:45,040 --> 00:53:46,719
Speaker 1: and we're able to come back with a portfolio that

1047
00:53:46,760 --> 00:53:49,640
Speaker 1: we thought from a capital market perspective made sense for

1048
00:53:49,680 --> 00:53:54,200
Speaker 1: the end client with the nod towards being sustainable or

1049
00:53:54,239 --> 00:53:57,839
Speaker 1: social or whatever the UM the issue might be. So

1050
00:53:57,920 --> 00:54:00,359
Speaker 1: that that's been a huge success for SO. I think

1051
00:54:00,400 --> 00:54:02,399
Speaker 1: we've we've now got ten year track records in those

1052
00:54:02,440 --> 00:54:06,600
Speaker 1: areas and those portfolios track really closely to our standard portfolios,

1053
00:54:07,200 --> 00:54:10,320
Speaker 1: the core portfolios UM. So the performance has been terrific,

1054
00:54:10,360 --> 00:54:13,640
Speaker 1: The expectations have been met UM and for clients and

1055
00:54:13,640 --> 00:54:17,920
Speaker 1: for advisors who are are interested in in that aspect

1056
00:54:17,920 --> 00:54:21,120
Speaker 1: of investing UM, there are available options for them. So

1057
00:54:21,320 --> 00:54:23,080
Speaker 1: we feel really good about that and we think it's

1058
00:54:23,080 --> 00:54:26,160
Speaker 1: been a real success for for all sides. And going forward,

1059
00:54:26,160 --> 00:54:28,920
Speaker 1: I'm sure, there's gonna be more interest in that from

1060
00:54:28,960 --> 00:54:32,400
Speaker 1: from clients and so forth on that go forward. So

1061
00:54:32,440 --> 00:54:34,680
Speaker 1: what else might there be more interest in it in

1062
00:54:34,840 --> 00:54:38,480
Speaker 1: going forward? E s G is clearly on the rise,

1063
00:54:38,560 --> 00:54:44,320
Speaker 1: but its roots go back decades. Smart data, UM perhaps

1064
00:54:44,360 --> 00:54:48,840
Speaker 1: not as far back. Factor investing even further back. What

1065
00:54:48,920 --> 00:54:53,480
Speaker 1: do you imagine the next big trend in investing is

1066
00:54:53,520 --> 00:54:55,799
Speaker 1: going to be? And I honestly don't know if there's

1067
00:54:55,800 --> 00:54:58,479
Speaker 1: an answer, but you have a different advantage point, maybe

1068
00:54:58,480 --> 00:55:00,640
Speaker 1: you see it a little differently. You know, there's always

1069
00:55:00,680 --> 00:55:04,120
Speaker 1: going to be another you know, academic paper or another

1070
00:55:04,360 --> 00:55:07,719
Speaker 1: area of research that that helps us refine how we

1071
00:55:07,760 --> 00:55:10,239
Speaker 1: think about the capital markets. And UM, we've seen that

1072
00:55:10,280 --> 00:55:13,720
Speaker 1: recently with you know, profitability for instance. Uh so there's

1073
00:55:13,760 --> 00:55:16,719
Speaker 1: gonna be more of that, you know. For me, I

1074
00:55:16,719 --> 00:55:19,760
Speaker 1: think that the bigger change, and I've been really inspired

1075
00:55:19,800 --> 00:55:22,480
Speaker 1: by recently is I think this UM I would call

1076
00:55:22,560 --> 00:55:30,000
Speaker 1: the human element of advice. It's the advisor's contribution to

1077
00:55:30,040 --> 00:55:33,759
Speaker 1: the end client result that that that comes from this

1078
00:55:33,840 --> 00:55:36,719
Speaker 1: interaction at a human level. So when I see sit

1079
00:55:36,800 --> 00:55:40,960
Speaker 1: with advisors now, the concept of trust has has elevated

1080
00:55:41,320 --> 00:55:43,480
Speaker 1: quite a bit, and and trust comes from a couple

1081
00:55:43,520 --> 00:55:47,479
Speaker 1: of different areas. One is is competency. So at demensionals level,

1082
00:55:47,920 --> 00:55:50,640
Speaker 1: you know, we've got to be able to deliver access

1083
00:55:50,680 --> 00:55:52,200
Speaker 1: to the capital market is the most efficient way, and

1084
00:55:52,239 --> 00:55:53,799
Speaker 1: I think we have We've got a thirty six year

1085
00:55:53,840 --> 00:55:56,840
Speaker 1: track record of of competence for the advisor. You know,

1086
00:55:56,880 --> 00:56:00,520
Speaker 1: the advisor provides a lot of different wealth management activities.

1087
00:56:00,560 --> 00:56:03,799
Speaker 1: They know the client intimately, UH, they know about their

1088
00:56:03,800 --> 00:56:06,480
Speaker 1: hopes and their dreams and so forth. And so when

1089
00:56:06,480 --> 00:56:09,560
Speaker 1: I think about the movement of financial advice, it's gone

1090
00:56:09,560 --> 00:56:13,120
Speaker 1: down that path, um, you know where historically thirty five

1091
00:56:13,160 --> 00:56:15,040
Speaker 1: years ago when I started the business, it was about

1092
00:56:15,320 --> 00:56:17,440
Speaker 1: trying to sell a stock or get a commission off

1093
00:56:17,480 --> 00:56:20,960
Speaker 1: of stock UH, purchase or sell. UH. It's changed to

1094
00:56:21,040 --> 00:56:23,840
Speaker 1: a holistic wealth management view. It's changed to start thinking

1095
00:56:23,840 --> 00:56:27,080
Speaker 1: about people's you know, hopes, their dreams, their children, their

1096
00:56:27,200 --> 00:56:31,839
Speaker 1: charitable giving, and doing that in a very systematic, uh

1097
00:56:31,880 --> 00:56:35,040
Speaker 1: efficient way from the capital market perspective, you know, using

1098
00:56:35,040 --> 00:56:38,239
Speaker 1: building blocks like demensional delivers UH to be able to

1099
00:56:38,680 --> 00:56:42,279
Speaker 1: execute on the client's expectations. And so I I think

1100
00:56:42,280 --> 00:56:44,920
Speaker 1: by executing on the client expectation, then the aspect of

1101
00:56:44,960 --> 00:56:48,080
Speaker 1: trust develops and it continues to build over time. And

1102
00:56:48,120 --> 00:56:50,840
Speaker 1: so I see these great relationships. I've been, you know,

1103
00:56:50,880 --> 00:56:53,040
Speaker 1: in this for twenty five years, and we've got advisors

1104
00:56:53,080 --> 00:56:54,839
Speaker 1: who've worked with us for twenty five years and their

1105
00:56:54,840 --> 00:56:56,879
Speaker 1: clients who have worked with them for twenty five years.

1106
00:56:57,360 --> 00:56:59,399
Speaker 1: And when you see those types of clients come into

1107
00:56:59,400 --> 00:57:03,239
Speaker 1: the office and talk about their experience, their journey, the

1108
00:57:03,280 --> 00:57:06,520
Speaker 1: fact that they feel okay about about their investments and

1109
00:57:06,560 --> 00:57:08,920
Speaker 1: about their retirement and where they want to go in

1110
00:57:08,960 --> 00:57:11,840
Speaker 1: the future, and another feeling, it's an amazing feeling. And

1111
00:57:11,880 --> 00:57:14,160
Speaker 1: so whenever I get you know, you wake up some mornings,

1112
00:57:14,200 --> 00:57:16,640
Speaker 1: you guess, you know, can I is another day of

1113
00:57:16,880 --> 00:57:19,919
Speaker 1: doing extra y you know, it just takes one conversation

1114
00:57:20,000 --> 00:57:23,560
Speaker 1: with a really satisfied client that makes you feel like, hey,

1115
00:57:23,400 --> 00:57:25,640
Speaker 1: I got it. The origin, the original reason why we

1116
00:57:25,680 --> 00:57:29,040
Speaker 1: started this was we wanted to make the client experience great.

1117
00:57:29,040 --> 00:57:31,560
Speaker 1: We wanted clients to feel good about their retirement, feel

1118
00:57:31,560 --> 00:57:33,600
Speaker 1: like they were going to be okay. And when you

1119
00:57:33,640 --> 00:57:35,919
Speaker 1: get to see that through the advisors who are working

1120
00:57:35,920 --> 00:57:38,240
Speaker 1: with these clients for a long, long time time periods,

1121
00:57:38,640 --> 00:57:41,760
Speaker 1: it's just a it's really um a feel good kind

1122
00:57:41,760 --> 00:57:43,600
Speaker 1: of a thing for anybody that works in that space.

1123
00:57:43,880 --> 00:57:45,640
Speaker 1: So so I'm going to assume that we're not going

1124
00:57:45,680 --> 00:57:49,520
Speaker 1: to see a d F a crypto funds launching anytime soon.

1125
00:57:50,680 --> 00:57:54,200
Speaker 1: You will not. So I like the idea of holistic

1126
00:57:54,840 --> 00:57:57,480
Speaker 1: asset management. It's a good term and it really does

1127
00:57:57,520 --> 00:58:02,320
Speaker 1: a nice job describing the full three sixty. So let's

1128
00:58:02,480 --> 00:58:06,280
Speaker 1: jump to our favorite questions that we ask all of

1129
00:58:06,280 --> 00:58:10,880
Speaker 1: our guests. Um, tell us the most important thing that

1130
00:58:10,920 --> 00:58:15,919
Speaker 1: we don't know about Dave Butler. Great question. Um, there's

1131
00:58:15,960 --> 00:58:17,960
Speaker 1: probably a lot that you don't know about Dave Butler,

1132
00:58:18,040 --> 00:58:22,720
Speaker 1: but I know a lot more now than Uh. Here's

1133
00:58:22,760 --> 00:58:25,800
Speaker 1: one because it's it's pretty relevant. So I Steve Kerr

1134
00:58:26,160 --> 00:58:29,160
Speaker 1: just won the NBA Championship of Golden State. I think

1135
00:58:29,160 --> 00:58:32,200
Speaker 1: he's got eight rings now as both the player and

1136
00:58:32,680 --> 00:58:34,560
Speaker 1: players coach. He and I played together on a US

1137
00:58:34,680 --> 00:58:36,560
Speaker 1: national team back in the day. We got the room

1138
00:58:36,600 --> 00:58:39,880
Speaker 1: for a month together. Uh, And I have to say

1139
00:58:39,880 --> 00:58:42,920
Speaker 1: I've taken a lot of inspiration from watching him coach

1140
00:58:43,840 --> 00:58:47,840
Speaker 1: a team of of major talents. But you know, taking

1141
00:58:47,880 --> 00:58:50,200
Speaker 1: that team of major challenge and developing them and knitting

1142
00:58:50,200 --> 00:58:54,240
Speaker 1: it into a collaborative unit is just genius. And I

1143
00:58:54,280 --> 00:58:56,160
Speaker 1: don't know if people give him the kind of credit

1144
00:58:56,240 --> 00:58:59,320
Speaker 1: that he should get. But it's an amazing thing to watch,

1145
00:59:00,040 --> 00:59:03,400
Speaker 1: you know. I read stuff about him quite often. Uh.

1146
00:59:03,520 --> 00:59:06,320
Speaker 1: You know, No, I take it to my team and

1147
00:59:06,320 --> 00:59:08,360
Speaker 1: I say, look, here's here's something that we ought to

1148
00:59:08,360 --> 00:59:10,080
Speaker 1: think about, and here's something we out of view and

1149
00:59:10,120 --> 00:59:13,240
Speaker 1: look at as well. So quick example is just on hiring.

1150
00:59:13,880 --> 00:59:15,760
Speaker 1: I can remember asking him when he played the University

1151
00:59:15,760 --> 00:59:18,560
Speaker 1: of Arizona. These teams were great, the players that I

1152
00:59:18,560 --> 00:59:21,240
Speaker 1: had met were great people. And I said, how does

1153
00:59:21,240 --> 00:59:23,720
Speaker 1: that happen? Uh? And he says to me, he says, well,

1154
00:59:23,760 --> 00:59:25,560
Speaker 1: he said lud Olsen, who was a coach at the time,

1155
00:59:25,600 --> 00:59:27,320
Speaker 1: he says, we have a we have an approach where

1156
00:59:27,600 --> 00:59:30,480
Speaker 1: we bring a player in for the weekend, uh, and

1157
00:59:30,560 --> 00:59:32,520
Speaker 1: on Monday morning we get together as a team. And

1158
00:59:32,800 --> 00:59:34,600
Speaker 1: Luke asked the question, even if it's the number one

1159
00:59:34,600 --> 00:59:36,400
Speaker 1: player in the country, says, do you guys want to

1160
00:59:36,440 --> 00:59:39,240
Speaker 1: play with this guy? Really? Yeah? And if we if

1161
00:59:39,240 --> 00:59:42,439
Speaker 1: we said no, then then he stopped recruiting him. So

1162
00:59:42,640 --> 00:59:45,440
Speaker 1: I actually took that into our team at Dementiel for

1163
00:59:45,560 --> 00:59:47,840
Speaker 1: some time and and we we had the same kind

1164
00:59:47,840 --> 00:59:50,000
Speaker 1: of approach. We had nine or ten people interview a

1165
00:59:50,000 --> 00:59:53,840
Speaker 1: new team member, and it never was my decision and

1166
00:59:53,920 --> 00:59:55,480
Speaker 1: I passed it to the team. We start with the

1167
00:59:55,520 --> 00:59:57,320
Speaker 1: youngest person first and we say, hey, do you want

1168
00:59:57,320 --> 00:59:59,240
Speaker 1: to play with this person? This is a person that's

1169
00:59:59,240 --> 01:00:01,320
Speaker 1: going to be on your team that you have to

1170
01:00:01,360 --> 01:00:03,360
Speaker 1: play with, and do you want to do it or not?

1171
01:00:03,600 --> 01:00:05,240
Speaker 1: And so that's I think a great way to think

1172
01:00:05,280 --> 01:00:07,360
Speaker 1: about building out a team. You know, you want to

1173
01:00:07,560 --> 01:00:10,480
Speaker 1: you want to find ways to to elevate the collaboration

1174
01:00:10,560 --> 01:00:14,000
Speaker 1: and the the the enjoyment of the team that that

1175
01:00:14,200 --> 01:00:17,280
Speaker 1: that's really quite quite fascinating, and they are building what

1176
01:00:17,400 --> 01:00:21,360
Speaker 1: looks like a dynasty for the Ages franchise. Yeah, right

1177
01:00:21,520 --> 01:00:25,640
Speaker 1: for sure. Um tell us about your early mentors who

1178
01:00:25,840 --> 01:00:29,200
Speaker 1: changed the way you look at the financial business and

1179
01:00:30,200 --> 01:00:34,600
Speaker 1: uh investment. Well, you mentioned the Universe Chicago connection, so

1180
01:00:34,880 --> 01:00:40,920
Speaker 1: I would include all of those folks that Merton Miller

1181
01:00:41,080 --> 01:00:43,480
Speaker 1: I got to meet Merton, you know when I first interviewed,

1182
01:00:43,520 --> 01:00:47,840
Speaker 1: and all of those folks have transformed the capital market

1183
01:00:47,880 --> 01:00:51,800
Speaker 1: experience and the investor experience in ways that are are

1184
01:00:51,840 --> 01:00:54,840
Speaker 1: were unimaginable at the time. But the whole you know,

1185
01:00:54,880 --> 01:00:57,760
Speaker 1: the the energy and the passion and the enthusiasm for

1186
01:00:57,800 --> 01:01:00,800
Speaker 1: the fact that that markets work, that prices are fair,

1187
01:01:01,360 --> 01:01:03,760
Speaker 1: that you had to invest in a way that's diversified

1188
01:01:03,800 --> 01:01:06,280
Speaker 1: and low costs and tax efficient. Those concepts didn't even

1189
01:01:06,800 --> 01:01:09,560
Speaker 1: hit the radar screen. And thirty years ago that was

1190
01:01:09,640 --> 01:01:11,680
Speaker 1: sort of poop poo and laughed at. And now we

1191
01:01:11,720 --> 01:01:14,400
Speaker 1: pushed forward it today and and this. You know, when

1192
01:01:14,440 --> 01:01:17,200
Speaker 1: you talk about independent advice, you talk multi factor investing,

1193
01:01:17,680 --> 01:01:20,600
Speaker 1: you talk about holistic wealth management, you know, those concepts

1194
01:01:20,640 --> 01:01:24,440
Speaker 1: are front and center for any client experience. So to

1195
01:01:24,480 --> 01:01:26,960
Speaker 1: see that transform and I know that these guys were

1196
01:01:27,040 --> 01:01:29,400
Speaker 1: part of that and then really elevated, it's really fun

1197
01:01:29,440 --> 01:01:33,040
Speaker 1: to watch. Let's let's talk about everybody's favorite question. Tell

1198
01:01:33,120 --> 01:01:36,040
Speaker 1: us about some of your favorite books, be they fiction, nonfiction,

1199
01:01:36,720 --> 01:01:40,120
Speaker 1: finance related non finance. What do you read? I am

1200
01:01:40,160 --> 01:01:44,280
Speaker 1: all about the biography, autobiographies, about the journey. I love

1201
01:01:44,520 --> 01:01:46,880
Speaker 1: just understanding people and how they got to where they

1202
01:01:46,880 --> 01:01:49,360
Speaker 1: are and why they're why they act the way they act.

1203
01:01:49,480 --> 01:01:51,600
Speaker 1: So you know some of the books that I've read recently, Um,

1204
01:01:51,760 --> 01:01:56,440
Speaker 1: you know, um Red Shoe Doog, Phil Knight, Nike. I

1205
01:01:56,480 --> 01:01:59,600
Speaker 1: just read Bruce Springsteens moren to Run. I have that

1206
01:01:59,600 --> 01:02:02,240
Speaker 1: that's in my Q and I haven't gotten great books,

1207
01:02:02,040 --> 01:02:05,120
Speaker 1: but it's so big, a little intimidating, it's a great,

1208
01:02:05,120 --> 01:02:07,080
Speaker 1: great book, and you know, but all of these things really,

1209
01:02:07,080 --> 01:02:10,480
Speaker 1: to me, it's about the struggle. It's about the journey.

1210
01:02:11,080 --> 01:02:14,400
Speaker 1: You know. People see quote unquote success from people and

1211
01:02:14,400 --> 01:02:16,840
Speaker 1: and what you realize. And this is what I've told

1212
01:02:16,880 --> 01:02:19,880
Speaker 1: David Booth. Even with Dimensional, people look at Demensional say well,

1213
01:02:19,920 --> 01:02:22,200
Speaker 1: what a successful firm, and how amazing and how great.

1214
01:02:22,240 --> 01:02:25,440
Speaker 1: But their time periods when you know that the concept

1215
01:02:25,480 --> 01:02:29,760
Speaker 1: of indexing wasn't even wasn't accepted by anybody. Um, there's

1216
01:02:29,760 --> 01:02:32,160
Speaker 1: a time when small cap stocks, you know, back in

1217
01:02:32,200 --> 01:02:35,320
Speaker 1: the nineteen eighties, when small caps underperformed for ten years,

1218
01:02:35,960 --> 01:02:38,360
Speaker 1: the S and P five hundred by by ten percent,

1219
01:02:38,440 --> 01:02:42,640
Speaker 1: that that people question whether Dimensional as a firm, you know,

1220
01:02:42,800 --> 01:02:45,800
Speaker 1: was was really a firm that could deliver uh, you

1221
01:02:45,800 --> 01:02:48,720
Speaker 1: know small cap stock returns. You know, so there's always

1222
01:02:48,720 --> 01:02:51,240
Speaker 1: going to be a struggle along the way. Um, But

1223
01:02:51,360 --> 01:02:54,320
Speaker 1: what's inspiring to me is to watch how that struggled

1224
01:02:54,320 --> 01:02:57,920
Speaker 1: and translates into an action that then leads to this,

1225
01:02:58,000 --> 01:03:00,000
Speaker 1: you know, the success that we've seen. So it's fun.

1226
01:03:00,160 --> 01:03:04,040
Speaker 1: You mentioned shoe Dog, what was so surprising in that

1227
01:03:04,120 --> 01:03:10,400
Speaker 1: book is how many times Nike just you know, managed

1228
01:03:10,480 --> 01:03:14,440
Speaker 1: to miss the executioner's acts. They were on the edge

1229
01:03:14,640 --> 01:03:17,880
Speaker 1: repeatedly in the early days of the company. Yeah, give it.

1230
01:03:17,880 --> 01:03:20,120
Speaker 1: Give us one other book, one other thing that you uh,

1231
01:03:20,280 --> 01:03:24,160
Speaker 1: you read and really enjoy well, you know, anything John Wooden.

1232
01:03:24,360 --> 01:03:26,720
Speaker 1: You know I read that stuff all day long. Give

1233
01:03:27,240 --> 01:03:28,960
Speaker 1: John wood in the life. You know, there's a there's

1234
01:03:28,960 --> 01:03:32,000
Speaker 1: a book that just John Wooden. Um, but it's you know,

1235
01:03:32,440 --> 01:03:34,800
Speaker 1: John Wooden. I think, you know, and I tell the

1236
01:03:34,840 --> 01:03:36,960
Speaker 1: kids this all the time. If if you you look

1237
01:03:37,000 --> 01:03:40,600
Speaker 1: at what John Wooden stands for and how he built

1238
01:03:40,640 --> 01:03:43,560
Speaker 1: his pyramid of success and what's involved in the pyramid

1239
01:03:43,600 --> 01:03:46,040
Speaker 1: of success. You know, my view is if if you

1240
01:03:46,400 --> 01:03:49,240
Speaker 1: follow that in a you know, conceptual way, it's it's

1241
01:03:49,280 --> 01:03:52,560
Speaker 1: tough not to have success in something, and success meaning

1242
01:03:53,200 --> 01:03:55,000
Speaker 1: that you've given it your all and you've worked at it.

1243
01:03:55,120 --> 01:03:57,840
Speaker 1: And even if you don't win or win or lose,

1244
01:03:58,240 --> 01:04:00,640
Speaker 1: you know this the knowledge of satisfy. Actually you've worked

1245
01:04:00,680 --> 01:04:03,480
Speaker 1: really hard at something. I think his success success in

1246
01:04:03,520 --> 01:04:08,880
Speaker 1: itself really interesting. What what has you excited today? What

1247
01:04:08,880 --> 01:04:13,360
Speaker 1: what do you really jazzed about? In two thousand and eighteen. Uh, well,

1248
01:04:13,360 --> 01:04:16,160
Speaker 1: I'd come back to the aspect of trust in the

1249
01:04:16,200 --> 01:04:18,080
Speaker 1: financial services space. I think I think a lot of

1250
01:04:18,080 --> 01:04:21,000
Speaker 1: trust was lost back in two thousand eight and two

1251
01:04:21,040 --> 01:04:23,960
Speaker 1: thousand nine, But I think this, I think what we've

1252
01:04:23,960 --> 01:04:27,480
Speaker 1: come out of that segment of time in is that

1253
01:04:28,040 --> 01:04:30,920
Speaker 1: I think holistic wealth management has has taken its position.

1254
01:04:31,640 --> 01:04:36,840
Speaker 1: I think independent advice his HISS has gained its rightful spot.

1255
01:04:37,360 --> 01:04:41,800
Speaker 1: I think uh indexing i E. And then multi factor investing,

1256
01:04:41,800 --> 01:04:43,600
Speaker 1: which again which is Demensil has been doing for thirty

1257
01:04:43,680 --> 01:04:46,080
Speaker 1: six years. I think that's front and center. So it's

1258
01:04:46,080 --> 01:04:48,440
Speaker 1: satisfying to me to look at all these trends that

1259
01:04:48,760 --> 01:04:51,560
Speaker 1: um going your way that we identified, you know, thirty

1260
01:04:51,640 --> 01:04:53,520
Speaker 1: years ago, that we thought, you know, and again we didn't.

1261
01:04:53,760 --> 01:04:57,280
Speaker 1: We didn't identify them for marketing reasons or for business reasons.

1262
01:04:57,280 --> 01:04:59,800
Speaker 1: We identified because we thought that was We thought independent

1263
01:04:59,800 --> 01:05:04,120
Speaker 1: of ICE and multi factor investing and holistic wealth management

1264
01:05:04,160 --> 01:05:07,400
Speaker 1: and human element of the advisor, the necessity for the

1265
01:05:07,400 --> 01:05:09,680
Speaker 1: advisor to get great results for the client. We thought

1266
01:05:09,720 --> 01:05:11,400
Speaker 1: that was the right thing for the end client. And

1267
01:05:11,680 --> 01:05:14,600
Speaker 1: that's what's it's played out. So tell us about a

1268
01:05:14,600 --> 01:05:17,600
Speaker 1: time you failed and what you learned from the experience

1269
01:05:19,160 --> 01:05:24,160
Speaker 1: well failure. Uh, you know, like we all, I've I've

1270
01:05:24,160 --> 01:05:27,320
Speaker 1: failed many many times, and I you know that the

1271
01:05:27,400 --> 01:05:29,080
Speaker 1: lesson I give the kids is like, you know you're

1272
01:05:29,080 --> 01:05:32,320
Speaker 1: gonna fail in terms of losing or getting beat or

1273
01:05:32,320 --> 01:05:34,160
Speaker 1: getting knocked down or whatever it might be. And and

1274
01:05:34,200 --> 01:05:37,000
Speaker 1: you know, the question really is is did you prepare

1275
01:05:37,000 --> 01:05:41,360
Speaker 1: yourself to succeeds as as best you could? And if

1276
01:05:41,400 --> 01:05:44,240
Speaker 1: you did not succeed as as an I e. A loss,

1277
01:05:44,840 --> 01:05:46,800
Speaker 1: you know, did you get back up and dust yourself

1278
01:05:46,840 --> 01:05:49,720
Speaker 1: off and and do it again? So I think that's

1279
01:05:49,760 --> 01:05:52,320
Speaker 1: the lesson you learned from failure. You know you mentioned

1280
01:05:52,360 --> 01:05:57,520
Speaker 1: did you did you prepare yourself to win? Um? Giants coach,

1281
01:05:57,520 --> 01:06:00,920
Speaker 1: I'm drawing a blank on his name, Tom Tom Colin.

1282
01:06:01,040 --> 01:06:03,760
Speaker 1: Tom Coughlin wrote a book, Earned the Right to Win,

1283
01:06:04,280 --> 01:06:07,040
Speaker 1: which is that exact I find a lot of sports

1284
01:06:07,280 --> 01:06:10,120
Speaker 1: books don't really they tend to be a little cliche,

1285
01:06:10,120 --> 01:06:13,040
Speaker 1: they don't really apply to business all that. Well, that book,

1286
01:06:13,040 --> 01:06:16,720
Speaker 1: more than any other that I've read, really talks to

1287
01:06:16,840 --> 01:06:20,920
Speaker 1: exactly what you're describing. If you were prepared, if you

1288
01:06:21,000 --> 01:06:23,720
Speaker 1: have done the heavy lifting beforehand, well then you just

1289
01:06:23,760 --> 01:06:25,600
Speaker 1: go out and do what you know how to do

1290
01:06:26,360 --> 01:06:28,440
Speaker 1: and if the wind comes, great and if it doesn't,

1291
01:06:28,480 --> 01:06:30,840
Speaker 1: go back to the drawing board and start over. Yeah. Absolutely,

1292
01:06:31,000 --> 01:06:33,120
Speaker 1: And I think and have the passion, you know, find

1293
01:06:33,320 --> 01:06:35,240
Speaker 1: something that you're passionate about, because at the end of

1294
01:06:35,240 --> 01:06:36,680
Speaker 1: the day, if you if you fail and you get

1295
01:06:36,760 --> 01:06:39,280
Speaker 1: knocked down, you know, if you're passionate about something, going

1296
01:06:39,320 --> 01:06:41,160
Speaker 1: to keep coming back until you until you get to

1297
01:06:41,200 --> 01:06:43,720
Speaker 1: that quote unquote success platform. What do you do for fun?

1298
01:06:43,800 --> 01:06:46,280
Speaker 1: What do you do outside of the office that you

1299
01:06:46,320 --> 01:06:50,000
Speaker 1: are passionate about. Yeah, well I think my fun now

1300
01:06:50,240 --> 01:06:52,840
Speaker 1: my my knees and ankles and stuff from basketball, probably

1301
01:06:52,880 --> 01:06:55,760
Speaker 1: a little banged up. So I do catch and shoot

1302
01:06:55,800 --> 01:06:57,920
Speaker 1: for the catch and pass for the kids, the boys.

1303
01:06:58,360 --> 01:07:01,040
Speaker 1: But I play sand volleyball, so that's sort of my passion.

1304
01:07:01,080 --> 01:07:04,240
Speaker 1: My two daughters play sand volleyball. Now it's it's nice

1305
01:07:04,280 --> 01:07:07,160
Speaker 1: on the legs. I can get a good workout at

1306
01:07:07,200 --> 01:07:10,080
Speaker 1: my age and and feel good the next day. Note

1307
01:07:11,320 --> 01:07:14,320
Speaker 1: two man, I'm still playing two man. That's an exhausting

1308
01:07:14,400 --> 01:07:18,080
Speaker 1: game back in my youth. Yeah, that's the challenge. Just

1309
01:07:18,120 --> 01:07:20,120
Speaker 1: try to keep playing two mans as many years as

1310
01:07:20,120 --> 01:07:22,120
Speaker 1: I can. So I'd love to get to sixty and

1311
01:07:22,160 --> 01:07:23,840
Speaker 1: still be playing two man. That would be that would

1312
01:07:23,840 --> 01:07:26,840
Speaker 1: be a good an ultimate goal for me. Um. So

1313
01:07:27,120 --> 01:07:29,880
Speaker 1: let me ask you a question you mentioned the kids.

1314
01:07:30,040 --> 01:07:33,360
Speaker 1: If a a millennial or a recent college graduate came

1315
01:07:33,440 --> 01:07:36,160
Speaker 1: up to you and said they were interested in a

1316
01:07:36,240 --> 01:07:40,680
Speaker 1: career in financial services or asset management, what sort of

1317
01:07:40,720 --> 01:07:43,240
Speaker 1: advice would you give them. You know, I just read

1318
01:07:43,280 --> 01:07:45,480
Speaker 1: an article flying out here yesterday. I thought was was

1319
01:07:45,520 --> 01:07:48,120
Speaker 1: really great. It's and it was a commencement speech. It

1320
01:07:48,200 --> 01:07:49,880
Speaker 1: was a guy. I can't remember who it was, but

1321
01:07:49,920 --> 01:07:52,960
Speaker 1: it's His basic line was grab a mop as in,

1322
01:07:53,800 --> 01:07:56,040
Speaker 1: don't be afraid to do the hard work, don't be

1323
01:07:56,080 --> 01:07:58,160
Speaker 1: afraid to do the dirty work, don't be afraid to

1324
01:07:59,040 --> 01:08:01,000
Speaker 1: you know, quote unquote, I'm at it every day with

1325
01:08:01,080 --> 01:08:03,720
Speaker 1: your best effort um because what's going to happen. And

1326
01:08:03,720 --> 01:08:07,160
Speaker 1: I tell the younger people, the millennials around dimensional is

1327
01:08:08,000 --> 01:08:11,000
Speaker 1: is look, people are gonna look at how you how

1328
01:08:11,080 --> 01:08:14,920
Speaker 1: you work. They're gonna look at your optimism, your enthusiasm,

1329
01:08:15,000 --> 01:08:19,840
Speaker 1: your energy, and you know, when when opportunity comes uh

1330
01:08:20,000 --> 01:08:23,240
Speaker 1: in a name pops into their head. For that opportunity,

1331
01:08:23,280 --> 01:08:24,960
Speaker 1: it's going to be the person who's done just that,

1332
01:08:25,000 --> 01:08:29,960
Speaker 1: who's worked hard who's enthusiastic, who's optimistic, who's who's smart, um,

1333
01:08:30,000 --> 01:08:33,040
Speaker 1: who's collaborative? All that stuff. So you want to put

1334
01:08:33,080 --> 01:08:36,200
Speaker 1: yourself in a position to get quote unquote lucky by

1335
01:08:36,320 --> 01:08:39,439
Speaker 1: by preparing yourself and doing things really well, and hopefully

1336
01:08:39,479 --> 01:08:41,760
Speaker 1: somebody sees you and taps you on the shoulder and says,

1337
01:08:41,800 --> 01:08:44,200
Speaker 1: you know, Barry, this is the person that we want

1338
01:08:44,240 --> 01:08:46,120
Speaker 1: to have run this or we wanted to have this

1339
01:08:46,160 --> 01:08:48,839
Speaker 1: person go do that. And that's where you know, success

1340
01:08:48,880 --> 01:08:51,200
Speaker 1: in a career comes from. So what is it that

1341
01:08:51,280 --> 01:08:54,720
Speaker 1: you know about the world of financial services today that

1342
01:08:54,800 --> 01:08:57,800
Speaker 1: you wish you knew five years ago when you were

1343
01:08:57,800 --> 01:09:01,080
Speaker 1: first starting. Well, I think I think the AHA moments

1344
01:09:01,120 --> 01:09:03,080
Speaker 1: for me was, you know, I got ahold this thing

1345
01:09:03,080 --> 01:09:06,800
Speaker 1: called the matrix book. Um. And the matrix book is

1346
01:09:06,840 --> 01:09:09,519
Speaker 1: as a book that basically shows the returns of the

1347
01:09:09,520 --> 01:09:13,200
Speaker 1: capital markets over time. And so the lessons that I

1348
01:09:13,320 --> 01:09:15,720
Speaker 1: learned from that. You know, in business school, you don't

1349
01:09:15,760 --> 01:09:18,080
Speaker 1: look you learn about this kind of cash flow and

1350
01:09:18,080 --> 01:09:20,160
Speaker 1: how to how to price a stock and whether you

1351
01:09:20,160 --> 01:09:23,640
Speaker 1: should buy that stock or you should sell that stock short. Um.

1352
01:09:23,680 --> 01:09:26,680
Speaker 1: That's one aspect of finance, but the broader aspect from

1353
01:09:26,680 --> 01:09:30,120
Speaker 1: an investment perspective for the average person from my mom.

1354
01:09:30,160 --> 01:09:32,120
Speaker 1: You know, how does my mom get comfortable with that

1355
01:09:32,200 --> 01:09:35,120
Speaker 1: she's going to be okay in retirement? Well, she needs

1356
01:09:35,120 --> 01:09:38,599
Speaker 1: to know about just the simple averages, the simple averages

1357
01:09:38,680 --> 01:09:41,800
Speaker 1: that come with the capital market returns. She also needs

1358
01:09:41,800 --> 01:09:43,479
Speaker 1: to know what you just point out early with value

1359
01:09:43,560 --> 01:09:47,160
Speaker 1: or size or the markets in general, is that that

1360
01:09:47,160 --> 01:09:48,760
Speaker 1: that return is not going to be there every year.

1361
01:09:48,880 --> 01:09:52,479
Speaker 1: So there's a lot of lessons around a big picture

1362
01:09:52,520 --> 01:09:55,320
Speaker 1: backing off and understanding what what does the stock market return,

1363
01:09:55,400 --> 01:09:57,840
Speaker 1: what does small cap stocks return? What a large cap

1364
01:09:57,880 --> 01:10:01,479
Speaker 1: stocks return? Why would you diversify internation only? Um? Why

1365
01:10:01,520 --> 01:10:04,320
Speaker 1: would you have fixed income instead of equity? And all

1366
01:10:04,360 --> 01:10:06,479
Speaker 1: of that goes into this big puzzle that I think again,

1367
01:10:06,479 --> 01:10:09,800
Speaker 1: the advisor do a great job of of sitting down

1368
01:10:09,840 --> 01:10:12,720
Speaker 1: and providing the human element, understanding the client in a

1369
01:10:12,800 --> 01:10:15,639
Speaker 1: in a way that UM, a stockbroker thirty years ago

1370
01:10:15,800 --> 01:10:19,320
Speaker 1: wouldn't and couldn't. UM, they're having those conversations now and

1371
01:10:19,320 --> 01:10:21,040
Speaker 1: they're part of that person's life to be able to

1372
01:10:21,080 --> 01:10:24,240
Speaker 1: help them deliver on the experience. It's going to be

1373
01:10:24,240 --> 01:10:27,760
Speaker 1: the right one for the client. Absolutely fascinating. Thank you

1374
01:10:27,840 --> 01:10:30,519
Speaker 1: so much. For being so generous with your time. We

1375
01:10:30,600 --> 01:10:34,200
Speaker 1: have been speaking with Dave Butler. He is co CEO

1376
01:10:34,800 --> 01:10:39,240
Speaker 1: of Dimensional Funds Advisors. If you enjoy this conversation, well,

1377
01:10:39,280 --> 01:10:41,120
Speaker 1: be sure and looked Up an Inch or Down an

1378
01:10:41,120 --> 01:10:47,080
Speaker 1: Inch on iTunes, Stitcher, overcast, Bloomberg dot com wherever final

1379
01:10:47,160 --> 01:10:49,200
Speaker 1: podcasts are sold, and you can see any of the

1380
01:10:49,280 --> 01:10:54,040
Speaker 1: other two hundred plus such conversations we've had. We love

1381
01:10:54,080 --> 01:10:57,360
Speaker 1: your comments, feedback and suggestions. Be sure to write to

1382
01:10:57,439 --> 01:11:01,800
Speaker 1: us at m IB podcast at Bloomberg dot net. I

1383
01:11:01,840 --> 01:11:04,080
Speaker 1: would be remiss if I did not thank my crack

1384
01:11:04,200 --> 01:11:08,799
Speaker 1: staff that helps put together these conversations each week. Medina

1385
01:11:08,880 --> 01:11:13,120
Speaker 1: Parwana is my audio engineer slash producer who keeps me

1386
01:11:13,320 --> 01:11:17,120
Speaker 1: on time and on track with these conversations. Taylor Riggs

1387
01:11:17,600 --> 01:11:21,120
Speaker 1: is my booker producer. Michael Batnick is our head of research.

1388
01:11:21,760 --> 01:11:25,240
Speaker 1: I'm Barry Ritolts. You've been listening to Master's in Business

1389
01:11:25,600 --> 01:11:26,679
Speaker 1: on Bloomberg Radio.