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Speaker 1: Welcome to Trallians. I'm Joel Weber in America. Pile tunis Eric.

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Speaker 1: We took a field trip to Pennsylvania recently. You know,

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Speaker 1: your home state. Yeah, not really that far a field

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Speaker 1: trip for me. I live in Philly, so it's almost

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Speaker 1: like a home game's early train out of pinn Station,

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Speaker 1: although anytime you go on the school gol it is

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Speaker 1: an adventure. It's that road seventy six that goes from

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Speaker 1: Philly out Vorst traffic in the country, second worst highway

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Speaker 1: after the one in l A in the country. Yeah,

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Speaker 1: I think it should be renamed the Day Kill. So

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Speaker 1: we did that because at the other end of that

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Speaker 1: journey is a living legend at Vanguard named Jack Bogel.

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Speaker 1: That's right, and the reason we went at to see him.

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Speaker 1: Not only are we trying to interview, you know, experts

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Speaker 1: in the industry now and then, but in this case,

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Speaker 1: we were interviewing him for a special series we have

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Speaker 1: coming out called Trillions Presents, which is sort of like

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Speaker 1: a ken Burn style documentary on the story of the

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Speaker 1: E t F, a six part series, and Bogel is

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Speaker 1: part of that story. So we wanted to interview him

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Speaker 1: for this special series. And while we were interviewing him,

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Speaker 1: it lasted about an hour and ten minutes. He was

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Speaker 1: so over us. He was at the end, I could

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Speaker 1: tell he just wanted us to leave. Yeah. Yeah, But

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Speaker 1: amazing guy though, totally. And there were so many things

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Speaker 1: that came out of his mouth that weren't exactly applicable

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Speaker 1: to the story of the E t F. But we're

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Speaker 1: just little nuggets that I thought we should not just

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Speaker 1: let sit on this file. Absolutely every word that was

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Speaker 1: coming out of his mouth, you're just hanging on it

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Speaker 1: because he's so astute still, I mean, he's right there.

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Speaker 1: He is sharp, He's like the Ben Franklin of the

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Speaker 1: financial world. He's got he's not only talking logic, and

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Speaker 1: he's built, you know, second big assassinent enter. But he's

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Speaker 1: just little nuggets of wisdom just sort of come out.

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Speaker 1: And I mean basically almost every American can basically chock

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Speaker 1: up the retirement to Jack Bogel. Yeah, even Buffett says,

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Speaker 1: this guy is the one they should build statue. He

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Speaker 1: will definitely make the history book. So it's literally a legend.

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Speaker 1: But beyond Bogel's place in history, he's also sitting there

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Speaker 1: in the Bogel research Center. So what he does is

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Speaker 1: similar to what I do, and he studies fund so

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Speaker 1: he's got a lot of good opinions on what's going

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Speaker 1: on right now and it's part of the founder of

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Speaker 1: Van Garden. Now they kind of moved in it into

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Speaker 1: this other capacity where he's more of an advisor. Yeah,

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Speaker 1: he writes books and does research, so in a way,

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Speaker 1: he and I have a very similar job and tracked

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Speaker 1: the same. That's generous. Yeah. On this episode of Trillions

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Speaker 1: Getting Mutualized with Jack Bogel, Okay, why are we calling

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Speaker 1: this getting mutualized Because when we sat down with him,

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Speaker 1: he was in the middle of writing his latest book

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Speaker 1: and he was going through a chapter he wrote over

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Speaker 1: the weekend. We saw him on a Monday, and this

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Speaker 1: latest book is an upcoming book, not even out yet,

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Speaker 1: so he was sharing what he was writing. So we

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Speaker 1: kind of gus the weekend writing like the whole weekend

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Speaker 1: he said, he wrote. Yeah, he said he naps a lot,

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Speaker 1: which is understandable, but and I like to know right now,

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Speaker 1: right now. And one of the things that stuck out

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Speaker 1: to me about with this chapter he was writing about

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Speaker 1: everybody thinks the indstages can consolidate because everybody wants low

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Speaker 1: cost products, and you know there's favorite things to talk about, right,

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Speaker 1: and so in the end, you know we're gonna see

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Speaker 1: a lot of companies get together to get scale and

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Speaker 1: go cheaper. He's gone beyond that. He thinks they're going

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Speaker 1: to actually mutualize, which means they're gonna what does that mean?

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Speaker 1: That means that Vanguard is a mutual ownership structure there

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Speaker 1: so different than anybody else. Absolutely means that that the

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Speaker 1: fun investors are the shareholders. He thinks more and more

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Speaker 1: companies will be forced to do this in order to compete. Radical. Radical. Yeah,

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Speaker 1: it's like a Bernie Sanders moment totally. So let's play

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Speaker 1: the clip in my book. I am telling you the

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Speaker 1: world in the coming era, there will be mass mutual

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Speaker 1: relations of large firms in the business. And there are

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Speaker 1: a whole lot of reasons. One is there's a competitor

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Speaker 1: out there that's eating their lunch and then know perfectly

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Speaker 1: well why is eating there less? And so far they

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Speaker 1: have not wanted to get competitive again. They'd have to

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Speaker 1: slash their phase, but they can never slash them or

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Speaker 1: not to get down to where mutual can do. So

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Speaker 1: he's not talking about et f there right, he's talking,

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Speaker 1: it's bigger than that, bigger than that. And this is

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Speaker 1: obviously a little out of our normal purview here, but

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Speaker 1: this is something that I've been focused on a lot.

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Speaker 1: If everybody wants their funds for dirt cheap, and Vanguard's

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Speaker 1: taking in about two thirds of all the money, and

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Speaker 1: the reason Vanguard is is because they're so cheap and

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Speaker 1: they've been lowering their fees for thirty or forty years,

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Speaker 1: what's going to happen to this industry? And he's basically saying,

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Speaker 1: this is what's gonna happen, and this, by the way,

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Speaker 1: is an industry level phenomenon. He answered this. The question

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Speaker 1: that we first asked him that this was the answer of,

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Speaker 1: was why does he think other firms haven't done Vanguard's

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Speaker 1: mutual ownership structure as opposed to being sort of a

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Speaker 1: for profit company? And that was his answer was that, well,

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Speaker 1: they haven't because they haven't had too. But now they

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Speaker 1: they're probably gonna have to radical, very radical, because it's

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Speaker 1: a completely different way of operating and that is going

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Speaker 1: to mean a lot of lower revenues for these companies.

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Speaker 1: But what's crazy about what he says is when you

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Speaker 1: think of consolidation, you think, okay, if you consolidate with

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Speaker 1: three or four companies, get your assets to a couple

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Speaker 1: of trillion, you have so much an assets, you could

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Speaker 1: lower your fees to Van Guardian levels. He's basically saying

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Speaker 1: that's not going to be enough. Jack Bogel has a

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Speaker 1: way of delivering savagery, but in a folksy manner, and

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Speaker 1: that was classic Bogel. Your jugg on the ground. But

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Speaker 1: you're like, oh, it's it's sounded so grandfather like. He

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Speaker 1: We also asked him about what the timeline would be

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Speaker 1: like for this, which he said didn't he didn't really

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Speaker 1: think about it that way. It's just gonna happen. It

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Speaker 1: could be five years, it could be ten years, it

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Speaker 1: could be two decades, but it will happen. He thinks

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Speaker 1: it's in eventuality. Okay, next one. We buried the lead

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Speaker 1: on this one. Yeah, so we did. We're on an

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Speaker 1: et F show here, so we had to ask about ETF. Now,

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Speaker 1: Bogel has famously not exactly been a fan. Where he

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Speaker 1: stands on this one. He is not a fan. His

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Speaker 1: famous quote was that E t F are like handing

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Speaker 1: an arsonist the match, except that he may have one

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Speaker 1: up to it with his interview with us. All right,

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Speaker 1: let's play this clip. Well, t is just an only forum,

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Speaker 1: index fun um, a sort of bastardized forum for the

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Speaker 1: one of a better word for one of the better word. Yeah,

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Speaker 1: I mean it's pretty blunt to the chase. That's how

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Speaker 1: he feels. But why does he feel that one? Here's

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Speaker 1: why the e t F was really designed and this

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Speaker 1: goes back to our documentary to increase volume on the AMEX.

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Speaker 1: It was created by people in exchange who wanted to

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Speaker 1: see volume from the volume totally. And he hates volume.

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Speaker 1: He thinks you're holding period should be like a hundred years.

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Speaker 1: So it's a trading This is a trading tool conceived

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Speaker 1: of as a trading tool, and he is not a trader.

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Speaker 1: He's a long term investor. And what I think hurts

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Speaker 1: him is that he's he created the index fund or

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Speaker 1: made it into the big success it is, and this

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Speaker 1: is sort of a mutation of it. So it kind

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Speaker 1: of gets credit for the rise of passive but in

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Speaker 1: in no way is it passive investing. So he does

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Speaker 1: think that it may have contaminated this. It can be

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Speaker 1: used for pastive investing and it can be. And we

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Speaker 1: we we challenged them with the fact that yes, some

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Speaker 1: some ETFs are trade a lot by a lot of

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Speaker 1: big investors, and that those volume figures can overshadow the

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Speaker 1: people who are buying and holding. And and he admitted

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Speaker 1: that there's no way to separate out the volume. And

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Speaker 1: when you press Fogel on E t F s as

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Speaker 1: being a fine vehicle if you buy and hold, he

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Speaker 1: will admit that he just thinks that many people are.

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Speaker 1: And let's play that clip. Absolutely And you know my

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Speaker 1: statement about that may seem kind of senegal, But exchange

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Speaker 1: traded funds, you're fine just so long as you don't

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Speaker 1: trade them. And that that's quite a true statement because

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Speaker 1: you should stay with the class hey ones, the broadly

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Speaker 1: diversitified ones, the total stock mark at the SNP, total

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Speaker 1: international um, total bond and more total balance is even easier.

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Speaker 1: I want to stay with one. So yes, so that's interesting. Yeah,

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Speaker 1: actually does acknowledge that it's okay, you just have to ignore,

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Speaker 1: you know, E t F. You just have to ignore

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Speaker 1: the tea exactly. And I know from I've studied the

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Speaker 1: flows all the time, like it's my job basically, and

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Speaker 1: I can tell you they're the low cost products from

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Speaker 1: Vanguard and Schwab and some I shares core. They definitely

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Speaker 1: have lower turnover. They're used more by advisors for long

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Speaker 1: term building block purposes an institutional investors who will hold

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Speaker 1: those blocks for a long time. Yeah, long term investors

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Speaker 1: like the E t F for the low fees and

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Speaker 1: their tax efficiency. So uh, they are if used correctly.

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Speaker 1: That's why I compare E t F to Gremlins. Remember

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Speaker 1: the magua that was handed to that boy in the

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Speaker 1: movie Gremlins. Cute little thing. As long as you've been well,

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Speaker 1: is he rules? Yeah, And one of the rules, in

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Speaker 1: my opinion, is don't overtrade. If you can just withstand

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Speaker 1: the temptation of not trading, you can get so many,

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Speaker 1: so much of the benefits of the t F upper

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Speaker 1: case lowercase T, upper case F. I like that. And

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Speaker 1: speaking of acronyms, Boglos trying to introduce his own acronym

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Speaker 1: for index funds. I think you might think that it's

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Speaker 1: just sort of blends. He's trying to coovid little catchy acronym.

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Speaker 1: So he called the TIFFs TIFFs traditional index fund. So

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Speaker 1: I've never heard of that before. Had you heard that before,

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Speaker 1: I haven't. He's trying to push it. You know, when

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Speaker 1: you try to push a buzzword or not, it sometimes

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Speaker 1: doesn't work. But anyway, he's trying his best. Then here's

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Speaker 1: him on TIFFs. T I s are a phrase that

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Speaker 1: will have to be used. And you see these comparison.

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Speaker 1: It says E T s versus other mutual funds, and

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Speaker 1: other mutual funds are probably six index funds. You know,

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Speaker 1: we know overall, but it's exactly. Funds are index one.

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Speaker 1: But if you take the ETFs out and look at

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Speaker 1: the rest of it, it's gonna be six percent or

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Speaker 1: five index. Men, there's got to be a separation of

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Speaker 1: those two things because they are as different as day

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Speaker 1: and night. And you can argue that indeed that an

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Speaker 1: e T F has far more characteristics of an actively

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Speaker 1: manage fund than than a traditional than the next one does.

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Speaker 1: Let me just think about that. So what he's getting

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Speaker 1: at here is that again, if you look at the

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Speaker 1: holding periods for TIFFs, they tend to be really long

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Speaker 1: term discipline type investors because because it includes stuff like

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Speaker 1: mutual funds. Yeah, and look when we say when people

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Speaker 1: talk about, like, oh, all the money is going from

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Speaker 1: mutual funds to um e t f s, that's not

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Speaker 1: true because index mutual funds are mutual funds. Or when

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Speaker 1: people say that all the money is going from active

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Speaker 1: to passive, that's also not quite true because a lot

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Speaker 1: of e t fs are being used very actively. So

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Speaker 1: he's trying to say that a lot of the generalization

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Speaker 1: of these trends is not really true because people tend

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Speaker 1: to forget that index funds are mutual funds and truly passive.

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Speaker 1: In other words, there's nuance yes. Um. Another thing that

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Speaker 1: I think is somewhat of a scoop in our interview,

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Speaker 1: which I have never heard Bogel say, and I study

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Speaker 1: a lot of his interviews. He talked about when Vanguard

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Speaker 1: launched e t s, he was not running the company,

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Speaker 1: so it was a little bit out of his control

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Speaker 1: that they did it, and history says, or legend says,

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Speaker 1: he wasn't very happy about it. So we asked him

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Speaker 1: about it, and he kind of conceded he would have

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Speaker 1: done the same thing if you were running the company.

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Speaker 1: And I thought that really was him moving a notch

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Speaker 1: closer to sort of coming to peace with the Vanguard ETFs,

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Speaker 1: which is maybe not surprising considering how much of a

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Speaker 1: dominant player they've become. I also think he sees that,

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Speaker 1: compared to some of the other e t s, vanguard

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Speaker 1: ets are not traded as much, and I think he's

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Speaker 1: come to more peace with that. So here he is.

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Speaker 1: And I, even, to be quite blunt about it, said,

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Speaker 1: you know, I'd probably have done it too, But for me,

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Speaker 1: compared to anybody else, it was a big stretch. But

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Speaker 1: looking back on my career, I made some really stupid judgments,

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Speaker 1: and I think more when I had a marketing hat

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Speaker 1: on and this is a marketing product. This is a

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Speaker 1: product and bring in money and the serve investor as well.

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Speaker 1: We don't really know that. It's a bit of a

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Speaker 1: backhanded compliment. I love to travel in his voice like

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Speaker 1: he sees it, and then it's like it's tough. Look,

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Speaker 1: it's baby steps for him. I think, you know, Bogel

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Speaker 1: to me reminds me of the father whose daughter has

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Speaker 1: married a guy he does not like, and it's sort

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Speaker 1: of the slow process of warming up to the son

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Speaker 1: in law. And it looks like a really frustrating Thanksgiving dinner.

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Speaker 1: There's some life lessons in there. So the marketing hat

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Speaker 1: being a real one, which is if you're just selling,

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Speaker 1: then probably it's not gonna work out in your favorite

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Speaker 1: in the long run. Well, the case that was made

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Speaker 1: at the time Banguard Large CTS was that ETS will

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Speaker 1: get us into broker's channels, and Vanguard had never really

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Speaker 1: been in that business of trying to get it stuff

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Speaker 1: into distribution channels. It just it was sort of build

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Speaker 1: it and they will come. And I think that's part

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Speaker 1: of also why he didn't necessarily love it, because it

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Speaker 1: was part to market Vanguard, and he's never been about

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Speaker 1: being overtly like into marketing, so that was another reason.

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Speaker 1: So that's what he's saying. In the movie of Jack

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Speaker 1: Bogo's life. Are you saying Kevin Costner plays Jack Bogel?

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Speaker 1: I would say, Henry Fonda. He reminds me of Henry

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Speaker 1: Fonda from on Golden Pond. That's that's the kind of

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Speaker 1: vibe I get from him. I can see that. Kevin

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Speaker 1: Costinger one, right, come on, okay, Well I would be well, look,

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Speaker 1: if we did a biopic, Kevin Costomer would be maybe

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Speaker 1: like the Middle Years, the Bogol we met that was

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Speaker 1: Henry Fonda, Maybe the young would be I don't know,

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Speaker 1: um Shia Lebou or something like. So another thing we

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Speaker 1: asked about, and we've talked about this in the past episode,

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Speaker 1: which is in two thousand eight, Vanguard never saw a

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Speaker 1: month of outflows. Every month was in flows, even in October.

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Speaker 1: And just to make that perfectly clear, that's insane. It

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Speaker 1: is insane in the midst of the biggest financial crisis

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Speaker 1: in the past, you know, twenty years, and money only

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Speaker 1: goes in. And remember by October everybody was already definitely

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Speaker 1: afraid and the market went down another seventeen percent in

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Speaker 1: that month. Vanguard took in money. They just think about that.

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Speaker 1: So in these sell offs that we've seen in the

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Speaker 1: first quarter in February and a couple of times of

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Speaker 1: the past eight years, I've studied what happens in sell offs,

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Speaker 1: Vanguard takes in money. And so they've taken money when

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Speaker 1: it rains and when it's sunny. And so we asked

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Speaker 1: about this sort of Navy seals level discipline of the

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Speaker 1: Vanguard investor and why they're different. And that is, if

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Speaker 1: somebody brings you to a new phone, a salesman and

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Speaker 1: so on, and he's gonna want move you when things

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Speaker 1: go down and I don't know. They say people get

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Speaker 1: itchy and say I gotta get out, but I think

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Speaker 1: an awful lot of brokers and advisors say, to protect themselves,

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Speaker 1: you better get out now. So having that intermediary airy

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Speaker 1: force is a is a force that is a disruptive

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Speaker 1: force against long term holdings. So here again he's saying

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Speaker 1: that a lot of the reason other fund investors are

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Speaker 1: not behaving well is because the intermediary needs to turn

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Speaker 1: stuff to make it seem like they're doing their job,

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Speaker 1: whereas the people who come directly to Vanguard are. They're

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Speaker 1: attracting already discipline investors first of all, and there's no intermediary,

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Speaker 1: many of whom you know have gotten into investing through

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Speaker 1: through Bogle and his books. What's ironic about all this

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Speaker 1: is that a lot of the r A s that

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Speaker 1: the sort of new school fee based advisors that love ETFs,

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Speaker 1: they're saying their actual value add is to be do

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Speaker 1: behavioral coaching, and they do use Vanguard. So I do

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Speaker 1: think that Vanguard does also attract inter d areas that

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Speaker 1: are well behaved and are into good behavior. Because again,

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Speaker 1: if you don't behave well and you pull out at

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Speaker 1: the bottom and come back in on the top and

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Speaker 1: all that the cost savings of using an et F

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Speaker 1: over a mutual phone will get blown away by your behavior.

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Speaker 1: So what he's talking about here is a complicated, layered

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Speaker 1: issue and just really fascinating. What was what was another

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Speaker 1: thing that you thought he said that was surprising? Basically

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Speaker 1: how big some of these big companies can get, namely

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Speaker 1: black Rock and Vanguard. A lot of people are worried

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Speaker 1: they're getting too big. They're the top two shareholders of

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Speaker 1: about sp F understocks through any any stock stock and

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Speaker 1: they black Rock, Vanguard or Vice versa. And that's that.

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Speaker 1: And so we asked them about like how big this

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Speaker 1: is and there are legal limits to how big they

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Speaker 1: can get. Yeah, but they're very liberal. He thinks they

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Speaker 1: should be more conservative, which is interesting. So let's hear

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Speaker 1: him talk about that right now. For example, on the

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Speaker 1: best example I can give you out of the act,

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Speaker 1: no neutral may own more than ten percent the voting

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Speaker 1: stock of anyone company. What what would happen if we

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Speaker 1: said no mutual fun complex con on more than ten

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Speaker 1: percent of the voting sum anyone company. Vanguards almost there

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Speaker 1: were eight and a half. Black Rock is I think

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Speaker 1: just a little bit be honestly not quite clear. But

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Speaker 1: let me let make call M seven right, and I

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Speaker 1: don't think State Street will ever get there, but they

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Speaker 1: are at probably four percent. So basically, if if things

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Speaker 1: keep up, Vanguard could be say, owner of all the

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Speaker 1: stocks in the country. And the rule now is ten

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Speaker 1: percent of a fund. So let's say the Vanguard Total

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Speaker 1: Market fund, which I think owns about three or four

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Speaker 1: percent of Apple. Maybe if that hits ten, they could

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Speaker 1: just create a total market too, and then there is

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Speaker 1: no limit effect. What he's saying is what if we

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Speaker 1: make at the company which would put Vanguard close to

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Speaker 1: that ten percent limit? There black Rock seven And what

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Speaker 1: he was also talking about was something you pressed them

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Speaker 1: on a lot, which was this. In his book, he's

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Speaker 1: writing about the New forty Act, which he thinks should

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Speaker 1: be right like that. You know, this thing that's been

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Speaker 1: the bedrock of mutual funds, and e t F was

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Speaker 1: also introduced in and to his point, one of the

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Speaker 1: things he said is that when you go back and

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Speaker 1: look at it, most of it no longer applies at all,

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Speaker 1: and a lot of it was for closes and fronds funds,

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Speaker 1: and they're pretty much minimalized at this point, and I

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Speaker 1: think a lot of people would agree with that. I

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Speaker 1: think a lot of people in the industry would disagree

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Speaker 1: with his what he's thinking of doing, which is one

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Speaker 1: creating these limits. The other thing I thought that he

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Speaker 1: talked about was it was interesting is he don't he

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Speaker 1: doesn't think that any company that is public list and

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Speaker 1: has shareholders should also be fiduciary or vice versa, which,

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Speaker 1: unless I'm reading this wrong, it basically means that all

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Speaker 1: these asset managers that trade on the exchange and have

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Speaker 1: to serve shareholders, uh, would have to just stop or

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Speaker 1: delist or something, because I think what he's saying is

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Speaker 1: you're trying to serve two masters. You can make your

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Speaker 1: shareholders happy with revenue, but that's sort of against making

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Speaker 1: your investors happy with lower fees and whatnot and being fiduciary.

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Speaker 1: He thinks those are two gods that are clashing, and

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Speaker 1: I think he's calling for a new Fordi Act that

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Speaker 1: would eliminate that, which is again radical, radical Bernie Sanders

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Speaker 1: type stuff. So we also threw a few grenades, you know,

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Speaker 1: we've been throwing him at that the industry, and then

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Speaker 1: he went to an industry group which is called the

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Speaker 1: I see I or the Investment Company Institute, the biggest

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Speaker 1: lobby and group of asset managers. And I guess he

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Speaker 1: was uninvited or wasn't invited. And you know he was

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Speaker 1: a president once, Yeah, and Vanguard's a huge member, and uh,

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Speaker 1: I think he was a little had some hurt feelings

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Speaker 1: about that, and he talks about it here. That's why

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Speaker 1: if you recently read, if you read the whole article

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Speaker 1: at the i C. I doesn't want me to come

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Speaker 1: down there and speak to him, which I thought was

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Speaker 1: really weird. You know, here I am the founder of

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Speaker 1: the most successful company in the history of this industry,

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Speaker 1: a former governor, a former attendant I mean former at

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Speaker 1: the general membership meeting every year, and I understand why

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Speaker 1: they don't like me, But I don't understand what Stay

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Speaker 1: Street and black Rock and Vanguard, why it isn't much

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Speaker 1: more of a index fund oriented institute. I mean, those

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Speaker 1: three firms are pretty close to the industries asset And

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Speaker 1: by the way, that article that he was referring to

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Speaker 1: in that clip was cover story in Barren's recently that

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Speaker 1: you can check out to the grenades man. Well, look,

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Speaker 1: I explained to him after this second, I was basically

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Speaker 1: trying to say, I think when you think about what's

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Speaker 1: happening in the industry, people can get sensitive because while

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Speaker 1: he's saying index fund should be a bigger part of it,

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Speaker 1: the problem is what he's saying doesn't make people a

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Speaker 1: lot of money, and people have families to support. It

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Speaker 1: can get a little sensitive for people. I've experienced this

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Speaker 1: experiences myself on Twitter. I can step on toes when

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Speaker 1: I go to pro passive because I think people are

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Speaker 1: like scared, and I think he taps into that. He's

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Speaker 1: the face of what of what they kind of know

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Speaker 1: is happening and may not want to admit or fan

401
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Speaker 1: the flames of They might go, Okay, it's happening, but

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Speaker 1: let's not let's not quicken it, because if it goes,

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Speaker 1: if this whole move to low or no fee funds

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Speaker 1: speeds up, uh, we we could have problems in terms

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Speaker 1: of people's jobs. So this has come up a couple

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Speaker 1: of times about how advice fits into all of this,

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Speaker 1: but it's some really interesting things to say about the

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Speaker 1: future advice. Yeah, so um we talked about ETFs are

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Speaker 1: loved by advisors, especially fee based advisors, and they love

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Speaker 1: the cheap ones and part of the reason they like

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Speaker 1: it they get to keep their own fee, so the

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Speaker 1: advisor makes one percent. He's around there. Robo advisors came

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Speaker 1: at at basis points and sort of try to shock

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Speaker 1: the system, but hasn't made that much aheadway. Vanguard now

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Speaker 1: has an advisory service and they'll basically have a human

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Speaker 1: advice for robo fees. A lot of people I think

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Speaker 1: this is going to disrupt the whole industry, So we

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Speaker 1: asked them whether the advice business would needs disrupting or

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Speaker 1: how that might change that. This industry will get more

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Speaker 1: and more professional and less and less like a business.

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Speaker 1: And I think what will come along with that is

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Speaker 1: more and more professional ways of paying fees. So you

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Speaker 1: might be paying fees on a visit basis by the hour.

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Speaker 1: I don't know what it would be, but for an advisor,

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Speaker 1: it seems to me that the flat percentage fee, or

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Speaker 1: even the tapered percentage fee is something that's not going

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Speaker 1: to sustain itself. This is a big deal. This is

428
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Speaker 1: basically saying that instead of your advisor getting a percent

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00:22:50,680 --> 00:22:53,520
Speaker 1: of your assets or a commission, they would get maybe

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Speaker 1: an hourly rate or something more akin to a different

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00:22:56,440 --> 00:22:59,639
Speaker 1: type of business. And I've seen flashes of this on

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Speaker 1: Twitter and on blogs, which is where usually things start.

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00:23:03,119 --> 00:23:05,400
Speaker 1: And so he's right in tune with that. In terms

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Speaker 1: of talking about the changing payment structure for advisors, what

435
00:23:11,000 --> 00:23:16,080
Speaker 1: are the what are the ramifications of that, it's again

436
00:23:16,160 --> 00:23:19,879
Speaker 1: we're going back to possibly shrinking revenues for everybody, because

437
00:23:20,359 --> 00:23:21,960
Speaker 1: when you make a percentage of the assets of a

438
00:23:22,000 --> 00:23:24,280
Speaker 1: portfolio and the stock market goes up, you kind of

439
00:23:24,320 --> 00:23:26,320
Speaker 1: get paid just based on the market returns, and it's

440
00:23:26,320 --> 00:23:29,000
Speaker 1: and it's if you change to hourly and it's sort

441
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Speaker 1: of indifferent on how the market does. Um, this would

442
00:23:31,640 --> 00:23:36,119
Speaker 1: definitely lower revenues, but some investors may want that. And again,

443
00:23:36,240 --> 00:23:40,960
Speaker 1: advisors have roughly trillion under management in the US, so

444
00:23:41,080 --> 00:23:43,000
Speaker 1: that's bigger than the mutual fund industry. So when you're

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Speaker 1: talking about the advisory business, it's a potentially a whole

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Speaker 1: new area that sort of uh might go through what

447
00:23:50,920 --> 00:23:52,840
Speaker 1: the mutual fund industry is going through right now in

448
00:23:52,960 --> 00:23:55,080
Speaker 1: terms of being disrupted. You know, it dawned on me

449
00:23:55,359 --> 00:23:58,800
Speaker 1: while you're describing all this. There's an Internet name behind Badger.

450
00:23:59,080 --> 00:24:02,080
Speaker 1: I think Jack Bogel is the honey Badger. Honey Badger

451
00:24:02,160 --> 00:24:05,479
Speaker 1: don't care totally, and that's why he's a great interview. Um.

452
00:24:06,040 --> 00:24:10,520
Speaker 1: He Usually people who run their own company, especially once

453
00:24:10,560 --> 00:24:13,400
Speaker 1: they're retired and don't you know, are kind of out

454
00:24:13,440 --> 00:24:15,679
Speaker 1: of it in terms of not being in the game anymore,

455
00:24:16,000 --> 00:24:18,280
Speaker 1: are the best interviews because they are just so blunt.

456
00:24:18,359 --> 00:24:21,040
Speaker 1: And he's also he reminds me of my grandfather a

457
00:24:21,080 --> 00:24:23,680
Speaker 1: little bit, who is deceased now, but he was World

458
00:24:23,720 --> 00:24:26,359
Speaker 1: War two generation, and they have a way of talking

459
00:24:26,480 --> 00:24:29,520
Speaker 1: that's just it's it's folksy, but it's blunt, and I

460
00:24:29,640 --> 00:24:32,399
Speaker 1: think there's a lot of that there. And he also

461
00:24:32,720 --> 00:24:34,560
Speaker 1: it's interesting. There's some other parts of the interview that

462
00:24:34,600 --> 00:24:37,280
Speaker 1: we're not going to get to now, but he's very

463
00:24:37,720 --> 00:24:40,119
Speaker 1: I could tell he's very satisfied getting to watch all

464
00:24:40,160 --> 00:24:44,399
Speaker 1: this playoff, you know, um, and see this industry change

465
00:24:44,880 --> 00:24:46,879
Speaker 1: at the speed it's changing right now. I think he

466
00:24:46,960 --> 00:24:49,760
Speaker 1: feels like he kind of won the fight. So if

467
00:24:49,800 --> 00:24:51,399
Speaker 1: you get time with Jack Bogo, you can ask him

468
00:24:51,400 --> 00:24:53,399
Speaker 1: about all the expected stuff, but then you have to

469
00:24:53,440 --> 00:24:55,840
Speaker 1: tell him a couple of curved balls too. So one

470
00:24:55,840 --> 00:24:58,480
Speaker 1: of the ones we threw him was what about bitcoin?

471
00:24:58,720 --> 00:25:00,920
Speaker 1: And we'll van guard ever get into that game. Here's

472
00:25:00,920 --> 00:25:04,280
Speaker 1: what he said. This is a double entendre over my

473
00:25:04,440 --> 00:25:08,280
Speaker 1: dead body. Not exactly a surprising answer that I was.

474
00:25:08,880 --> 00:25:11,480
Speaker 1: That was exactly what I was expecting. He'd say something

475
00:25:11,560 --> 00:25:13,880
Speaker 1: like I don't think he has a bitcoin wallet? Yeah?

476
00:25:14,080 --> 00:25:16,359
Speaker 1: He um. I said, you know, is it all just

477
00:25:16,440 --> 00:25:19,920
Speaker 1: nonsense to you? And he said absolutely. So. Look, I

478
00:25:20,080 --> 00:25:24,440
Speaker 1: personally think that bitcoin's resilience when it should have died

479
00:25:24,520 --> 00:25:27,080
Speaker 1: many times, gives me some faith. And I think that

480
00:25:27,160 --> 00:25:32,960
Speaker 1: it's bitcoins um really based on the financial crisis and

481
00:25:33,040 --> 00:25:35,520
Speaker 1: all these banks getting bailed out, and there's real spirit there,

482
00:25:36,160 --> 00:25:39,000
Speaker 1: and I do think it's got some interesting technological benefits.

483
00:25:39,040 --> 00:25:41,280
Speaker 1: So I'm not I'm not as bearish as he is,

484
00:25:41,359 --> 00:25:44,120
Speaker 1: but I get where he's coming from, and I also

485
00:25:44,200 --> 00:25:46,320
Speaker 1: kind of get the evangelists, so I'm more in the middle.

486
00:25:46,400 --> 00:25:48,200
Speaker 1: But I wasn't shocked that that he was on that

487
00:25:48,280 --> 00:25:51,200
Speaker 1: side of the fence. And then we asked one of

488
00:25:51,280 --> 00:25:56,000
Speaker 1: our favorite closing questions, which is what's your favorite DTF ticker,

489
00:25:56,520 --> 00:25:59,520
Speaker 1: which he sort of stopped and looked at me and

490
00:26:00,160 --> 00:26:02,840
Speaker 1: was like who. Then he looked at me to interpret

491
00:26:04,680 --> 00:26:06,520
Speaker 1: I can't believe it was because like, I can't believe

492
00:26:06,560 --> 00:26:08,840
Speaker 1: this this shmuck just asked me this question. What is he?

493
00:26:08,960 --> 00:26:13,040
Speaker 1: What is he asking me? But we asked, and here's

494
00:26:13,040 --> 00:26:15,240
Speaker 1: what he is. He had a great answer. C r

495
00:26:15,359 --> 00:26:19,040
Speaker 1: z Y. It's too funny. There is no et F

496
00:26:19,119 --> 00:26:21,200
Speaker 1: with that ticker. That's his way of saying. But you

497
00:26:21,280 --> 00:26:24,399
Speaker 1: get how he feels about to all of this. And

498
00:26:24,480 --> 00:26:26,119
Speaker 1: I want to just sort of explore this for a

499
00:26:26,160 --> 00:26:28,720
Speaker 1: second because it's a funny answer. I mean it's real

500
00:26:28,800 --> 00:26:31,240
Speaker 1: wit there and makes you think he's thought about this before.

501
00:26:31,640 --> 00:26:33,800
Speaker 1: That he is sharp, yes, but I don't think he

502
00:26:33,880 --> 00:26:35,840
Speaker 1: has I'm just saying that just came out. And I

503
00:26:36,200 --> 00:26:40,119
Speaker 1: believe he's eighty eight years old, and I mean he

504
00:26:40,280 --> 00:26:44,360
Speaker 1: is sharpest. I hope I'm that sharp, right, And look,

505
00:26:44,400 --> 00:26:47,359
Speaker 1: he's still fired up. I personally, what I sometimes get

506
00:26:47,440 --> 00:26:50,560
Speaker 1: from him is that, uh, the key to longevity might

507
00:26:50,640 --> 00:26:53,520
Speaker 1: being might be, you know, just being fired up about stuff,

508
00:26:53,520 --> 00:26:56,720
Speaker 1: because he definitely still is fired up. And uh that

509
00:26:57,000 --> 00:26:58,359
Speaker 1: that was a little bit of a dig on E.

510
00:26:58,440 --> 00:27:00,639
Speaker 1: T F S. And I just think it's Yeah, it

511
00:27:00,720 --> 00:27:03,280
Speaker 1: really I think embodies, uh what it's like the interview.

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Speaker 1: Thanks for listening to trillions. Until next time, you can

513
00:27:13,720 --> 00:27:17,680
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts,

514
00:27:18,160 --> 00:27:21,280
Speaker 1: and wherever else you listen to podcasts. We'd love to

515
00:27:21,359 --> 00:27:25,080
Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show.

516
00:27:25,600 --> 00:27:30,280
Speaker 1: He's at Eric Altunas Big. Thanks to Vanguard and Jack

517
00:27:30,359 --> 00:27:34,800
Speaker 1: Vogel for this episode. Trillions is produced by Magnus Hendrickson.

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00:27:35,359 --> 00:27:38,399
Speaker 1: Francesco Leavie is the head of Bloomberg podcast, but