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Professional journalists and a small group of interested others (special invitations extended by the panelists) were invited to join a group of investor advocates and fiduciary leaders for a virtual discussion on May 5, 2020 at 3:00 pm ET.
Organized by the Institute for the Fiduciary Standard and “Friends of Jack” and hosted by Impact Communications, this virtual conversation brought leading fiduciary voices and investor advocates together to discuss the legacy of John C. "Jack" Bogle.
Bogle was the founder and chief executive of The Vanguard Group and is credited with creating the first index fund. He preached investment over speculation, long term patience over short term action and minimizing investment costs. The ideal investment vehicle for Bogle was a low-cost index fund held over a period of a lifetime.
Born on May 8, 1929, Bogle would have turned 91 on May 8, 2020. This virtual discussion focused on the Vanguard founder's legacy since his passing 16 months ago. This virtual discussion was timed for May 5, 2020, so that interested journalists could glean comments from a group of financial services professionals for potential stories of their own. Journalists and all others attending the virtual discussion were asked to embargo corresponding coverage and social media posts until May 8, 2020, at 7 am ET (the morning of Bogle's 91st birthday). Participating on the May 5th GoToMeeting were:
Read the transcript (below) or watch the video now.
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TRANSCRIPT FROM VIRUAL PRESS CONFERENCE
Marie Swift: Well hello everybody and welcome. This is Marie Swift of Impact Communications and you are joining us for a special virtual discussion today. Today's date is May 05, 2020 and we will be taking about Jack Bogle, his life, and legacy.
We have a number of esteemed panelists here today. We are so glad that you took time out of your busy day to join us. If you have any questions, if you are a member of the media, please direct them to me either using your question feature on your console here on the GoToWebinar. You can also chat with me privately or send a message to all the panelist. If you have questions for the panelist or if you would like to come off of mute later in the program, please don't hesitate to put in that request. If there is time, we may be able to take you off of mute and converse with us. Otherwise, I may just read your question to our group. My contact information is there, and you should all know me. Let's move onto our next slide. This is who we have with us today. Christine Benz from Morningstar, Knut Rostad, from the Institute for the Fiduciary Standard, Chip Roame from Tiburon Strategic Advisors, Rick Ferri from Ferri Investment Solutions, Chip Simon from Taconic Advisors / The Alliance of Comprehensive Planners, and Jane Bryant Quinn, a celebrated book author and. journalist who has been covering personal finance for many of years and then me, Marie Swift, I'm doing the hosting today. Christine Benz will be doing the moderating today for the panel and I will be watching for your questions and available to help with any follow up you may need. Our request is any stories that you may wish to publish, our request would be that you will hold them until the morning of Jack's birthday which is in three days from now, May 8th. We think that would be a great way for everybody to go with their stories and make a splash. If you can do that, we would appreciate it. So, we have guests all across USA and someone that we are expecting from Australia too. That person would be Jack's personal assistant and also a good friend of Jack who may be able to make it to the call. One person asked that. I read a statement from him because this individual is recouperating right now from COVID-19. This statement is from Warren Boroson who is retired journalist. He was formally writing for the New Jersey Bergen Record and we wish him well and he goes through his recouperation period. I’ll read this and then I'll turn the floor over to you, Christine. "Once, I was boasting about my skills and choosing stocks or something and John Bogle challenged me. Have you ever made any mistakes he asked? I thought about it and answered, ‘Well, I bet on Neopolean.’ He laughed, which he did often, when he wasn't fumigating against the crupeors.” “Another time, I was introducing him to a large audience of investors in Rochelle Park, NJ. A man who had known the poet, John Keates, I told the group I was so proud that this he had actually written this on his tombstone. ‘A friend of Keates.” But when I die I want to have it written on my tombstone, ‘He brought Jack Bogle to Rochelle Park, NJ.’” “Then, there was the time he had to cancel a talk because of major surgery. He had, I explained he had … a change of heart.” “He did my career as a columnist for the Bergen Record in New Jersey a lot of good. He let me interview him many times and accepted lecture assignments all over the place all while spreading the good word about how low cost index funds. When I think about him, I remember just not his emmenit common sense, I remember his fine sense of humor." With that Christine, the floor is yours. Christine Benz: Thank you so much Marie for hosting this event and thank you to Knut Rostad for spearheading it and lining up the panelist. I would like to start by quickly introducing each of them. Knut Rostad is the President, Institute for the Fiduciary Standard which is a non-profit formed in 2011 to advance the fiduciary standard through research, education and advocacy. He is the editor in the book, The Man in The Arena, about Vanguard Founder John C. Bogle and his lifelong battle to serve investors first. I'm also delighted that legendary personal finance journalist Jane Bryant Quinn is here as well. Jane has long been a champion of individual investors and her individual work has gone a long way of helping them make better decisions about their money. Her latest book is How to Make Your Money Last. Investment advisor Rick Ferri is here with us. Rick heads up Ferri Investment Solutions, as Marie said. He is also longtime Boglehead and author of several investment books. He was also the co-editor of the Bogleheads community authored book the Bogleheads’ Guide to Retirement Planning, which is a wonderful resource on retirement planning. Also joining us is financial planner, Chip Simon. He is the principal of Taconic Advisors, which is a fee-only financial planning firm in the Hudson Valley, and a member of the Alliance of Comprehensive Planners, a group of fiduciary advisors who take a tax-focused, holistic approach to working with their clients on a commission-free, retainer basis. He is a big believer in low-cost investing and had the chance to meet and interview and get to know Jack Bogle during his lifetime. Last, but certainly not least, Chip Roame is here. Chip is managing partner of Tiburon Strategic Advisors, managing partner of the Tiburon Partners Fund and a leading strategic advisor to CEOs to other senior executives and board of directors in the banking, insurance, brokerage, investment management and fintech. His Tiburon CEO Summit is a must attend for investment industry executives. So, Knut is going to get us started and kick things off and discuss a survey that his institute conducted about Jack Bogle’s legacy. Knut, over to you for that. Knut Rostad: Thank you Christine! The Institute for the Fiduciary Standard and Friends of Jack organized today's virtual conversation, to hear from individuals from different perspectives on Jack Bogle’s legacy. So, thank you Chip Roame, Rick Ferri, Christine Benz, and Chip Simon for taking the time to share your views. And a special thanks to Jane Bryant Quinn for joining and Impact Communications and Marie Swift for hosting. We have this conversation as part of an effort by the Friends of Jack, a group that came together last year to help secure and inseminate his legacy. His friends sponsored this survey and the Institute's efforts to advance its mission. Our research brings into the discussion the voice, the single voice, that animated Jack more than anything and that's investors. Our research obtained the views of investing public on Jack Bogle’s investing principals, indexing and how he stacks up against other prominent leaders in finance and business. After exiting Vanguard, Jack spoke and wrote on investing and serving investors for nineteen years. His voice resonated with many of the most influential people in our country. This includes Bill Clinton, former Fed Chair Paul Volker and Warren Buffet. This survey shows his voice resonates just as loudly with the investing public too. I am just going to go over some highlights for a couple of minutes here. Among and in the investing public, 36% say they know Jack at least a little bit or feel they certainly did. Of this group, his favorable to unfavorable ratings, which is commonly used in the industry, is literally off the charts. That is, 60% consider his reputation to be favorable while only .3% considered it to be unfavorable. Compared to Warren Buffet, Bill Gates, Steve Jobs, Michael Bloomberg, Charles Schwab and Mark Zuckerberg, Jack's familiarity is far less. There is no doubt. He didn't have the same name awareness. However, among those that said they know Jack well, his reputation is absolutely stellar. The reputations of Bogle, Buffet and Gates are at the very top of the ratings at 51%. Meanwhile, Bloomberg and Zuckerberg bring up the rear with ratings of 26% and 19% respectively. So, how is Jack Bogle remembered? Unsurprisingly, among the themes offered, investing in the entire market and low-cost index funds is better than stock picking comes to the top. That is no surprise. But, interestingly, the number two or second theme for the public “made investing understandable” is right next to it. I think this has significance. When it comes to principles, investing for the long-term and diversifying are very important to both investors at 57% and 53% and to Vanguard investors alike at 70% and 64%. Finally, a majority of the investing public reports being knowledgeable with the index funds -- at 59% -- as do Vanguard Investors at 75%. So, what do all these numbers mean? I think three major themes stand out from this data. One, the stellar reputation. It is in the clouds; it's in a stratosphere that mere mortals I think have a hard time appreciating just because it is just so far up there. Number two, the comparative levels of importance placed in core principals between Vanguard investors and the investing public. His influence far exceeded the boundaries, however large and however wide, of Vanguard investors themselves. And number three, the importance placed in making investing understandable. Think about this as we are looking at the landscape today and I suggest that in both light of regulatory and market development underway. This is a huge issue that doesn't get enough attention. In this last screen, when given the chance to say in their own words, how they remembered Jack, here are some of the quotes we got from the survey. With that Christine, I will pass along the microphone. Again, welcome everybody to this presentation. Christine Benz: Thank you! Chip Roame had some additional thoughts to offer on that survey. Chip, if you care to share those that would be terrific. Chip Roame: Absolutely, thank you Christine. So, my take on the survey is that all three of Jack's investment philosophies came through quite clearly. If you got to know Jack over the years if you did get to know Jack over the years. Three things he repeated over and over and believed in stronger. Diversifying one's portfolio, investing for the long haul, and minimizing costs. I thought all three of those came through in the institute survey. I thought specifically the third one, and I just want to call out the data. In the third one, on the data about minimizing costs, 40% of general investors and some 65% of Vanguard investors, Christine, called that out as a very important legacy of Jack Bogle. I think at the end of the day, one of the things the survey did was reaffirm Jack's reinvesting philosophy, diversifying, investing for the long haul and minimizing cost. He helped us realized that those have stuck with us in the industry. Christine Benz: Thanks Chip. It's terrific to see Jack's legacy has resonated so much with the investing public. Now, we would like to take a few minutes to hear from the panelists about what they've believed his legacy has been for the industry and for investors. Jane let's start with you. Jane Bryant Quinn: I want to tell you quickly how I met Jack. I was writing a column for the Washington Post; it was the late 70s and my phone rang. He said, "Hello, this is Jack Bogle I would like to talk to you about a better way of investing." I said, “sure you and everybody else” and, as I always said, “send me something” because I wanted to know what he was talking about. So, he sent me the material about indexing. I looked at it and said this is interesting, but it certainly can't possibly be true, but I ought to have lunch with this guy. So, he came to New York and we had lunch. Anyone who has ever had lunch with Jack, especially in those early days, it didn't matter what you ordered all the dishes went to the side and all the papers came out and all the research. First thing you'd know is all you are doing is going through papers. He was showing you this and that. I kept saying this can't be true! It can't be this easy. So, I took it back to the office and read it again and talked to him some more and I finally said, "Oh my God it's true!" I started writing about. So, for the past forty years the only column I've written about investing basically says allocate assets and buy index funds. It's kind of a miracle that people have kept thinking I was writing a different column all the time, which I never was. Jack's tremendous legacy of course is for the low-cost indexing and for buying the whole market and not trying to beat the whole market. His loss is tremendous because we need someone that is standing out there with some kind of moral force and efficiency to make sure people keep that going. I think it's very incumbent on Vanguard now as an organization and institution to stand up and keep that going. If you get any wavering from Jack's legacy which is Vanguard, then others will waiver pretty quickly. I think we would have zero index funds as we have now in a few cases if it weren't for the fact that Vanguard were in there keeping cost low, pitching it and making it very important to individuals. Christine Benz: Thank you Jane. That is terrific! Rick Ferri, I know that you and Jack had a long and fruitful relationship. Let's hear from you, as what you perceive to be his major impact on the industry and on investors. Rick Ferri: I believe Jack revolutionized investing. There is no other way of describing it. The work he put into creating the first available index mutual fund back in 1976 was the beginning of something I don't think anybody could have ever predicted where we would be today. All the money going into indexing and exchanged funds that track indexes. Back then, he was trying to launch a product that would give investors their fair share of the market returned. It did not go over well as you recall. A lot of people chastised Jack. They called it Bogle’s Folly. Companies called it un-American to try to do indexing. They wanted Jack to fail and they wanted indexing to fail. Maybe they could see the writing on the wall. Maybe this was the end of the facade that had been going on Wall Street since its beginning. It took a long time. It didn't happen overnight. I think it took almost twelve years before Vanguard got the first billion dollars into their S&P 500 fund. Then, things really began to take off. Jack created more indexes and more index funds to track different indexes. By 1996 he had covered the world. He had an international index; he had a US total stock market index and total bond market index. He really had covered the world. You could go and create a full index portfolio that bar none, extremely, high probability of outperforming anything else that you were going to do out there. That was the beginning. Then, even though Jack didn't like exchange traded funds, he thought it was like giving matches and gasoline to an arsonist. The fact is, the growth of exchange traded funds in the late 1990s and early 2000s really helped propel Jack's message, especially to the advisor community. Right now, more people have access to very low-cost indexing. So, the phenomenon he created, the change in the industry, is really immeasurable. He has saved hundreds of billions if not trillions of dollars for investors in creating what he created. It's just going to continue. I don't see any end to this. Christine Benz: Thanks Rick! Now Chip Simon, like Rick, you're on the front lines with investors with your clients. Can you tackle that question from your perspective of Jack's legacy for investors and for the industry? Chip Simon: Thanks Christine. I met Jack in 2014 when he was speaking the ACP Annual Conference in Philadelphia. I was invited to meet with him ahead of time to introduce him to our fee-only, fiduciary group. As a matter of fact, Rick Ferri spoke at that very same conference. From the point of the view of the financial planning industry, number one is Jack's legacy was he was totally behind the idea as advisors as fiduciaries. He spoke very strongly against the product sales orientation of the investment industry and although the undiluted fiduciary approach still struggles for acceptance, which Knut is working on, with the Institute; he believed that the fiduciary approach is on the right side of history. Of course, by being a tireless advocate, part of his legacy is to help create that history going forward because he was such an educator and out there, and out in front selling it all the time. Secondly, regarding financial planners, planners don't only do investing for clients. Investments are part or one part of client relationship because we are helping clients move forward on things like income taxes, estate planning and insurance and retirement matters. On top of that, there is another wrinkle because many financial planners do not come from the investment backgrounds and training like Rick Ferri as a CFA. We are CFPs, Certified Financial Planners. So, since we are not stock pickers or analysts, we focus on education and helping client’s control what they can control. What sort of things do we talk about with clients? Reducing sales loads, products costs, operating expenses, emotion based trading behaviors, improving diversification. Does that sound familiar? This was all promoted by Jack and his indexing revolution. So, clients no longer have to beat the market, they can just buy the market. So, really Jack just gave the planning industry a way to manage investments for clients in the absence in that specific traditional training as analyst. But the option of that I think has escaped on people is that the value of time. We gain time in our lives because we don't, as planners, need to create brokerage type portfolios with thirty different mutual fund families that are meant to keep sales distributors and commission brokers happy. I don't even spend time in performance reports. Because if a client truly buys into the idea that they investing to get market returns, why do you care how you compare to the market? You accept the fact that you get market returns. Clients hate performance reporting meetings. Here’s a little historical thing about how things went in the last quarter. Many advisors are still doing that performance song and dance because they are trying to beat the market and have to show value. So, not having to do stuff, his legacy for investing ironically is to de-emphasize investing or at least the time spent on investing for both planners and also individuals in the world. I remember at the conference him saying, "Don't spend time looking at the investments. Get a life! You’ll have all this time available; you have this great tool to help buy into the wealth building potential of the United States. Now, go do other things in your life." So, those are some of the impacts on planning industry, to my recollection, to my belief. But the other legacy of Jack's was quite personal. After that conference he sent me a handwritten note, thanking me for the preparation and he thought that our planning group had it right in values and philosophies. When I met him in the office, he signed the inside cover of his book "Enough." I said, “Jack will you please say something for my clients.” And he signed with these words: “To Chip's clients, Listen to him." I'm just a planner in Poughkeepsie but think of that as a really nice third-party endorsement. It was so generous on a personal level and it really comes through -- he really was that sort of person. Christine Benz: That is a lovely memory! Thank you so much Chip Simon. Chip Roame, you knew Jack from many years as well. He also engaged with your group of financial services executives. Let's talk about how you think his work made an impact on them. Chip Roame: Thanks Christine. So, for context as Knut said upfront, I run Tiburon Strategic Advisors which advises a lot of CEOs in the financial services industry broadly. So, if you are a CEO of a bank or brokerage or investment firm, you've probably found your way to Tiburon Strategic Advisors at one time or another. We have a summit every six months for those CEOs and periodically over nineteen years we've given out the Tiburon Award. We've given it out twelve times. The reasons for getting the award, the criteria for which the award is based, is two things. One, focusing on the consumer and secondly challenging conventional wisdom. Jack won the award, and I would say, Jack Bogle is almost an ideal example of those two things. If you think about the fact that he focused on investors and consumers in my terms and the amount of money he saved as referenced earlier is in the billions of dollars. He saved these people billions of dollars. Frankly, that cost him some of his net worth to a large degree. Secondly, and challenging conventional wisdom. When Jack entered this industry, again, many people on this call probably weren't around but in the mid-1970s, the average mutual fund cost over three hundred basis points. The average stock trade was four or five percent. A ridiculously expensive industry and along comes a person saying, "Oh geez, diversify and low-cost etcetera." He challenged everything about the conventional wisdom. So, this is a man who had absolutely consumers or investors at the front of his mind and who absolutely who absolutely challenged conventional wisdom. So, Jack won the Tiburon Award and I think more importantly and what many of the Tiburon attendees remember is Jack kept coming back to the Tiburon CEO Summits. Sometimes to speak, sometimes to just blend into the audience and hang out. I can't tell you how many people sat in the Tiburon CEO Summit audience and tried to talk to Jack or sit next to Jack or get some wisdom from Jack and then all I would hear about afterwards were Jack's lectures on the elevators about making sure you hold the door for the ladies before you get on. This was a gentleman, a wonderful man, who had a big impact on the Summits and had a ginormous impact on many investors in this country. Christine Benz: Thank you so much Chip! Knut, I know that you and Jack had a long and fruitful collaboration on a fiduciary standard. Let's talk about what you think his legacy will be from that standpoint. Knut Rostad: I think that legacy from that point of view actually has been pointed out by the investors who are speaking to us through the survey. When they focus on, these are not the Vanguard investors, this is the general public investors. When they focus on second most important theme, they remember from Jack Bogle, he made investing understandable. Very few people who follow Jack would probably put that in their top three list and that's understandable. That is not what his mission was about directly but indirectly it was everything in the context of this issue we face today. It's already come to a head and we can already see the marketplace responding positively to it while the regulatory folks on the federal level are responding the opposite way and that's transparency. That is what Jack did. Sure, people know about this, but he doesn't give the same level of recognition in terms of writing his corporate reports, in terms of communicating with investors. It was absolutely huge and where it comes to a head today Christine, when you contrast the view of the industry or the view of the regulators when I talk about retail investors. You can't get them to talk for two seconds without saying investor confusion. That is the problem in their minds. However, contrast that with a normal discussion with the millions of Vanguard investors who understand what Vanguard is doing and that's not by chance. So, I think that's in terms of his legacy and focusing on the importance of making investing understandable and making it transparent. That is absolutely huge. It's already come to a head in many ways that we see right now, and I think that's what will be more focused on going forward. Christine Benz: Thank you Knut. I think he had that tremendous voice to, in addition to be a great writer, he was a terrific speaker. So, now we want to have a little bit of a roundtable discussion where we want to talk about topics that are top of mind for this group. The first question is how Jack's influence will reverberate over the next twenty years? I think we see as people have said already investors are exhibiting a very strong preference for low cost funds, especially index funds. So, what is the next frontier of that given that the trend towards passive investments, towards lower costs is also well underway? Jane, can you take that one? Jane Bryant Quinn: Well, I think one of the twenty-year effects is a question is with all due respect to the advisors we are talking with is whether the cost for advice would come down? Of course, if you are an index investor or basically gone to zero, it's practically a commodity these days doing asset allocation, present decent portfolios. So, all the value added in the advice. Then, the question becomes the advisor costs have not fallen and, in some cases, have increased. So, if there will be any pressure on advisory costs is kind of an open question for me. I don't know, the worth of an advisor is now not the money, the investment management so much as it is as both Chips have said managing and as Rick has said doing the personal finance and having people manage their lives and manage their budgets and make that succeed. So, it's going to turn now onto the advisory industry and what are they producing for the money they charge? I think transparency should continue although I'm obviously disturbed as Knut is about the changes that have happened to the fiduciary standard and the setbacks we have taken. I don't think the new best interest standard is going to be tremendously helpful to deconfuse investors. We've already seen, I don't think it's going to work very well. It creates what I call "fake fiduciaries" who are using the best interest standards even though they are highly conflicted. You can read in the account agreement where the conflicts are, and I guess the SEC takes the view if you look at all the conflicts and buy it anyway, you must assume the bets are in your best interests and that takes care of it. So, I think there is going to be a great deal of investor confusion going forward. We've taken a big step back from transparency and it's going to take a major overhaul of Congress to try to bring us back in the right direction. Heaven knows the Institute for Fiduciary Standard is working pretty hard on that. Christine Benz: Knut, do you want to pick up from there and talk about some of what Jane alluded to, the future of the fiduciary? Knut Rostad: Well, the future of the fiduciary in the foreseeable future is not going to continue because of the fellow regulators. By that, what I mean is it's only going to be meaningful and happen if the industry itself decides to make it happen just as the professions have in the past. Be they legal, be they medical professions, it was the individual practitioners that made a profession. In terms of fiduciary going forward, it's going to be combination of the industry itself deciding it's important and unfortunately, it's not quite there yet. There are voices in the industry that are deeply upset as they should be but the industry itself hasn't come together. In fact, Chip's events are a good place to hear the discussion on that. In terms of going forward and being optimistic the positive developments are going to happen because of the changes in the marketplace because of alternatives in the marketplace and because of the next generation. The difference in view between the twenty-eight and thirty-eight-year-old versus their parents, which is my generation, is night and day. That's an absolutely good thing when it comes to buying financial advice. So, that is very good. And the new technologies which make possible which we couldn't do before. Finally, there are a lot of states that are very upset, they know what's going on and they are trying their best to implement a fiduciary duty at a state level. In the short-term going forward, it's the states, the marketplace, technology, which in the industry itself will make it happen. If a real fiduciary standard is going to continue to survive and it's not clear that it will be based off of what we've seen right now. Christine Benz: Thanks Knut. People are submitting questions through the chat which is fantastic. Here’s a question from InvestmentNews which is: How will Regulation BI effect Bogle’s legacy if at all? Will it make index investing more popular? Less popular? Or will it have no effect? Anyone care to take that question? Jane Bryant Quinn: I'm not sure it will have a direct effect. Regulation BI, when you've heard my opinion on it, is it's going to create a lot of fake fiduciaries, but I also think people who understand indexing. I'm shocked that only 59% do so far and I'm sorry about the other 41% because they are losing money. I think that people that understand indexing also understand what a true fiduciary is. I would be surprised if Reg BI had a negative effect on index investing. I think the idea, indexers have learned pretty clearly, that actually very sophisticated to be simple. It's very difficult to be simple. Rick was right when he talked about how difficult it was to convince people in the public. Indexing in the first place, I was convinced because I had lunch with Jack and looked at all his data and immediately started investing in his S&P fund and have been with indexing ever since. But to try to pursue the public to understand indexing, it's so easy to go against it. The broker saying, "Well indexing that's just average. You don't want to be average, do you? You want to be above average." You have to convince people that average, and investing is like par in golf. Beating the market is like par. Not many people get it but your average investor making par all the time is a really terrific thing to do. I would say that's a side from the Reg BI problem. The BI problem is people might begin to trust those that are not true fiduciaries. I think indexers once they've been with Vanguard, Schwab, or if they are using the Fidelity Index Funds whatever they are doing ETFs or BlackRock or whatever, I think they've come to understand what truly low-cost investing means. Some of you may have a different view. Christine Benz: Rick Ferri, I would like you to follow up with Jane's comment about the direction about the advice whether Jack's long-term legacy will be on how much and how investors will pay for advice. I know you've been banging this drum for a while, and you've set up your own firm that is designed to charge hourly. So, let's talk about that. Rick Ferri: Sure Christine, thank you. I've been banging the drum on high advisor fees for more than twenty years. Before I was doing the hourly model, I was only charging a quarter of a percent per year for the management fee, which was unheard of some twenty years ago. But now I am doing hourly as you say. I call advisors fee the last bastion of gluttony in the personal finance industry. The last bastion of gluttony; everything comes down to price. Trading costs have literally come down to zero. You can buy and sell ETFs at no commission. ETFs and indexing costs are down to a few basis points. In fact, Fidelity has a zero cost ETFs and it really is a true zero cost. Fidelity has a couple of zero costs index funds US total market and international total market who are truly zero cost. You look at the performance of those funds relatively to even Vanguard which charges only a couple of basis points. Fidelity has outperformed because they are a couple of basis points low. So, we have rock bottom trading cost now at almost zero. Indexing cost are almost at zero for people who want to buy index funds. The last bastion of gluttony out there are the advisors. Many of them are still charging one and a half percent to put together portfolios -- sometimes they are actively managing funds that are bound to underperform indexes. I think there needs to be and there is occurring a big swell of interest. Advisors charge differently than the traditional 1% AUM. We see a lot of interest in hourly models. We see a lot of interest in flat fee models. We see interest in subscription models. So, there is a lot going on in the advisory world. I've tried to bring advisor fees down and I think, rightly so, they need to be aligned with the amount of work the advisors are actually doing. If you have a million-dollar client, that million-dollar client shouldn't be paying twice as much as a $500,000 client and getting the same service. A lot of people are talking about this, which is good. I think it's the next focus I would hope. The other reporters and journalists out there need to take a look at this. Christine Benz: Thanks Rick! So, another question here. This one from Investment Advisor magazine, they would like to hear more about the survey. Who you surveyed? How many? And when it was conducted? Knut do you want to take that one. Knut Rostad: Sure. The survey was conducted in the field last October. We had two samples. We had a sample of the investing public that we defined as those that self-reported a $100,000 or more in investable assets. Then, we had a second sample of those who self-reported that they were invested with Vanguard. Each group had 500 individuals in it. Those are the samples and how we collected the data. Christine Benz: There is another question here from Reuters, this one about what the panelists will miss the most about Jack. Anyone care to take that one? Chip Roame: I think what each of us will miss is an interesting question. I think what investors and what consumers will miss is even a better question. I think about the fact that some of us lose perspective on Jack's legacy. Jack was gone from Vanguard for twenty something years when we lost him, when he passed away. He already has a legacy. We are well past and into his legacy. Vanguard today, recent market turbulence aside, thirty million clients, six and a half trillion dollars of client money, so he's had a huge impact on the industry. What I think what Rick was referring to earlier, I'll get behind Rick in line here, I think what Jack would believe in today is he would believe in the fiduciary standard. He would believe in the value of financial planning over the value of investment management. I think he'd believe in video advise and fees where the worlds going. I think we will miss that guiding light. I think I will miss that guiding light. I think the industry will miss that guiding light. Jack set the course. Jack challenged conventional wisdom and pointed us all in the right direction. We need to keep evolving. As Rick said, I don't know if it's the gluttony but certainly the high fee now or advisors fee and I think Jack would have challenged that going forward. Christine: Thank you Chip! Chip Simon, I would like to hear from you on what are some of the key issues that clients are coming to you with today? It's obviously an extremely uncertain time. A lot of fear out there for a lot of reasons. Can you talk about what you are hearing from your clients about what worries? What concerns the top of mind for them? Chip Simon: Oh yes, I'd be happy to. First of all, I think people are driven to talk to a financial planner for the first time in their life when there is a transition going on. There are many different types of transitions that can take place. The one that we are most used to addressing, at least with our demographic in our practice, is the pre-retirement phase because people in general that we deal with have been lifelong savers. They never figured out how it's going to work when they retire. They come in a bit disorganized and stressed out about that uncertainty. So, a lot of what we are delivering as far as service is getting them organized and giving them peace of mind after they know they are on track that they have enough money. That is the big question, do I have enough money and how is that going to work? That is the retirement conundrum for most people. By the way, I think this is all a trend that goes back as Chip Roame said to the mid-seventies. Because, at that time there is a lot of upheaval to the loss of the fixed commissions and then 401(k)s were pushed on the world and also people become responsible for their own financial futures. They didn't have their pensions to rely on anymore. That actually parallels the growth of the financial planning industry in my mind. So, right now people come in with the transition on their minds. They still want to know they are okay. These days, this is big, this is an existential transition. The conversation we are having with clients is far beyond that we have to rebalance your plan and let's make sure you are picking up enough from emerging markets and getting a little slice in there. This is about, are you going to have enough money in place that is stable to get you through gosh knows what because we haven't been through this before. We are having very close conversations with clients about that. Conversations with clients because we are just not investing, we are doing a lot with their taxes and cash flow about I've been cut back on my job, I've been let go. I can think of a physician client of mine whose is young, in his forties, great salary but because he is an anesthesiologist and working on elective surgeries his compensation is cut in half, it was really good we build up the emergency fund. People really want to get investing but financial planners love the idea of an emergency fund for three to six months. Just think in your own minds right now just how better off the US population would be if everybody had an emergency fund of three to six months. Because, people don't have that and the stress that's putting on people and some of the desperation is coming on very soon. So, managing the transition is during today’s extremes is what we are dealing with and wondering about changes in the marketplace. How are your church services going to be conducted? How are you going to be training people for the jobs? These are all the conversations we have. Are estate plans updated? People worry about their children. Worry about family get togethers. Again, it's much more the listening to people and talking with them. It's much more than about the investing. It's about the money and the relationships they have. In the normal times the relationship matters we deal with are things like surviving spouses, parents worrying about college education. Funding college education, are there going to be college semesters that are going to be given this fall? Who knows? Inheriting dad's stocks. In our area, as Jane would know, its IBM country. People come in with big portfolios of IBM stocks that have been accumulated over years that have to be diversified. People want to know that they are okay. Our retirees are in great shape. We are reaffirming that picture for them, but they are willing to take pause and just make sure we get through this that there is enough money in place and managing and hoping that their family's health is good. That's what our conversations are really about now. Christine Benz: Thank you so much Chip Simon. So, another question that came in, this one from Advisor Perspectives. The question is: Jack was very clear that indexing meant a low-cost cap weighted index. What would he say about the proliferation of exchange traded funds that track an index but really represent a bet on a specific quantitative strategy or thematically constructed portfolio? So, kind of a question about strategic or smart beta. Rick Ferri: I would love to take that question Christine! Jack would say: Just skip it and go to a total market index fund. You don't need any of that. That's a whole lot of marketing. Yeah maybe there is some credence to the long-term, maybe not, but most people should just skip it and just buy a total stock index fund or a total bond market index fund. Jane Bryant Quinn: [What would he say about the proliferation of exchange traded funds that track an index but really represent a bet on a specific quantitative strategy or thematically constructed portfolio?] That's just stock picking by another name! Christine Benz: So, another question: What would Jack be saying to investors during this very turbulent time? Allen Roth via Financial Planning magazine wrote a really great piece channeling Jack last month. I'd like to hear from the panel, maybe you, Jane, talking about what wisdom Jack would be imparting through this uncertain time. Jane Bryant Quinn: Of course. One of his famous sayings was, "Don't do something just stand there." When you look over history you know that there are lots of serious crisis and God knows this COVID-19 is a terrible one. We had the financial collapse on 08/09; we've had other collapses. The market always comes back. I think Jack was pretty clear when he said that if the market does down and you are panicking and you're selling then maybe you shouldn't be in the market. Or, you should reconsider how much of your money you have allocated to that segment of the market because you have to accept that markets are going to go down 25% or more from time to time. If you can't do that, then you're probably not a candidate for being in the market at all. Although he may have modified that to say, well at least put less money into the market. But when you look over history, the market recovery since 19 round trips from top to bottom back to recovery since 1950, has been on average a little over two years. The shortest was five months in ‘87 and the longest was about five years following the tech stock crash in 2000. So, young people that are panicking because they've never seen a bear market before, are in great shape. They can last two years, they can last five years. They can just stand there, do nothing and keep on putting money into their 401(k)s because that way you are automatically investing at lower prices which is nice. You should just not change your strategy on account of this [current turbulent] alone. You wait it out and then you reconsider what your strategy should be later. Investors who are in their 50s and 60s, you are long-term investors, too. You are going to live another thirty years. Why should you say at 60 or 65 years old ‘well I ought to be all safe in investments’? Because if the average recovery is two years and the worst you've had since 1950s is five years, you can wait that out. You can have some safer money to live on now with the cash we were just talking about. Cash reserves as well as various bond Treasuries that usually go up when stocks go down, which is nice. Then you have this growth for the later years because you've left some money in stocks. So, you're a long-term investor at age 60 or 65. As long as you are doing it the Jack Bogle way by allocating your assets and buying your index funds, there is no reason to believe the market is going to so substantially change over time that you ought to get out of it. Christine Benz: Thanks, so much Jane. There is another question here. This one from one of our special guests. The question is: How was Jack thinking about the ESG trend? I'm just sort of reflecting on my interviews with Jack over the years and not sure we discussed it. Does anyone have any thoughts on that? Rick Ferri: I had a conversation with Jack about his philanthropy and what he believed. I can't say for sure because I didn't have a direct dialogue with him about socially responsible investing and such. He never talked about it; but personally I’d say do what you are going to do with your money as far as giving it away. Investing wise, I think Jack was on the track of just being in the lowest cost index fund you can get. Christine Benz: I think he probably would be pleased with the cost. They've come way down to do ESG investing. That's my guess. Let's take a last question which is: People's favorite saying or piece of advice from Jack. Jane, you shared yours which is, "Don't just do something, stand there." That's a terrific one. Anyone else care to weigh in and talk about their favorite piece of wisdom from Jack's books or speeches? Jane Bryant Quinn: Christine, can I get one more? "Don't look for the needle in the haystack. Just buy the haystack." Rick Ferri: Jack's last book that he wrote, and he published a few months before he passed, I think the title of that book says it all, "Stay the Course." Which means, come up with a sensible plan, implement the plan as Jane was saying and stay the course. Don't change it. Don't try to time the market. Don't be making bets. When the market goes haywire, don't do something just stand there. Stay the course. That's your best long-term solution to how to achieve financial security. Chip Roame: I think both of the prior panelists said the same thing and I would agree. Actually Jane, I would repeat the quote you said, "Don't do something; just stand there." I think Christine what's relevant for us all to remember is we are [today via this webinar] speaking primarily to a group of journalists who have lots of readers out there in consumer or investor land. If there is any message at all that can be repeated by Jack Bogle in the COVID crisis right now, it's that. Don't do something; just stand there. We have a significant market pull back roughly every five years or so. That's just how it goes. He would have believed in his principles, diversification and long-term orientation and minimizing costs. He would have said, "Don't do something; just stand there." I think that's the most relevant advice you can give in today's world. This is what we live in. I think that's terrific advice, that one line, just resonates very strongly given today's situation. Christine Benz: We also have a comment from Pam Kruger of Wealthramp, who is in the audience. She says she loves the discussion and was fortunate enough to spend many of hours with John Bogle in a one-hour special on PBS called, "An Evening with John Bogle: Looking at the Financial Crisis of 2008." So, that might be one to check out. Thank you so much for that. I'd like to also mention we have a couple of VIPs on the call. Phyllis Borzi is here as well as Jeremy Duffield, who offered the eulogy at Jack's funeral, is joining us from Australia. We are very privileged to have them here as well. Any other parting words? Chip Simon: As far as favorite expressions, I was struck how Jack would often, in the middle of his talks, get a little Shakespearean or provide classical references; and I remember he had a statement, "Investing, you get what you don't pay for." Which he would have regarded as something being from Hamlet and talking about thrift and the ratio of thrift. [He is basically saying, by being thrifty] you are saying keep your money and you are keeping your money working overtime. He was very proud of his Scottish background. That came out in his books, the Scotsman in him. Investing, you get what you don't pay for – so thrift is an important lesson. Not just in the way you invest, but also how you conduct your life because if you don't have money left over to invest you are not going to get very far with developing your wealth either. One more, I love the saying, "The market is a big distraction to the business of investing.” I love that quote because it's so true. When. people start looking at the market, they are focusing on what's going on on a day-to-day basis but it's nothing but a big distraction. In the long run, buy and hold. A good portfolio is low-cost index funds; stay the course, it's the best course of action. Christine Benz: Thank you Chip Simon. Marie. Swift, our host, has indicated that our recording will arrive in about an hour of this session. Thank you for holding your stories and social media posts until the morning of May 8th which is Jack Bogle’s birthday. Any additional questions may be directed to Marie Swift. Marie's mobile number is 913-961-4030 and her email is [email protected]. Marie and Knut, any closing remarks you want to share? Knut Rostad: I just want to go back to something that Chip Roame said about the legacy and what we will miss. There is a little bit of a parallel here of what we are going through right now in the COVID as it regards trust. The degree to which we are trusting what we are hearing from various people. I think the piece that is going to be the most missed in many respects about Jack is, again, reflected in the investors’ view: that they trusted him. They trusted him to say it straight and to tell the truth. That's huge and I think the piece that's going to be missed in many respects. Christine Benz: Thank you so much Knut and thanks to all our journalist, VIPs and other people who were on the call. We very much appreciate you joining us today. Jane Bryant Quinn: And thank you Christine for managing us all so well. Marie Swift: Thank you everyone! 
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