Across the globe, the financial advice community continues to navigate a significant period of change. The need for financial advice has only increased, intensifying the demands placed on advisors and their most valuable commodity - their time spent with clients. Morningstar's Wealth group has also evolved by providing an integrated suite of offerings to equip advisors as they seek to empower investor success. This environment of increasing global demand for advice, and the evolution of new and improved capabilities available to advisors can be summarized in one word - opportunity.
Jonathan Linstra: Hello, and welcome to Simple But Not Easy, where we turn complicated financial developments into actionable ideas. This is a podcast from Morningstar's Wealth Group where we equip financial advisors with our best ideas to remove friction and help clients achieve their goals. I'm Jonathan Linstra, managing director of the Americas for Investment Management, and today I'm joined by Daniel Needham, President for Morningstar's Wealth Group. He promises straight talk where he will share his observations on the value of advice and take you behind the scenes, including his own journey to-date. This is a refreshing chat that is sure to get you thinking. If you'd like to know more about Morningstar's integrated suite of offerings for advisors, please email us at simple@morningstar.com and we'll get you the details you're after.
Let's get started. Daniel, welcome back to the podcast. You've been a frequent guest here a number of times. And we're going to start things a little differently this time. I know many that have followed in our audience and heard you before, have heard a lot about your investment expertise and your views on the markets in the intermediary landscape. But we're going to start a little differently this time. We're going to start a little bit with you, which I know our audience is eager to get to know you a bit more. But tell us a little bit about your background and maybe what led you up to your current role now.
Daniel Needham: Yeah. Thanks, Jonathan. Thanks for having me. It's good to be back on Simple But Not Easy. I came into the industry through the investment management channel, and so, started as an analyst and then made my way through the investment channel up to portfolio manager and then started to run multi-asset, multi-strategy part of the business I worked in and then was CIO and then really, kind of, leading investment teams for a number of years. And investing is my first love. I'm a bit of a Buffett disciple and so, really, just a dyed in the wool, sort of, value investor. And so, I was global CIO until last year actually, but had always had, sort of, a bit of a business leadership and an investment leadership background, but spent the majority of my time managing portfolios, working with PMs, analysts and building investment teams. So, that was a lot of fun. But I've now got a new chapter. So, President of Morningstar's Wealth Group. I've been doing that since the beginning of this year, and yeah, really exciting. I love to learn and take on challenges, and it's a lot of fun.
Linstra: Well, we're certainly going to unpack your current role a bit more as we go on, but I'm going to stop you again. We're going to go apart from the investment and only. What are your passions and love, even outside of investment and the industry?
Needham: Yeah. Look, I'm probably a pretty boring individual. So, I love – my hobby is investing as well. I love investing and I love reading about investing. I love reading. I'm a big reader, and probably my favorite way of consuming information is the written word. Unfortunately, it's only English that I can read. But I love to read and learn new things and pretty wide-ranging areas of interest when I'm reading. And so, I spent a lot of time on that. I love to read and exercise – obviously, stay healthy and love to run. Played a lot of rugby when I was growing up, bit of cricket – that was always fun. I know it's probably foreign for a lot of listeners. But when you grow up in Australia – in Sydney, Australia, it's rugby in the winter and cricket in the summer. And yeah, that's really it. I'm married. My wife, Susan – we spend a lot of time together. She's probably my other hobby. She probably wouldn't say the same thing about me.
Linstra: Well, fantastic. A last question on this. But you are a voracious reader. We all know you to be so. If you were to recommend one book to our audience that maybe it's a lesser known or maybe it's well known but just something that's really impacted you throughout your career or is most meaningful to you.
Needham: Yeah. I guess…
Linstra: I'll give you two if you need it. That's fine.
Needham: Yeah. So, from an investment perspective, I think anyone who is an investor – and a lot of people talk about investing. But for me, the real awakening with investing was reading Buffett and Munger, but really reading Warren Buffett's letters and then getting some hands on some of the notes from the shareholders' meeting if you're able to get it. And then, just reading about how he managed money and how he thought about business and how he ran things, that was a real eye opener. I feel you went to like an alternative universe or something when you're going to do that. So, there's so much written about him. I'd say start with the Berkshire Hathaway letters. That's had a huge impact on me from an investment perspective, from a personal perspective, how I view the world? And I'm probably a bit of a fan, but I think he's brilliant.
And then, books – I love to read very wide-ranging topics, but probably "Who We Are and How We Got Here" by David Reich, which looks at ancient DNA and helps to understand how humans spread across the planet and how the different migrations of humans out of Africa happened, and relationships with Neanderthal and Denisovans in the eastern part of Asia. That's really fascinating.
One of my favorite books before that is really "Guns, Germs, and Steel" by Jared Diamond, which I think is actually really changed the way I thought about the world. And so, he really talked a lot about how humans have ended up, what are the key drivers of that, and a part of that is like – he really focused on the migration of humans around the world over time. And so, I was reading the Wall Street Journal, I read it every day, and Jared Diamond had reviewed that book, "Who We Are and How We Got Here". So, I read his review and I bought the book, and it really updated that understanding of humanity, how humans have populated the planet. Super fascinating. And so, if that's your kind of bent, then I really recommend reading it.
Linstra: Fantastic. Well, those authors – thank you. I'm sure we've got some Amazon orders being placed now. Great. Well, let's put it then. Daniel, let's talk a little bit about your current role. As President of Morningstar Wealth Group, what you're able and willing to share with our audience? Talk just a little bit about your strategy and your vision for the group and what you're currently working on.
Needham: Yeah. So, the Wealth Group was created at the beginning of 2012. So, at Morningstar, really, we've got a great business, we've been helping financial advisors around the world for many years now, and we had a number of really good businesses that we felt that if we were to really bring them together to combine them into an organization that's really focused on better serving financial advisors and their clients that they serve. And so, we created the Wealth Group. And so, we moved the Morningstar Investment Management business, the Morningstar Office business, which is really portfolio accounting and reporting software and service ByAllAccounts, which is an advisor-investor aggregation business, Morningstar.com which I'm sure many people will know, which is our public websites, our publishing sites as well as our subscription services and then some businesses – so AdviserLogic in Australia, and really bring those together within the Wealth Group to focus on serving advisors and individuals. And we really want to be a trusted partner who is empowering investors globally through an integrated suite of our wealth offerings that are personalized with uniquely Morningstar insights for both advisors and individuals. So, that's the vision for the group.
And so, my job as president of the group is to lead the group and work on the vision and the strategy and structure and execution. And we're really excited about the opportunity we have to serve advisors and bring the best of Morningstar together, including working with great strategic partners, third-party firms as well. But I couldn't be, frankly, happier with the hand that I've been dealt with as a leader, and I've got a super talented and mission-driven team at Morningstar, which is just an essential ingredient for success longer term, and I just consider myself very lucky.
Linstra: Well, that's fantastic. Empowering investor success. You mentioned the mission. I know that's obviously the mission of Morningstar. And so, I guess, just teasing on that a little further as far as how much time and attention do you and other members of the leadership team really dedicate to the challenges of financial advisors as a part of that vision as they seek to serve those clients and investors?
Needham: Yeah. For many of our businesses, it's really all we do, it's all we think about. And for us, empowering investor success means helping advisors have more time in their day-to-day to spend more time with their clients, which is, doing what they do best. So, for many of our businesses, it's 24/7. It's all I think about when I'm not reading about ancient DNA or staying up to speed on the markets. But that's really how we're organized and constantly thinking about how can we improve advisor experience. And as a mission-driven firm, I think many firms will have a vision statement, a mission statement, a purpose. But at Morningstar, it really matters. It carries weight. We'll do certain things because we think it's right for investors, and we won't do certain things because we don't think it's right for investors. And you inevitably leave money on the table. And we think that's a responsibility that we have is to do the right thing for investors and clients at all times and not participate in some parts of the market because we just don't think it's the right thing to do. So, it carries weight. It drives decisions, and we think that creates a really positive feedback loop in the business. It attracts the right people; the right people do a good job which reinforces the good behavior. And so, it just creates this kind of flywheel or the culture. And I think we've got that here, and it starts at the top with Kunal Kapoor, who lives and breathes the mission and Joe Mansueto, our Executive Chairman, who founded Morningstar and really built that out; Don Phillips, who is still a part of Morningstar, who is really one of the foundational leaders for Morningstar, really set the tone for that mission that we have, and empowering investor success, putting investors, clients first. It's a little bit hard to unpack because it's just so embedded and meshed in the business and the culture.
Linstra: It certainly permeates every – I've seen you in large meetings, small meetings and significant ones where hard decisions are being made, where I think that really tests our mettle on whether – yes, we believe it, but are we going to act on that? And it's been great to see that put into action in those environments.
Needham: It's energizing. I think, obviously, we're a company, we're a public company. We've got shareholders. But we exist for the services and the benefits we bring to investors. And over long term, if they win, then everybody wins. And so, I think, it really does drive what we do. And for me, I kind of joke – and I don't want to joke too much with Kunal – but I say I've always been ruined to work for any other company for Morningstar, because just the way we think and the way we operate, it's just so different to other businesses and you're, kind of, like a fish out of water there. So, I just hope he keeps me on until I retire, otherwise I'm going to be stuck.
Linstra: Great. That's fantastic insight. So, let's talk a little bit about – again, from the advisors, the value of advice to clients. Just in your opinion and from your perspective, how has the value of a financial advice evolved over the years? Is it better or worse than we were a decade or two ago, and what do you see there?
Needham: Well, I think, everything. Most things are better than they were a decade or two, despite all the kind of the people that kind of – I don't know what to call – people who are kind of…
Linstra: No names, Daniel. No names.
Needham: Yeah. So, I won't name them. But those people that every time you speak to them, it feels like the world has just got a little bit worse. But things are rarely as bad as what the doomsday prophecies suggest. But I'd say that most industries have gotten better over the last 20 years, right? So, whether it's better technology, better processes, better governance, better education, better accreditation. So, I think, financial advice is no exception. I think it's gotten better. I think the value that's delivered through advice has improved as people have lowered their prices for advice, the quality of the products and services they're delivering improved. The incentives have shifted a bit as well as there's less commission-based models which you can actually work if they're managed appropriately. But on balance, I think, just generally, the value of advice has improved. The cost to the end consumer, when you stack everything up, has gone down.
Linstra: Yeah, certainly.
Needham: And so, from that perspective, I think the value has gone up. The world is complicated. People always say, like, we're in a period of high uncertainty. I've never actually lived through a period of low uncertainty. So, I don't know what that is. But I'd probably say that same expression as myself when I need to. And so, I think it's – the role of humans is just as essential, and people need help. And there are more people on the planet now than they were 20 years ago, so more people need help.
Linstra: And so, as you put yourself in the shoes of advisors that are navigating this time, Daniel, what would you identify are the key elements for an advisor's value proposition right now to clients?
Needham: Just being very tactical. Obviously, this is a period where individuals are seeing their account balances down. And behavioral science teaches us that people feel the pain of losses more than that they enjoy the pleasure of gains. And so, just being present, just – I think Abraham Lincoln had that line. He was referring to King Solomon, where all the wise men brought – King Solomon asked for a phrase that would be true over all time, and they brought him the phrase and that was – this too shall pass. And Abraham Lincoln had – it was (I don't know), which one of his speeches or letters he had it in – but that simple, this too shall pass, like the value that that can bring somebody who is feeling the pain of loss at that time, there's just no substitute for that.
So, right now, the best thing – and I don't need to tell advisors what the best thing is. They know what the best thing to do is. But I see right now that core element of the value proposition, sensible, calm recognizing that people are feeling – these are real emotions. It's not irrational to feel an emotional response to seeing your portfolio down. So, that that role to me is really important.
There's no substitute, in my view, just in general, the value proposition, let's say, this is for all time for an advisor is – there's no substitute for a knowledgeable, empathetic human who knows your situation for a person that needs help with a complex, difficult question that's related to their financial affairs. We're all humans. We've all been there. And so, an advisor that I've known for many years from Australia, he has a simple way of describing it. He says that whenever I meet with a client and they ask me a lot of questions, he says that really getting to the ultimate question, which is, am I okay? And as good as digital tools and digital advice and robo, there's just really no substitute for that human, somebody that understands you, understands your situation can relate. And to me, that will remain critical. So, there's the financial element, let's call it, the utility, the utilitarian part of it, which is delivering the advice that's a rational calculation, the logical side, and then there's a behavioral element, which is, engaging with people, understanding their situation, empathizing with them, letting them know that they're okay, so that they can live their lives and sleep at night. And sure, maybe you end up delivering some financial advice that isn't maybe the most optimal from a spreadsheet perspective, but it's no good if people can't stick to it. So, I don't know – looking out 20 years, do I think that's going to change? Probably not. I mean, sure, the products and services and the tools, but yeah, it's been pretty durable so far.
Linstra: Interesting point too, and you mentioned the human element so many times there and referenced robo as well. And as we see literally everybody from now Walmart and – they're joining other private equity folks and entering this space. What are your thoughts on those types of entrants?
Needham: Yeah. Well, I've a huge amount of respect for Walmart as a company and an institution and phenomenally successful. And so, if you could pick competitors to enter your industry, you don't want good ones. But unfortunately, that's generally not how it goes. So, I think that they've really gone into the venture capital area. So, it's going to be more of a fintech startup from incubator from what I remember, which is, frankly, a pretty crowded space right now, VC. So, they're not alone. It's a very valuable part of capitalism in the market. It's kind of the primordial soup of a market-based system. VC people risk their capital and a lot of them fail. But some of them knock it out of the park and they do well. And so, I think having good VC firms that are well backed in there, trying new things is good for the industry longer term. And I'd classify them a little differently to, sort of, private equity, which I call leveraged buyout firms that specialize in taking leverage and buying existing businesses. But yeah, the industry benefits from new innovation and VC is a really great way to fund that along with experimentation within existing enterprises.
Linstra: And leave it to Walmart to be able to pull it off, right?
Needham: Yeah, that's right.
Linstra: You used the term durable, and I really like that term a lot in that I think as we think about the needs of advisors in the future and going forward, what are those durable needs of advisors in a sense of what will enable them and equip them to perform at their best to deliver to the clients? I guess, just who and what, if anything, do they need by their side as far as that tool set?
Needham: So, I kind of put that a little and say, like, for us, we're investing in serving advisors. And so, the question I ask around durable needs is, like, what are the things that I think in 10 years or 20 years from now an advisor is still going to want – or take the opposite view – is not going to want less? And so, when I think about those durable needs of an advisor, I think about ease of use and less friction in their workflow. So, do I think in 10 or 20 years an advisor is going to want things to be harder to use or easy to use? No, right? So, I think, for us, if we can invest in that and continue to focus and make it easier for advisors to use what we provide, help them run their day-to-day, deliver a productivity dividend to them, which then they can spend in a really high returning way, which is, engage with their clients. And related to that, I think advisors will want to run a more profitable, growing, scalable, practice. I don't think that's going to change in 10, 20 years. If anything, it may become more important as pricing pressure may come in, and so it's really a scale game versus a stable – being able to charge the same fee that you charged in all years.
I also think that flipping it a little – for the investor, I think lower service fees in total for their clients is also going to be continuing. So, that comes to the scale game. So, as advice practices get larger, as service providers to advisors and investors get larger, the ability to deliver lower prices, I think it may hit flat spots and go up and down. But on the whole, I would expect that to continue, and potential consolidation just supports that. And from how they run their practice, another durable trend is, more investment choice and flexibility. I don't think advisors, even though you've got the paradox of choice, it's kind of a word trodden sort of topic. I think if you're going to serve advice practices and advisors giving them choice and flexibility so that depending on how they want to run their practice or how they want to manage their clients, they can put what's appropriate in place for them. And so, when I think about those four areas, they are areas where lots is going to change in the industry, a lot of like how things are delivered. But I think the core of those four, I'd be willing to bet that they're still going to be pretty important to advisors in 10 and 20 years, and that's really what we want to build, that's where we want to focus our time. They're the areas that we want to continue to invest and improve our products and services and engagement. And the good news is, it's a big canvas to paint on. So, it's going to keep us plenty busy.
Linstra: Great. And maybe along those same lines, Daniel, we talk a lot about flexibility and choice. Another topic getting a lot of headlines these days is personalization. And so, how do we think about that? And obviously, related to direct indexing efforts, again, that's a lot of offerings out there and a lot of chatter, a lot of headlines. It's a crowded conversation. What are you seeing and what are you expecting as far as the growth of direct indexing?
Needham: Yeah. I think personalization is a key theme for advisors. And it's definitely, as you mentioned, related to that choice and flexibility. And so, for advisors to be able to deliver a more personalized financial plan and matching financial assets with deploying the capital consistent with the goals and the plan, direct indexing really fits pretty nicely in that sense. And so, whether it's UMA, unified managed accounts, and being able to combine different strategies or managers, or investments to match specific goals, whether you're able to kind of reflect the person's occupation or their concentrated stock position in the way that the rest of their capital is deployed that, that's, kind of, I consider personalization. Whether you're able to reflect their non-financial preferences like impact or ESG elements in their portfolio or not? Or maybe go the other direction? Some people may be really feel strongly that fossil fuels are essential for humanity, and they want to invest more in them.
So, there's a lot of different ways that you can reflect individual circumstances, requirements, preferences. And I just view direct indexing as another way of building a more personalized, goals-based plan for an investor. And the technology has changed such that you've got the ability to move and store a bunch of data really cheaply, really quickly. You can do complex calculations on the fly, like, optimizations, drawing individual information that's sitting in somebody's brokerage account, like tax gains and losses. You can trade it virtually for no cost, certainly no direct brokerage costs for many clients. And for some, they can even own fractional shares. So, it's made it way easier to build really specific portfolios for individuals with relatively low balance, certainly relative to where they were maybe 10 or 20 years ago. So, I think it's going to become really important.
Direct indexing is absolutely not for everybody, and I think it's one of these things where you have to be careful. This can be a bit faddish, and people can get really excited, and it's not a cure all. It's going to be appropriate for some clients some of the time. And for other clients, it's not going to be appropriate. And I view direct indexing and personalization as a useful tool in the toolkit for an advisor, but there's no substitute for making sure that it's appropriate for the client. And that's really where we're really excited to be launching the product and be participating, but we'll only be providing it through advisors that feel like it's appropriate for their clients. And again, that gets back to our mission.
Linstra: Yeah, very much.
Needham: But yeah, it's an interesting area, and it seems – I know your views. You know the space well, probably the U.S. advisor space. What are your thoughts?
Linstra: Well, I'll tell you. As I pose the question about durable needs, I think it's from the client perspective, it's durable requirements. What are their long-term requirements from advisors in the sense of, look, I would like, of course, lower costs or reasonable costs depending on the value that I'm receiving, but also that personalization. Everything is customized these days. And so, why would I not want that, to your point about, perspective requirements as far as asset levels and appropriate situations. But the durable requirements of clients might be another way to think about that as far as their expectations going forward.
Needham: That's right. That's right.
Linstra: Yeah.
Needham: The text side of it's clear. Tax management has been around a long time. But now, looking at it from net of expenses, benefits, taxes, kind of, as you mentioned, reduces a bit of that cost for the client if you can manage taxes appropriately.
Linstra: And let's face it. The only reason why we're talking about this now is because the evolution of technology, right? That's what's really equipped this to even have this conversation now that we're able to offer this at those lower account minimums and do it in importantly at a scalable manner for advisors where it's not just a portion for that top 1% of their book of business anymore. They can really widen out that aperture and provide that customized engagement, if you will, to a much broader set of their clients.
Needham: Yeah, and that's why the question you asked earlier around has the value of advice improved over the last 20 years. I mean, you're spot on, things that things are just getting better. And so, there's a book – I can't remember the surname of the author – but Factfulness, where it's about how humanity has improved, and it just looks at the numbers. And again, if you just spend too much time reading all the doomsday prophecies of. But you'd lose sight of the fact that generally most things have gotten a lot better. And whilst it's a never-ending march forward of progress, hopefully, for a very, very, very long time, maybe until the sun kind of burns out or something like that. And I think within the financial advice industry, it's just the same; things have just generally got a lot better.
Linstra: Fantastic. Great. We're going to telescope out a little bit now. As someone who you obviously oversee financial advisory services across the globe, and you've you're you know from Sydney and lived in London and now in Chicago. Shed a little light on key differences in the financial advice community that you've seen, regulatory differences, et cetera. Or are there more similarities than differences?
Needham: Yeah. I'm going to be boring and say, there's more similarities than differences. It's interesting. Having spent a decent chunk of time with advisors in really three core markets – so, Australia, U.K. and the U.S. And being in a lot of smaller countries – South Africa and India – well, India is not smaller, but the advice community is a lot smaller – and Hong Kong, Singapore, they're the main markets that I've spent a decent chunk of time in. But the similarities are remarkable. Like there's way more that is similar than different across the markets, and it's because it gets back a bit to that point I made earlier, which is, people that are facing complex difficult questions about their financial affairs, when they've reached a point where they've got a decent amount of financial capital saved over, they also want to talk to somebody. And whilst the different tax jurisdictions and regulatory frameworks and industry dynamics and product structures mean that it's not sort of a one size fits all. There's a lot of similarities in that problem, especially when you're in a sort of a more developed world where there's relatively well-established regulators, or in the case of India, where the regulators been really, really heavily guided by say the SEC and the FCA in the U.K. and ASIC in Australia. And so, there's a lot of similarities.
But maybe it's more interesting – the differences. And so, the role that financial planning and goals-based tools plays is probably the biggest difference. In Australia, financial planning and financial plans and really regulated forms of advice called statements of advice are really central. Everybody has a CRM and a financial planning provider. And that's the core. Now, obviously, there's a human element, but it's really financial planning, and that's a core part of the practice. And whilst it wasn't called goals-based or anything like that, it was generally cash flow-based planning. So, a lot of the planning tools would have an asset, liability, cash flow-based approach. And then, if you flip that, you go to the U.K. Certainly, when I was there in the last decade, so early last decade – it was very – it's historically been very risk tolerance based, RTQ kind of risk level based, and that was really the core of the advice proposition, and the FSA was moving to the FCO. So, the regulator changed their name and after a lot of challenges during the Global Financial Crisis. But that was really risk tolerance-based, and there was always risk tolerance in the U.S. and Australia. But that was kind of the really interesting core of there. So, it was planning in Australia, risk tolerance in the U.K., and then here, it's kind of a bit of a mix in the U.S. And because the U.S., I think, really has come from the – I don't mean to insult anybody. But probably whenever you say that, you probably insult…
Linstra: More than half of our…
Needham: That's right. But the U.S. really did come out of the brokerage business, right, which was stockbroking mainly, and there were parts of the Australian business which came in there, but mainly it came out of the insurance industry. And so, you came out of this sort of stockbroking. And so, a lot of it came from that sort of stockbroking commission side of things. And so, that meant that it was a very – U.S. is very investment-centric advice, very investment-focused. And with that investment focus, it was – RTQ was there, but that was mainly within the larger firms. So, it is really a diverse way of delivering advice in the U.S. And what I've seen in the last decade has been real increase in financial planning. So, the U.S. market looking more like the Australian market and just planning – probably planning on goals, just picking up everywhere. A lot of similarities, but probably they're the big differences. And ones are 60-40, ones are 70-30, ones are…
Linstra: Well, I think, as you mentioned earlier, it sounds like we've got – from an individual investor perspective, a lot of advisors that are engaging them and the question being asked is, am I okay, right, regardless of – the nest eggs that they've worked hard to earn, am I okay is prevalent across the world.
Needham: Yeah. And each advice – each industry looks at the individual or the household tax level. Is it managed appropriately? The asset location? Are you putting enough into your superannuation in Australia, your pension in the U.K., your 401(k) here? And so, there's really a lot of the same elements, which is really good to see. And I think the quality of advice is high in all three markets. And the independent model is increasing in all three markets, so same as what you've seen here. You still have your kind of – you're more broker/dealer kind of. I don't know if people don't like the White House term.
Linstra: We still use it, yeah.
Needham: But yeah, the that sort of fee-based advice is really picking up everywhere.
Linstra: Fantastic. So, looking ahead, Daniel, as you think about the industry, I guess, what is the industry and/or advisors perhaps not paying close enough attention to right now from your perspective that it might be a future, let's say, landmine or a goldmine, right? Either a challenge or an opportunity? Anything on your mind in that perspective?
Needham: Yeah. The usual, kind of, evergreen issue is I think just complexity of products and services. And at Morningstar, we just carry a healthy level of skepticism when it comes to new things that the industry cooks up and where it's complex, it's illiquid, it's wrapped in a structure. Whenever somebody starts to explain something to me, and whilst I don't consider myself to be a smart person in the industry, I think I have got an ability to understand structures. When I'm struggling to understand something, my natural inclination is to button my wallet. And so, the finance industry, our industry collectively just has a really unique way of repackaging the same old garbage over and over again in a more complex structure. And so, that's where I feel like people like our firms – like ours like Morningstar really help advisors cut through the noise. And you can see the transparency of underlying structures.
I just think crypto is a really great example where whilst the blockchain technology is really interesting and could really be widely adopted, that doesn't mean that you should make a ton of money off Bitcoin or Ethereum or other digital tokens. And I just think it's a really good time to step back. If you want to understand what folly looks like, financial folly, the South Sea bubble in the 1700s and the tulip mania 16th century in the Netherlands, look at Bitcoin or even technology-oriented companies.
Linstra: An investment lesson and a history lesson in one.
Needham: If it feels too complicated and you don't understand it, do what Warren Buffett does and put it in the too hard basket. In our industry, you don't get points for difficulty. It's not diving, right? Like, oh wow, I kind of cleared this 10 foot. You don't get any rewards for that. All you do is you just take extra risk. So, focus on one-foot hurdles and keep it simple.
Linstra: Stick the landing on those one-foot hurdles.
Needham: Exactly.
Linstra: Got it. Good. Hey, great. Well, we're almost going to wrap here, Daniel. But I have to ask you, as you think about the Wealth Group now and your leadership of it, just what is your vision for success 10 years out from now and how will you know you that we've achieved it?
Needham: Yeah. I think it's pretty simple that we're serving more advisors and more households around the world, and that we've been able to deliver better value-for-money products and services over that decade. Through our investments in the business, through technology, through resources, we're able to deliver more value than what we're charging within the fees of the services that we provide and that's it really. And at the end of the day, advisors are smart. They vote with their feet. And if we can do the right thing and bring the best in Morningstar together, more of them will want to work with us and serve more of their clients, households with us. So, it's pretty simple. And I think we've got a compelling proposition at Morningstar, I think we've got a compelling trusted brand, and it's a really great opportunity that we have to continue to invest and serve more and be a force for good in the industry.
Linstra: Fantastic. Daniel, I don't think anyone has tuned out just yet. Fantastic discussion here today. So, thank you. But 10-second takeaway. If anyone has tuned us out, what's one thing you think everyone should remember? A 10-second takeaway.
Needham: For us, at Morningstar just to be a trusted partner with financial advisors around the world, and it's a really big responsibility that we have and it's one that we're really, really happy to be able to deliver. So, thanks for listening and thanks for being a great host here, Jonathan.
Linstra: Yeah, pleasure. Thank you.
And there you have it, another episode of Simple But Not Easy. As always, we thank you for your time and attention and special thanks to Daniel for his time and insights. Again, if you'd like to know more about Morningstar's integrated suite of offerings for advisors, please email us at simple@morningstar.com, and we'll get you the details you're after. We also encourage you to subscribe on your favorite podcast platform. Until next time, thanks again from the team at Morningstar Wealth.
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