What We Believe In


Jamie Wickham, CFA, Managing Director Morningstar Australasia  |   09th Sep 2019  |   5 min read

This article is an excerpt of my opening address at the Morningstar Fund Manager of the Year Awards held in Sydney Friday night 1st March. For more on the winners and finalists, see the article here.

Rather than focus on the findings of the Royal Commission and what that means for the industry, I talked about Morningstar’s values and what we stand for. For us, they are more than just words on a corporate poster – we live them day to day in our business.

The opening image on the screen was that of Joe Mansueto – Morningstar’s founder, executive Chairman and majority shareholder…

Joe started Morningstar in his Chicago apartment in 1984 – 35 years ago. He left his job as a stock analyst. His vision was to give individual investors access to the same depth of information that was only available to professional investors at the time. He realised that investors lacked the data and tools required to make intelligent investment decisions and build better portfolios.

From day one, Morningstar’s business has been built on the foundation of serving the end investor and helping them reach their financial goals. All roads lead back to what is best for the end investor – we make decisions on that basis every day – both large and small.

2018 was a landmark year for Morningstar. Globally, we broke through US$1bn in revenue for the first time – a significant milestone for the company.

We are in a strong financial position with over US$350 million in cash on the balance sheet. Stable ownership and a strong financial position enables long term thinking and investment in the business.

Back in Australia, we passed several milestones. There are more than 10,000 users on Adviser Research Centre – our web-based platform to deliver our research; and usage of Morningstar’s flagship software platform, Morningstar Direct surpassed 400 users.

 

So what? Who cares about Morningstar’s beliefs and our financial position?

Clients and prospects care. Increasingly, we hear from individuals and organisations that Morningstar’s beliefs are just as important (if not more important) as our capabilities in their eyes. From my perspective, there has been a noticeable shift in this perspective post-Royal Commission.

The growing number of independent financial advisers care that we use Morningstar’s financial position, global scale and local footprint to deliver on the promise to support them and to improve outcomes for their clients.

We intend to accelerate our investment and product development efforts in 2019 and you will be hearing more from us on that front.

Some of our current initiatives are outlined below through the lens of three things we stand for– investor centricity, independence and transparency.

 

Investor Centricity

For investors, we aim to simplify the complex, to whittle down endless lists of investments, to educate and to encourage a long-term investment mindset.

We are rebuilding our individual investor website and subscription-based service to support these goals; and reaffirm our commitment to the individual investor. This work is underway and is scheduled to launch in Q3.

 

Independence

Morningstar’s manager research team is growing, and we are investing in that team as we support more clients – their APL management and manager selection needs; and requirement to build portfolios and managed accounts.

In line with the growth of the team, research coverage has increased 30% over the last two years.

Morningstar’s independence will remain front and centre. Coverage will be determined by investment merit and the needs of our clients. We won’t accept payment from product providers in return for coverage.

Whilst our coverage may be smaller than our competitors, our business model enables greater conviction and a skew to quality. That is positive for advisers and the clients you serve.

 

Transparency and Disclosure.

The importance of transparency and disclosure has never been greater – to engender trust, to engage investors and to further personalise advice.

Investors have the right to know what they own and the fees they are being charged relative to the value and services being delivered – by both the adviser and the product provider. We have and will continue to be active to drive greater transparency across the industry. These activities include:

  • Over the last two years, Morningstar has been working with the asset management community to move to voluntary full portfolio holdings disclosure.
  • We are at the table with the industry and regulators as it relates to RG97 to ensure we present and distribute fee data in a way that supports comparability and broad disclosure.
  • Our data team is building an SMA database to shine a light on this growing area.

For 35 years, Morningstar has built its business by putting the investor above all else. It is reflected in our underlying principles and the things we stand for – like independence and transparency. It informs our partners, who we hire, our product roadmap and most importantly, when we say no. It is ingrained in our DNA – the Morningstar you experience in 35 years’ time will be the same as the one Joe setup in that Chicago apartment in 1984 and the one you interact with today. Our commitment to support and align with advisers that share these beliefs has never been greater.

 

Originally posted 2019-03-06 09:23:16.

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