Episode summary
Don Phillips: Encouraging Better Outcomes for Investors
The Long View
· · Hosts: Ben Johnson, Christine Benz, Amy Arnott · Guests: Don Phillips
Summary
Don Phillips argues that good investing starts with a big-picture mindset: identify the issues investors face, then build tools and commentary that improve long-term outcomes. He says Morningstar’s work has always been guided by that same principle, and that the best investors keep a clear north star rather than getting lost in short-term noise.
A major theme is stewardship versus salesmanship. Phillips says the industry often rewards products and manager incentives that are easy to sell now but harmful to own over time, especially when compensation pushes managers to chase short-term rankings or take excess risk. He extends that concern to private assets, warning that retail investors are being asked to absorb higher costs, lower liquidity, and more concentration just as the industry emphasizes their supposed diversification benefits.
He is broadly positive on indexing and AI as tools that can simplify investing, but only if users keep asking questions and stay engaged. He also thinks fixed-income funds remain especially vulnerable to misleading labels and hidden risk, and he sees the next big unmet needs in retirement as better deaccumulation, tax management, and advice that helps people use investing as a means to security rather than a scorekeeping game.
Key takeaways
- Phillips says the right investing question is not what is easiest to sell, but what is best to own over years, which he frames as the difference between salesmanship and stewardship.
- He argues that indexing and AI are useful because they make it easier to reach a good answer, but they can also encourage investors to stop asking deeper questions.
- Phillips warns that private equity and private credit may reduce liquidity, raise costs, and increase concentration for retail investors, even as they are marketed as diversification tools.
- He says fixed-income funds are especially prone to risk misalignment because investors still mentally anchor on money-market-style safety while managers are pushed to chase yield.
- He believes the industry is under-serving retirees by focusing on accumulation instead of deaccumulation, tax management, and advice that improves real-life financial security.
Notable quotes
“what are the issues and challenges that investors are facing and then I come back and think what can you know I contribute or what can Morning Star contribute to help encourage better outcomes for investors”
“I just think of this spectrum from salesmanship to stewardship”
“indexing is terrific. I think it's the right choice for the vast majority of investors”
“if you use AI to go deeper if you question AI if you get it to refine your thinking then it's very very positive”
“the industry is still so very focused on the accumulation process and it's a very attractive process for the industry”
How the episode opens
Please stay tuned for important disclosure information at the conclusion of this episode. Hi and welcome to the long view. I'm Amy Arnot, portfolio strategist for Morning Star, and I'm Christine Benz, director of personal finance and retirement planning for Morning Star.
Our guest on the podcast today is Don Phillips. Don is a managing director for Morning Star. He joined the company in 1986 as its first mutual fund analyst and soon became editor of the flagship print publication Morning Star Mutual Funds, establishing the editorial voice for which the company is best known.
He helped to develop the Morning Star style box, the Morning Star rating, and other distinctive proprietary Morning Star innovations that have become industry standards. Don has served in a variety of leadership roles at Morning Star, most recently head of global research before pairing back his schedule to take on a part-time non-management role. He holds a bachelor's degree from the University of Texas and a master's degree from the University of Chicago.
Don, welcome to the Long View.
Thank you. It's great to be back. — It's great to have you here. A lot of our listeners are probably familiar with the Phillips curve column you write for Morning Star magazine every quarter. How do you come up with ideas for the column?
You know, for me everything starts with what are the issues and challenges that investors are facing and then I come back and think what can you know I contribute or what can Morning Star contribute to help encourage better outcomes for investors. So you know that's really the playbook. has been the playbook from day one at Morning Star in the things that we write, the tools that we come up with, and now it sort of I guess carries on to to some degree in my column.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- investing culture
- stewardship
- indexing
- private credit risks
- fixed-income funds
Companies and tickers mentioned
- MORN
- Morningstar
- Vanguard
Watch the episode
Watch “Don Phillips: Encouraging Better Outcomes for Investors” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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The Long View, this episode and its artwork belong to Morningstar, Christine Benz - Director of Personal Finance and Retirement Planning, Ben Johnson - Head of Client Solutions, Amy Arnott - Portfolio Strategist. Octagon is not affiliated with the show; this page is an independent summary.
