Don Phillips: We’re All in the Behavior Modification Business

<p>Our guest for this week's installment of The Long View podcast is Morningstar managing director Don Phillips. Don was Morningstar's first mutual fund analyst and eventually became CEO of the firm; he established Morningstar's independent voice and mentored scores of analysts. He also helped develop many of the tools that investors today take for granted, such as the Morningstar Style Box and the Morningstar Rating for stocks (also known as the star rating). Throughout his career Don has worked to enact positive change in the fund industry, speaking out on issues such as misleading advertising and high-fee funds as well as the need for better shareholder disclosures.</p> <p> In this broad-ranging interview, Don discusses his path from a paper boy investor in Templeton Growth Fund to a job analyzing mutual funds at Chicago startup Morningstar in the mid-1980s. He also opines on the industry's evolution from the opaque, sales-driven culture that he encountered 30-plus years ago to its current emphasis on transparency and very low costs. <p> Early influences<br /> • The paper-boy years: Don’s early investing influences (1:40) • The magic of mutual funds: “Sir John Templeton is my personal money manager” (2:45) • “I had gotten married”: How an aspiring literature professor became Morningstar’s first mutual-fund analyst (4:00) <p>Building Fund Research<br /> • “Dark days”: What it was like in the fund industry of the 1980s (5:20)<br /> • Democratizing data: When the freshest fund stats were nine months old (7:10)<br /> • Getting them to answer the phone: How Morningstar’s fund database was built (8:30)<br /> • “Putnam wouldn’t talk to us”: How pull demand (i.e., a reporter’s background notes) changed that (9:45)<br /> • “My first job was to read 777 mutual fund prospectuses” (11:20)<br /> • Don’s “el-train” indoctrination to investing (12:10)<br /> • “Not interested (click)”: Opening doors in the early days (13:00)<br /> • “It’s who you surround yourself with”: How to build a team (14:20)<br /> • “Their funds are b