Morningstar Advisor - August/September 2011 - (Page 46)

Morningstar Conversation It’s the Destination, Not the Vehicle By Dan Culloton Vanguard’s Bill McNabb and Invesco’s Marty Flanagan discuss the future of advisory services, their stances on new products, and their strategies for meeting client needs To say that the business of giving financial advice to people has changed dramatically over the past several years is a dramatic understatement. Not only are the ranks of fee-only advisors swelling, but so is the array of products and providers seeking to serve them. To explore these changes, we invited two executives who are addressing the advisor market from different vantage points. Marty Flanagan has dealt with advisors of all stripes his entire career, first at Franklin Templeton and now as CEO of Invesco. Vanguard, primarily seen as a shop for do-it-yourself investors, has taken increasing interest in fee-only advisors under Bill McNabb and his predecessor. Both firms have broad mutual fund lineups, but they also are fighting for market share in the exchange-traded fund space—Vanguard with a stable of broad-based index ETFs and Invesco PowerShares with a lineup that has pushed the boundaries of passive investing. What follows is an edited transcript of Flanagan and McNabb’s discussion on June 25 on the best way to serve advisors and their clients. Dan Culloton: Given the changes in the advisor market, what are the challenges of reaching advisors in this environment? Marty Flanagan: I think a lot of the changes in the advice channel have been positive ones. The movement away from commission-based compensation to asset-based compensation is very, very good for investors. There’s been obviously quite an emergence of independent financial advisors. Our focus is a pretty simple one: All we do is manage money. And so, first and foremost, our focus is making 46 Morningstar Advisor August/September 2011

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2011

Morningstar Advisor - August/September 2011
Letter From the Editor
Simplicity and Design Matter
Do You Use ETFs Strategically or Tactically?
The Institutional Way
How to Analyze an ETF
Eyeing ETFs’ Next Chapter
Small-Cap/Large-Cap Flip-Flop?
Four Picks for the Present
Investment Briefs
Morningstar Investment Conference
Pitfalls of Peer Groups
A REIT Recovery, With a Catch
Turning Fund Distribution on Its Head
Here Come ETF Managed Portfolios
Circle These Picks Amid the Crop of New ETFs
ETF Analyst Favorites
Beware, the Accidental Portfolio Manager
It’s the Destination, Not the Vehicle
New Growth, Rooted in Experience
Better Ways to Look at ETFs
How to Better Manage Your Clients’ Future(s)
More Bargain Than Bubble
Cheap, Local, and On a Roll
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
First-Quarter Assets Hit an All-Time High
You Say You Want a Revolution?

Morningstar Advisor - August/September 2011