'Mergers suck' and more frank comments heard at Morningstar

Published
  • May 01 2017, 3:42pm EDT
Mergers suck. The fintech revolution is overhyped. This is the worst time to be an investor.

These were just some of the blunt comments and contrarian viewpoints shared at Morningstar's Investment Conference from luminaries such as BlackRock CEO Larry Fink and Ritholtz Wealth Management CEO Josh Brown.

More than 2,000 attendees heard industry giants inveigh against what they saw as troubling trends. At the same time, they also got words of encouragement. Fink, lamenting the poor state of financial literacy in the United States, told advisers now was their best chance to make a positive impact on clients' lives.

Scroll through to see the crème de la crème of what Morningstar had on offer.

Mergers suck. The fintech revolution is overhyped. This is the worst time to be an investor.

These were just some of the blunt comments and contrarian viewpoints shared at Morningstar's Investment Conference from luminaries such as BlackRock CEO Larry Fink and Ritholtz Wealth Management CEO Josh Brown.

More than 2,000 attendees heard industry giants inveigh against what they saw as troubling trends. At the same time, they also got words of encouragement. Fink, lamenting the poor state of financial literacy in the United States, told advisers now was their best chance to make a positive impact on clients' lives.

Scroll through to see the crème de la crème of what Morningstar had on offer.

"Mergers suck. They're hard. They take years and years off your life," Larry Fink, CEO of BlackRock, said.

Click here to learn more about Fink's views on consolidation in the asset management industry as well as advancements in adviser desktop technology.

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"I study the history of markets to try to understand what the financial advice business has been like through the decades. The more I do that, the more I realize that what we call innovation is really packaging. Not everything new is necessarily new,” Josh Brown, CEO of Ritholtz Wealth Management, said.

To read more about the future of fintech innovation and who benefits the most, click here.

"I hope I'm done with Wall Street as a subject because if I'm writing about it, really bad things are happening," author Michael Lewis said.

"My sense is, and no one will say this publicly, but on the brokerage side, there is some gratitude in that this is forcing them to do some things that they've long wanted to do," said Paul Ellenbogen, director of global regulatory solutions for Morningstar. "You have a thousand advisers writing on yellow pads for asset allocation. So you don't know if there is a consistent client experience, and that's a problem legally and as well as from a business perspective."

He added: "The law kind of gives them a negative incentive in that if we don't start measuring our results and client experiences, then we might open ourselves to a lawsuit."

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"I think they'll come up with another way to comply [with the fiduciary rule] that doesn't necessarily involve a private right of action where you could be sued by investors," Aron Szapiro, director of policy research at Morningstar, said.

To read more about the likely outcome of the fiduciary rule, click here.

"The AUM model is the model for the foreseeable future. Why would anyone give up getting paid [in terms of] AUM? It's the best thing in the world," Don Phillips, managing director at Morningstar, said.

"In some ways it's almost more interesting to look at the sustained innovation that comes after [technology-based] disruption," Paolo Sironi, author of “FinTech Innovation: From Robo-Advisors to Goal Based Investing and Gamification,” said.

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"Once you've been working for a client for five years, it gets harder and harder to meet with them," said Michael Kitces, a Financial Planning contributing writer and a partner and director of wealth management at Pinnacle Advisory Group.

"Fintech's effect on consumer finance is overblown. Disrupting the existing models is extremely hard to do," Colin Plunkett, equity analyst for Morningstar, said.

Plunkett added: "A successful disruption in financial services overall takes place over a longer period of time than people think. It takes several decades, not years. Anything like Uber [in financial services] is probably unsustainable."

To hear more contrarian points of view on the fintech revolution, click here.