Jan 7, 2021
At its core, managing wealth is about finding the best solutions
for your clients. As he mentions in today’s discussion with him,
this sentiment has guided David Booth’s storied career. As the
Co-Founder and Executive Chairman of Dimensional Fund Advisors,
David’s career is so illustrious that he’s been called the father
of evidence-based investment products. We open our conversation by
exploring David’s career, beginning with his job as a shoe salesman
in Kansas to developing the first index fund. We ask David if he
had been able to foresee the power that “geeks” would have over the
asset management business. His answers highlight how immature the
industry was when he founded Dimensional Fund Advisors and how they
had to first convince people before selling them on small cap
funds. Reflecting on his early successes and challenges, David
opens up about how his clients reacted when small caps
underperformed. A key theme this episode, David emphasizes the
importance of making decisions that are grounded in academic
research. We then dive into several topics ranging from David’s
views on value portfolios to the stroke of luck that led
Dimensional to open their products to financial advisors. After
chatting about why Dimensional is now entering the ETF space, David
shares his take on direct indexing and why he still favors
simplicity over complexity. Near the end of the episode, we discuss
how David built his company culture, how luck factored into his
life, and how he defines success. An incredible conversation that
touches on pivotal moments in the history of financial services,
tune for more insights into the life and work of David Booth.
Key Points From This Episode:
- Introducing today’s guest, Dimensional Fund Advisor Co-Founder
David Booth. [0:00:14]
- David talks about how his background informed his professional
- Hear about David’s role in developing one of the first index
- Why David’s work creating index funds for Wells Fargo came to a
- Exploring the origins of Dimensional Fund Advisors.
- How David saw the future of his industry when he started
Dimensional and how they created the first small cap funds.
- The reaction from David’s early clients when small caps
- David recalls the “borderline character assassination” that he
faced when pushing for small caps. [0:24:16]
- How and why Dimensional first added value portfolios.
- Unpacking David’s view that values struggle relative to growth.
- The recent lessons that Dimensional has learned about value
relative to growth stocks. [0:33:17]
- What it would take for Dimensional to reconsider their entire
- The importance of flexibility and believing in your solutions
when dealing with uncertainty. [0:43:19]
- David emphasizes that your financial solutions should be based
on robust data. [0:47:00]
- How Dimensional began giving financial advisors access to their
- Why, after so many years, Dimensional is now entering the ETF
- With widespread fee compression, hear how Dimensional is
handling fee cuts. [0:55:53]
- Answering the question — what’s the next big thing for
- David shares his take on direct indexing and customizable
- How David built his company culture and the role that luck
plays in his life and in business outcomes.
- We ask David how he defines success in his life.