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Helping Investors Beyond the Markets

Our Investor Success Project aims to provide practical, data-driven information to help investors succeed financially, above and beyond the markets.

It's a good time to be an investor. There is an ever-increasing array of low-cost investing options, high-quality data, and a range of vehicles investors can use to pursue their strategies: from plain-vanilla indexes, to targeted sustainable funds, to strategic beta investments. The result is a proliferation of choice accompanied by a steady decrease in costs. And in the U.S., investors are also experiencing the second-longest bull market in history.

However, there is still significant work to be done: both in terms of participation among non-investors, and in terms of challenges current investors can face in reaching their goals. Morningstar is bringing together its existing work on investor success and adding a series of new research papers to ask a straightforward, but important question: What can we do to help investors succeed, beyond the markets? 

Challenges Potential Investors Face
Investing provides the best available opportunity for Americans to build long-term wealth by participating in the economic engine and growth of our society. Yet, nearly half of Americans do not participate at all. Only 54% of American households invest in stocks in any form. The vast majority who do participate in the stock market do so through 401(k)s or IRAs: They are often defaulted in by their employers and have relatively low balances. (For example, among Vanguard 401(k) account holders, the median balance in 2016 was $24,713.)

Investors also continue to face non-market obstacles to their success (i.e., obstacles above and beyond investment performance, fees, and product selection). Some of these are behavioral: from a low savings rate, on average, to the risks of investors selling during downturns and missing the subsequent upswing. Some of them are structural: 52% of workers in the U.S. currently do not have access to an employer-sponsored retirement plan, for example, and financial illiteracy is widespread around the world.

To help investors succeed, we should be looking at both sides of the equation: the investment market (fees, performance, options, and such), and the goals and needs of investors themselves (who invests, and behavioral and structural obstacles to success).

Why This Matters
The financial-services industry spends a great deal of time discussing and competing over the characteristics of financial products: which fund has the best risk-return profile, which is lowest cost, which is uncorrelated with other assets, which offers the steadiest income stream, etc. These factors are important, and the industry should never stop seeking to improve the quality of information--that’s a big part of our mission here at the quality of the investments themselves. However, products are only part of the picture.

For many Americans, the real competition to a particular investment product isn’t a similar ETF or mutual fund. It’s credit cards. It’s unsustainable mortgages, stagnant wages, and expenses that eat away at every dollar of income. And, it’s fear and distrust of investing. That’s what keeps people from investing in the first place, and, among current investors, diverts money that might otherwise be invested and benefiting from the long-term growth of our economy. To look beyond markets (and the products our industry offers) is to look at the tremendous potential for people to become investors and for current investors to expand their efforts when and where they want to.

A Not-So-New Initiative at Morningstar
Morningstar has long been a leader in providing quality investment data and research, and that is perhaps what we’re best known for. But for many years we’ve also been tackling these broader investing issues. Don Phillips, a powerful champion of investors, is one example; Christine Benz’s extensive writings on personal finance is another.

If you’re a frequent reader you’ll have come across many of these “beyond the markets” pieces. However, this extensive work to help investors more broadly isn’t as well-known as our investment-focused research. So, we’re bringing together our range of research on investors and their success and looking for gaps: unanswered questions that can help investors, and the professionals that serve them, succeed. And, we’re launching a new effort, The Investor Success Project, to answer those questions for individual investors, advisors, asset managers, plan providers, and other industry leaders.

The Investor Success Project will roll out new research on investing and investors--who currently invests, what goals people have, and how the industry can make the biggest impact in helping investors reach those goals. We don’t know what we’ll find, but we’ll share everything we learn. We believe every bit of data that’s uncovered can move the industry toward a future that emphasizes investors’ front-and-center role in the markets and helps them succeed. We are committed to conducting this research, publishing it for the investment community to read and react to, and integrating these lessons into our own products and services.

This new body of research will be found here on, building on our long history of providing practical, data-driven information to help investors succeed financially, above and beyond the markets. We look forward to the dialogue with you: to ask the right questions, to answer them collectively, to learn from the lessons, and to keep moving to attack each successive challenge that holds investors back from succeeding in their financial goals.