Podcast Summary: "Ben Felix: Rational Reminders for Good Financial Decisions"
Podcast Information:
- Title: The Long View
- Host/Author: Morningstar
- Episode: Ben Felix: Rational Reminders for Good Financial Decisions
- Release Date: June 3, 2025
Guests:
- Ben Felix: Chief Investment Officer for PWL Capital, co-host of the Rational Reminder podcast, CFA charter holder, and CFP professional.
1. Introduction and Background
In the premiere segment of the episode, hosts Amy Arnott and Christine Benz welcome Ben Felix to "The Long View." Ben shares his unique journey from mechanical engineering to finance. Initially pursuing engineering at Northeastern University on a basketball scholarship, Ben admitted that his transition to finance was not driven by a burning passion but rather a series of practical decisions. After realizing the inefficacies in actively managed mutual funds during his MBA program, Ben discovered a more scientific approach to investing through Dimensional Fund Advisors (DFA), which led him to stay in the finance sector.
Notable Quote:
"I stumbled across Dimensional Fund Advisors and their application of the FAMA French asset pricing research, which just made so much sense to me." – Ben Felix [05:07]
2. Role at PWL Capital and Interactions
As the Chief Investment Officer at PWL Capital, Ben elaborates on his role within the firm. While he began as a client-facing advisor, his responsibilities have increasingly shifted towards collaborating with advisors rather than directly managing client relationships. Ben highlights the close-knit nature of PWL, allowing for ad hoc interactions and asynchronous communication, often sparked by discussions from their Rational Reminder podcast.
Notable Quote:
"Our advisors typically invest personally in the same way that they advise their clients." – Ben Felix [05:34]
3. Investing Philosophy: Efficient Markets and Passive vs. Active Management
Ben discusses his investment philosophy, emphasizing a preference for efficient market models and low-cost, diversified portfolios. He acknowledges that while he doesn't hold a religious belief in market efficiency, it serves as a practical framework for decision-making. Comparing the Canadian and U.S. markets, Ben notes that Canada's heavy tilt towards active management is influenced by conflicts of interest and advisors' misguided beliefs, citing a study from the Journal of Finance.
Notable Quote:
"I think efficient markets is a good model for making investment decisions, but like any model, it's not a perfect reflection of reality." – Ben Felix [05:37]
4. The Rational Reminder Podcast: Origins and Community
Ben recounts the inception of the Rational Reminder podcast, attributing its start to PWL Capital's strategic focus on knowledge and communication over ad spend. The podcast quickly gained traction, fostering a robust community of around 11,000 members on their Discourse platform. This community thrives on respectful and informed discussions about investing and financial decision-making.
Notable Quote:
"We got microphones and we recorded an episode, and then I don't think we've missed a single week since then." – Ben Felix [08:54]
5. Favorite Episodes and Impactful Guests
When asked about his favorite episodes, Ben mentions interviews with John Cochran on asset pricing and inflation, as well as Scott Cederberg on life cycle asset allocation. These conversations not only resonated with him but also sparked significant engagement within the podcast community.
Notable Quote:
"Scott's research is so practically relevant, which is why I think it's been popular." – Ben Felix [16:10]
6. PWL Capital's Acquisition by OneDigital
Ben explains the strategic decision for PWL Capital to join OneDigital, highlighting the benefits of access to capital and the ability to acquire like-minded advisor firms across Canada. This partnership aims to amplify PWL's impact by leveraging OneDigital's extensive experience in scaling businesses.
Notable Quote:
"They give us access to capital which lets us acquire like-minded advisor firms in Canada." – Ben Felix [20:44]
7. Client Profiles and Fee Structure
PWL Capital caters primarily to clients with an average household investment of around $2 million, though there is significant dispersion. Ben outlines their tiered fee structure, starting at 1.25% for the first half-million and decreasing with increased investment amounts. He defends the fee levels by benchmarking against similar firms and noting that recent fee adjustments have not adversely affected client growth.
Notable Quote:
"We raised our fee last year from 1% and it has not affected our growth." – Ben Felix [25:03]
8. Investment Approach: Asset Allocation and Global Diversification
Ben describes PWL's asset allocation strategy, which incorporates six core models emphasizing Dimensional funds. Portfolios typically consist of 60-70% in stocks, with moderate tilts towards smaller, cheaper, and more profitable stocks. Despite a significant home country bias (about one-third of portfolios in Canadian equities), Ben justifies this through tax efficiency and empirical research, including studies by Vanguard and Scott Cederberg.
Notable Quote:
"Canadian stocks are more tax efficient for Canadian investors... That's one big reason for the home country bias." – Ben Felix [29:27]
9. Views on Various Asset Classes
Crypto: Ben explains that after thorough exploration, PWL Capital does not include crypto in portfolios due to its high volatility and ideological rather than technical innovations.
Gold: Similarly, Ben dismisses gold as an investment hedging strategy, citing its mixed historical performance and high current real prices, which suggest low future real returns.
Commodities: PWL Capital has evaluated commodities but decided against their inclusion due to low expected returns and unfavorable trade-offs.
Notable Quote:
"We don't use crypto in portfolios. After that whole podcast series, we came away thinking that it's more of an ideological innovation than it is a technical innovation." – Ben Felix [37:13]
10. Current Economic Issues: Tariffs and Inflation
Addressing the impact of tariffs, Ben asserts that the market is appropriately pricing in the uncertainties, and investment strategies should remain steady. On inflation, he references John Cochran's fiscal theory of the price level, suggesting that as long as government deficits are managed responsibly, inflation can remain low. PWL Capital does not employ specific inflation hedges but monitors real return bonds for market indicators.
Notable Quote:
"As long as government deficits are paired with a credible promise to repay, inflation in a country can stay low." – Ben Felix [35:14]
11. Retirement Planning and Drawdown Strategies
Ben advocates for personalized retirement drawdown strategies over rigid spending rules. By regularly updating financial planning projections and engaging in meaningful conversations with clients, PWL Capital helps retirees adjust their spending based on individual circumstances and priorities, rather than adhering to a fixed formula.
Notable Quote:
"It's going to be based on their specific situation and what's important to them at that time." – Ben Felix [43:18]
12. Total Cost Reporting Initiative in Canada
Ben discusses the forthcoming total cost reporting requirement in Canada, which will mandate advisors to disclose both their fees and the embedded fees in investment products. He believes this transparency will illuminate the true costs clients bear and potentially shift preferences towards low-cost index funds.
Notable Quote:
"All of a sudden people are going to realize, or at least it'll be explicitly presented to them, how much they're actually paying for their investment products." – Ben Felix [49:02]
Conclusion
Ben Felix provides insightful perspectives on investment strategies, the importance of efficient market models, and the evolving landscape of financial advising in Canada. His emphasis on education, transparency, and personalized client interactions underscores PWL Capital's commitment to fostering informed and rational financial decisions.
Final Notable Quote:
"I think educating clients on their financial situation, on how much they are able to spend, may help in some cases, but it doesn't always work." – Ben Felix [45:49]
Note: This summary excludes advertisements, introductory segments, and outtro sections to focus solely on the substantive content of the conversation.