Since Mark Matson was little, he always wanted be a financial planner.
“My dad was an insurance agent and then later a financial planner in the ’70s,” he told ThinkAdvisor. “Lots of kids grew up wanting to be firemen or football players, and I grew up wanting to be a financial planner.”
However, when Matson first got his start in the industry — as a financial planner with Chubb Securities in 1987 — he says he quickly found out that he hated the industry.
“I found out that it was largely commission-driven [and] product-driven, and that the funds and investments we were selling didn’t do what they were supposed to do,” he explained.
He’d sell investments that had great money managers with 20- and 30-year track records to his clients, and then two years later he’d be sitting down with his clients trying to explain why all the managers he had picked with these great track records were underperforming the market by 3% to 5% a year.
“I thought that was totally unacceptable,” he said. “My clients were having a sub-optimal investing experience.”
Matson realized that if he continued to do commission-based financial planning for the rest of his life, he’d be “pretty worn down” with a “business that wasn’t worth anything.”
So, in 1991, Matson decided to go fee-based instead of commission-based, and he opened up a registered investment advisory firm, Matson Money.
“I knew I could never go back and do what I was doing before, using stock picking and market timing,” he explained.
So he formed a relationship with Dimensional Fund Advisors. Around the same time, he was introduced to the work of Eugene Fama, the economist and oft-called “Father of Modern Finance.” Matson then combined efficient market theory, modern portfolio theory and the three-factor model and started putting these theories into practice at his new firm.