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Christine Benz on the Industry Issue That Keeps Her Up at Night

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Christine Benz, director of personal finance and retirement planning for Morningstar, is known for her insightful research and informative columns and also co-hosts a regular podcast, The Long View, in which she and Morningstar’s Chief Ratings Officer Jeffrey Ptak interview retirement and financial experts.

Turning the tables a bit in our VIP series, we asked Benz via email a series of questions that touched on not only her professional knowledge but what she does off the clock as well.

1. What market indicator or industry statistic are you watching most closely right now and why?

Christine Benz: I’d be lying if I said anything other than CPI at the moment. Inflation is top of mind for everyone right now and a major point of discussion in my professional life, [as well as] when I’m out and about in the real world.

People experience rising prices so viscerally, and they have a lot to say about them!

2. How has this statistic been changing recently, and how do you expect it to change next year?

Inflation was a nonissue for a good decade-plus — generally much lower than the historical averages. When a trend persists that long, there’s a natural inclination to assume it will ever be thus.

I’m not in the prognostication business, but I do expect that some of the current inflationary pressures will abate before long. And what’s underdiscussed is the leverage that workers have right now — rising wages are an offsetting force that helps compensate for inflation.

3. What would you suggest advisors do now or consider doing in the future about it?

It’s smart to think about inflation as affecting both sides of the ledger — spending and income. On the spending side, to what extent is the client spending heavily on things that are inflating rapidly — such as used cars or new homes in Austin or Nashville?

Jason Zweig [of The Wall Street Journal] wrote long ago about how we each have our own inflationary experience based on our spending baskets, and that’s such an important concept. He called it “me-flation”; in other words, inflation isn’t CPI, and we can put a finer point on it.

And then on the income side of the ledger, to what extent is the person’s purchasing power protected? If it’s someone who is getting solid cost-of-living adjustments from their job and they have an equity-heavy portfolio and don’t plan to retire soon, I’d say they’re pretty well protected.

On the other hand, if it’s a senior who has a lot of fixed-rate investments that are being spent for living expenses, then inflation is a bigger risk factor and the portfolio should be hedged accordingly.

4. Who or what critical source of information do you track to keep up with this issue?

The St. Louis Fed data provide a good look at what’s going on in the economy alongside historical data. I often check TIPS breakeven rates on the [Federal Reserve Economic Data or] FRED site, as well as the yield differential between lower-quality bonds and Treasuries. (I’ve been fretting about yield-chasing for a long time, and I’ll be right eventually…)

We also have a lot of great market data on Morningstar.com. One quick view of stocks’ relative attractiveness is our Market Fair Value graph, which is an amalgamation of the price/fair values that our equity analysts have for their coverage universe. Not surprisingly, they think stocks are a bit expensive right now.

5. Are you changing any of your work habits at this stage of the pandemic? 

More on this topic

I’m starting to go into the office a bit more, about once a week or so, mainly to shoot videos. I love to see my colleagues in person, and I enjoy the energy of being downtown. And I have a few work-related travel obligations on my calendar for 2022.

I’ll be excited to speak to live audiences for a change, after a lot of Zooming for nearly two years. Looking into the cold, dead eyes of my laptop camera gets a bit old.

6. What’s your biggest hobby?

My husband and I love to travel, and while we haven’t been able to travel overseas during the pandemic, we recently went to Los Angeles for a long weekend. We walked our legs off, had some fabulous meals (both highbrow and lowbrow), and spent time with some family in that vicinity. As the weather is turning cooler in Chicago, it felt good to warm up.

7. How about your charitable activities?

I’m on the board for the John C. Bogle Center for Financial Literacy and involved in the Bogleheads community, which is a group of folks committed to low-cost investing and sensible, minimalist portfolios.

We’re planning the next live conference for fall of 2022, and I’ve had the chance to speak to some of the Bogleheads chapters in recent months. Hearing from live audiences gives me a good sense of what to work on for Morningtar.com.

At a more grassroots level, I’m involved in a group that delivers financial education to survivors of domestic abuse. We’re kicking off a new series of courses over the next few months. That work makes me stretch a bit, in a good way, because it’s a lot more about budgeting and managing credit and much less about investing and taxes.

8. What book are you reading now and why?

I just wrapped up David Chang’s book, “Eat a Peach.” He’s the chef behind the Momofuku line of restaurants. The book is about his life in the restaurant industry and his struggle with bipolar disorder. He’s self-deprecating and hilarious.

The latest work-related book I’ve read was Zachary Karabell’s “Inside Money,” which is a history of Brown Brothers Harriman. We interviewed Zach for the Long View podcast and he’s a terrific writer; the book weaves in a lot of U.S. history.

9. Do you have any special holiday plans?

My husband and I always take off the last two weeks of the year to chill out. We’ll look forward to catching up with family, and I’ll pursue what I jokingly call my holy trinity — reading, walking, and cooking — with a vengeance.

10. Anything else you’d like to share?

In our investment community we get a little obsessed with how people are allocating their financial capital. But “time on earth” allocations are even more important.

I try to check in often to ensure that there’s an alignment between what I value and what I’m doing with my time, and I love to hear that advisors are doing this kind of discovery with their clients. I think “life planning” is the next frontier in this industry.