THE

OUTSIDER
TONY ROBBINS BUILT A CAREER ON MAKING PEOPLE HAPPY.
CAN HE ALSO MAKE YOU RICH? In conversation with Jack Bogle
PHOTOGRAPHS BY BENJAMIN LOWY

Robbins relaxing
and workingat
home on his patio in
West Palm Beach.

38 m o n e y. c o m M AY 2 0 1 7 M AY 2 0 1 7 m o n e y. c o m 39

Robbins squeezing T HAS BEEN one of the more remarkable career
in some work on arcs in business.
his private plane en
Tony Robbins came to fame in 90s infomer-
route to Toronto.
cials, pitching 30-day programs with slogans
like personal power. Over the next two
decades, through dogged entrepreneurship and
a message of self-transformation delivered
with zeal, he won the ears of some of the most
influential people in the world. He advised Bill
Clinton during the impeachment scandal, has
counseled hedge fund billionaire Paul Tudor
Jones for years, and was dubbed the CEO
Whisperer by Fortune for his work coaching
top executives.
Last years Netflix documentary I Am Not
Your Guru went behind the scenes of his mas-
sively popular seminar Date With Destiny, a
40 m o n e y. c o m M AY 2 0 1 7
THE OUTSIDER
six-day emotion-filled event in which thousands old founder of the Vanguard Group and an early you really want to help
of paying attendees hang on to his every word. champion of index funds. Bogle calls Robbins a people, you gotta look at
Now Robbins, 57, is bringing his brand of voice for goodperhaps one who can help these 401(k) fee struc-
gut-level life and business strategies to the spread the gospel of low-cost investing to an tures. Ninety million
mainstream investor. His new book, Unshake- even wider audience than Bogle ever could. Americans have a 401(k)
able, aims to coach the masses that trying to Its a fascinating pairing: one an industry [or related accounts]. Its
outperform the market is, for the most part, a insider, the other a charismatic outsider who where most Americans
bad idea. has worked his way in. What they share is an have their money, and its
Better, he writes, to be averageinvest in investment philosophy that may soon face a where most Americans are
low-cost index funds, which give you exposure critical test at the next market downturn. being taken advantage of.
to the entire market, and keep investing through At MONEYs invitation, Robbins and Bogle And one of the chal-
the markets inevitable spikes and corrections. recently sat down to talk about low fees, high lenges there, Jack, as you
And he cautions against letting fear or anxiety risk, and what it means to be an investor today. know, is that 80% of 401(k)
steer your decisions. This transcript of their conversation has been plans are at small to
Youre not jarred by winter when you know edited for length and clarity. medium-size businesses,
it comes every year, Robbins likes to say, refer- We began by asking how they met. and most of these plans
encing the markets long-term pattern of boom are pay to play. They
and bust. (For the record, he says the bulk, but dont even offer index
not all, of his own portfolio is in index funds.) JACK BOGLE: I got a note funds. So thats one of the
Robbins is also promoting showmethefees from David Swensen reasons I started doing
.com, an online tool offered by Americas Best manager, as everybody research. We now have a
401k (ABk), a company he has partnered with knows, of the Yale place online, showmethe-
that designs and administers retirement plans. endowment fund. And he fees.com, where people
The site lets you see an estimate of the fees said would I be willing to can put in their numbers
charged by your workplace retirement plan talk to Tony Robbins. and find out not only what
expenses that Robbins says are usually way too Im a nice guy. Davids the fees are, but what they
highvs. what ABk might charge. a nice guy. So Tony and I cost [after] compounding.
Coaching others has certainly been good for got together. We allowed
Robbins own fortunes: He says his net worth 15 minutes, maybe half BOGLE: Well, its all about
is half a billion dollars. And he has a financial in- an hour. But we were the cost. Investing is the
terest in this latest endeavor. Robbins son, Josh completely gripped by one business in the world
Jenkins-Robbins, serves as ABks chief market- the conversation. It must where you not only dont
ing officer. He and his son are also affiliated have gone on for over an get what you pay for, but
with Creative Planning, a registered investment hour, and its pretty clear you get what you dont
adviser mentioned frequently in Unshakeable. from the way Tonys [first pay for. [Both laugh.]
The book was cowritten by Creative Plannings investing] book came out
president and owner, Peter Mallouk. Robbins that II guess I was ROBBINS: Thats awesome.
is the firms chief of investor psychology and a persuasive. [Laughs.] Ill tell you something else
board member. He receives compensation from you taught methe
the company based on increased business TONY ROBBINS: Actually, metaphor of 1,000 gorillas
derived by Creative Planning from his services. Jack, I came for a flipping quarters. One flips
Accordingly, Robbins has a financial incentive 45-minute interview, and 20 heads in a row and we
to refer investors to Creative Planning, ac- it was 3 hours! all think, What a lucky
cording to a legal disclaimer. (Robbins says his One of the things you gorilla. But when its in the
proceeds from the book will go to the charity did was educate me to the financial business we go,
Feeding America.) realities of the market and What a genius. [Laughs.]
Along the way, Robbins has won the backing the tyranny of fees. I did 50 You have a way of
of one of the most respected figures in the finan- interviews, but you were cutting through the
cial services industry: Jack Bogle, the 87-year- the one who said, Tony, if bulls--t, Jack.
M AY 2 0 1 7 m o n e y. c o m 41
THE OUTSIDER
In his first personal finance book, Money: Master
the Game, Robbins also spoke of the importance of
fees and was critical of most annuities. But he
described fixed indexed annuities as a proven
strategy that offers upside without the downside.
Gains with no losses.
MONEY has been critical of these insurance
products for their high fees and overly complicated
structure. The SEC has also warned that you can
lose money buying an indexed annuity. If you need
to cancel your annuity early, you may have to pay a
significant surrender charge and tax penalties.
Robbins says income needs are an important
issue for many investorsand fixed indexed
annuities were discussed in that context. He says
theyre not a great investment right now, given
low interest rates. But it comes down to which
companys annuity youre using and what are
they really charging? To just say, Throw out the
baby with the bathwater, to me seems really poor.
BOGLE: Its actually a lot
like a lottery. I cant
remember how much you
touched on it in your
book, but one of the most
powerful ideas in invest-
ing is reversion to the
mean. A fund does very
well, then it does badly. A
fund does very badly, then
it tends to do well. Costs
play a big role.
To the extent that a
fund is doing badly
because of its costs
[annual] expense ratios,
sales loads, portfolio
turnover rateits not
going to revert to the
mean. It cant do it. Its
Robbins stuck in the bottom.
roars with So its reversion to the
excitement mean for the good guys,
before a and a little reversion, but
packed not nearly as strong, for
crowd at
the Toronto the people who have not
Convention done a good job because of
Center. their high costs.
42 m o n e y. c o m M AY 2 0 1 7
ROBBINS: The other piece
that relates to that is the
average investor. When
theyre trying to figure
out what [fund to invest
in], maybe they go to
Morningstar [and try to
look up] five-star funds,
not understanding
reversion to the mean.
But its just like you
were talking about. If you
look at the research, out of
428 five-star-rated funds,
four are still five-stars 10
years later. People are
buying at the peak.
Theyre being sucked into
doing the very opposite of
what the greatest inves-
tors do.
BOGLE: In investing, youre
better off learning from
the experience of others
than learning on your
own [because] its an
expensive way to learn.
ROBBINS: Well, thats why
we both write the books
we write. Tell me some-
thing: What would you
tell me now? Because Im
talking to a lot of people
right now, and there are a
lot of people very fearful
People are being
that the markets valua- sucked into doing
tions are extremely high, the very opposite of
and theyre extremely
concerned.
what the greatest
investors do.
BOGLE: Well, let me first
say that waiting until the
weather clears in the
stock market probably
means you started
waiting when World
War II started. [Laughs.]

My next thought
comes out of [your book].
The book is excellent
and I read it before I did
the endorsement. But it
had, to me, a little too
optimistic cast looking at
past returns and things of
that nature. So in my
introduction, I wrote this,
and Im very glad you
kept it in:
We live in an uncer-
tain world and face not
only the risks of the
known unknowns but also
the unknown unknowns
the ones that we dont
know we dont know.
Despite these risks, if we
are to have any chance
for meeting our long-term
financial goals, invest
we must.
And I would stick by
that. This is the time to
really emphasize risk.
Valuations are clearly
high, dividend yields are
low, earnings growth will
probably be less than the
long term [average],
which is around 5%. It
could be as low as 4%,
and inflation will take
a little bit out of that
now. So its a time for
some caution.
The index [fund] is not
Bogle is referring to the fact that stocks are frothy
by most historical standards. The markets
so-called price/earnings ratio, based on 10 years of
averaged corporate profits, stands at nearly 30, a
level seen only during the Great Depression and the
dotcom bubble. History says that when the markets
P/E ratio is higher than average, you can expect
muted equity gains over the subsequent 10 years.
44 m o n e y. c o m M AY 2 0 1 7
a panacea. Its participa- ROBBINS: By the way,
tion in a risky business
that eliminates the risk of probably comes from
individual stocks,
eliminates the risk of
picking managers,
eliminates the risk of
picking the hot sector of
the day, and leaves only
the risk [of] the stock time I sent [the book] to
market itself.
But that risk is not to
be disregarded. Its always me to send you a bunch,
been high. It always
will be.
THE OUTSIDER
what they actually do.
If youre not investing,
now is the time to start.
The best single thing that
can happen to [young]
investors who are accu-
mulating money is a major
and sustained market
decline. Think about that.
And thats not the best
thing that can happen to
somebody who already
has their capital in.
There arent any
easy answers. We will
mind-set is really, really, eventually get to the
really helpful. place where the con-
The overall concept is sumerthe investor
just helping people to consumerunderstands
understand that theres what Tony and I are
risk in whatever you do, talking about here today
and its really about and behaves accordingly.
increasing the probabili- Regular investing,
ties to your side. Thats diversified investing,
the essence of what the and above all, low-cost
Robbins wades book is about. investing.
through a charged [Economist] Paul
crowd at a seminar in BOGLE: But invest your Samuelson wrote in his
Toronto in March;
Vanguard founder money. preface to my first book
Jack Bogle (right). in 1993, saying that Bogle
ROBBINS: Thats exactly has changed a basic
right. Jack, what do you industry in the optimal
tell people right now who direction. He knew it
are on the sidelines? before anybody else did.
BOGLE: Are you gonna do ROBBINS: Youre right, Especially younger
[that sense of optimism] it free? brother. I understand. You millennials. Those are the ROBBINS: Which one was
know, I give Warren ones Im really focusing your first book?
Warren Buffetts Dont ROBBINS: Course! Buffetts argument based on right now, because
bet against America on the past and based on they have such an BOGLE: It was called Bogle
mentality. But we put in BOGLE: Why dont you send the fact that every bear opportunity if they just on Mutual Funds: New
additional cautions me 50 copies? market weve had has start to get in the game. Perspectives for the
throughout, so you know. been followed by a bull. I Even if they take Intelligent Investor. And,
And Ill send youlast ROBBINS : Okay. Ill send show all those numbers. some hits, theyre young boy, did that stand the test
you 50. The man is always But then I also look at enough to see that of time. Probably my best
you, you wanted, like, 80 cost-conscious whats happened in [long-term] impact. one, which is awful to say
B O G L E : M AT T F U R M A N
to 100 copies. You want Japan. There is no because that means Ive
BOGLE: Live it or you guarantee in life. You just BOGLE: Well, I can tell you gone downhill.
to be able to hand out the dont live it, Tony. [Both said, Its not a panacea. what I say to them, but Dont put that in. [Both
new one as well? laugh.] Its participation. That youll have to figure out laugh.]
M AY 2 0 1 7 m o n e y. c o m 45