Advisers OK with David Booth stepping down as co-CEO of Dimensional Fund Advisors

Joe Duran says move is "an important transition," comparing founder David Booth to other icons in the financial services industry such as Vanguard's John Bogle

Feb 23, 2017 @ 2:00 pm

By John Waggoner

Advisers took the announcement in stride Thursday that David Booth, founder of Dimensional Fund Advisors, was leaving his post as co-CEO of the firm.

DFA, the $460 billion fund powerhouse, has made David Butler co-CEO alongside Eduardo Repetto. Mr. Booth will become executive chairman.

Mr. Butler will oversee the fund's army of loyal investment advisers, who, famously, have to apply to invest in Dimensional's products and pay their own plane fare to attend company seminars.

The process has paid off for the Austin, Texas-based company. It pulled in an estimated net $3.6 billion in January, second only to Vanguard, according to Morningstar. The fund company currently has $460 billion in assets worldwide and 12 offices in eight countries.

"It's something I've been thinking about for a long time," said Mr. Booth. "It's part of succession planning. Mr. Butler has been part of the firm for a long time, and it's time to include him as the firm grows."

Mr. Butler joined DFA in 1995, serves on the firm's executive committee and has been involved with firmwide strategic vision and decision making for many years, the company said.

The dual CEO structure has worked well for DFA, Mr. Booth said. "There are two parts to the firm, investing the money and working with clients, and both are equally important. It lends itself naturally to having co-CEOs." Mr. Booth noted that Rex Sinquefield oversaw the company's investment arm before Mr. Repetto. "Now I'm going to be the old guy, the executive chairman of the board, who's involved in things that shareholders are interested in and long-term strategy," Mr. Booth said.

"It makes sense to have one guy on the money management side and another on the adviser side," says Paul Reudi, CEO of Ruedi Wealth Management and an early member of the DFA team of advisers. "[Mr.] Butler is such a level-headed guy – I've never seen him get mad at anyone. And it was clear to me from day one that his relationship with David Booth was really close. It's continued to be that way over time – they looked like they were soulmates."

Does this mean that retirement is on the horizon for Mr. Booth, now 70? "No, they'll have to drag me out of here," Mr. Booth said. "This just enables me to serve longer, with less stress, hopefully."

"I think it's an important transition, even though you have some feelings when someone like David Booth takes a less active role," said Joe Duran, founder and CEO of United Capital. "I'd put him up there with other icons like John Bogle: He completely changed the financial services industry. He has democratized index investing beyond simply a passive technique. He gave advisers success with index funds that are a value add."

Mr. Butler will continue in his role as head of Global Financial Advisor Services. "I'm honored and humbled to be taking on this role for Dimensional," Mr. Butler said in a statement. "During my tenure with the firm, we've grown from less than $10 billion [in assets] to $460 billion. In that time, I've gained an appreciation for the important pillars of the firm. Dimensional embodies a focus on the client, while always pursuing the best answer, implementing well, and carefully managing client expectations. I fully intend to carry that vision and culture forward."

Mr. Repetto, meanwhile, will focus on the money management side of the business. Although his academic background is in aeronautics – he has a Ph.D in the field from the California Institute of Technology and won the William F. Ballhaus Prize for outstanding doctoral dissertation in aeronautics – he has been a DFA director since 2009. He's currently co-chief investment officer of Dimensional Fund Advisers LP, alongside Gerard O'Reilly.

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