Morningstar Founder Steps Down as CEO


Last week Joe Mansueto, billionaire CEO of Chicago-based investment research, data and analytics firm, Morningstar, Inc. announced that he would be stepping down as CEO at the end of this year and will become executive chairman of the board on January 1, 2017.

Stepping Down But Not Retiring

Mansueto, who founded Morningstar in 1984, said he has been giving this move considerable thought over the past year, explaining “As I turn 60, I’m ready to transition to an executive chairman role.  I’ll still be very involved with Morningstar, but my role will focus more on strategy, capital allocation, advising Kunal and our senior team, and leading our board of directors.”

Clearly, Mansueto, who still owns 56.6% of the public company, feels the firm would best served if he focused on helping chart its course from a strategic perspective.  He noted that he still loves the company, and he “is looking forward to having a more flexible schedule and more time to think about investing and technology.”

Mansueto said he plans to meet weekly with the firm’s new CEO to discuss the growth and vision of the company.

Hand Picked Replacement

Mansueto’s hand-picked replacement is Kunal Kapoor, the firm’s 41 year old president who started as a data analyst at Morningstar in 1997.  Kapoor will take over day-to-day responsibilities as CEO and will join Morningstar’s board of directors on January 1, 2017.

Mansueto is confident Kapoor is the right choice for CEO.  “I think he’s ready to go. He’s been president for about a year but even before that, he’s he was heading up global products and solutions. He’s been here 19 years and worked in most every part of the firm. He knows more about Morningstar than anyone. He’s widely respected.”

It’s unlikely the appointment of Kapoor will alter the firm’s primary direction to any great degree.  Kapoor explains, “A big part of what I want to emulate is to ensure that Morningstar shines with its mission we have for a strong focus on the end investor — which includes financial advisors.  If I take a step back, I can see that independent business models are really beginning to stand out and I give all of the credit to Joe for thinking about this 30 years ago when it was tougher for a model like that to work. Joe and I are both contrarians. We’re value investors and a trait that we both share is we’re both long-term oriented in the way we think about things.”

However, this does not mean Kapoor won’t look to foster change and innovation at Morningstar. Matt Fellowes, the founder of HelloWallet, which was purchased by Morningstar in 2014 said of Kapoor, “I remember one trip we took earlier this year to visit with about 10 different tech companies – Google, Salesforce, Oracle, and smaller start-ups – and he was peppering executives with lots of questions about talent, management, and operations. When we got back to Morningstar, he [Kapoor] started up numerous new initiatives inside Morningstar based on what he learned.  He is definitely one of the biggest advocates inside of Morningstar for innovation and leading the company into the future.”

Our Take

While this move may be a little sooner than expected by some who follow the company, Mansueto hinted a year ago that Kapoor was being groomed to be his successor when he was named to be president of Morningstar.

However, the financial services industry has been undergoing seismic changes over the past  few years which have created unique challenges and opportunities for Morningstar’s data and research business.  Past stock market volatility has prompted investors to migrate from active to passive investment vehicles.  New rules from the U.S. Department of Labor will require brokers to act in the best interests of their clients.  In addition, European regulations are pushing asset managers to become more transparent with how they are spending client commissions to pay for investment research.

In our view, the fact that Mansueto chose to step down as CEO now was based on his realization that the significant changes in the marketplace require that he focus more on the strategic direction of the firm than he had done previously.  Consequently, we suspect that Mansueto will be actively involved in helping Morningstar management think through and position the firm  to take advantage of these developments in the financial services industry.


About Author

Mike Mayhew is one of the leading experts on the investment research industry. In addition to founding Integrity Research, Mike is on the board of directors of Investorside Research Association, the non-profit trade association for the independent research industry, and a frequent speaker on research industry trends and developments. Mike has over thirty years of research industry experience. Email:

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