Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We want to bring in the CEO of Vanguard, Selim Ramji.
Speaker 2: He took the helm just under one month ago on
Speaker 2: July eighth, actually launch day of this show, Seleem.
Speaker 1: It's great to see you in person.
Speaker 3: It's great to be here.
Speaker 1: So I don't know if.
Speaker 2: You know this, but there's a huge sell off underway
Speaker 2: right now in market.
Speaker 3: I thought this was going to be a quiet day
Speaker 3: in August when I first agreed to do this.
Speaker 2: You and we well, well, I want to get to
Speaker 2: your big picture of view for Vanguard, but we have
Speaker 2: to start, of course with the news of the day,
Speaker 2: and that's that Schwab Fidelity.
Speaker 1: Seems like the whole industry is.
Speaker 2: Dealing with outages right now on their trading platforms.
Speaker 1: Are you having any troubles over at Vanguard.
Speaker 3: Yeah, it's best we can tell. It's an industry wide
Speaker 3: kind of slow set of issues. For us at Vanguard,
Speaker 3: we were impacted by some of the slowness that's happening
Speaker 3: all across the industry as a result of higher volumes
Speaker 3: all across the industry. Our kind of success rate for
Speaker 3: weblogins and the like is kind of ninety eight point
Speaker 3: nine percent, So it's fine. It's not as much as
Speaker 3: we want it in the normal course of the day,
Speaker 3: but at least as of five minutes ago, things we're
Speaker 3: kind of getting back to normal, if you will. We
Speaker 3: benefit in some ways as Vanguard because we don't have
Speaker 3: a large active trader population. By design, we're about long
Speaker 3: term investing and we're about staying in the market rather
Speaker 3: than timing the market. But at the same time, we're
Speaker 3: always looking at what the industry kind of issues are
Speaker 3: and how they impact our clients, and the team has
Speaker 3: been on it, particularly with the higher volumes that we expected.
Speaker 2: I was going to say, you know, it's a big
Speaker 2: day when your buy and hold Vanguard investors are trying
Speaker 2: to log in and see what their investments are doing.
Speaker 2: But we'll continue to look for updates on that situation.
Speaker 2: But let's talk a little bit about you. Let's talk
Speaker 2: about Vanguard because you've made waves. Is the first outside
Speaker 2: CEO hire since Jack Gologal, of course founded the company
Speaker 2: in the nineteen seventies.
Speaker 1: What's on the top of your to do list?
Speaker 3: So there really are three things, Katie, and it's been
Speaker 3: great to really get started, which I did just as
Speaker 3: the three of you got started on your new show
Speaker 3: back on July eighth. And the first piece is really
Speaker 3: just listening and understanding what's foremost on the minds of
Speaker 3: our clients. And so I've been spending a lot of
Speaker 3: time both here today over the past few weeks, meeting
Speaker 3: with some of our large retirement services clients are large
Speaker 3: wealth management clients, but also just listening in on the
Speaker 3: phones and listening in with our advisors as they're dealing
Speaker 3: with the kind of advice and all the day to
Speaker 3: day issues for individual investors as well. And so it's
Speaker 3: really just first and foremost making sure that we're taken
Speaker 3: care of and serving our clients well for today. And
Speaker 3: I think that the second piece is really about getting
Speaker 3: to know all the crew. I've been spending a lot
Speaker 3: of time at my new home in Malvern, but also
Speaker 3: in Charlotte and Scottsdale in a couple of weeks in
Speaker 3: London to really get to know our crew all over
Speaker 3: the world and really understand the culture from the inside.
Speaker 3: You know. I've admired the culture from the outside and
Speaker 3: all of the Bogels writings and works, but really being
Speaker 3: able to see it and see how our crew members
Speaker 3: really believe in the mission and believe in the purpose
Speaker 3: and understand what's important to them is also kind of
Speaker 3: high on the list. And I would say the third
Speaker 3: thing is really with a view to the future, what
Speaker 3: are the changing needs and expectations of our clients, Whether
Speaker 3: it's around things like retirement income, or people investing for
Speaker 3: the first time, or getting access to a broader range
Speaker 3: of low cost investments even well beyond in next these
Speaker 3: are all things that I think our clients are asking for.
Speaker 3: I think that they're things that we can deliver.
Speaker 1: I guess, but it's about the future.
Speaker 4: I guess the future is why they hired an outsider, right,
Speaker 4: because they could have hired an insider to just keep
Speaker 4: the culture the way it is and not change anything.
Speaker 4: I interviewed your predecessor, Tim Buckley in Frankfort a few
Speaker 4: years ago when he was making a big push to
Speaker 4: grow the ETF business in Europe. Vanguard could really grow
Speaker 4: more in Europe. You are also making a push to
Speaker 4: grow in your personal advisory service right, institutional and family
Speaker 4: office wealth. What do you want to change? What are
Speaker 4: the new things that you can bring to Vanguard?
Speaker 3: Yeah, I would say, Matt to your point, it's really
Speaker 3: been about two things. Certainly, some of it is around
Speaker 3: what are the new ways to serve clients or the
Speaker 3: new opportunities to deliver value to clients, and I hope
Speaker 3: and expect some of my external kind of experiences would
Speaker 3: help with that. But I will also say the majority
Speaker 3: of my interviews with the board, even coming into this role,
Speaker 3: we're all about culture and the cultural fit, because I
Speaker 3: think the first and most important thing is not just
Speaker 3: having a leader, but having a leadership team that really
Speaker 3: kind of advances the mission and the purpose that Google
Speaker 3: set out twenty nine years ago. And so it's those
Speaker 3: two things. But to answer your question around the future,
Speaker 3: look some of it learning and understanding. I think there's
Speaker 3: more to do outside the United States in terms of
Speaker 3: the opportunities in Europe, but I'm going to be spending
Speaker 3: some time there later this month in getting a firsthand
Speaker 3: view around that. I also think when you look at
Speaker 3: issues like retirement income for boomers particularly who have accumulated
Speaker 3: really well with us over the years but now need
Speaker 3: income and draw down solutions, that's a really big deal.
Speaker 3: And even first time investors in getting people who might
Speaker 3: be investing in their late twenties or early thirties, and
Speaker 3: would really be drawn to the type of proposition that
Speaker 3: we have, but maybe haven't heard of us in the
Speaker 3: way that I might have heard of Vanguard in my
Speaker 3: late twenties early thirties. And so those are a few
Speaker 3: of the things, but a lot of it is really
Speaker 3: just listening and understanding where the opportunities are and what
Speaker 3: fits with Vanguard's culture and what fits with our.
Speaker 5: Ethos as well, wondering if this part of the market fits.
Speaker 5: If you think about the explosion you've seen in private assets,
Speaker 5: you've seen Vanguard really be a myth when it comes
Speaker 5: to a big, liquid indexed market. How much do you
Speaker 5: feel that you need to encompass some of that change
Speaker 5: that's been happening in the market. Just very recently, your
Speaker 5: alma mater made two major acquisitions when it came to
Speaker 5: the private markets, do you feel that you need to
Speaker 5: have a bigger foothold as well?
Speaker 1: Well?
Speaker 3: You know, it's interesting Vanguard from its origins also had
Speaker 3: active management, kind of going back to even the founding
Speaker 3: of the firm, And if you look at our client's
Speaker 3: assets today, about twenty percent of them are an actively
Speaker 3: managed fund. Sometimes it's through active managed subadvisors like we
Speaker 3: typically do inequities. Sometimes it's in our active fixed income
Speaker 3: capability that Sarah Devereaux and our CIO does kind of
Speaker 3: within Vanguard and the thing that unifies both of these,
Speaker 3: because Vanguard sometimes is thought of as an index versus active,
Speaker 3: I don't think that's the truth. What we're really about
Speaker 3: is low cost investing, and low cost investing applies an
Speaker 3: index to apply as inactive, and I would like it,
Speaker 3: over time to also apply in private assets. To your point,
Speaker 3: we'd struck a partnership a couple of years ago in
Speaker 3: private equity really just to test this theory about can
Speaker 3: you bring lower cost investing to private assets, and it
Speaker 3: seems like there's some demand there. But if you really
Speaker 3: look across the universe and what we're about, we're about
Speaker 3: bringing lower cost, kind of simpler forms of investing to
Speaker 3: individual investors. We've shown we're doing that in index, We've
Speaker 3: shown where we're doing that inactive, and I think to
Speaker 3: your point, there's a broader universe in which we can
Speaker 3: apply that, where we can add value to our clients,
Speaker 3: and where we can partner with firms that do some
Speaker 3: of the things that we don't It's.
Speaker 2: Interesting listening to this conversation because you've made clear that
Speaker 2: culture is what you're really concerned with, that's at the
Speaker 2: top of the priority list, that you really want to
Speaker 2: stick to Jack Bogul's mission. But it seems like when
Speaker 2: you look to the future some of those things could
Speaker 2: come into tension, private equity being one of them, crypto
Speaker 2: being one of them. You think about how to stay
Speaker 2: relevant and grow an audience among younger investors. I mean,
Speaker 2: do you see attention there? How do you thread that
Speaker 2: needle of sticking to your knitting but also remaining relevant
Speaker 2: and creating relevance among a younger subset.
Speaker 3: We have a term that have come to learn in
Speaker 3: Vanguard of does it load? Which is really and what
Speaker 3: it really means is does the investment offering that we
Speaker 3: may come up with does it help on the efficient frontier?
Speaker 3: Does it really fit in the context of a broader portfolio. Now,
Speaker 3: we may be conservative from time to time in our
Speaker 3: view on that, but we're very deliberate, We're very methodical,
Speaker 3: and we're always looking at first and foremost does it
Speaker 3: fit in a client's portfolio and is there distinctive and
Speaker 3: unique at capabilities that we as Vanguard can provide either
Speaker 3: on our own or through partnerships like we've done with
Speaker 3: sub advisors for many, many decades, and so we're always
Speaker 3: looking at that through a portfolio lens, and I think
Speaker 3: for some things like private markets, which would become a
Speaker 3: much more important part of an overall portfolio, and you
Speaker 3: can see it in institutional clients kind of all over
Speaker 3: the world. But the key to whether it loads is
Speaker 3: can we offer something that's very specific to Vanguard, which
Speaker 3: means lower cost, which means it fits with a portfolio,
Speaker 3: which means simplicity. And I think there's a great deal
Speaker 3: of innovation that we can do kind of in that
Speaker 3: regard as well, but it's got to be true to
Speaker 3: who we are. It's got to be true to our
Speaker 3: own principles, whether as investors or whether in terms of clients.
Speaker 2: Let's talk about customer service, because you think about one
Speaker 2: of the issues that seems to be keep coming up
Speaker 2: for Vanguard, it seems to be quality around customer service.
Speaker 2: You've said that that's a priority, but I'm hoping that
Speaker 2: you can get a little bit more specific about how
Speaker 2: you plan on improving it, whether that's increased investments, are
Speaker 2: you hiring more, what's the actual plan to improve it.
Speaker 3: So I've been spending a lot of time, Katie in
Speaker 3: the past four weeks just really listening to clients and
Speaker 3: understanding from them firsthand what they love about Vanguard and
Speaker 3: what they want us to improve about Vanguard. And this
Speaker 3: is not just kind of large wealth managers, are large
Speaker 3: kind of workplace clients, but also individual investors and joining
Speaker 3: our advisors on the phones and really understanding kind of
Speaker 3: each of that. So the first piece is make sure
Speaker 3: I've got all the facts and really hearing firsthand from
Speaker 3: our clients about both aspects of them. And there's a
Speaker 3: huge amount of loyalty affection for Vanguard, and so that
Speaker 3: in moments where we let a client down, clients take
Speaker 3: it very personally, so do I, so do all of us.
Speaker 3: I think the encouraging thing, as I've come to learn,
Speaker 3: is that about starting about three years ago, we'd made
Speaker 3: some very significant investments in modernizing our technology to make
Speaker 3: things more cloud based, to make things much much more resilient.
Speaker 3: And I benefit from a lot of those infrastructure investments
Speaker 3: that have been made over the past few years.
Speaker 1: So are you planning on doubling down on that so
Speaker 1: to speak?
Speaker 3: We're going to continue to invest behind giving our clients
Speaker 3: the experience they expect and deserve from us. And so
Speaker 3: I'm understanding exactly what the investments that we've made. Many
Speaker 3: of these are behind the scenes and things which are
Speaker 3: important enablers. I said all of last week with our
Speaker 3: personal Investors team to understand all the changes that are
Speaker 3: now underway and all the ones that are planned for
Speaker 3: the future. But that's an important priority for me to
Speaker 3: understand for us to continue to invest in in part
Speaker 3: because of the great deal of loyalty and trust that
Speaker 3: our clients have, and in part because of the expectations
Speaker 3: they have for us to continue to deliver to them
Speaker 3: not just low cost investing, but low cost investing with
Speaker 3: high quality and a high level of experience. And we
Speaker 3: think because of technology and because of some of the
Speaker 3: investments that we have been making, we can do all
Speaker 3: of those things.
Speaker 5: Jilly, you know, of course you've been a pioneer in
Speaker 5: low cost investing. But there is a sense here that
Speaker 5: perhaps some of the industry feet pressures have gone far enough.
Speaker 5: Bloom our intelligence has suggested that maybe you could hold
Speaker 5: the line here and use some of that extra fee
Speaker 5: and come to reinvest in customer service.
Speaker 1: Is that an option for you?
Speaker 3: We are always looking at ways in terms of being
Speaker 3: able to invest back in client experience. And as I said,
Speaker 3: some of the technology investments were made and well predate
Speaker 3: me in technology, and we will continue to invest behind
Speaker 3: things that get our client experience to where our clients
Speaker 3: expect them. And one of the beauties I think the
Speaker 3: real genius of the original model that Bogel had set
Speaker 3: up is that our clients are our owners, and so
Speaker 3: we are singularly focused on one constituency, which is our clients.
Speaker 3: And so after important reinvestments that we make back in
Speaker 3: our technology and in our client experience, we can also
Speaker 3: continue to invest behind the mission of low cost investing.
Speaker 3: And as we talked about earlier Shanelli, I sort of
Speaker 3: view this across the spectrum. I view it indexation, I
Speaker 3: view it in active management. If we can extend that
Speaker 3: to areas like private assets, often through partnerships, great because
Speaker 3: I do think even though the mission has kind of
Speaker 3: been going on for forty nine years, there still is
Speaker 3: a lot of opportunity to bring lower cost, more accessible
Speaker 3: investments to millions and millions of people. And that's what
Speaker 3: our business model allows us to do and actually necessitates
Speaker 3: that we do do so we have less.
Speaker 2: Than a minute left with you, And it sounds like
Speaker 2: again there's a lot on the priority list. But I'm wondering,
Speaker 2: when you look out into the future, could you ever
Speaker 2: see taking Vanguard public?
Speaker 3: No, no, no, I would never do it. I don't
Speaker 3: think it's possible. Jack as well as I said the
Speaker 3: original model, And I think one of the geniuses of
Speaker 3: the model, and the reason why the culture and the
Speaker 3: ethos are so real at Vanguard is because of this
Speaker 3: model that we are singularly focused on our clients, because
Speaker 3: our clients are O runners, We have no doubt in
Speaker 3: our minds who we work for. And I think it's
Speaker 3: a great, beautiful, reinforcing kind of mechanism. It still has
Speaker 3: a huge way to go in terms of helping first
Speaker 3: time investors, helping people who want to retire understand how
Speaker 3: they draw down. Uh, and so like yeah, that I
Speaker 3: think is one of the great kind of original genius.
Speaker 4: Would an't I PO be? Wouldn't I PO be counter
Speaker 4: to what Bogel started?
Speaker 1: The front.
Speaker 3: And it would be it would both do those things,
Speaker 3: And I think it's genius. What was originally what was
Speaker 3: originally set out, and so like, yeah, why would you
Speaker 3: change that, particularly because it's a there's a space for
Speaker 3: a firm that clients trust and that knows that we're
Speaker 3: always on their side. We're always kind of reinvesting, whether
Speaker 3: it's in fee reductions, technology improvements on their behalf.
Speaker 4: And want to ask you, as as an outsider coming in,
Speaker 4: do you feel any pressure to do that? As anyone
Speaker 4: said you should I po zero yer.
Speaker 1: All right, that's a good place to leave.
Speaker 2: It's slim. It is great to see you. Really appreciate
Speaker 2: you making the time for weeks into the job. That
Speaker 2: of course is Sali Ramji. He is the CEO of
Speaker 2: Vanguard