1
00:00:02,520 --> 00:00:11,880
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in

2
00:00:11,960 --> 00:00:15,440
Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

3
00:00:16,640 --> 00:00:19,840
Speaker 2: This week on the podcast, I have an extra special guest,

4
00:00:20,239 --> 00:00:24,040
Speaker 2: the Vanguard Group's Karen reci the person who is responsible

5
00:00:24,079 --> 00:00:29,160
Speaker 2: for so many initiatives, so much growth, so many new products,

6
00:00:29,200 --> 00:00:35,240
Speaker 2: including the Vanguard Ria, the internal advisory service that runs

7
00:00:35,240 --> 00:00:38,240
Speaker 2: three hundred and fifty billion dollars. This is a fascinating

8
00:00:38,320 --> 00:00:42,080
Speaker 2: conversation if you're at all interested in what it's like

9
00:00:42,200 --> 00:00:45,400
Speaker 2: to be part of a fast growing organization that is

10
00:00:45,880 --> 00:00:49,080
Speaker 2: racking up trillions of dollars in assets, what it's like

11
00:00:49,159 --> 00:00:53,320
Speaker 2: to create new initiatives. Really, this is tour de force conversation.

12
00:00:53,840 --> 00:00:56,800
Speaker 2: She has just concluded about twenty eight years at Vanguard

13
00:00:57,040 --> 00:00:59,640
Speaker 2: and is moving over to Harbor Vest, which is the

14
00:00:59,680 --> 00:01:03,640
Speaker 2: out side private equity shop that Vanguard has been working with.

15
00:01:04,400 --> 00:01:06,840
Speaker 2: I thought this conversation was fascinating, and I think you

16
00:01:06,920 --> 00:01:11,720
Speaker 2: will also with no further ado, my conversation with the

17
00:01:11,800 --> 00:01:15,480
Speaker 2: Vanguard Group and Harbor Vests Karen REESI.

18
00:01:16,800 --> 00:01:18,600
Speaker 3: Thanks for having me, Barry. I'm happy to be here.

19
00:01:18,840 --> 00:01:21,240
Speaker 2: I'm happy to have you. I want to talk about

20
00:01:21,240 --> 00:01:25,759
Speaker 2: your time at Vanguard, but before I do that Bachelor's

21
00:01:25,800 --> 00:01:30,039
Speaker 2: in Finance MBA from Villanova. Finance always was a career plan.

22
00:01:30,080 --> 00:01:31,160
Speaker 2: That's what it kind of looks like.

23
00:01:32,000 --> 00:01:35,040
Speaker 3: Yes, I think it looks that way, but I'll say

24
00:01:35,040 --> 00:01:37,960
Speaker 3: I got more intentional over time, Barry, But no, I

25
00:01:38,040 --> 00:01:41,040
Speaker 3: initially actually wanted to go to art school. Oh real

26
00:01:41,120 --> 00:01:41,880
Speaker 3: little known fact.

27
00:01:41,959 --> 00:01:44,679
Speaker 2: Yes, so we did from Villanova. Do you go straight

28
00:01:44,720 --> 00:01:46,640
Speaker 2: into the NBA or do you work and then go back?

29
00:01:46,800 --> 00:01:50,040
Speaker 3: I worked for a few years at Sinoco in Center City, Philadelphia,

30
00:01:50,120 --> 00:01:53,680
Speaker 3: and then I started my MBA there and then joined

31
00:01:53,760 --> 00:01:55,880
Speaker 3: Vanguard and finished up my MBA in my first couple

32
00:01:55,880 --> 00:01:56,640
Speaker 3: of years at Vanguard.

33
00:01:56,800 --> 00:01:59,400
Speaker 2: Really, so right from business school and then the only

34
00:01:59,400 --> 00:02:02,960
Speaker 2: company you've worked for since school is Vanguard. That's an

35
00:02:02,960 --> 00:02:05,840
Speaker 2: impressive run. How did you find your way to Vanguard?

36
00:02:06,560 --> 00:02:09,320
Speaker 3: Like so many people at Vanguard, I had a friend

37
00:02:09,320 --> 00:02:12,000
Speaker 3: that worked there, So I was a couple of years

38
00:02:12,080 --> 00:02:15,200
Speaker 3: out of school in investor relations at Snoko, and then

39
00:02:15,280 --> 00:02:18,040
Speaker 3: I had a friend who said, you know, if you

40
00:02:18,080 --> 00:02:21,440
Speaker 3: want to get more into finance and investments, we have

41
00:02:21,480 --> 00:02:23,560
Speaker 3: an opening at Vanguard. I think you'd really like it.

42
00:02:23,720 --> 00:02:27,639
Speaker 3: And that truly is how I got into the interview process.

43
00:02:27,680 --> 00:02:29,000
Speaker 3: I grew up in the area. I grew up in

44
00:02:29,000 --> 00:02:33,160
Speaker 3: the suburbs of Philadelphia, so I knew Vanguard go Berts, yes,

45
00:02:33,360 --> 00:02:36,400
Speaker 3: but I didn't know really that much about it, and

46
00:02:36,440 --> 00:02:39,080
Speaker 3: I only had one friend who worked there. But I

47
00:02:39,120 --> 00:02:41,799
Speaker 3: went for the interview process and joined as an investment

48
00:02:41,840 --> 00:02:43,200
Speaker 3: analyst in nineteen ninety seven.

49
00:02:43,440 --> 00:02:46,800
Speaker 2: So late nineties, Vanguard had to be a really interesting place.

50
00:02:46,800 --> 00:02:48,280
Speaker 2: What was it like during that period?

51
00:02:48,639 --> 00:02:53,079
Speaker 3: It was an interesting place. It was not an unknown

52
00:02:53,440 --> 00:02:57,160
Speaker 3: like many of my you know, retired predecessors are. You know,

53
00:02:57,200 --> 00:02:59,440
Speaker 3: when they joined Vanguard in the eighties, it was really

54
00:03:00,040 --> 00:03:03,239
Speaker 3: off the radar. We were starting to gain traction. Indexing

55
00:03:03,360 --> 00:03:06,880
Speaker 3: was starting to gain traction, the hiring classes were getting bigger.

56
00:03:06,919 --> 00:03:09,360
Speaker 3: So I joined with you know, dozens of other people

57
00:03:09,639 --> 00:03:13,160
Speaker 3: when I joined Vanguard in May of ninety seven, and

58
00:03:13,919 --> 00:03:17,440
Speaker 3: you know, we were still though, this small ish firm

59
00:03:17,720 --> 00:03:22,760
Speaker 3: in Malvern, Pennsylvania, Valley Forge, Pennsylvania, very different from Wall Street.

60
00:03:23,320 --> 00:03:27,240
Speaker 2: So if you join Vanguard in ninety seven, Jack Brennan.

61
00:03:27,000 --> 00:03:28,160
Speaker 1: Is CEO, is that right?

62
00:03:28,280 --> 00:03:29,120
Speaker 3: That's exactly right.

63
00:03:29,280 --> 00:03:34,760
Speaker 2: A delightful, serious individual and I find him, like every

64
00:03:34,800 --> 00:03:37,880
Speaker 2: other prior CEO of Vanguard, fascinating guy.

65
00:03:38,280 --> 00:03:41,440
Speaker 3: Yes, yes, and you're right a serious individual. Yes, Jack

66
00:03:41,680 --> 00:03:43,360
Speaker 3: was leading the firm by the time I got there

67
00:03:43,360 --> 00:03:46,080
Speaker 3: in ninety seven, but of course Jack Bogel was still

68
00:03:46,360 --> 00:03:50,080
Speaker 3: sort of around present on campus. You know, his whole

69
00:03:50,120 --> 00:03:52,160
Speaker 3: spirit looms large even today.

70
00:03:53,280 --> 00:03:57,360
Speaker 2: And so if I memory serves, it was only a

71
00:03:57,360 --> 00:04:01,040
Speaker 2: couple of years later Brennan kicked himself up to chairman

72
00:04:01,280 --> 00:04:04,200
Speaker 2: and Bill McNabb comes in it as CEO. So you

73
00:04:04,360 --> 00:04:08,160
Speaker 2: worked with some really tremendous corporate leaders.

74
00:04:08,320 --> 00:04:10,560
Speaker 3: I did. In fact, if you think about the CEOs

75
00:04:10,560 --> 00:04:13,480
Speaker 3: at Vanguard I worked. I had a really special opportunity

76
00:04:14,040 --> 00:04:16,560
Speaker 3: to work directly for Jack Brennan, just for one year

77
00:04:16,600 --> 00:04:20,680
Speaker 3: on a special assignment working on scalable advice, which we'll

78
00:04:20,760 --> 00:04:24,400
Speaker 3: figure later into my career trajectory. And then I worked

79
00:04:24,400 --> 00:04:28,360
Speaker 3: directly for Bill McNabb, our next CEO. I worked for

80
00:04:28,440 --> 00:04:31,480
Speaker 3: him in multiple capacities when he was running our institutional business,

81
00:04:31,839 --> 00:04:33,520
Speaker 3: and then again I worked for him directly as a

82
00:04:33,520 --> 00:04:36,680
Speaker 3: member of the senior team when he was CEO. Similarly,

83
00:04:36,760 --> 00:04:41,400
Speaker 3: Tim Buckley, our last CEO, worked for him in multiple capacities.

84
00:04:41,440 --> 00:04:43,400
Speaker 3: He ran our retail division, and I was working for

85
00:04:43,480 --> 00:04:45,160
Speaker 3: him at that time, and then I worked for him

86
00:04:45,680 --> 00:04:47,839
Speaker 3: again when he took the CEO spot.

87
00:04:48,440 --> 00:04:50,680
Speaker 2: So you mentioned Jack Bogel. Did you get to spend

88
00:04:50,720 --> 00:04:52,640
Speaker 2: a lot of time with him? He is Saint Jack

89
00:04:52,800 --> 00:04:54,080
Speaker 2: is pretty legendary.

90
00:04:54,279 --> 00:04:57,280
Speaker 3: He is legendary for sure, not a lot of time.

91
00:04:57,360 --> 00:05:00,320
Speaker 3: I never worked directly with Jack, but as I I said,

92
00:05:00,440 --> 00:05:02,760
Speaker 3: you know, I was working on the third floor of

93
00:05:02,839 --> 00:05:05,080
Speaker 3: the Victory Building, which is where Jack still had his

94
00:05:05,640 --> 00:05:07,440
Speaker 3: office for a time, and then he moved down to

95
00:05:07,440 --> 00:05:10,160
Speaker 3: the second floor. So he was very present on campus

96
00:05:10,520 --> 00:05:12,800
Speaker 3: in my earliest years at Vanguard, but I did not

97
00:05:12,880 --> 00:05:13,800
Speaker 3: work with him directly.

98
00:05:14,240 --> 00:05:18,560
Speaker 2: So you were head of strategy, Product, marketing, Communications? Like,

99
00:05:18,720 --> 00:05:20,960
Speaker 2: is that one job? Is that four jobs? Tell us

100
00:05:20,960 --> 00:05:24,040
Speaker 2: a little bit about your progression over twenty seven years

101
00:05:24,480 --> 00:05:26,120
Speaker 2: through the leadership ranks at Vanguard.

102
00:05:26,360 --> 00:05:29,799
Speaker 3: Yeah, that what you just described was my final post

103
00:05:29,800 --> 00:05:33,320
Speaker 3: at Vanguard, and it was, yeah, kind of like four jobs,

104
00:05:33,360 --> 00:05:37,160
Speaker 3: but it was one one assignment throughout the twenty seven

105
00:05:37,200 --> 00:05:38,960
Speaker 3: years though I had, as you know, a bunch of

106
00:05:38,960 --> 00:05:43,240
Speaker 3: different roles at Vanguard, really strong rotational culture at the firm.

107
00:05:43,640 --> 00:05:46,920
Speaker 3: So I joined in the corporate division as an investment analyst.

108
00:05:47,000 --> 00:05:49,159
Speaker 3: Then I moved to corporate strategy. Then I moved and

109
00:05:49,200 --> 00:05:51,480
Speaker 3: I did probably a five year stint in a couple

110
00:05:51,480 --> 00:05:54,520
Speaker 3: of different roles in our institutional division, and then I

111
00:05:54,560 --> 00:05:59,080
Speaker 3: spent probably a dozen years in our retail division, where

112
00:05:59,120 --> 00:06:01,640
Speaker 3: as you mentioned, I ran the Ultimately I ran the division,

113
00:06:01,640 --> 00:06:04,720
Speaker 3: but I started in different roles in the division, particularly

114
00:06:04,839 --> 00:06:08,400
Speaker 3: leading the advisory group before taking over. And then my

115
00:06:08,480 --> 00:06:11,520
Speaker 3: final post before I retired at the end of last

116
00:06:11,600 --> 00:06:17,359
Speaker 3: year was as you mentioned, strategy marketing, global investment, product development,

117
00:06:17,560 --> 00:06:19,960
Speaker 3: oversight of all of our external managers, and then also

118
00:06:20,040 --> 00:06:20,880
Speaker 3: corporate communication.

119
00:06:21,080 --> 00:06:23,560
Speaker 2: So let's put some flesh on the bones. So when

120
00:06:23,600 --> 00:06:27,960
Speaker 2: I hear corporate communications, I think investor relations, public relations,

121
00:06:28,680 --> 00:06:32,359
Speaker 2: just and for It's kind of interesting for most of

122
00:06:32,440 --> 00:06:37,839
Speaker 2: Vanguard's history, not a very aggressively public firm, kind of

123
00:06:37,839 --> 00:06:41,800
Speaker 2: a low key firm. Not that Jack was low key,

124
00:06:41,960 --> 00:06:46,479
Speaker 2: but the firm itself wasn't doing the usual rounds. Isn't

125
00:06:46,480 --> 00:06:48,520
Speaker 2: out there yelling and jumping up and down with the

126
00:06:48,600 --> 00:06:52,680
Speaker 2: hair on fire, just very quietly, at least from my observation.

127
00:06:52,839 --> 00:06:53,960
Speaker 2: Tell me if I'm wrong.

128
00:06:53,839 --> 00:06:57,360
Speaker 3: No, I think that's a fair characterization. Jack Bogel certainly

129
00:06:57,520 --> 00:07:01,599
Speaker 3: was out in the industry and vocal at the firm level.

130
00:07:01,760 --> 00:07:04,440
Speaker 3: You're right, we didn't do a lot of advertising. We

131
00:07:05,279 --> 00:07:08,279
Speaker 3: were quite happy to be in Malvern, Pennsylvania and sort

132
00:07:08,279 --> 00:07:11,600
Speaker 3: of out of the limelight. That was intentional on our part,

133
00:07:12,000 --> 00:07:14,880
Speaker 3: especially in the earlier years. I think over time we've

134
00:07:14,880 --> 00:07:18,280
Speaker 3: gotten far more comfortable taking a stand and expressing our

135
00:07:18,320 --> 00:07:22,000
Speaker 3: point of view. But by and large your characterization is fair.

136
00:07:22,520 --> 00:07:26,600
Speaker 3: The corporate communications function at Vanguard today, you know, has

137
00:07:26,680 --> 00:07:29,760
Speaker 3: evolved considerably from back in the early days. We now

138
00:07:29,760 --> 00:07:33,440
Speaker 3: have a crisis communications function, certainly a well developed and

139
00:07:33,480 --> 00:07:36,960
Speaker 3: global PR function, as well as all of the standard

140
00:07:37,000 --> 00:07:39,600
Speaker 3: sort of corporate messaging and things that you would see

141
00:07:39,640 --> 00:07:40,720
Speaker 3: on our digital properties.

142
00:07:41,040 --> 00:07:44,840
Speaker 2: Product development, that's such an ambiguous phrase. Tell us what

143
00:07:44,920 --> 00:07:48,000
Speaker 2: product development means specifically at Vanguard.

144
00:07:48,640 --> 00:07:52,160
Speaker 3: Of course, for Vanguard, it means investment product development. So

145
00:07:52,440 --> 00:07:56,280
Speaker 3: I head oversight of our four hundred and twenty plus

146
00:07:56,360 --> 00:07:59,880
Speaker 3: the numbers probably even greater now, first mutual funds and

147
00:07:59,840 --> 00:08:03,760
Speaker 3: increasingly ETFs, and we do as you know, all of

148
00:08:03,760 --> 00:08:07,040
Speaker 3: our passively managed products are our managed in house by

149
00:08:07,080 --> 00:08:10,960
Speaker 3: our investment management group. But our actively managed funds are

150
00:08:11,000 --> 00:08:13,160
Speaker 3: active equity funds. I should say, we do active fixed

151
00:08:13,160 --> 00:08:16,960
Speaker 3: in house, but our active equity funds are subadvised to

152
00:08:17,240 --> 00:08:19,840
Speaker 3: a stable of investment advisors, and I had purview over that.

153
00:08:19,920 --> 00:08:23,720
Speaker 3: My team's identified and then oversaw and built the relationships

154
00:08:23,720 --> 00:08:26,720
Speaker 3: with each of those external advisors firms like Wellington, Prime Cap,

155
00:08:26,760 --> 00:08:27,200
Speaker 3: et cetera.

156
00:08:27,640 --> 00:08:30,320
Speaker 2: And a lot of people don't realize because you know,

157
00:08:30,440 --> 00:08:35,840
Speaker 2: Vanguard and Blackrock are synonymous with broad indexing. But am

158
00:08:35,920 --> 00:08:38,320
Speaker 2: I getting the numbers right? About twenty five percent on

159
00:08:38,360 --> 00:08:41,080
Speaker 2: the equity side is active or is it even higher

160
00:08:41,160 --> 00:08:41,400
Speaker 2: than that?

161
00:08:41,880 --> 00:08:44,600
Speaker 3: It's about probably just shy of a trillion dollars in

162
00:08:44,760 --> 00:08:45,520
Speaker 3: active equity.

163
00:08:45,600 --> 00:08:47,000
Speaker 2: Uh huh that's real money.

164
00:08:47,040 --> 00:08:48,160
Speaker 3: Yeah, yeah, it's real money.

165
00:08:48,280 --> 00:08:51,200
Speaker 2: How many subadvisors are you working with? And what is

166
00:08:51,200 --> 00:08:52,160
Speaker 2: that process like?

167
00:08:52,559 --> 00:08:55,120
Speaker 3: Well? Today, I think the number it fluctuates a bit

168
00:08:55,200 --> 00:08:57,960
Speaker 3: as we add managers to the stable in part ways

169
00:08:58,000 --> 00:09:00,240
Speaker 3: with some others, but I think the high water mark

170
00:09:00,320 --> 00:09:02,240
Speaker 3: was probably in the mid twenties. It's probably down to

171
00:09:02,240 --> 00:09:04,440
Speaker 3: twenty two or twenty three now, you have to check

172
00:09:04,480 --> 00:09:06,200
Speaker 3: with the team. But when I left, I think it

173
00:09:06,240 --> 00:09:09,000
Speaker 3: was about twenty two or twenty three different managers. And

174
00:09:09,480 --> 00:09:12,000
Speaker 3: given the design of the product and the client need

175
00:09:12,000 --> 00:09:14,320
Speaker 3: we're trying to meet, we look for the best possible

176
00:09:14,400 --> 00:09:16,080
Speaker 3: active manager to fill that mandate.

177
00:09:16,720 --> 00:09:20,400
Speaker 2: So I didn't realize until you just said this earlier.

178
00:09:21,120 --> 00:09:24,720
Speaker 2: All of the active fixed income is in house, but

179
00:09:24,840 --> 00:09:29,800
Speaker 2: the active equity is external. What's the difference between the

180
00:09:29,840 --> 00:09:32,840
Speaker 2: two for our audience? I think I have an idea

181
00:09:32,880 --> 00:09:36,520
Speaker 2: of the difference in terms of active fixed income has

182
00:09:36,600 --> 00:09:40,120
Speaker 2: certain attributes that active equity doesn't, but I want to

183
00:09:40,160 --> 00:09:40,720
Speaker 2: hear it from you.

184
00:09:41,040 --> 00:09:45,880
Speaker 3: Well, maybe one minor clarification. Vast majority of our active

185
00:09:45,880 --> 00:09:48,240
Speaker 3: fixed income is managed in house. Wellington does manage one

186
00:09:48,280 --> 00:09:51,400
Speaker 3: or two active mandates for us, still legacy mandates like

187
00:09:51,440 --> 00:09:55,560
Speaker 3: Jenny May, et cetera. But really the difference being Vanguard

188
00:09:55,640 --> 00:09:58,679
Speaker 3: chooses to manage funds in house where we have the

189
00:09:58,960 --> 00:10:02,319
Speaker 3: talent and expertise to do so, and active fixed income.

190
00:10:02,360 --> 00:10:06,439
Speaker 3: Our bond desk is tremendously deep in talent. Greg Davis,

191
00:10:06,440 --> 00:10:08,560
Speaker 3: who I know you've had on the show before. He's great,

192
00:10:08,679 --> 00:10:11,839
Speaker 3: Yes he is. He and his team have built out

193
00:10:11,840 --> 00:10:14,160
Speaker 3: our fixed income capabilities over the years, and so we

194
00:10:14,240 --> 00:10:17,760
Speaker 3: really are in a strong position to offer active fixed

195
00:10:17,760 --> 00:10:20,280
Speaker 3: income across the range, and I think you'll see Vanguard

196
00:10:21,000 --> 00:10:24,640
Speaker 3: leaning into our fixed income product lineup even more going forward.

197
00:10:24,920 --> 00:10:30,840
Speaker 2: At risk of oversimplifying this, it always feels like active

198
00:10:30,880 --> 00:10:36,120
Speaker 2: fixed income, you can run a screen and screen out

199
00:10:36,320 --> 00:10:41,920
Speaker 2: riskier product, riskier bonds, lower quality bonds, and that immediately

200
00:10:42,120 --> 00:10:46,839
Speaker 2: accrues to outperformance. For an active bond portfolio, you could

201
00:10:46,880 --> 00:10:50,880
Speaker 2: develop screens to select certain quality bonds that you have,

202
00:10:50,960 --> 00:10:54,600
Speaker 2: certain return characteristics that you like. Am I wrong? And

203
00:10:54,880 --> 00:10:57,439
Speaker 2: I always feel like I'm making I'm dumbing it down

204
00:10:57,480 --> 00:11:00,200
Speaker 2: too much. It feels like you can do more on

205
00:11:00,240 --> 00:11:05,000
Speaker 2: the fixed income side actively and generate a return for

206
00:11:05,040 --> 00:11:08,079
Speaker 2: your effort, whereas it's so much harder to do that

207
00:11:08,240 --> 00:11:09,320
Speaker 2: on the equity side.

208
00:11:09,400 --> 00:11:11,480
Speaker 3: I think that's fair, and I think Sarah Dever, who

209
00:11:11,520 --> 00:11:14,680
Speaker 3: runs our fixed income shop at Vanguard now, would agree

210
00:11:14,679 --> 00:11:16,960
Speaker 3: with you. I think there's a lot of opportunity that

211
00:11:17,000 --> 00:11:19,960
Speaker 3: the team sees based on what's happening in the environment.

212
00:11:21,160 --> 00:11:23,680
Speaker 3: And perhaps I don't know, I'm not in a position

213
00:11:23,720 --> 00:11:26,480
Speaker 3: to say relative to active equity. I don't know if

214
00:11:26,480 --> 00:11:29,200
Speaker 3: our active equity managers would agree, but I know that

215
00:11:29,240 --> 00:11:30,360
Speaker 3: Sarah's team would agree.

216
00:11:30,720 --> 00:11:33,880
Speaker 2: You mentioned that Vanguard is headquartered in Melvern, that it

217
00:11:33,960 --> 00:11:38,280
Speaker 2: was a purposeful decision not to locate and headquarters in

218
00:11:38,360 --> 00:11:41,320
Speaker 2: Boston and New York City. What are the advantages of that,

219
00:11:41,360 --> 00:11:42,920
Speaker 2: How does that accrue to the culture.

220
00:11:43,360 --> 00:11:46,360
Speaker 3: I do think it plays a big role in our culture,

221
00:11:46,480 --> 00:11:49,720
Speaker 3: especially over decades. I think it's a big part of

222
00:11:50,160 --> 00:11:52,959
Speaker 3: in some ways the talent we attract. There is a

223
00:11:53,080 --> 00:11:55,280
Speaker 3: very purposeful decision on the part of most people in

224
00:11:55,320 --> 00:11:58,760
Speaker 3: our industry to in many cases relocate their family to

225
00:11:59,360 --> 00:12:01,800
Speaker 3: the suburbs of Philadelphia. Many of them are coming from

226
00:12:01,840 --> 00:12:04,280
Speaker 3: New York or other areas, And you have to really

227
00:12:04,320 --> 00:12:06,560
Speaker 3: buy into the mission and purpose of Vanguard and its

228
00:12:06,600 --> 00:12:10,080
Speaker 3: company and its culture to you know, make a consequential

229
00:12:10,080 --> 00:12:14,880
Speaker 3: decision like that. And I think it speaks to the

230
00:12:14,960 --> 00:12:19,120
Speaker 3: ability for our mission and purpose to resonate with top

231
00:12:19,160 --> 00:12:20,120
Speaker 3: talent in the industry.

232
00:12:20,320 --> 00:12:23,520
Speaker 2: And to be fair, Philadelphia is a great American I

233
00:12:24,080 --> 00:12:26,920
Speaker 2: I agree. Every time I've ever gone to Vanguard, I've

234
00:12:26,920 --> 00:12:30,079
Speaker 2: always arranged a weekend in Philly. It's always a blast.

235
00:12:30,480 --> 00:12:33,760
Speaker 2: The food is great, the history is great. It's not

236
00:12:34,120 --> 00:12:37,480
Speaker 2: like nothing is New York. But I would put Philly

237
00:12:37,520 --> 00:12:41,600
Speaker 2: in Boston, you know, absolutely on par in terms of, hey,

238
00:12:41,640 --> 00:12:43,200
Speaker 2: we have this great city right here.

239
00:12:43,400 --> 00:12:46,240
Speaker 3: I would agree with you, Barry, And I think from

240
00:12:46,240 --> 00:12:50,800
Speaker 3: a Vanguard culture perspective, it also allowed us to really

241
00:12:50,840 --> 00:12:54,760
Speaker 3: instill in you know, now twenty thousand crew around the globe,

242
00:12:54,800 --> 00:12:57,600
Speaker 3: but those of us in Malvern for sure. This notion

243
00:12:57,679 --> 00:13:00,640
Speaker 3: that our culture is really reflection more of Main Street

244
00:13:00,679 --> 00:13:03,400
Speaker 3: than Wall Street. You kind of hear that around Vanguard

245
00:13:03,400 --> 00:13:05,160
Speaker 3: every now and then, and it speaks to the clients

246
00:13:05,160 --> 00:13:07,040
Speaker 3: that we serve and the way we think about product

247
00:13:07,040 --> 00:13:08,640
Speaker 3: development and all of the rest of it.

248
00:13:08,840 --> 00:13:12,720
Speaker 2: Huh, really interesting. So I mentioned Vanguard is about to

249
00:13:13,040 --> 00:13:16,360
Speaker 2: celebrate its fiftieth anniversary. By the time the sales it's

250
00:13:16,400 --> 00:13:17,199
Speaker 2: already happened.

251
00:13:17,240 --> 00:13:17,680
Speaker 3: That's right.

252
00:13:17,960 --> 00:13:20,640
Speaker 2: That's a nineteen seventy four was when it was launched.

253
00:13:20,640 --> 00:13:24,760
Speaker 2: That's an amazing run fifty years. What does that mean

254
00:13:24,840 --> 00:13:27,200
Speaker 2: to affirm the size of Vanguard?

255
00:13:27,840 --> 00:13:30,560
Speaker 3: Oh, I think it's you know, an important milestone. But

256
00:13:31,360 --> 00:13:34,120
Speaker 3: it is a reflection of everything that Vanguard has been

257
00:13:34,400 --> 00:13:38,240
Speaker 3: over the last fifty years. I think, you know, our culture,

258
00:13:38,320 --> 00:13:41,560
Speaker 3: our mission, our purpose has been incredibly consistent from the

259
00:13:41,600 --> 00:13:44,800
Speaker 3: top down, you know, modeled by every leader you mentioned,

260
00:13:44,880 --> 00:13:47,760
Speaker 3: the CEOs of Vanguard that you have already had the

261
00:13:47,760 --> 00:13:48,720
Speaker 3: pleasure of talking to.

262
00:13:49,040 --> 00:13:49,959
Speaker 2: Got to get the new guy in.

263
00:13:50,080 --> 00:13:51,960
Speaker 3: Yeah, you got to get the new guy in. But

264
00:13:52,280 --> 00:13:55,960
Speaker 3: you know, there is just a remarkable consistency across what

265
00:13:56,000 --> 00:13:58,520
Speaker 3: we try to do for clients and how our leaders

266
00:13:58,559 --> 00:14:01,320
Speaker 3: express that and how our crew you know, feel that

267
00:14:01,760 --> 00:14:03,839
Speaker 3: and reflect that to our clients when they serve them

268
00:14:03,840 --> 00:14:04,280
Speaker 3: every day.

269
00:14:04,520 --> 00:14:06,920
Speaker 2: So I'm going to share a Bill McNabb's story, which

270
00:14:06,960 --> 00:14:09,200
Speaker 2: I'm sure you experienced, and I want to just get

271
00:14:09,200 --> 00:14:13,280
Speaker 2: your reaction to it. He told the story here during

272
00:14:13,280 --> 00:14:16,800
Speaker 2: the financial crisis, he would occasionally plug into the phone

273
00:14:16,800 --> 00:14:21,360
Speaker 2: system and listen to advisors speaking to clients, and not

274
00:14:21,400 --> 00:14:23,640
Speaker 2: only were the clients freaked out, but you could hear

275
00:14:24,000 --> 00:14:27,120
Speaker 2: people on the phone. They were a little nervous. All

276
00:14:27,160 --> 00:14:29,840
Speaker 2: hands on deck, phone call, Hey, listen, We're going to

277
00:14:29,920 --> 00:14:33,080
Speaker 2: come through this better than ever. Nobody's getting fired, nobody's

278
00:14:33,080 --> 00:14:36,160
Speaker 2: getting laid off. Take a deep breath, go do your jobs.

279
00:14:36,680 --> 00:14:42,400
Speaker 2: And suddenly everybody is just, you know, running on all cylinders.

280
00:14:42,840 --> 00:14:45,840
Speaker 2: What was your experience during the financial crisis with McNab

281
00:14:45,840 --> 00:14:46,640
Speaker 2: at the HELM.

282
00:14:46,760 --> 00:14:49,800
Speaker 3: Very similar to what you just described and very consistent

283
00:14:49,880 --> 00:14:53,800
Speaker 3: with how Vanguard approaches crisis. Really, I mean, the GFC

284
00:14:53,920 --> 00:14:56,600
Speaker 3: was definitely qualified as a crisis for our firm in

285
00:14:56,640 --> 00:15:01,240
Speaker 3: the industry and investors, and there was a calmness coming

286
00:15:01,280 --> 00:15:04,040
Speaker 3: from Bill as the CEO, but also the rest of

287
00:15:04,080 --> 00:15:07,440
Speaker 3: the leadership team and providing assurance to our crew. And

288
00:15:07,600 --> 00:15:11,520
Speaker 3: You're right, there was, you know, an explicit assurance that

289
00:15:12,040 --> 00:15:15,760
Speaker 3: we were going to keep calm and carry on and

290
00:15:15,920 --> 00:15:21,080
Speaker 3: really importantly continue investing in our strategic priorities. Where you know,

291
00:15:21,160 --> 00:15:25,160
Speaker 3: some firms were immediately pulling back after the GFC, Vanguard

292
00:15:25,200 --> 00:15:28,800
Speaker 3: had the luxury of you know, we are playing a

293
00:15:28,800 --> 00:15:32,440
Speaker 3: long game and continuing. I recall Bill and the leadership

294
00:15:32,440 --> 00:15:34,920
Speaker 3: team expressing to our crew at the time, We're going

295
00:15:34,960 --> 00:15:37,280
Speaker 3: to continue to invest in our strategic priorities. We're leaning

296
00:15:37,320 --> 00:15:40,080
Speaker 3: in really and I think it had a very big

297
00:15:40,160 --> 00:15:41,240
Speaker 3: calming effect on the car.

298
00:15:41,720 --> 00:15:44,560
Speaker 2: That's how he told it. And I'm not surprised that

299
00:15:44,680 --> 00:15:48,520
Speaker 2: at your reaction. I mentioned Jack Brennan, Bill mcnah have

300
00:15:48,560 --> 00:15:52,320
Speaker 2: another rock steady guy that's whose hand you on on

301
00:15:52,360 --> 00:15:55,080
Speaker 2: the tailer. You know, this guy isn't going to be

302
00:15:55,200 --> 00:16:00,000
Speaker 2: rattled by a market sellof or a crisis, and that's

303
00:16:00,040 --> 00:16:05,120
Speaker 2: that's really fascinating. My colleague Eric Belchunis wrote a column

304
00:16:05,480 --> 00:16:10,360
Speaker 2: called the Vanguard Effect way back in twenty sixteen, and

305
00:16:10,440 --> 00:16:14,720
Speaker 2: at the time he ran the numbers and said Vanguard's

306
00:16:14,960 --> 00:16:20,240
Speaker 2: low fee approach has saved investors either directly or through

307
00:16:20,320 --> 00:16:24,760
Speaker 2: indirect fee pressure a trillion dollars. That was almost ten

308
00:16:24,840 --> 00:16:27,560
Speaker 2: years ago. I think we could bullpark it closer to

309
00:16:27,600 --> 00:16:32,160
Speaker 2: two trillion dollars. Tell us about the focus on cost

310
00:16:32,880 --> 00:16:36,680
Speaker 2: and how that's impacted investors and the entire industry.

311
00:16:37,000 --> 00:16:38,640
Speaker 3: Yeah, I'm not going to check your math on that,

312
00:16:38,680 --> 00:16:42,600
Speaker 3: but I'll buy Eric's and your your estimate there on

313
00:16:42,640 --> 00:16:45,440
Speaker 3: what we've saved investors over time. And I think the

314
00:16:45,480 --> 00:16:49,320
Speaker 3: focus on cost has been relentless, something that is in

315
00:16:49,360 --> 00:16:53,200
Speaker 3: the fabric of the organization. We counsel our investors and

316
00:16:53,240 --> 00:16:55,760
Speaker 3: our clients to focus on the things they can control,

317
00:16:55,840 --> 00:16:59,120
Speaker 3: and you know, expense ratios, whether it's mutual funds or ETFs,

318
00:16:59,160 --> 00:17:02,080
Speaker 3: these are things that are within an investor's control and

319
00:17:02,120 --> 00:17:04,160
Speaker 3: it helps them keep more of their return. It's part

320
00:17:04,200 --> 00:17:07,600
Speaker 3: of our whole, you know, portfolio construction methodology when we

321
00:17:07,640 --> 00:17:10,639
Speaker 3: advise clients. It's one of the factors, not the only factor,

322
00:17:10,680 --> 00:17:13,560
Speaker 3: and maybe not even the first factor, Barry, but certainly

323
00:17:13,640 --> 00:17:16,359
Speaker 3: keeping cost low is something that Vanguard feels obligated to

324
00:17:16,400 --> 00:17:20,399
Speaker 3: do for it's now fifty plus million investors around the world. Wow,

325
00:17:20,440 --> 00:17:25,600
Speaker 3: and the Vanguard effect to use Eric's phrase is real.

326
00:17:25,680 --> 00:17:27,920
Speaker 3: I mean we have seen that, particularly when we enter

327
00:17:28,000 --> 00:17:30,080
Speaker 3: new markets outside the US.

328
00:17:30,720 --> 00:17:35,520
Speaker 2: You see feed compression imediately when Vanguard shakes everybody's cage.

329
00:17:35,640 --> 00:17:35,920
Speaker 1: Yes.

330
00:17:36,240 --> 00:17:39,480
Speaker 2: So it's funny because Eric eventually writes the book the

331
00:17:39,480 --> 00:17:45,080
Speaker 2: boggle effect. You mentioned. Cost isn't the first principle. I

332
00:17:45,280 --> 00:17:47,800
Speaker 2: kind of get the sense then, of the things that

333
00:17:47,840 --> 00:17:52,000
Speaker 2: you can control. It's being a long term investor and

334
00:17:52,040 --> 00:17:57,040
Speaker 2: being a buy and hold investor. That wasn't popular when

335
00:17:57,160 --> 00:17:59,680
Speaker 2: Vanguard launched in nineteen seventy four, was it.

336
00:18:00,160 --> 00:18:02,680
Speaker 3: No, Sometimes it's still not even popular today. But we've

337
00:18:02,680 --> 00:18:06,720
Speaker 3: been pretty clear and steadfast in our view that investors

338
00:18:06,720 --> 00:18:09,480
Speaker 3: should have a goal. It should be intentional about what

339
00:18:09,480 --> 00:18:13,000
Speaker 3: they're trying to achieve, having some balance and diversification, being

340
00:18:13,080 --> 00:18:16,520
Speaker 3: thoughtful about how you construct a portfolio and perhaps getting

341
00:18:16,520 --> 00:18:18,760
Speaker 3: the help of an advisor to do that if an

342
00:18:18,760 --> 00:18:22,400
Speaker 3: investor would benefit from that, and really having the discipline

343
00:18:22,440 --> 00:18:24,919
Speaker 3: to your point of sticking with it for the long term,

344
00:18:25,320 --> 00:18:28,800
Speaker 3: and understanding what your personal risk tolerance is, your investment

345
00:18:28,840 --> 00:18:32,960
Speaker 3: time horizon, and really thinking about how you're going to

346
00:18:33,000 --> 00:18:33,840
Speaker 3: achieve those goals.

347
00:18:34,160 --> 00:18:36,160
Speaker 2: So I want to ask you a question, and I'm

348
00:18:36,320 --> 00:18:39,760
Speaker 2: very cognizant of the fact that you are no longer

349
00:18:39,800 --> 00:18:44,880
Speaker 2: with Vanguard. We'll talk a little bit about where you've went.

350
00:18:45,840 --> 00:18:49,359
Speaker 2: There has been in the industry as a whole, but

351
00:18:49,520 --> 00:18:56,720
Speaker 2: surprisingly at Vanguard also a move towards some privates some alternatives.

352
00:18:57,480 --> 00:18:59,800
Speaker 2: Tell us about this evolution.

353
00:18:59,760 --> 00:19:02,480
Speaker 3: Yeah, I think it's an exciting one, both for the

354
00:19:02,480 --> 00:19:05,919
Speaker 3: industry but also for Vanguard. As you mentioned, we began

355
00:19:06,160 --> 00:19:10,080
Speaker 3: offering in twenty twenty. I think we began offering private

356
00:19:10,080 --> 00:19:14,040
Speaker 3: equity fund to some of our retail investors, those that

357
00:19:14,040 --> 00:19:17,760
Speaker 3: were qualified for it. It was a first for Vanguard,

358
00:19:17,760 --> 00:19:22,320
Speaker 3: but I would say the notion of broadening access to

359
00:19:22,600 --> 00:19:25,680
Speaker 3: different types of investments for mainstream investors is not a first.

360
00:19:25,720 --> 00:19:27,320
Speaker 3: I mean, it's what we did with mutual funds, it's

361
00:19:27,359 --> 00:19:29,359
Speaker 3: what we did with ETFs, it's what we endeavored to

362
00:19:29,359 --> 00:19:32,760
Speaker 3: do with advice, and so private equity is part and

363
00:19:32,800 --> 00:19:35,600
Speaker 3: parcel really of that advice offer for many of our

364
00:19:35,640 --> 00:19:38,320
Speaker 3: advice clients. I think you'll see a lot more of that.

365
00:19:38,520 --> 00:19:42,399
Speaker 3: In fact, there was subsequent to my leaving, there was

366
00:19:42,440 --> 00:19:45,919
Speaker 3: a recent announcement that there is even another product that

367
00:19:45,960 --> 00:19:49,800
Speaker 3: there'll be more information on. With partnering with Blackstone and Wellington,

368
00:19:50,640 --> 00:19:51,680
Speaker 3: which is pretty exciting.

369
00:19:52,080 --> 00:19:55,679
Speaker 2: And where did you end up shifting after twenty seven years.

370
00:19:56,320 --> 00:19:58,359
Speaker 3: Well, I'm still making the shift, you know. I'm still

371
00:19:58,440 --> 00:20:01,840
Speaker 3: kind of writing my next chapter, which is really exciting.

372
00:20:01,880 --> 00:20:06,200
Speaker 3: But I will be joining Harborvest Partner's board next month.

373
00:20:06,520 --> 00:20:10,959
Speaker 2: So May, first, you're at harbor Vest Vanguard, did I

374
00:20:11,000 --> 00:20:15,600
Speaker 2: want to say Experiments which they've expanded, which was working

375
00:20:15,600 --> 00:20:20,120
Speaker 2: with harbor Vest, which you know, maybe the layperson knows Vanguard,

376
00:20:20,160 --> 00:20:22,480
Speaker 2: but they don't know harbor Vest. They're one of the

377
00:20:22,480 --> 00:20:24,919
Speaker 2: biggest private equity in private credit shops out there, right,

378
00:20:24,960 --> 00:20:26,840
Speaker 2: tell us what are you doing at Harborvest.

379
00:20:27,240 --> 00:20:30,320
Speaker 3: Really excited to join harbor Vest in May. I'm going

380
00:20:30,359 --> 00:20:32,919
Speaker 3: to be joining their board, really getting to know the

381
00:20:32,920 --> 00:20:35,200
Speaker 3: firm in a different capacity. When I was at Vanguard,

382
00:20:35,240 --> 00:20:38,280
Speaker 3: of course, in twenty twenty, we partnered with Harborvest. I

383
00:20:38,320 --> 00:20:42,400
Speaker 3: oversaw the team that actually selected Harborvest among multiple managers

384
00:20:42,400 --> 00:20:46,160
Speaker 3: that we considered for our first private equity offer for

385
00:20:46,280 --> 00:20:50,720
Speaker 3: both retail and ocio clients at the time. So multiple

386
00:20:50,760 --> 00:20:55,000
Speaker 3: series or vintages of that fund have progressed and Vanguard

387
00:20:55,040 --> 00:20:57,399
Speaker 3: continues to work with Harborvest. And now I'm looking forward

388
00:20:57,440 --> 00:20:59,040
Speaker 3: to working with them in a different capacity.

389
00:20:59,160 --> 00:21:02,080
Speaker 2: So this raised this's a fascinating question. There has been

390
00:21:02,119 --> 00:21:06,320
Speaker 2: a giant shift from public to private assets over the

391
00:21:06,359 --> 00:21:11,240
Speaker 2: past you know, certainly decade or so. Not everybody can

392
00:21:11,280 --> 00:21:13,919
Speaker 2: be in the top ten percent, as the joke goes,

393
00:21:15,119 --> 00:21:18,200
Speaker 2: but it seems like there's almost a land grab going

394
00:21:18,240 --> 00:21:23,280
Speaker 2: on for the retail investor thinking about a traditional sixty

395
00:21:23,359 --> 00:21:27,600
Speaker 2: forty portfolio, why should they also be thinking about adding

396
00:21:27,680 --> 00:21:31,920
Speaker 2: a slug of private debt or private equity to their portfolio.

397
00:21:32,240 --> 00:21:34,719
Speaker 3: Yeah, I think it's one of the next things that

398
00:21:34,760 --> 00:21:38,280
Speaker 3: we as an industry, not just vanguard, but more broadly,

399
00:21:38,560 --> 00:21:42,439
Speaker 3: advisors have to help clients with retail clients in particular,

400
00:21:42,560 --> 00:21:45,480
Speaker 3: who are used to, as you said, at conventional sixty

401
00:21:45,520 --> 00:21:49,800
Speaker 3: forty public portfolio, really thinking about is first is there

402
00:21:50,040 --> 00:21:53,880
Speaker 3: a role for privates in their portfolio construction? And then

403
00:21:54,359 --> 00:21:58,560
Speaker 3: if yes, if appropriate, then how they should integrate that

404
00:21:58,640 --> 00:22:02,080
Speaker 3: into their portfolio, and then which manager they should do

405
00:22:02,119 --> 00:22:04,000
Speaker 3: that with. So it is a you know, a multi

406
00:22:04,080 --> 00:22:06,760
Speaker 3: layered decision process, and I think one that advisors can

407
00:22:06,800 --> 00:22:10,000
Speaker 3: really help with. That's a personal opinion. I think advisors

408
00:22:10,000 --> 00:22:13,720
Speaker 3: can help clients who maybe know a little bit about

409
00:22:13,720 --> 00:22:16,800
Speaker 3: private equity but not enough or have heard about private

410
00:22:16,840 --> 00:22:19,359
Speaker 3: credit and all of the you know, press headlines that

411
00:22:19,400 --> 00:22:22,119
Speaker 3: private credit is getting right now, and really trying to

412
00:22:22,119 --> 00:22:24,320
Speaker 3: figure out is this right for me? And and in fact,

413
00:22:24,880 --> 00:22:29,680
Speaker 3: can it generate excess returns well above public markets over time?

414
00:22:29,720 --> 00:22:32,360
Speaker 3: And is that something I should incorporate into my portfolio.

415
00:22:33,119 --> 00:22:35,439
Speaker 3: I think that's a you know, a problem statement that

416
00:22:35,600 --> 00:22:39,480
Speaker 3: many clients aren't even approaching yet, but but perhaps should.

417
00:22:39,520 --> 00:22:42,280
Speaker 3: Perhaps there is a spot for and I think if

418
00:22:42,280 --> 00:22:44,240
Speaker 3: you look at all of you called it a land grab,

419
00:22:44,920 --> 00:22:47,480
Speaker 3: I think that's pretty fair. I think there's a ton

420
00:22:47,560 --> 00:22:51,360
Speaker 3: of movement. Sure, everybody I speak with and probably those

421
00:22:51,359 --> 00:22:54,320
Speaker 3: that you speak with too, are talking about democratizing privates.

422
00:22:55,160 --> 00:22:57,440
Speaker 3: I think it's a trend right now, but I think

423
00:22:57,480 --> 00:23:00,280
Speaker 3: in general it's something that should be here to say.

424
00:23:00,400 --> 00:23:02,880
Speaker 2: So, let me ask you two questions about that, an

425
00:23:02,880 --> 00:23:06,760
Speaker 2: easy question and a hard question. The easy question is, Hey,

426
00:23:06,840 --> 00:23:10,239
Speaker 2: is this about non correlated diversified returns or is this

427
00:23:10,320 --> 00:23:14,879
Speaker 2: about generating alpha and outperforming markets at public markets?

428
00:23:14,960 --> 00:23:16,680
Speaker 3: Yeah? I think it can be both. It's a really

429
00:23:16,680 --> 00:23:19,679
Speaker 3: good distinction. I think it can be both. It depends

430
00:23:19,720 --> 00:23:21,719
Speaker 3: on your wealth level, It depends on how much of

431
00:23:21,760 --> 00:23:25,520
Speaker 3: your overall allocation you're going to put into privates, and

432
00:23:25,560 --> 00:23:29,359
Speaker 3: then what type of private market asset class you're going

433
00:23:29,400 --> 00:23:31,800
Speaker 3: to be working with. So yes, I think it can

434
00:23:31,840 --> 00:23:36,720
Speaker 3: be an uncorrelated return opportunity and also an alpha generation opportunity.

435
00:23:36,920 --> 00:23:40,800
Speaker 2: So now the hard question. Vanguard built its reputation on

436
00:23:40,960 --> 00:23:47,240
Speaker 2: low cost alternatives, have a reputation of being pricey, So

437
00:23:47,280 --> 00:23:48,920
Speaker 2: how do you square that circle?

438
00:23:49,359 --> 00:23:51,600
Speaker 3: I think it's going to be a matter of you

439
00:23:51,640 --> 00:23:54,800
Speaker 3: pay different things for different asset classes, and private market

440
00:23:54,840 --> 00:23:58,440
Speaker 3: investing is different than public market investing, so I would

441
00:23:58,520 --> 00:24:01,320
Speaker 3: imagine that investors should expect to pay more for a

442
00:24:01,359 --> 00:24:04,720
Speaker 3: private equity offer or a private credit offer. The key

443
00:24:04,800 --> 00:24:08,119
Speaker 3: for me, you know, and again speaking personally, would be

444
00:24:08,160 --> 00:24:10,480
Speaker 3: I want to know that I'm getting a top quality

445
00:24:11,040 --> 00:24:14,240
Speaker 3: manager at a fair price. I think, you know, giving

446
00:24:14,280 --> 00:24:17,120
Speaker 3: a fair price is the obligation that the industry has

447
00:24:17,160 --> 00:24:18,240
Speaker 3: to investors.

448
00:24:18,200 --> 00:24:21,680
Speaker 2: And that's the Vanguer culture, even spilling over into private

449
00:24:22,200 --> 00:24:25,840
Speaker 2: So we've come to know Vanguard not just for passive,

450
00:24:25,960 --> 00:24:29,000
Speaker 2: not just for indexing, not just for stocks and bonds,

451
00:24:29,560 --> 00:24:35,600
Speaker 2: but generally a putting clients first, A fiduciary approach to

452
00:24:35,760 --> 00:24:40,240
Speaker 2: asset management is that consistent with some of the criticism

453
00:24:40,320 --> 00:24:43,600
Speaker 2: we've seen of the alternative space, or is it simply

454
00:24:43,720 --> 00:24:47,120
Speaker 2: as much as not all alternatives are created equally.

455
00:24:48,359 --> 00:24:50,720
Speaker 3: Certainly, not all alternatives are created equally. I think you

456
00:24:50,720 --> 00:24:54,080
Speaker 3: could say that for sure, And I think with regard

457
00:24:54,119 --> 00:24:56,479
Speaker 3: to what Vanguard endeavors to do, it'll be up to

458
00:24:56,840 --> 00:24:59,080
Speaker 3: the current CEO and his leadership team. But I would

459
00:24:59,080 --> 00:25:02,960
Speaker 3: suspect that they will stay true to the notion of

460
00:25:03,000 --> 00:25:06,680
Speaker 3: trying to provide clients with the best possible offers that

461
00:25:06,840 --> 00:25:09,360
Speaker 3: meet their long term investing needs. And I do think

462
00:25:09,359 --> 00:25:13,040
Speaker 3: that there is a place for private assets in that,

463
00:25:13,160 --> 00:25:15,600
Speaker 3: but that'll be up to the current team to decide.

464
00:25:16,080 --> 00:25:20,320
Speaker 2: Really really fascinating. So I read a crazy stat that

465
00:25:20,600 --> 00:25:23,600
Speaker 2: in the state of Pennsylvania, if you are a certified

466
00:25:23,640 --> 00:25:28,280
Speaker 2: financial planner, ninety three percent odds that you work for Vanguard.

467
00:25:28,480 --> 00:25:30,280
Speaker 2: Can that possibly be correct?

468
00:25:30,560 --> 00:25:33,080
Speaker 3: Again, I'm not going to check your stat but I

469
00:25:33,119 --> 00:25:37,640
Speaker 3: think yes. Having built out the personal advisor offer from

470
00:25:37,680 --> 00:25:40,960
Speaker 3: the ground up and passed it on to multiple of

471
00:25:41,000 --> 00:25:44,520
Speaker 3: my colleagues since then, we're now well over I think

472
00:25:44,520 --> 00:25:49,359
Speaker 3: a thousand advisors for sure, so it's possible. Luckily, we

473
00:25:49,440 --> 00:25:53,520
Speaker 3: have other domestic offices. Not just Pennsylvania, there's also Charlotte

474
00:25:53,560 --> 00:25:57,120
Speaker 3: and Arizona and Dallas, so we can we can attract

475
00:25:57,119 --> 00:25:59,679
Speaker 3: talent in the CFP ranks from multiple spots.

476
00:25:59,760 --> 00:26:02,240
Speaker 2: So I have to ask you. You're working at this

477
00:26:02,440 --> 00:26:07,320
Speaker 2: giant shop and you say, I know, let's build an RIA,

478
00:26:07,480 --> 00:26:12,719
Speaker 2: your registered investment advisory firm that's a fiduciary within a

479
00:26:12,800 --> 00:26:16,199
Speaker 2: giant asset manager. Tell us about the genesis of this.

480
00:26:16,960 --> 00:26:21,080
Speaker 3: Yeah, well, definitely not my vision alone. There was. It

481
00:26:21,160 --> 00:26:25,159
Speaker 3: was a firm wide kind of push. For sure. We

482
00:26:25,320 --> 00:26:28,040
Speaker 3: had been this is going way back. We had been

483
00:26:28,240 --> 00:26:31,760
Speaker 3: chasing scalable advice for decades. At Vanguard. We had an

484
00:26:31,800 --> 00:26:35,959
Speaker 3: offer very small relative to you know, the firm size

485
00:26:36,000 --> 00:26:39,240
Speaker 3: at the time. It was called Asset Management Services. The

486
00:26:39,280 --> 00:26:42,440
Speaker 3: minimum was five hundred thousand dollars to invest. You got

487
00:26:42,720 --> 00:26:45,280
Speaker 3: a one on one dedicated advisor, much the same way

488
00:26:45,280 --> 00:26:48,320
Speaker 3: you do today. And I think we charged back then, Barry,

489
00:26:48,320 --> 00:26:52,439
Speaker 3: probably ninety basis points on the first million. Okay, great offer.

490
00:26:52,680 --> 00:26:57,080
Speaker 3: Clients loved it, high ENDPS scores, but certainly not scalable.

491
00:26:57,440 --> 00:26:59,760
Speaker 3: You know, we had a few hundred, fewer than two

492
00:26:59,800 --> 00:27:04,040
Speaker 3: high advisors really powering that offer. And you know, fewer

493
00:27:04,040 --> 00:27:07,359
Speaker 3: than ten thousand clients, So we knew that we had

494
00:27:07,440 --> 00:27:13,600
Speaker 3: the ability to offer great advice using mostly Vanguard product

495
00:27:13,600 --> 00:27:16,639
Speaker 3: at the core of the advice methodology at the time,

496
00:27:17,400 --> 00:27:19,360
Speaker 3: and we wanted to scale it. But I credit really

497
00:27:19,440 --> 00:27:23,760
Speaker 3: Jack Brennan initially for wanting that scalable advice. I mentioned

498
00:27:23,800 --> 00:27:25,960
Speaker 3: at the top of the program that I had a

499
00:27:26,000 --> 00:27:29,720
Speaker 3: special opportunity to work for Jack doing research, really kind

500
00:27:29,760 --> 00:27:33,600
Speaker 3: of pulling together research and helping the senior team determine

501
00:27:33,600 --> 00:27:36,560
Speaker 3: whether they were going to try to do this scalable

502
00:27:36,600 --> 00:27:40,440
Speaker 3: advice offer. And there were multiple iterations before Personal Advisor.

503
00:27:40,880 --> 00:27:44,199
Speaker 3: Personal Advisor, which we launched in twenty fifteen, that's the

504
00:27:44,240 --> 00:27:47,000
Speaker 3: offer you just referenced, well over three hundred and fifty

505
00:27:47,000 --> 00:27:50,840
Speaker 3: billion now serving hundreds of thousands of clients. It started

506
00:27:51,000 --> 00:27:55,480
Speaker 3: with multiple iterations inside of Vanguard, so I think we

507
00:27:55,640 --> 00:27:58,400
Speaker 3: had a couple of goes at it before we perfected

508
00:27:58,600 --> 00:28:01,479
Speaker 3: what I had the really the privilege to lead in

509
00:28:01,520 --> 00:28:02,199
Speaker 3: twenty fifteen.

510
00:28:02,520 --> 00:28:06,040
Speaker 2: Huh, that's really fascinating. I know Vanguard has a direct

511
00:28:06,040 --> 00:28:10,760
Speaker 2: indexing product now, it's kind of fascinating to look at

512
00:28:11,200 --> 00:28:15,399
Speaker 2: all these different product lines and divisions because in the

513
00:28:15,520 --> 00:28:18,560
Speaker 2: early days Jack Bogel didn't want to do ETFs, didn't

514
00:28:18,560 --> 00:28:21,520
Speaker 2: want to do international. Hey, we do one thing, we

515
00:28:21,600 --> 00:28:25,120
Speaker 2: do it really well, and everybody else can can play catch.

516
00:28:24,960 --> 00:28:26,760
Speaker 3: Up, and you can add advice to that list. He

517
00:28:27,160 --> 00:28:29,720
Speaker 3: didn't want to do advice either. In fact, oh for sure,

518
00:28:29,760 --> 00:28:33,359
Speaker 3: we had thousands of frontline phone associates who were told

519
00:28:33,440 --> 00:28:35,840
Speaker 3: do not use the word advice. You know, there was

520
00:28:36,000 --> 00:28:39,680
Speaker 3: definitely a very clear line between guidance and advice, and

521
00:28:39,720 --> 00:28:43,280
Speaker 3: we were very careful to step back from the advice line,

522
00:28:43,280 --> 00:28:44,200
Speaker 3: if you will.

523
00:28:44,240 --> 00:28:47,680
Speaker 2: So what's the difference between guidance and advice?

524
00:28:48,160 --> 00:28:51,560
Speaker 3: Well, there is a regulatory difference, for sure, and that's

525
00:28:51,600 --> 00:28:53,320
Speaker 3: what we were homing in on at the time.

526
00:28:53,400 --> 00:28:59,680
Speaker 2: But well, you have discretion, right your fiduciaries. Yes, so

527
00:29:01,160 --> 00:29:03,760
Speaker 2: I don't see the difference. Listen, if you're giving your

528
00:29:03,840 --> 00:29:06,960
Speaker 2: child advice or you're giving them guidance, maybe guidance is

529
00:29:07,000 --> 00:29:08,240
Speaker 2: a little gentler.

530
00:29:08,080 --> 00:29:11,640
Speaker 3: Yes, guidance is gendler. It's there is definitely a difference.

531
00:29:12,280 --> 00:29:15,680
Speaker 3: But you know, I had in earlier in my career,

532
00:29:15,720 --> 00:29:19,480
Speaker 3: I led phone groups, you know, hundreds of phone associates

533
00:29:19,520 --> 00:29:24,240
Speaker 3: and we would train them to serve the client's transactional

534
00:29:24,280 --> 00:29:28,120
Speaker 3: needs and help them with guidance. But I cannot tell you.

535
00:29:28,160 --> 00:29:30,320
Speaker 3: In the same way that Bill McNabb would monitor phone calls,

536
00:29:30,360 --> 00:29:32,760
Speaker 3: I would monitor phone calls when I was leading those groups,

537
00:29:33,280 --> 00:29:37,320
Speaker 3: and so many clients just wanted to know which fund

538
00:29:37,360 --> 00:29:40,240
Speaker 3: should I buy, you know, that was what you said.

539
00:29:40,280 --> 00:29:42,440
Speaker 3: I had a small stable of friends and now we have,

540
00:29:42,680 --> 00:29:46,840
Speaker 3: you know, four hundred different options, and I think it

541
00:29:46,840 --> 00:29:49,920
Speaker 3: It also led to the genesis of our personal advisor offer,

542
00:29:49,960 --> 00:29:52,160
Speaker 3: because we realized there was an incredible pent up demand

543
00:29:52,640 --> 00:29:56,640
Speaker 3: people who had joined Vanguard, you know, perhaps with a

544
00:29:56,680 --> 00:29:59,040
Speaker 3: single mutual fund, you know, maybe they started with a

545
00:29:59,080 --> 00:29:59,760
Speaker 3: money market fund.

546
00:30:00,120 --> 00:30:01,160
Speaker 2: Totally self directed.

547
00:30:01,520 --> 00:30:04,400
Speaker 3: Totally self directed is really the legacy of the firm.

548
00:30:04,480 --> 00:30:07,600
Speaker 3: You know, we still have a much greater cadre of

549
00:30:07,920 --> 00:30:10,760
Speaker 3: self directed clients than advised clients. The vast majority of

550
00:30:10,960 --> 00:30:12,600
Speaker 3: vast majority of vast majority of clients.

551
00:30:12,800 --> 00:30:16,680
Speaker 2: Although I say this as an RIA I know the

552
00:30:16,840 --> 00:30:21,480
Speaker 2: RIA side of the industry are big buyers and supporters

553
00:30:21,480 --> 00:30:22,440
Speaker 2: of Vanguard products.

554
00:30:22,480 --> 00:30:24,400
Speaker 3: Oh for sure, I mean I would acknowledge that the

555
00:30:24,520 --> 00:30:27,719
Speaker 3: RIA channel, for sure is it's a totally different division

556
00:30:27,720 --> 00:30:31,360
Speaker 3: at Vanguard, but it is absolutely critical to our success

557
00:30:31,360 --> 00:30:33,760
Speaker 3: and growth over time. What we've been talking about is

558
00:30:33,800 --> 00:30:38,040
Speaker 3: really that direct relationship when a client, you know, opens

559
00:30:38,080 --> 00:30:40,959
Speaker 3: a mutual fund account directly with Vanguard and then that

560
00:30:41,040 --> 00:30:44,040
Speaker 3: is essentially what what I'm referring to as self directed.

561
00:30:44,040 --> 00:30:48,320
Speaker 3: But in the same timeframe, we were growing our Financial

562
00:30:48,360 --> 00:30:51,840
Speaker 3: Advisor Services division as well, and that is a critical

563
00:30:51,840 --> 00:30:53,040
Speaker 3: component of what we do today.

564
00:30:53,480 --> 00:30:56,400
Speaker 2: And when this first rolled out, there was a little rumbling.

565
00:30:56,880 --> 00:30:59,640
Speaker 2: I think Vanguard managed to thread the needle and say

566
00:31:00,800 --> 00:31:04,920
Speaker 2: we're not offering advice, we're offering guidance and not exactly

567
00:31:04,920 --> 00:31:06,200
Speaker 2: competing with that channel.

568
00:31:07,080 --> 00:31:10,400
Speaker 3: Well, we were offering advice, but you're right that there

569
00:31:10,480 --> 00:31:12,320
Speaker 3: was a little bit of needle threading to do. I

570
00:31:12,360 --> 00:31:15,800
Speaker 3: think partially we were able to do that well because

571
00:31:15,920 --> 00:31:19,760
Speaker 3: there was so much internal collaboration across the senior leaders

572
00:31:19,800 --> 00:31:22,800
Speaker 3: at the firm. First Martha King and then Tom Rampoola

573
00:31:22,920 --> 00:31:26,440
Speaker 3: ran the FAS division at that time, and when Tom

574
00:31:26,520 --> 00:31:29,960
Speaker 3: took over, I was running the retail division, and there

575
00:31:30,040 --> 00:31:32,200
Speaker 3: was a lot of discussion around, you know, what we

576
00:31:32,280 --> 00:31:35,600
Speaker 3: needed to do to both serve rias really well through

577
00:31:35,640 --> 00:31:40,560
Speaker 3: Tom's division and also be a growing and thriving ria

578
00:31:40,760 --> 00:31:45,520
Speaker 3: ourselves serving individual investors with our own advice methodology, and

579
00:31:45,520 --> 00:31:48,680
Speaker 3: I think there's been a lot of collaboration between those

580
00:31:48,680 --> 00:31:52,320
Speaker 3: divisions over time, where we use research and the things

581
00:31:52,360 --> 00:31:55,280
Speaker 3: that we learn through our Investment Strategy group or our

582
00:31:55,440 --> 00:31:58,920
Speaker 3: in house research, we share that with the rias that

583
00:31:58,960 --> 00:31:59,440
Speaker 3: we serve.

584
00:32:00,120 --> 00:32:02,160
Speaker 2: So here's a crazy stat I want to throw out

585
00:32:02,160 --> 00:32:06,800
Speaker 2: at you. So total investible assets of stocks bonds were

586
00:32:07,280 --> 00:32:09,360
Speaker 2: not quite one hundred trillion, but where it's not that

587
00:32:09,480 --> 00:32:12,720
Speaker 2: far off in the United States, how is it possible

588
00:32:12,800 --> 00:32:16,959
Speaker 2: that nobody in the RIA space has market share? You

589
00:32:17,000 --> 00:32:22,000
Speaker 2: guys are three hundred and fifty billion dollars And it's like, eh.

590
00:32:21,200 --> 00:32:24,280
Speaker 3: Well, there are some pretty big and very strong independent

591
00:32:24,520 --> 00:32:26,880
Speaker 3: arias and we serve a lot of them. Their clients

592
00:32:26,880 --> 00:32:30,280
Speaker 3: a vanguards. But you're right, it's a it's a fragmented market. Still,

593
00:32:30,680 --> 00:32:32,840
Speaker 3: there's definitely a top tier for sure.

594
00:32:33,160 --> 00:32:36,240
Speaker 2: All right, But there's ten firms with yes, you're one

595
00:32:36,280 --> 00:32:39,960
Speaker 2: hundred billion, two hundred billion, and a ton of firms

596
00:32:40,000 --> 00:32:43,040
Speaker 2: with twenty forty sixty billion. And it's funny when I

597
00:32:43,080 --> 00:32:46,280
Speaker 2: discuss these numbers with family, they think five billion is

598
00:32:46,280 --> 00:32:48,480
Speaker 2: a lot of money. I'm like, oh no, no, we're peons.

599
00:32:48,760 --> 00:32:52,400
Speaker 2: They don't really, they don't really know what trillions are,

600
00:32:52,840 --> 00:32:55,040
Speaker 2: but why is the industry so fragmented?

601
00:32:55,560 --> 00:32:57,800
Speaker 3: You know, I don't know what the why is behind that,

602
00:32:57,880 --> 00:32:59,920
Speaker 3: but I can certainly say, just in the time that

603
00:33:00,040 --> 00:33:02,440
Speaker 3: I've left Vanguard, all of the conversations I've had around

604
00:33:02,480 --> 00:33:05,120
Speaker 3: the industry, there is a ton of interest in and

605
00:33:05,200 --> 00:33:07,640
Speaker 3: you see it yourself, all of the consolidation that is

606
00:33:07,640 --> 00:33:11,520
Speaker 3: happening among all of those mid and smaller tier rias.

607
00:33:12,200 --> 00:33:15,560
Speaker 3: You know, the larger firms the top tier are either

608
00:33:15,600 --> 00:33:19,360
Speaker 3: buying up those arias. There's consolidation across the industry. There's

609
00:33:19,400 --> 00:33:22,920
Speaker 3: a lot of private equity money invested and investing interested

610
00:33:22,960 --> 00:33:25,400
Speaker 3: in investing more in the RIA space. There's just a

611
00:33:25,440 --> 00:33:27,880
Speaker 3: ton of movement in wealth management, which I think is

612
00:33:27,920 --> 00:33:29,920
Speaker 3: exciting and hopefully is good for investors.

613
00:33:30,040 --> 00:33:32,840
Speaker 2: And there's some crazy number the average advisors age is

614
00:33:32,920 --> 00:33:35,680
Speaker 2: like sixty six. So there's a whole succession planning.

615
00:33:35,720 --> 00:33:38,560
Speaker 3: Yeah, that's the other thing, You're right, the demographics. It's

616
00:33:38,600 --> 00:33:41,920
Speaker 3: you know, lots of rias are you know, looking to

617
00:33:41,960 --> 00:33:43,560
Speaker 3: turn over their book and they don't have a strong

618
00:33:43,600 --> 00:33:44,320
Speaker 3: succession plan.

619
00:33:44,680 --> 00:33:44,880
Speaker 1: Huh.

620
00:33:45,280 --> 00:33:48,240
Speaker 2: That's really fascinating. So one of the things you launched

621
00:33:48,240 --> 00:33:51,360
Speaker 2: at Vanguard there's so many different initiatives you did, but

622
00:33:51,480 --> 00:33:55,240
Speaker 2: the Vanguard Women's Initiative for Leadership Success. Tell us a

623
00:33:55,240 --> 00:33:59,400
Speaker 2: little bit about that. What led to this project and

624
00:34:00,080 --> 00:34:01,200
Speaker 2: what have the results been.

625
00:34:01,360 --> 00:34:04,240
Speaker 3: They call it WILLS internally at Vanguard, and you're right,

626
00:34:04,320 --> 00:34:07,360
Speaker 3: it's the Women's Initiative for Leadership Success. It was spearheaded

627
00:34:07,480 --> 00:34:10,719
Speaker 3: under Bill mcnath Leadership and I mention that because it

628
00:34:10,760 --> 00:34:14,640
Speaker 3: is so important that top down the CEO made it

629
00:34:14,680 --> 00:34:16,880
Speaker 3: a priority, and I think that's why it continues to

630
00:34:16,960 --> 00:34:19,880
Speaker 3: thrive today. I had the honor of being one of

631
00:34:19,920 --> 00:34:23,520
Speaker 3: the founding leaders of our WILLS initiative more than fifteen

632
00:34:23,560 --> 00:34:26,680
Speaker 3: years ago at this point, but it's still an incredibly

633
00:34:26,719 --> 00:34:30,600
Speaker 3: important employee resource group within the firm, and it was

634
00:34:30,640 --> 00:34:33,719
Speaker 3: the first of several, so we probably have half a

635
00:34:33,760 --> 00:34:36,920
Speaker 3: dozen or more different employee resource groups now. But the

636
00:34:37,000 --> 00:34:41,720
Speaker 3: importance of encouraging women and helping them develop into leaders

637
00:34:41,719 --> 00:34:44,920
Speaker 3: at Vanguard, and I use the term leader broadly, so

638
00:34:45,080 --> 00:34:49,520
Speaker 3: leader of people, but also specialists in portfolio management, or

639
00:34:49,600 --> 00:34:53,680
Speaker 3: legal or data analytics, you name it. So there's just

640
00:34:53,719 --> 00:34:56,319
Speaker 3: been a lot of evolution over time, but that consistent

641
00:34:56,600 --> 00:35:00,719
Speaker 3: drumbeat of helping our women develop into to the you know,

642
00:35:00,920 --> 00:35:03,720
Speaker 3: highest potential leaders that they could be at the firm

643
00:35:03,880 --> 00:35:07,640
Speaker 3: in whatever area of expertise they were best suited to.

644
00:35:08,200 --> 00:35:10,399
Speaker 2: What sort of advice would you give to a young

645
00:35:10,480 --> 00:35:14,080
Speaker 2: woman aspiring to a leadership role in the world of

646
00:35:14,120 --> 00:35:15,240
Speaker 2: investing in finance?

647
00:35:15,560 --> 00:35:18,799
Speaker 3: If I think particularly about the advice and counsel that

648
00:35:18,840 --> 00:35:22,640
Speaker 3: I have given to many younger women in the organization,

649
00:35:23,520 --> 00:35:26,160
Speaker 3: I often will say, don't be afraid to take a risk.

650
00:35:26,560 --> 00:35:28,560
Speaker 3: You know, do the work, develop a point of view,

651
00:35:28,800 --> 00:35:30,759
Speaker 3: have your own point of view, and be willing to

652
00:35:30,840 --> 00:35:33,640
Speaker 3: share it. That's you know, there's often a confidence gap.

653
00:35:33,680 --> 00:35:35,520
Speaker 3: It's not an aptitude gap.

654
00:35:35,360 --> 00:35:39,400
Speaker 2: But men blunder in regardless of their competency. Women are

655
00:35:39,480 --> 00:35:43,360
Speaker 2: much more circumspect. Pardon me for man's blating sexism, but

656
00:35:44,440 --> 00:35:49,520
Speaker 2: like my observations have been, man as a as a dude,

657
00:35:50,280 --> 00:35:54,440
Speaker 2: I I'm out over my skis, I have no radio training.

658
00:35:54,440 --> 00:35:58,040
Speaker 2: What am I doing here? And I've noticed since I've

659
00:35:58,080 --> 00:36:02,560
Speaker 2: been doing this that men just seem to be we

660
00:36:02,640 --> 00:36:06,840
Speaker 2: are blithe idiots stumbling into things, and women seem to

661
00:36:06,840 --> 00:36:08,600
Speaker 2: be more thoughtful in circumspect.

662
00:36:08,880 --> 00:36:12,000
Speaker 3: Those are your words, so I'll just say yes, I

663
00:36:12,080 --> 00:36:15,799
Speaker 3: find many times men are infinitely comfortable sharing their point

664
00:36:15,840 --> 00:36:20,080
Speaker 3: of view regardless. Yes, but I think women can often

665
00:36:20,200 --> 00:36:24,000
Speaker 3: use some encouragement to, you know, want one do the work,

666
00:36:24,080 --> 00:36:26,200
Speaker 3: develop the point of view right that there is work

667
00:36:26,239 --> 00:36:28,879
Speaker 3: to be done. But once you have a point of view,

668
00:36:29,520 --> 00:36:31,320
Speaker 3: take a risk and share it and know that it's okay.

669
00:36:31,360 --> 00:36:34,080
Speaker 3: When you are wrong, you will be wrong. I think

670
00:36:34,120 --> 00:36:39,040
Speaker 3: there's often a fear of the criticism that will you know,

671
00:36:39,080 --> 00:36:41,440
Speaker 3: will follow when you express your point of view, and

672
00:36:41,480 --> 00:36:43,800
Speaker 3: I think a lot of the council is develop the

673
00:36:43,840 --> 00:36:47,000
Speaker 3: point of view, take the risk because no one will

674
00:36:47,040 --> 00:36:48,560
Speaker 3: know you're in the room until you open your mouth,

675
00:36:48,719 --> 00:36:52,919
Speaker 3: right and you know related, but perhaps a little different

676
00:36:53,000 --> 00:36:56,680
Speaker 3: than that, I would give the advice to women who

677
00:36:56,719 --> 00:37:01,799
Speaker 3: are looking for expanded leadership opportunities more responsibility to be

678
00:37:02,040 --> 00:37:05,480
Speaker 3: explicit in asking for it. And that's also something that

679
00:37:06,239 --> 00:37:07,879
Speaker 3: you hope. You keep your head down and do the work,

680
00:37:08,160 --> 00:37:10,480
Speaker 3: and you get noticed, and you get chosen for the

681
00:37:10,520 --> 00:37:14,040
Speaker 3: special project or the next assignment or the rotation, and

682
00:37:14,160 --> 00:37:16,880
Speaker 3: often you know you're just not top of mind, and

683
00:37:16,920 --> 00:37:20,280
Speaker 3: that's okay. So you have to be more explicit about

684
00:37:20,600 --> 00:37:25,440
Speaker 3: expressing your interest in taking on more responsibility, expanding your

685
00:37:26,040 --> 00:37:30,000
Speaker 3: remit within the organization or getting on some research project.

686
00:37:30,600 --> 00:37:32,880
Speaker 3: You have to tell people that you're interested in doing

687
00:37:32,920 --> 00:37:34,400
Speaker 3: more than you've already been asked to do.

688
00:37:35,120 --> 00:37:38,600
Speaker 2: So let me throw you a curveball. You served or

689
00:37:38,640 --> 00:37:42,400
Speaker 2: you are serving as a director on the Vanguard Foundation board.

690
00:37:42,880 --> 00:37:45,480
Speaker 3: I did serve as a member of the Vanguard Foundation

691
00:37:45,520 --> 00:37:48,040
Speaker 3: Board when I was at the firm. I also served

692
00:37:48,120 --> 00:37:52,160
Speaker 3: as a member of the Irish Funds Board, and I

693
00:37:52,200 --> 00:37:55,360
Speaker 3: also had the opportunity it's separate from Vanguard but related,

694
00:37:55,360 --> 00:37:58,960
Speaker 3: I also served on Vanguard Charitables Board for a number

695
00:37:59,000 --> 00:38:02,760
Speaker 3: of years. So all of those, you know, through different lenses,

696
00:38:02,760 --> 00:38:05,919
Speaker 3: were opportunities outside of my day to day's swim lane

697
00:38:06,000 --> 00:38:08,879
Speaker 3: or you know job, if you will to give back

698
00:38:08,920 --> 00:38:11,280
Speaker 3: to either the community with regard to the Vanguard Foundation,

699
00:38:12,160 --> 00:38:15,760
Speaker 3: or get involved in our international business through our Irish

700
00:38:15,800 --> 00:38:19,879
Speaker 3: Funds distribution through that board or in Vanguard Charitables case,

701
00:38:20,080 --> 00:38:23,239
Speaker 3: really think about donor advise funds and learn more about that.

702
00:38:23,320 --> 00:38:26,160
Speaker 2: And that's a big that's like eighteen twenty billion dollars

703
00:38:26,200 --> 00:38:28,920
Speaker 2: something like that. That's a big chunk of money that

704
00:38:29,000 --> 00:38:33,239
Speaker 2: people are saying, help us distribute this philanthropically exactly right,

705
00:38:33,840 --> 00:38:37,719
Speaker 2: huh quite fascinating. All right, let's jump to our favorite questions,

706
00:38:38,320 --> 00:38:41,360
Speaker 2: starting with what are you watching these days or listening to?

707
00:38:41,400 --> 00:38:44,080
Speaker 2: What's keeping you entertained on the What am I watching?

708
00:38:44,280 --> 00:38:48,640
Speaker 3: I would say, hacks is Do you like it? I

709
00:38:48,680 --> 00:38:49,000
Speaker 3: love it?

710
00:38:49,160 --> 00:38:52,799
Speaker 2: We not only do we love the show, but we

711
00:38:52,880 --> 00:38:53,720
Speaker 2: watch it straight.

712
00:38:54,000 --> 00:38:54,200
Speaker 3: You know.

713
00:38:54,280 --> 00:38:57,080
Speaker 2: At the end there's a little podcast discussion, yes, by

714
00:38:57,120 --> 00:38:59,960
Speaker 2: the showrunners and the creators, and they're just charming to

715
00:39:00,080 --> 00:39:00,760
Speaker 2: lifeful people.

716
00:39:00,880 --> 00:39:04,200
Speaker 3: Yeah. Yeah, for those that don't know, I think it's

717
00:39:04,320 --> 00:39:06,520
Speaker 3: worth a It's very different from anything you see on

718
00:39:06,560 --> 00:39:10,000
Speaker 3: TV right now. Gene smart Is, you know, talk about

719
00:39:10,040 --> 00:39:12,040
Speaker 3: longevity in a career. She's in her seventies. I love

720
00:39:12,120 --> 00:39:16,480
Speaker 3: seeing that, and it's just a darkly funny, you know,

721
00:39:16,840 --> 00:39:21,520
Speaker 3: mentorship between one character and a much younger characters. It's

722
00:39:21,560 --> 00:39:22,320
Speaker 3: a good one.

723
00:39:23,000 --> 00:39:26,640
Speaker 2: Tell us about your mentors who helped shape your career.

724
00:39:27,040 --> 00:39:31,160
Speaker 3: Man too many to count. At Vanguard really just spoiled

725
00:39:31,200 --> 00:39:33,440
Speaker 3: with lots of great leaders, all of whom were mentors

726
00:39:33,440 --> 00:39:37,400
Speaker 3: in different ways, particularly in the very early days of

727
00:39:37,400 --> 00:39:41,360
Speaker 3: my career, people like Jeff Moltor taking a chance on me,

728
00:39:41,400 --> 00:39:43,640
Speaker 3: giving me my first job at Vanguard when I was

729
00:39:43,680 --> 00:39:47,200
Speaker 3: not an obvious choice. Really helping me develop a thick skin.

730
00:39:47,320 --> 00:39:51,919
Speaker 3: He was notorious for giving very straight feedback. Martha King

731
00:39:52,080 --> 00:39:55,800
Speaker 3: I mentioned her earlier, just one of my earliest female

732
00:39:55,880 --> 00:39:58,919
Speaker 3: role models at the firm when there really weren't that many.

733
00:39:58,920 --> 00:40:02,479
Speaker 3: There still are not enough across the industry, but many

734
00:40:02,520 --> 00:40:06,520
Speaker 3: more today than back in the late nineties. And then

735
00:40:06,560 --> 00:40:10,160
Speaker 3: certainly I mentioned I've already talked about Jack Brennan, Bill McNabb,

736
00:40:10,160 --> 00:40:14,000
Speaker 3: and Tim Buckley, but certainly Bill McNabb and Tim Buckley

737
00:40:14,040 --> 00:40:18,360
Speaker 3: for sure figure prominently in my career as advocates for

738
00:40:18,440 --> 00:40:21,440
Speaker 3: me over decades. They are still to this day as

739
00:40:21,480 --> 00:40:24,319
Speaker 3: I think about writing my next chapter and what I

740
00:40:24,360 --> 00:40:26,759
Speaker 3: want to do post Vanguard, I still am looking to

741
00:40:27,440 --> 00:40:30,239
Speaker 3: the mentorship and advocacy of both Bill and Tim, so

742
00:40:30,360 --> 00:40:31,399
Speaker 3: very grateful for them both.

743
00:40:32,080 --> 00:40:34,839
Speaker 2: Really really interesting list. Let's talk about books. What are

744
00:40:34,840 --> 00:40:36,800
Speaker 2: some of your favorites? What are you reading currently?

745
00:40:37,280 --> 00:40:39,680
Speaker 3: Well, favorites for sure. You can't spend twenty eight years

746
00:40:39,680 --> 00:40:43,160
Speaker 3: of Vanguard without the required reading. A random walked down

747
00:40:43,200 --> 00:40:45,840
Speaker 3: Wall Street I think was dropped on my chair truly

748
00:40:45,880 --> 00:40:48,120
Speaker 3: within the first month of my joining the firm. One

749
00:40:48,160 --> 00:40:51,839
Speaker 3: of my Burt mais yes Bert Malkil, who is the Yes,

750
00:40:52,000 --> 00:40:56,840
Speaker 3: longtime board member at Vanguard, But really, you know, required

751
00:40:56,880 --> 00:41:01,279
Speaker 3: reading on passive the benefits of passive investing, And you know,

752
00:41:01,320 --> 00:41:03,759
Speaker 3: when I joined Vanguard, I knew about indexing, but I

753
00:41:03,800 --> 00:41:06,399
Speaker 3: didn't know it to the depth that I would later,

754
00:41:06,920 --> 00:41:10,360
Speaker 3: And so that was was an early educational book, probably

755
00:41:10,400 --> 00:41:13,520
Speaker 3: in the same era when Genius failed is a fat

756
00:41:13,880 --> 00:41:17,239
Speaker 3: line yep. Roger Lowenstein and the Rise and Fall of

757
00:41:17,280 --> 00:41:20,200
Speaker 3: long term capital management. Think about when I joined Vanguard

758
00:41:20,200 --> 00:41:23,719
Speaker 3: in ninety seven. You know that was all unfolding in

759
00:41:23,760 --> 00:41:26,840
Speaker 3: the early two thousands. I didn't know anything about hedge funds,

760
00:41:27,120 --> 00:41:29,920
Speaker 3: I didn't know anything about leverage. Really, it moved so

761
00:41:30,000 --> 00:41:33,319
Speaker 3: far afield from what was happening in Malvern, Pennsylvania that

762
00:41:33,560 --> 00:41:36,600
Speaker 3: it was just like a fascinating read and really a

763
00:41:36,600 --> 00:41:38,399
Speaker 3: cautionary tale that for.

764
00:41:38,360 --> 00:41:42,080
Speaker 2: The financial crisis not but a decade later. Correct, all

765
00:41:42,120 --> 00:41:45,439
Speaker 2: those lessons were totally ignored. If anything, maybe it made

766
00:41:45,440 --> 00:41:48,440
Speaker 2: people too cocky. You don't worry about it, The FED puts.

767
00:41:48,320 --> 00:41:51,239
Speaker 3: Yeah, yeah, yeah, that's a fair point. What am I

768
00:41:51,280 --> 00:41:53,720
Speaker 3: reading now? I just finished, and I'm like way behind

769
00:41:53,719 --> 00:41:56,439
Speaker 3: the times because a million colleagues had suggested I read

770
00:41:56,480 --> 00:42:00,600
Speaker 3: Outlive by Peter Attia M h. You know it's been

771
00:42:00,760 --> 00:42:04,920
Speaker 3: on the bestseller list for multiple years now. Yeah, but

772
00:42:05,120 --> 00:42:09,520
Speaker 3: fascinating to think about the longevity and the notion of

773
00:42:09,600 --> 00:42:14,040
Speaker 3: health span versus life span. Looking inwardly for each person.

774
00:42:14,080 --> 00:42:15,960
Speaker 3: I have some work to do to live to one hundred,

775
00:42:16,400 --> 00:42:19,200
Speaker 3: but I'm gained for it. And the book on my

776
00:42:19,280 --> 00:42:22,800
Speaker 3: shelf next is related to that. It's called the Longevity Principle,

777
00:42:23,280 --> 00:42:25,160
Speaker 3: and that takes sort of a broader view of how

778
00:42:25,239 --> 00:42:29,800
Speaker 3: society will need to change to support from an infrastructure, healthcare,

779
00:42:30,000 --> 00:42:34,239
Speaker 3: financial sector, all these different dimensions that will need to

780
00:42:34,320 --> 00:42:36,400
Speaker 3: change to support all these people who will be living

781
00:42:36,400 --> 00:42:39,000
Speaker 3: to maybe one hundred in the future and not that

782
00:42:39,080 --> 00:42:39,560
Speaker 3: far away.

783
00:42:39,960 --> 00:42:42,840
Speaker 2: And the conversation the way the math works, if you

784
00:42:42,960 --> 00:42:46,400
Speaker 2: make it into your sixties without dropping debt of a

785
00:42:46,400 --> 00:42:49,840
Speaker 2: heart attack or whatever, the odds of hitting mid eighties

786
00:42:49,960 --> 00:42:53,360
Speaker 2: or beyond go up dramatically, yes, And so suddenly the

787
00:42:53,440 --> 00:42:55,920
Speaker 2: question is, hey, have I saved enough money if I'm

788
00:42:55,960 --> 00:42:58,440
Speaker 2: going to be around to eighty five ninety. It's a

789
00:42:58,600 --> 00:43:03,120
Speaker 2: genuine planning issue for anybody thinking about their financial future.

790
00:43:03,239 --> 00:43:05,520
Speaker 3: You're right. I remember when we first started the personal

791
00:43:05,520 --> 00:43:09,960
Speaker 3: Advisor offer and we were creating the advice methodology, we conservatively.

792
00:43:10,320 --> 00:43:12,560
Speaker 3: You know, our planning horizon was to one hundred years.

793
00:43:12,840 --> 00:43:15,400
Speaker 2: Well, Evan Monte Carlos, that goes to one hundred.

794
00:43:15,480 --> 00:43:17,719
Speaker 3: Yes, And I cannot tell you how many clients at

795
00:43:17,719 --> 00:43:19,680
Speaker 3: the time said that's insane, I'm going to drop that

796
00:43:19,719 --> 00:43:22,200
Speaker 3: at seventy or eighty or whatever, and they would fight

797
00:43:22,239 --> 00:43:25,400
Speaker 3: with us. And now it's you know, it's not inconceivable.

798
00:43:25,840 --> 00:43:29,680
Speaker 2: That doesn't surprise me at all. Our final two questions,

799
00:43:30,320 --> 00:43:33,000
Speaker 2: what advice would you give to a recent college grad

800
00:43:33,239 --> 00:43:38,480
Speaker 2: interested in a career in wealth management or personal financial guidance?

801
00:43:38,760 --> 00:43:42,760
Speaker 3: I would say, for sure, pay attention to the company

802
00:43:43,560 --> 00:43:46,319
Speaker 3: and the mission and purpose of that company. Be proud

803
00:43:46,360 --> 00:43:49,680
Speaker 3: of the company you work for. Worry about that more

804
00:43:49,760 --> 00:43:54,320
Speaker 3: than the job or the starting salary. Think hard about

805
00:43:54,400 --> 00:43:56,680
Speaker 3: the company that you want to connect yourself with. I mean,

806
00:43:56,880 --> 00:43:59,759
Speaker 3: it's it's unlikely that many college grads are going to

807
00:43:59,760 --> 00:44:01,560
Speaker 3: have a twenty eight year run at a company like

808
00:44:01,600 --> 00:44:04,239
Speaker 3: I just did. But even if you're only going to

809
00:44:04,239 --> 00:44:07,320
Speaker 3: be there for a shorter stint, you know, think about

810
00:44:07,320 --> 00:44:10,359
Speaker 3: the company ahead of the actual job you're going to do.

811
00:44:10,400 --> 00:44:12,319
Speaker 3: Because my next piece of advice is do more than

812
00:44:12,400 --> 00:44:16,120
Speaker 3: is asked. Think about how you can contribute outside of,

813
00:44:16,560 --> 00:44:20,759
Speaker 3: you know, your finite job description. Lastly, I would say,

814
00:44:20,800 --> 00:44:23,960
Speaker 3: seek to understand the context. When you join a company

815
00:44:23,960 --> 00:44:26,080
Speaker 3: and you're right out of college and you're eager to

816
00:44:26,280 --> 00:44:29,280
Speaker 3: make a mark, I think it's really important to understand

817
00:44:29,280 --> 00:44:32,040
Speaker 3: what came before you. You know, take the time to

818
00:44:32,080 --> 00:44:35,200
Speaker 3: invest in relationships with your peers and understand the context

819
00:44:35,200 --> 00:44:36,920
Speaker 3: of what's going on at the firm and the history

820
00:44:36,960 --> 00:44:41,040
Speaker 3: behind it before you charge into whatever you're going to do.

821
00:44:41,239 --> 00:44:43,880
Speaker 2: And our final question, what do you know about the

822
00:44:43,920 --> 00:44:47,600
Speaker 2: world of wealth management and investing today That would have

823
00:44:47,600 --> 00:44:50,320
Speaker 2: been useful in nineteen ninety seven when you were first

824
00:44:50,560 --> 00:44:51,560
Speaker 2: getting your feet wet.

825
00:44:51,840 --> 00:44:54,160
Speaker 3: Yeah. Well again here I feel like a bit of

826
00:44:54,200 --> 00:44:56,920
Speaker 3: a ringer because not many twenty three year olds have

827
00:44:56,960 --> 00:45:01,879
Speaker 3: the benefit of people like Jack Brennan or Bill McNab, etc.

828
00:45:02,280 --> 00:45:07,239
Speaker 3: Telling them explicitly. I remember sitting in the office with

829
00:45:07,320 --> 00:45:08,640
Speaker 3: Jack Brennan and he said, all you need to do

830
00:45:08,680 --> 00:45:10,600
Speaker 3: is live below your means. And it was something that

831
00:45:10,680 --> 00:45:12,560
Speaker 3: Jack Bobo used to say all the time, and it

832
00:45:12,600 --> 00:45:15,600
Speaker 3: was instilled in you the minute you got into Vanguard,

833
00:45:15,680 --> 00:45:18,520
Speaker 3: along with things like invest in the four oh one

834
00:45:18,600 --> 00:45:22,160
Speaker 3: k and take advantage of the company match and build

835
00:45:22,200 --> 00:45:24,160
Speaker 3: up an emergency fund, and all these things that are

836
00:45:24,160 --> 00:45:27,000
Speaker 3: the basic tenets of financial planning. But when you're in

837
00:45:27,000 --> 00:45:32,120
Speaker 3: your early twenties you don't necessarily focus on These are

838
00:45:32,160 --> 00:45:35,000
Speaker 3: things that I actually, twenty eight years later, have benefited

839
00:45:35,000 --> 00:45:37,799
Speaker 3: from because the magic of compounding was a very real

840
00:45:37,880 --> 00:45:40,960
Speaker 3: thing that I was able to take advantage of before

841
00:45:41,239 --> 00:45:44,360
Speaker 3: perhaps many of my peers who were working at different

842
00:45:44,400 --> 00:45:46,799
Speaker 3: companies where that wasn't such a strong focus, but at

843
00:45:46,880 --> 00:45:49,200
Speaker 3: Vanguard such a strong focus.

844
00:45:49,680 --> 00:45:52,600
Speaker 2: Well, thank you, Karen for being so generous with your time.

845
00:45:53,160 --> 00:45:56,800
Speaker 2: We have been speaking with Karen reci formally of the

846
00:45:56,880 --> 00:46:01,200
Speaker 2: Vanguard Group, now on the board of Harbor. If you

847
00:46:01,440 --> 00:46:04,600
Speaker 2: enjoy this conversation, well, be sure and check out any

848
00:46:04,600 --> 00:46:07,480
Speaker 2: of the five hundred and fifty we've done. You can

849
00:46:07,520 --> 00:46:11,600
Speaker 2: find those at iTunes, Spotify, YouTube, Bloomberg, wherever you find

850
00:46:12,040 --> 00:46:15,320
Speaker 2: your favorite podcast. And be sure and check out my

851
00:46:15,560 --> 00:46:20,480
Speaker 2: new book How Not to Invest The ideas, numbers and

852
00:46:20,520 --> 00:46:24,560
Speaker 2: behaviors that destroy wealth and how to avoid them How

853
00:46:24,600 --> 00:46:28,240
Speaker 2: Not to Invest at your favorite bookstore today. I would

854
00:46:28,239 --> 00:46:30,200
Speaker 2: be remiss if I did not thank the Crack staff

855
00:46:30,280 --> 00:46:33,719
Speaker 2: that helps you put these conversations together each week. John

856
00:46:33,760 --> 00:46:37,000
Speaker 2: Wasserman is my audio engineer. Anna Luke is my producer.

857
00:46:37,080 --> 00:46:41,799
Speaker 2: Sean Russo is my researcher. I'm Barry Rickols. You've been

858
00:46:41,880 --> 00:46:45,400
Speaker 2: listening to Masters in Business on Bloomberg Radio.