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