That is the newest in a brand new collection of columns about portfolio methods, planning and asset administration.
Vanguard CEO Tim Buckley’s shock choice to retire by year-end, with no successor named, has left trade watchers questioning what’s subsequent for the world’s second-largest asset supervisor.
Vanguard critics and supporters alike level to actual or perceived points that the low-fee funding large faces, together with customer support complaints, evolving enterprise priorities and, within the close to time period, the seek for a brand new CEO.
On the similar time, advocates laud Buckley’s position in contributing to Vanguard’s success as an funding powerhouse with greater than 50 million clients globally and $9 trillion in belongings below administration, second solely to BlackRock.
The retirement announcement appeared to catch Vanguard watchers without warning. Barry Ritholtz, Ritholtz Wealth Administration founder, chairman and chief funding officer, famous in a publish on X, previously Twitter, that it was sudden.
The information was a bit stunning as a result of “Vanguard’s simply doing so nicely,” Eric Balchunas, Bloomberg senior ETF analyst, stated on Bloomberg TV following the announcement.
Buckley has spent 33 years on the low-fee asset supervisor, together with greater than six as CEO. In saying his retirement plans late final month, Vanguard famous that below his tenure, the agency’s international consumer base expanded by tens of thousands and thousands and AUM grew by 80%.
Vanguard has launched a complete CEO choice course of during which it’s each inside and exterior candidates. When it revealed Buckley’s plans, it additionally introduced it had appointed Greg Davis, its chief funding officer, to an extra position as Vanguard president.
Buckley’s Legacy
“Beneath Buckley, Vanguard has taken in nearly $1 billion a day, $3.6 trillion in asset progress,” Balchunas stated on Bloomberg TV. “Their asset progress below him is greater than like two or three total asset managers have in belongings.”
Balchunas, who wrote a ebook on Vanguard and founder John Bogle, “The Bogle Impact,” additionally famous that the corporate has taken in over half of exchange-traded funds’ web flows this 12 months. Bogle was famously skeptical of ETFs, and each successor since, together with Buckley, has pushed Vanguard additional into ETFs, which “are clearly the automobile of selection over the mutual fund.”
Furthermore, Balchunas famous, Buckley has constructed Vanguard’s private advisory service, which had practically $300 billion in AUM at year-end 2023.
“That is Vanguard turning into a wealth supervisor,” he stated. “That is essential as a result of a few of their shoppers are getting older, they want extra assist with their funds.”
Buyer Service Woes
Nonetheless, customer support has turn out to be a priority for a lot of clients in addition to trade consultants. Balchunas referred to as it Vanguard’s “one Achilles heel” and stated Buckley’s yet-unnamed successor might want to give attention to it. Monetary advisor Rick Ferri, who hosts the “Bogleheads on Investing” podcast, agreed that tending to customer support is vital.
“The largest problem dealing with the subsequent CEO is consumer service. The notion, proper or mistaken, is that consumer service slipped below Tim Buckley and that every little thing wants an replace together with the web site,” Ferri instructed ThinkAdvisor by e-mail.
Jon Luskin, a fee-only, advice-only planner and John C. Bogle Middle for Monetary Literacy board member, recommended that it might not be straightforward to eradicate consumer service complaints — and that the problem isn’t essentially particular to Vanguard.