You’ll want to pay attention to your money if you’re still with Vanguard, because times are changing with the announcement of new CEO Salim Ramji. As a BlackRock alum, Ramji will be the first outsider in Vanguard’s roughly 50-year history. It’s another shot across the bow for acolytes of founder Jack Bogle. The godfather of low fees must be turning in his grave. Because let’s be clear about this move: It’s about finding more streams of revenue from you.
You’ve already seen Vanguard move in this direction. It’s blown off course by selling fee-based advice, stuffing investors into their low-cost (in other words, no revenue) index funds. There was a time when Vanguard, a shareholder-owned company, sought to strip away bells and whistles in a crusade toward lower and lower fees. But that ship has sailed. Now, when you go to Vanguard’s website, it’s like entering a department store. Simple, it is not.
The success of index funds has resulted in a race to zero fees. The success of other firms offering the same product has turned index funds into commodities. Now, the index fund business is stepping up the pace, looking for new channels of growth. The game is about charging for advice and then putting investors in these no-cost funds or ETFs. They created a middleman to generate cash and upsell from there.
The original gangsters like Jack Bogle and my father-in-law Dick Young, through his Intelligence Report newsletter, helped put Vanguard on the map. Both guided investors into low expense, low turnover, no 12b-1 fee, and no front or back-end loaded products. Vanguard happened to be the belle of the ball. All to your benefit. They understood this is a relationship business built on trust. And so many trusted Vanguard.
Unfortunately, now we’re too many CEOs removed from Bogle. The divergence began when they parked Bogle’s office in some annex far from the C suites. You could see the changes taking place. Now, we have something that is far from the original Vanguard brand. That’s too bad.
Action Line: Good news. There’s a way forward. If you miss the old Vanguard and Intelligence Report, find a greener pasture with Your Survival Guy’s favored Fidelity Investments. Allow me to help you curate a portfolio of individual stocks and bonds that you own where you’re not grouped in with others like you are in a mutual fund or ETF. When you’re ready, let’s talk. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
