New Book - Inside Vanguard

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Gaston
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New Book - Inside Vanguard

Post by Gaston »

I just finished the new book Inside Vanguard by Charles Ellis. Just thought I’d share three thoughts from the book.

1. As much as we Bogleheads look up to Jack Bogle, it’s probably good that he stepped down as Vanguard’s CEO when he did. Vanguard needed to change, and needed a new leader to drive that change (particularly by investing more in IT).

2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).

3. With $8 trillion assets under management, every 1 basis point = $800 million per year that Vanguard can use to fund its operations and drive improvements.

I enjoyed the book, but I want to point out it’s not a book about investing. It’s a book about the history of Vanguard as a company.
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Re: New Book - Inside Vanguard

Post by investor4life »

Gaston wrote: Tue Oct 25, 2022 8:46 pm I just finished the new book Inside Vanguard by Charles Ellis. Just thought I’d share three thoughts from the book.

1. As much as we Bogleheads look up to Jack Bogle, it’s probably good that he stepped down as Vanguard’s CEO when he did. Vanguard needed to change, and needed a new leader to drive that change (particularly by investing more in IT).

2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).

3. With $8 trillion assets under management, every 1 basis point = $800 million per year that Vanguard can use to fund its operations and drive improvements.

I enjoyed the book, but I want to point out it’s not a book about investing. It’s a book about the history of Vanguard as a company.

If they did invest more in IT, it sure doesn't show. The new web interface is positively ghastly.
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Re: New Book - Inside Vanguard

Post by Cheez-It Guy »

Well, they have a website now.
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Re: New Book - Inside Vanguard

Post by UpperNwGuy »

Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots. I don't trust Vanguard any more than I trust Fidelity and Schwab.
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Re: New Book - Inside Vanguard

Post by Beliavsky »

UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots.
Could you elaborate?
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Re: New Book - Inside Vanguard

Post by retiredjg »

Cheez-It Guy wrote: Wed Oct 26, 2022 7:04 am Well, they have a website now.
It's a good thing...since there are no offices to use. :happy
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Re: New Book - Inside Vanguard

Post by jimgour »

There is a good reason we call ourselves the "Bogleheads" and not the "Vanguardites".
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Re: New Book - Inside Vanguard

Post by rob »

investor4life wrote: Tue Oct 25, 2022 10:24 pm If they did invest more in IT, it sure doesn't show. The new web interface is positively ghastly.
Agree.. Absolutely no proof of IT spend and incredibly bad value for money...
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Re: New Book - Inside Vanguard

Post by UpperNwGuy »

Beliavsky wrote: Wed Oct 26, 2022 8:32 am
UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots.
Could you elaborate?
1. A series of Vanguard leaders allowed the firm's information technology to fall behind, which is really strange for a brokerage that doesn't maintain a brick and mortar presence and is dependent upon information technology for most customer interactions.

2. The decline in customer service. Wait times on calls have increased to unacceptable levels. The expertise of the customer service reps has deteriorated dramatically in recent years.

3. The company now promotes its new actively-managed, higher-fee mutual funds and ETFs, confusing many new customers who came to Vanguard thinking that following the company's recommendations would automatically put them into the low-fee index funds that Jack Bogle recommended.

4. The heavy promotion of Personal Advisor Services (PAS) runs counter to the long-standing Vanguard culture of self-managed investing.
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Re: New Book - Inside Vanguard

Post by neurosphere »

rob wrote: Wed Oct 26, 2022 8:46 am
investor4life wrote: Tue Oct 25, 2022 10:24 pm If they did invest more in IT, it sure doesn't show. The new web interface is positively ghastly.
Agree.. Absolutely no proof of IT spend and incredibly bad value for money...
Well, Fidelity still requires me to mail a check to fund my solo 401k (which I have to do monthly because I have an employee). Vanguard's allows electronic contributions. That counts for something, right? :D But I'm too lazy to move my solo 401k to Vanguard.
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Re: New Book - Inside Vanguard

Post by stan1 »

UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots. I don't trust Vanguard any more than I trust Fidelity and Schwab.
What is said culture? I'm pretty sure low cost (cost cutting) is a big part of the culture, reducing costs is rumored to be part of how executives were compensated in the past, and Vanguard is for the most part doing pretty well at that however at this point on fund fees they are squeezing juice out of a turnip. There's not much expense left to extract other than customer support workers and they are now trying to move most people to a low cost, primarily online interaction. Clearly still a work in progress.

They are making low cost advisors available to the masses, saving the people who chose PAS over a 1% AUM advisor billions of dollars per year. No savings there for a DIY investor of course and some are frustrated that free perks are going away as part of cost cutting. Vanguard is delivering exactly what was promised: low costs.
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Re: New Book - Inside Vanguard

Post by Broken Man 1999 »

stan1 wrote: Wed Oct 26, 2022 8:53 am
UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots. I don't trust Vanguard any more than I trust Fidelity and Schwab.
What is said culture? I'm pretty sure low cost (cost cutting) is a big part of the culture, reducing costs is rumored to be part of how executives were compensated in the past, and Vanguard is for the most part doing pretty well at that however at this point on fund fees they are squeezing juice out of a turnip. There's not much expense left to extract other than customer support workers and they are now trying to move most people to a low cost, primarily online interaction. Clearly still a work in progress.

They are making low cost advisors available to the masses, saving the people who chose PAS over a 1% AUM advisor billions of dollars per year. No savings there for a DIY investor of course and some are frustrated that free perks are going away as part of cost cutting. Vanguard is delivering exactly what was promised: low costs.
So far as the Flagship "perks", for many a lot is expected from a pittance of expenses Vanguard collects from their index funds.

Honestly, a million dollars in Vanguard's index funds today brings in substantially less than a million dollar portfolio of 10-20 years ago. That is our reward from investing at Vanguard. Of course one can certainly be rewarded with rock-bottom costs at other companies as well.

The Flagship requirements should have been reviewed every few years and the entry level raised periodically. Today the Flagship Select requiring $5,000,000 should be the first tier of Flagship. DW and I would be drummed out of Flagship, but it would be the right thing to do.

Despite anecdotal accounts of poor service we constantly read here, surveys indicate clients don't believe Vanguard is the dumpster fire some posters believe. BTW, I believe the complaints are legit, the problem is the lack of context: Do the complaints represent a meaningful number of the 30million+ clients?

The Vanguard of today is a far cry from the Vanguard of Mr. Bogle's day. And that is a good thing. Businesses adapt or decline.

Had Mr Bogle been at the helm of Vanguard in the last 15 years or so, does anyone honestly believe he would have not made the changes that reflected the realities of the market?

I cannot believe Mr Bogle would have sat idly by and let his company become an also-ran. He had a healthy ego, just like so many other pioneers in various fields.

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Re: New Book - Inside Vanguard

Post by Sandtrap »

Gaston wrote: Tue Oct 25, 2022 8:46 pm I just finished the new book Inside Vanguard by Charles Ellis. Just thought I’d share three thoughts from the book.

1. As much as we Bogleheads look up to Jack Bogle, it’s probably good that he stepped down as Vanguard’s CEO when he did. Vanguard needed to change, and needed a new leader to drive that change (particularly by investing more in IT).

2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).

3. With $8 trillion assets under management, every 1 basis point = $800 million per year that Vanguard can use to fund its operations and drive improvements.

I enjoyed the book, but I want to point out it’s not a book about investing. It’s a book about the history of Vanguard as a company.
Here is a link to the hardcovery book available on Amazon.
https://smile.amazon.com/Inside-Vanguar ... 141&sr=8-1

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Re: New Book - Inside Vanguard

Post by asset_chaos »

Cheez-It Guy wrote: Wed Oct 26, 2022 7:04 am Well, they have a website now.
Tee, hee. I think Vanguard's first foray onto the web was around 1994 in AOL's so-called walled garden. I recall writing to Bogle saying they should be on the open internet instead. I got a reply from Brennen---unfortunately not from Bogle directly---outlining why they chose AOL for Vanguard Online but also saying I could---let's pull Feb 1995 letter out of file---"expect to see further development of our online capabilities via the Internet in the future".

USPS was the sine qua non of secure messaging in those days.-)
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Re: New Book - Inside Vanguard

Post by inverter »

I don't think Vanguard gets enough credit.

https://www.jdpower.com/business/press- ... tion-study
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Re: New Book - Inside Vanguard

Post by like2read »

Gaston wrote: Tue Oct 25, 2022 8:46 pm

With $8 trillion assets under management, every 1 basis point = $800 million per year that Vanguard can use to fund its operations and drive improvements.
Wow, you'd have to imagine one basis point could go quite a ways towards IT investments!
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Re: New Book - Inside Vanguard

Post by rjbraun »

Broken Man 1999 wrote: Wed Oct 26, 2022 2:52 pm <snip>
The Flagship requirements should have been reviewed every few years and the entry level raised periodically. Today the Flagship Select requiring $5,000,000 should be the first tier of Flagship. DW and I would be drummed out of Flagship, but it would be the right thing to do.
I thought Vanguard did away with Flagship, no? I was Flagship, and maybe I still am, on some level. I still haven't transitioned my mutual fund accounts to brokerage. I thought they were going to impose fees, as a result, but it doesn't seem that they have, at least for the time being.

Is there an actual Flagship Select level now for accounts totaling $5,000,000 or more? Are there any worthwhile benefits associated with Select status?

Thanks in advance for any insights you can offer on this.
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Re: New Book - Inside Vanguard

Post by abuss368 »

UpperNwGuy wrote: Wed Oct 26, 2022 8:48 am
Beliavsky wrote: Wed Oct 26, 2022 8:32 am
UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots.
Could you elaborate?
1. A series of Vanguard leaders allowed the firm's information technology to fall behind, which is really strange for a brokerage that doesn't maintain a brick and mortar presence and is dependent upon information technology for most customer interactions.

2. The decline in customer service. Wait times on calls have increased to unacceptable levels. The expertise of the customer service reps has deteriorated dramatically in recent years.

3. The company now promotes its new actively-managed, higher-fee mutual funds and ETFs, confusing many new customers who came to Vanguard thinking that following the company's recommendations would automatically put them into the low-fee index funds that Jack Bogle recommended.

4. The heavy promotion of Personal Advisor Services (PAS) runs counter to the long-standing Vanguard culture of self-managed investing.
Business must grow and evolve with the times to survive and prosper. Vanguard is no different.

Best wishes.
Tony
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Re: New Book - Inside Vanguard

Post by abuss368 »

inverter wrote: Wed Oct 26, 2022 9:14 pm I don't think Vanguard gets enough credit.

https://www.jdpower.com/business/press- ... tion-study
I agree. In the few times I have called over the last year, I barely waited and received very good service.

Nice to read a positive post on this subject.

Best.
Tony
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Re: New Book - Inside Vanguard

Post by abuss368 »

Gaston wrote: Tue Oct 25, 2022 8:46 pm I just finished the new book Inside Vanguard by Charles Ellis. Just thought I’d share three thoughts from the book.

1. As much as we Bogleheads look up to Jack Bogle, it’s probably good that he stepped down as Vanguard’s CEO when he did. Vanguard needed to change, and needed a new leader to drive that change (particularly by investing more in IT).

2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).

3. With $8 trillion assets under management, every 1 basis point = $800 million per year that Vanguard can use to fund its operations and drive improvements.

I enjoyed the book, but I want to point out it’s not a book about investing. It’s a book about the history of Vanguard as a company.
I received a copy and it appears very interesting. I am looking forward to reading.

Best.
Tony
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Re: New Book - Inside Vanguard

Post by Sconie »

investor4life wrote: Tue Oct 25, 2022 10:24 pm
Gaston wrote: Tue Oct 25, 2022 8:46 pm
If they did invest more in IT, it sure doesn't show. The new web interface is positively ghastly.
Heck......you're being too kind in your assessment of them!
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Re: New Book - Inside Vanguard

Post by UpperNwGuy »

abuss368 wrote: Sat Nov 19, 2022 1:22 pm
UpperNwGuy wrote: Wed Oct 26, 2022 8:48 am
Beliavsky wrote: Wed Oct 26, 2022 8:32 am
UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots.
Could you elaborate?
1. A series of Vanguard leaders allowed the firm's information technology to fall behind, which is really strange for a brokerage that doesn't maintain a brick and mortar presence and is dependent upon information technology for most customer interactions.

2. The decline in customer service. Wait times on calls have increased to unacceptable levels. The expertise of the customer service reps has deteriorated dramatically in recent years.

3. The company now promotes its new actively-managed, higher-fee mutual funds and ETFs, confusing many new customers who came to Vanguard thinking that following the company's recommendations would automatically put them into the low-fee index funds that Jack Bogle recommended.

4. The heavy promotion of Personal Advisor Services (PAS) runs counter to the long-standing Vanguard culture of self-managed investing.
Business must grow and evolve with the times to survive and prosper. Vanguard is no different.

Best wishes.
Tony
I don't disagree with your two sentence summary of what is going on, but it doesn't contradict my assertion that Vanguard has drifted away from its roots.
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Re: New Book - Inside Vanguard

Post by Bogle64Pilot »

Vanguard is sinking more quickly than the Titanic at this point. Way less transparency than Fidelity. Go ahead and ask Vanguard what their executive compensation is…
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Re: New Book - Inside Vanguard

Post by abuss368 »

Bogle64Pilot wrote: Sun Nov 20, 2022 7:45 pm Vanguard is sinking more quickly than the Titanic at this point. Way less transparency than Fidelity. Go ahead and ask Vanguard what their executive compensation is…
Interesting observation and curious how you arrived at that conclusion when Vanguard’s total assets have now topped $8 TRILLION and second only to BlackRock at $9.50 Trillion? At that rate, every 0.01 reduction in a funds expense ratio is saving huge dollars to investors.

I am not aware that Vanguard has ever disclosed executive compensation.

Best.
Tony
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Re: New Book - Inside Vanguard

Post by ee_guy »

I was trying to learn more about the philanthropic support that Vanguard provides. I am not referring to funds provided by donors through the donor advised funds but by VBS itself.

In the Boston area and NYC, Fidelity is very generous in supporting local non-profits. I see their name on donor boards,etc. There is a foundation setup by the Johnson family: https://www.fidelityfoundation.org/about-us/

Does Vanguard provide support to local non-profits? Or would that increase the expenses without benefiting the "owners"?
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Re: New Book - Inside Vanguard

Post by asset_chaos »

I would guess that Vanguard, like many large employers, matches to some level donations made by their employees, as part of their overall compensation package. A quick google finds this page with the Vanguard Group listed as having such a program.

It's not clear to me why I'd want Vanguard to have anything similar to Fidelity's foundation. That link says the Fidelity foundation was established by a Johnson and is run by the Johnson family. Why would I want Vanguard's senior management directing a chunk of Vanguard funds to charities they thought were interesting?
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Re: New Book - Inside Vanguard

Post by Cheez-It Guy »

I wouldn't.
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Re: New Book - Inside Vanguard

Post by Toth »

neurosphere wrote: Wed Oct 26, 2022 8:52 am Well, Fidelity still requires me to mail a check to fund my solo 401k (which I have to do monthly because I have an employee). Vanguard's allows electronic contributions. That counts for something, right? :D But I'm too lazy to move my solo 401k to Vanguard.
You can deposit into your brokerage account electronically and call them to move the funds into your solo 401k. I used my CMA, let the funds settle, then called them. Pretty easy, although it would nice not to have to call them at all.
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Re: New Book - Inside Vanguard

Post by Fallible »

Broken Man 1999 wrote: Wed Oct 26, 2022 2:52 pm ...
Had Mr Bogle been at the helm of Vanguard in the last 15 years or so, does anyone honestly believe he would have not made the changes that reflected the realities of the market?
...
Changes are inevitable, of course, and he would've made them. But the question is what would they have been and would they have been the right ones? And an even more important question, I think, is whether he would have just reacted to the need for change (as it appears is being done now and perhaps belatedly in the sense of catching up) or would he have envisioned a new direction for the company and then led it there? My bet would be on the latter, but there's no way to know for certain.
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Re: New Book - Inside Vanguard

Post by Broken Man 1999 »

Fallible wrote: Mon Nov 21, 2022 6:02 pm
Broken Man 1999 wrote: Wed Oct 26, 2022 2:52 pm ...
Had Mr Bogle been at the helm of Vanguard in the last 15 years or so, does anyone honestly believe he would have not made the changes that reflected the realities of the market?
...
Changes are inevitable, of course, and he would've made them. But the question is what would they have been and would they have been the right ones? And an even more important question, I think, is whether he would have just reacted to the need for change (as it appears is being done now and perhaps belatedly in the sense of catching up) or would he have envisioned a new direction for the company and then led it there? My bet would be on the latter, but there's no way to know for certain.
Well he had an opportunity to roll out ETFs, but missed the market on that opportunity, so who knows how he would have reacted to changing business conditions. Out of respect for Mr Bogle I believe management delayed ETF rollout, though it didn't take long for Vanguard to become a large player in that segment of the business. As it turned out, with the multiple class shares a better product came of Vanguard's effort. Mr Bogle could have been the ETF and index fund pioneer. Instead he was a one-hit wonder! :D But, oh what a hit index funds were, and are.

At any rate I believe the leadership of Vanguard after Mr Bogle has done a more than able job of pulling the company in the direction of what the customers want today.

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Re: New Book - Inside Vanguard

Post by nisiprius »

$23.98 for a Kindle eBook edition? No thanks, I'll wait until our public library network gets it.

The subtitle, "Leadership Secrets From the Company That Continues to Rewrite the Rules of the Investing Business" puts me off; that doesn't sound like there will be even a pretense of objectivity. I don't want a hatchet job, but I don't want a puff piece, either.

Good or bad, the Vanguard Managed Payout fund(s), introduced in 2008, were the last thing Vanguard has done that would qualify as "rewriting the rules" and doing something unique that its rivals were not doing.

If someone who has read the book can tell me if it casts any interesting new light on e.g. why Vanguard has been introducing and advertising actively managed bond funds like Vanguard Core Bond Fund and Vanguard Core-Plus Bond, then I might be more proactive about trying to get my hands on a copy.
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Re: New Book - Inside Vanguard

Post by Dave55 »

abuss368 wrote: Sat Nov 19, 2022 1:23 pm
inverter wrote: Wed Oct 26, 2022 9:14 pm I don't think Vanguard gets enough credit.

https://www.jdpower.com/business/press- ... tion-study
I agree. In the few times I have called over the last year, I barely waited and received very good service.

Nice to read a positive post on this subject.

Best.
Tony
You the guy who called? We were wondering..... 8-)

Dave
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Re: New Book - Inside Vanguard

Post by billaster »

Broken Man 1999 wrote: Mon Nov 21, 2022 6:27 pm Well he had an opportunity to roll out ETFs, but missed the market on that opportunity, so who knows how he would have reacted to changing business conditions. Out of respect for Mr Bogle I believe management delayed ETF rollout, though it didn't take long for Vanguard to become a large player in that segment of the business.
So what. Maybe Jack Bogle was right and Vanguard could still be a successful company offering mutual funds without jumping into the ETF market. Maybe better avoiding the whole brokerage thing. Bigger isn't the same as better.
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Re: New Book - Inside Vanguard

Post by neurosphere »

Toth wrote: Mon Nov 21, 2022 1:50 pm
neurosphere wrote: Wed Oct 26, 2022 8:52 am Well, Fidelity still requires me to mail a check to fund my solo 401k (which I have to do monthly because I have an employee). Vanguard's allows electronic contributions. That counts for something, right? :D But I'm too lazy to move my solo 401k to Vanguard.
You can deposit into your brokerage account electronically and call them to move the funds into your solo 401k. I used my CMA, let the funds settle, then called them. Pretty easy, although it would nice not to have to call them at all.
Thanks.
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Re: New Book - Inside Vanguard

Post by ebeb »

I dont understand why people complain about Vanguard IT. The website may not be pretty but it is reliable, has all needed functions and does its job very well. I dont think it is much worse than Schwab etc. :confused
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Valuethinker
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Re: New Book - Inside Vanguard

Post by Valuethinker »

nisiprius wrote: Mon Nov 21, 2022 6:45 pm $23.98 for a Kindle eBook edition? No thanks, I'll wait until our public library network gets it.

The subtitle, "Leadership Secrets From the Company That Continues to Rewrite the Rules of the Investing Business" puts me off; that doesn't sound like there will be even a pretense of objectivity. I don't want a hatchet job, but I don't want a puff piece, either.

Good or bad, the Vanguard Managed Payout fund(s), introduced in 2008, were the last thing Vanguard has done that would qualify as "rewriting the rules" and doing something unique that its rivals were not doing.

If someone who has read the book can tell me if it casts any interesting new light on e.g. why Vanguard has been introducing and advertising actively managed bond funds like Vanguard Core Bond Fund and Vanguard Core-Plus Bond, then I might be more proactive about trying to get my hands on a copy.
There is a Peter Bernstein article about "The business of investing vs investing as a business" -- some title like that.

These 2 are *always* in tension. Provide more value to customers (lower expense ratios, broad generalist funds eg Vanguard TSM) v provide more value to the firm owners

David Swensen covers this. To invest in an active manager you want someone who is small, owned by employees who have "skin in the game" in the funds. He goes through this but unfortunately his picks (from memory: Southeastern Asset Management but also Dodge & Cox?).

We saw PIMCO go through this wrenching conflict with explosive results - the departure of Bill Gross.

So Vanguard is stuck in that tension, and generally organisations of any type focus on growth in resources available to senior managers: staff, capital etc. That's how we got superbanks (of dubious profitability & stability) pre 2008. That's how you get overlarge and cumbersome government bureaucracies (Stanislaus Lem wrote 1-2 really good satirical short stories about that - as "science fiction" he could get away with things you couldn't normally do under a communist regime's censorship).

Blackrock, an explicitly "for the shareholders" firm, has the same tension. I understand the passive side is run entirely separately and that's how they negotiate that fault line. Not sure if the index funds are run by the same people as ishares, the ETFs, but I would assume so.
Broken Man 1999
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Re: New Book - Inside Vanguard

Post by Broken Man 1999 »

billaster wrote: Mon Nov 21, 2022 9:51 pm
Broken Man 1999 wrote: Mon Nov 21, 2022 6:27 pm Well he had an opportunity to roll out ETFs, but missed the market on that opportunity, so who knows how he would have reacted to changing business conditions. Out of respect for Mr Bogle I believe management delayed ETF rollout, though it didn't take long for Vanguard to become a large player in that segment of the business.
So what. Maybe Jack Bogle was right and Vanguard could still be a successful company offering mutual funds without jumping into the ETF market. Maybe better avoiding the whole brokerage thing. Bigger isn't the same as better.
Many investors want(ed) additional products.

BTW, Vanguard offered brokerage services via Pershing, long before ETFs . I would guess that at some point in time the management thought it best to have the brokerage at Vanguard.

Broken Man 1999
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billaster
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Re: New Book - Inside Vanguard

Post by billaster »

Broken Man 1999 wrote: Tue Nov 22, 2022 8:31 am
billaster wrote: Mon Nov 21, 2022 9:51 pm
Broken Man 1999 wrote: Mon Nov 21, 2022 6:27 pm Well he had an opportunity to roll out ETFs, but missed the market on that opportunity, so who knows how he would have reacted to changing business conditions. Out of respect for Mr Bogle I believe management delayed ETF rollout, though it didn't take long for Vanguard to become a large player in that segment of the business.
So what. Maybe Jack Bogle was right and Vanguard could still be a successful company offering mutual funds without jumping into the ETF market. Maybe better avoiding the whole brokerage thing. Bigger isn't the same as better.
Many investors want(ed) additional products.
I don't think that Bogle's goal was to provide lots of "products." People who want "products" have lots of other places to go.
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Re: New Book - Inside Vanguard

Post by Broken Man 1999 »

billaster wrote: Tue Nov 22, 2022 11:15 am
Broken Man 1999 wrote: Tue Nov 22, 2022 8:31 am
billaster wrote: Mon Nov 21, 2022 9:51 pm
Broken Man 1999 wrote: Mon Nov 21, 2022 6:27 pm Well he had an opportunity to roll out ETFs, but missed the market on that opportunity, so who knows how he would have reacted to changing business conditions. Out of respect for Mr Bogle I believe management delayed ETF rollout, though it didn't take long for Vanguard to become a large player in that segment of the business.
So what. Maybe Jack Bogle was right and Vanguard could still be a successful company offering mutual funds without jumping into the ETF market. Maybe better avoiding the whole brokerage thing. Bigger isn't the same as better.
Many investors want(ed) additional products.
I don't think that Bogle's goal was to provide lots of "products." People who want "products" have lots of other places to go.
Perhaps not.

I'm happy the current management is offering access to investments beyond mutual funds. I don't have to go elsewhere as I now have that access right here. ETFs, brokered CDs, corporate bonds, treasury and agency bonds, all available without having to leave Vanguard. Choice is nice.

Broken Man 1999
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Valuethinker
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Re: New Book - Inside Vanguard

Post by Valuethinker »

billaster wrote: Tue Nov 22, 2022 11:15 am
Broken Man 1999 wrote: Tue Nov 22, 2022 8:31 am
billaster wrote: Mon Nov 21, 2022 9:51 pm
Broken Man 1999 wrote: Mon Nov 21, 2022 6:27 pm Well he had an opportunity to roll out ETFs, but missed the market on that opportunity, so who knows how he would have reacted to changing business conditions. Out of respect for Mr Bogle I believe management delayed ETF rollout, though it didn't take long for Vanguard to become a large player in that segment of the business.
So what. Maybe Jack Bogle was right and Vanguard could still be a successful company offering mutual funds without jumping into the ETF market. Maybe better avoiding the whole brokerage thing. Bigger isn't the same as better.
Many investors want(ed) additional products.
I don't think that Bogle's goal was to provide lots of "products." People who want "products" have lots of other places to go.
I don't think VG could have "stayed in the game" without ETFs, which have become the leading form of passive investment management.

Bogle, or his successors, was forced to concede that this was a durable financial innovation, that offers real benefits to investors.
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Re: New Book - Inside Vanguard

Post by billaster »

Valuethinker wrote: Wed Nov 23, 2022 5:32 am I don't think VG could have "stayed in the game" without ETFs, which have become the leading form of passive investment management.
"In the game." What does that even mean? Why do folks throw around marketing drone gobbdegook like "in the game" like it means something. Is investing a game? Too many people think business is a "game" and winning the game is their primary goal.

Vanguard without ETFs might be smaller but so what. A large portion of Vanguard business is institutional 401(k)s, most of which don't use ETFs. People who want ETFs have plenty of other places to do business.
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Re: New Book - Inside Vanguard

Post by Broken Man 1999 »

billaster wrote: Wed Nov 23, 2022 12:29 pm
Valuethinker wrote: Wed Nov 23, 2022 5:32 am I don't think VG could have "stayed in the game" without ETFs, which have become the leading form of passive investment management.
"In the game." What does that even mean? Why do folks throw around marketing drone gobbdegook like "in the game" like it means something. Is investing a game? Too many people think business is a "game" and winning the game is their primary goal.

Vanguard without ETFs might be smaller but so what. A large portion of Vanguard business is institutional 401(k)s, most of which don't use ETFs. People who want ETFs have plenty of other places to do business.
I guess we will never know. History will show Vanguard enjoyed success with their ETFs.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
blueskytoo
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Re: New Book - Inside Vanguard

Post by blueskytoo »

:confused

First item criticized, IT.

I started at Vanguard when they only did mail for moving money or transferring from one mutual fund to another. :oops:

Today, I do all that on my computer. :beer

"We Bogleheads" have had some very bitter complaints when Vanguard updates the software, but fail to see that in most cases the site is either easier to use, or has features that replace the need to call for help. We should be having threads explaining the new features. I am too lazy to hunt around the Vanguard site to find new instruction. :happy

Phone service.

Waits were very unpredictable then, from on the first ring, to half an hour. :annoyed

Pretty much the same now, but there is a higher likelihood that the person will transfer you to an expert on the specific issue that I have called about. The simple things, I have figured out with a Google search. :happy
You do Google, don't you? 8-)

Over the years, I have had accounts at 6 other brokers, including some of the largest. :moneybag

Today, Vanguard and Fidelity are the only ones that I have, each for features where they excel. They are hard to beat, and each has its advantages. Neither is perfect for my needs.

On the subject of ETF's, Jack did not like them , neither did Fidelity. Progress has required any full service fund source to offer them. Vanguard and Fidelity were both late to the service, but both are doing them well. I bought from the early adopters, and still have them, as they have quite large gains, and I do not wish to pay the taxes to move them to F or V ETF's. :sharebeer
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Re: New Book - Inside Vanguard

Post by SxSW »

UpperNwGuy wrote: Wed Oct 26, 2022 7:43 am
Gaston wrote: Tue Oct 25, 2022 8:46 pm 2. I now understand why the financial advisor Allan Roth recently said that of all the brokerages, he trusts Vanguard the most. (It has to do with the culture that Jack and subsequent leaders embedded in Vanguard).
But is that culture still alive and well at Vanguard? Recent corporate actions seem to indicate that Vanguard is drifting away from its roots.
There is almost nobody left at Vanguard from when Bogle was there. How much does any company change as the decades go by? Over 20 years and two other CEOs having come and gone, it would be very naive to think that there is any lingering culture remaining.
1. A series of Vanguard leaders allowed the firm's information technology to fall behind, which is really strange for a brokerage that doesn't maintain a brick and mortar presence and is dependent upon information technology for most customer interactions.
As Bill McNab said, Vanguard has a funny relationship with technology.
2. The decline in customer service. Wait times on calls have increased to unacceptable levels. The expertise of the customer service reps has deteriorated dramatically in recent years.
Employees have stated that management apparently wants employees working almost nonstop, taking calls back-to-back. They feel they get more bang for their buck that way, but people eventually move on for more pay and better working conditions.

3. The company now promotes its new actively-managed, higher-fee mutual funds and ETFs, confusing many new customers who came to Vanguard thinking that following the company's recommendations would automatically put them into the low-fee index funds that Jack Bogle recommended.
20+ years after Bogle left, are there actually new customers who think that?

4. The heavy promotion of Personal Advisor Services (PAS) runs counter to the long-standing Vanguard culture of self-managed investing.
Regarding culture, see above. Not everybody has the time, willingness, and ability to self-manage. In fact, the vast majority lack at least one of those traits. If you could listen in on the phone calls to the average advisor, at any firm, you'd be shaking your head at the end of the day. Clients, many of them highly-educated, insist on timing the market, buying high, selling low, and investing in risky stocks or options based on the advice of a friend or co-worker. They'll call in asking to be taken out of the market during a downturn, and in the next breath ask if they can invest in crypto. You could tie them to a chair and read Bogle On Mutual Funds to them, and as soon as you release the ropes, they'll go buy marijuana stocks. Investment management is a worthwhile thing for most people, because otherwise they'll make catastrophic decisions.
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Re: New Book - Inside Vanguard

Post by bengal22 »

Bogle64Pilot wrote: Sun Nov 20, 2022 7:45 pm Vanguard is sinking more quickly than the Titanic at this point. Way less transparency than Fidelity. Go ahead and ask Vanguard what their executive compensation is…
Titanic sank in less than 3 hours. I have told you a million times not to exaggerate.
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