Susan Dziubinski: Now, you mentioned the advice and wealth units that they sort of broke off into their own group now. And they did hire someone from the outside again to sort of oversee this. I believe someone from Fidelity, right?
Daniel Sotiroff: Yes. I think you’re referring to Joanna Rotenberg, right? I hope I’m pronouncing her last name correctly. But, yeah, she kind of came over from Fidelity. That was her past employer. She had, like, a brief gap in her CV, I guess, I would say. But yes, she was at Fidelity for about two years, came from sort of their wealth advice, sort of business. I believe her role there is actually It actually fits exactly with what Vanguard is actually trying to do now. She actually helped carve out that wealth business from what is Fidelity’s essential personal investor. So she helped split it up between, I believe, their brokerage unit and then their sort of their wealth. So they have essentially two units now at Fidelity. And that’s in part because of her and the other people she was working with. So. A lot of ways, she’s kind of like, maybe a perfect fit, because that’s what Vanguard’s essentially trying to do here.
But if you look back further in her CV, she also has a lot more experience in sort of the wealth and advice side. She actually worked for BMO for 11 years before Fidelity. And then, you know, right before she left BMO and moved over to Fidelity, she was actually heading up their wealth and advice unit as well. So a lot of experience in that side of the business. Again, it sounds like what she was doing at Fidelity fits hand in glove with what’s going on at Vanguard. On paper, great fit.
Vanguard Moves Toward Advisory Services
Dziubinski: Yeah. Now, we’ve talked about, over the past couple of years, about Vanguard and trying to move more towards advice and wealth. What are some of the challenges you think that Vanguard’s facing on that front? That, you know, maybe breaking it off and having a new head is going to be able to help them with?
Sotiroff: Yeah, I kind of put them into two broad categories, I guess, I would say.
One is value proposition. What I mean by that is like, if you think about Vanguard historically, it was always this direct to investor experience, right? And that was where they made their business. You know, they cut the fees out by cutting out the middlemen, the distributors, all the commissions, and everything like that. And what you got was a very cheap, very well-managed mutual fund at the end of the day. And that was the secret sauce. That was what really created all the success for the investors at the end of the day. The other thing is like, this was something like one of Bogle’s sacred cows. If you go back to a lot of the books he wrote, he did not want to get into the advice business at all. And they’ve sort of tried it on and off for the last 30 years. They started dabbling in it in the ’90s, and it kind of like, in fits and starts, it kind of worked, it kind of didn’t. They’ve been getting a lot more serious about it now since like the mid-2010s, when they started to get into the personal advisor space and then they added the robo-advisor. So they’ve got this very well-structured progression where you start out with the robo, and you can sort of progress into these various levels of the personal advisor services now. So it’s a much more organized, it’s a much more serious effort this time around.
Can Vanguard Transition From Index Giant to Advisory Leader?
But again, is that going to sell with investors? That remains to be seen, because that’s not what Vanguard is really known for, I guess, is what I’m trying to say here.
The second one I really look at is client type, right? I think, when I think of what Vanguard is trying to do, this is almost sounds like more of a remote sort of virtual type of financial planner sort of setup. I don’t, I don’t see them setting up brick and mortar stores. Maybe they do. I don’t know. But it really seems to fit more with those sort of clients that are going to be a little bit more hands-off. Maybe bring you your financial life and say, hey, here’s my money. Let’s set up a plan, and I’ll check in with you a few times a year or something like that. So for those that just want to outsource a lot of this stuff, and they get it, and they’re too busy with the rest of their life, it works great for those types of clients. For those that are more hands-on, and they’ve got to be in their advisor’s office face-to-face every week or something like that, and they need a lot of hands-on. I don’t know if that’s going to work for them. Maybe it does, but I have a hard time seeing that. But we’ll see. We don’t really know what Vanguard is planning in this. They just brought in the new hire. I think we need to give her some time and let her figure out what she’s exactly going to do there. So it’ll be exciting to see. Yeah.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
