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Vanguard's Buckley: 'There's No One Even Close to Us'

Vanguard's CEO on balancing growth with delivering good client outcomes, the future of advice, and the trend toward "free" products.

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Our guest in this special bonus episode of The Long View podcast is Tim Buckley, chairman and CEO of the Vanguard Group, which manages over $5 trillion in assets globally. Tim took the helm at Vanguard in January 2018, succeeding Bill McNabb. Tim is a longtime Vanguard veteran, having joined the firm in 1991. Before assuming his current role, he served as Vanguard’s chief investment officer, head of its retail investor group, as well as its chief information officer.

In this mini episode, which was recorded live at the 31st annual Morningstar Investment Conference in Chicago, we discuss the significance of Vanguard's recent Morningstar Award for Investing Excellence, which the firm received for exemplary stewardship. Tim also addressed how Vanguard attempts to balance growth with delivering good outcomes to clients, its capital allocation philosophy and key initiatives, the future of advice, the trend toward "free" funds, as well as the firm's recent forays into sustainable investing, among other topics.

Show Notes
“It’s the core of Vanguard”: What stewardship and investor-centricity has meant to the firm (0:28-1:20)

Defining “client”: How Vanguard balances off the objectives of its different lines of business (1:21-2:51)

Incredible scale can’t be taken for granted: Is it enough to just be a fund company? (2:52-4:15)

Gazing into our crystal ball: What Vanguard looks like in 10 years and how that compares to today (4:16-5:30)

Goal-setting: How Vanguard defines success and how that informs the way they run the business (5:31-6:40)

The future of advice: “I can’t imagine anything but the price (for advice) coming down” (6:41-7:24)

Embrace technology and personalize: Tim’s counsel to advisors who are trying to adapt to falling advice fees (7:25-8:43)

“There’s no one even close to us”: What matters in a “freemium” world is the cost of the whole portfolio (8:44-10:12)

Pathways to growth: The future of ESG funds and factor investing and how Vanguard tries to position these strategies to advisors and other markets (10:13-12:40)

“All the money flowing to index funds--it’s not because active doesn’t work. It’s because high-cost active doesn’t work” (12:41-14:31)

“You can have your cake and eat it, too, in the active ESG approach”: How to succeed with ESG investing (14:32-16:22)

Best practices: How Vanguard settled on its approach to ESG investing (16:23-17:02)

“We’ve looked”: Vanguard’s approach to capital investment and answering the build-vs.-buy question (17:03-18:26)

“Vanguard is defined by its structure, and we’re going to keep it”: Tim on why Vanguard will never de-mutualize (18:27-19:20)

Tim Buckley, chairman and CEO, The Vanguard Group 

2019 Morningstar Awards for Investing Excellence: Nominees for Exemplary Stewardship 

Winners of the 2019 Morningstar Awards for Investing Excellence 

Vanguard founder John “Jack” Bogle 

Vanguard’s mutual ownership structure, explained 

Vanguard funds snapshot page 

Analyst-rated Vanguard Funds 

Analyst-rated Vanguard ETFs 

Investing Crosses the Rubicon: Free Index Funds” 

Vanguard: Competitors’ Pricing Behavior is Inconsistent” 

2018 Morningstar Fee Study Finds that Prices Continue to Decline” 

Vanguard: Cost of Advice Could Fall Further” 

About the Podcast: The Long View is a podcast from Morningstar. Each week, hosts Christine Benz and Jeff Ptak conduct an in-depth discussion with a thought leader from the world of investing or personal finance. The podcast is produced by George Castady and Scott Halver.

About the Hosts: Christine Benz and Jeff Ptak have been analysts and commentators on investments and the investment industry for many years. Christine is Morningstar's director of personal finance and senior columnist for Jeff is head of global manager research in Morningstar Research Services, overseeing Morningstar's team of 120 manager research analysts in the U.S. and overseas.

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Episode 1: William Bernstein: 'I Don't Think the System Needs Nudges. It Needs Dynamite.'

Episode 2: Don Phillips: 'We're All in the Behavior-Modification Business'

Episode 3: Morgan Housel: 'No One Hires a Luck Manager'