You’ve now led Vanguard’s Retail Investor Group for a year. Reflecting on your time at the helm, what evolving industry trends are helping to shape how Vanguard serves clients today and tomorrow?

We keep an eye on the entire landscape, but I’d say three trends are influencing the way we serve our clients. First, we’re finding that individual investors are increasingly interested in exchange-traded funds (ETFs) due to their low cost, broad diversification, and trading flexibility. As a result, we’re providing investors with more robust education about ETFs, and we’re investing in ways to make trading ETFs even more accessible and seamless for our clients.

Second, many of our clients have expressed a need for financial advice. We responded by launching Vanguard Personal Advisor Services® to broaden access to affordable financial advice.

Personal Advisor offers clients a comprehensive financial plan and an ongoing partnership with a Vanguard advisor. We use sophisticated computer models to develop plans based on Vanguard’s time-tested investment methodology and we offer clients a personalized web experience built around their investment goals. The cost is reasonable—0.30%—$300 on a $100,000 account.

Lastly, companies like Amazon and Google have raised consumer expectations for excellent digital customer experiences across all industries. We’ve found that the majority of our clients prefer to connect with us digitally. More than 90% of interactions occur through our website. So, we’ll continue to invest in our digital experience, with the goal of making it even stronger and more intuitive for clients over time.

How has Vanguard Personal Advisor Services resonated with clients?

We are very encouraged by the early adoption of the service, and our Personal Advisor clients seem pleased as well. Nearly 40% of our clients have consolidated assets with us after joining the service, which we view as a strong vote of confidence.

Clients find comfort in discussing their financial goals and plans with a Vanguard advisor, especially as they approach major life inflection points like retirement. While the service is well suited for individuals in any stage, the majority of our clients are saving for retirement, with about two-thirds nearing or already in retirement. We develop comprehensive, customized retirement income plans for these clients that take into account their risk tolerance, investment assets, Social Security benefits, and other sources of income.

The value of a Personal Advisor was particularly evident when volatility returned to the financial markets earlier this year. One client who plans to retire within the year, for instance, was ready to cash out when stocks took a tumble, worried about protecting his nest egg. His Vanguard advisor provided important counsel, encouraging him to stick to his long-term plan. The client remained invested and felt reassured that his advisor was looking out for his financial future.

Vanguard continues to enhance Personal Advisor Services. Can you shed some light on where you have focused?

Several enhancements come to mind. We recently incorporated a new account aggregation service enabling clients to see a more complete view of their investment assets when they log onto The service automatically aggregates and updates account information from other financial institutions and shows them alongside a client’s Vanguard assets.

Our video conferencing option has also been incredibly well received. In fact, one out of three clients chose to meet with their advisor via video in 2015. We’ve made some significant upgrades to our video conferencing technology and now offer new, on-demand video conference capabilities to enable clients to begin a virtual interaction with the click of a button.

Clients are also benefitting from enhancements to our Social Security guidance capabilities. Approximately 90% of Americans receive Social Security benefits at retirement and claiming options have become more complex over time.1 A client will receive a personalized report narrowing the multitude of potential Social Security claiming strategies down to three potential approaches based on his or her specific situation.

Finally, the majority of Personal Advisor clients are saving money as a result of expense ratio reductions reported for the Vanguard funds this year. We use ultra-low-cost Admiral™ Shares to construct portfolios, two of which—Admiral Shares of Vanguard Total International Stock Index Fund and Vanguard Total International Bond Index Fund—recently reported lower expense ratios of 2 basis points to 0.12% and 5 basis points to 0.14%, respectively.

Vanguard is not a bricks and mortar financial institution. How does that impact how you interact with clients?

We know that client expectations remain high regardless of channel—phone, mail, web, mobile device, app, video conference, or in-person. We aim to bring parity of experience to clients across all channels.

Today, the majority of our clients prefer to interact with us through a digital platform—we had 140 million visits to in 2015 and the vast majority of our client interactions occur over the web or through a mobile device. Moreover, 30% of traffic to occurs via tablets and phones, and that percentage is on the rise.

To support this investor preference, we’re investing in our digital capabilities to enhance key client activities, like buying and selling funds. We’re also investing to personalize our digital experience based on individual client needs. At the same time, the virtual nature of our business can understandably raise cyber security concerns. As stewards of more than 20 million clients’ retirement and college savings assets, we feel the enormity of that responsibility every day, especially as cyber criminals become more sophisticated.

We’ve increased our security measures to protect our clients, including voice verification and security text message codes. Hundreds of thousands of clients have already adopted the security code feature, which requires a six-digit text message code as an additional protective measure when logging onto the account and transaction area on the web.

Tell us about the Vanguard Brokerage Account introduced to clients in 2014.

Based on client feedback, we saw a clear opportunity to improve the client experience. Clients told us they want greater ease and simplicity in the investing experience—and the new Vanguard Brokerage Account provides that.

The Vanguard Brokerage Account allows clients to hold their mutual funds, ETFs, and individual stocks and bonds in the same account. Clients receive an integrated web experience through the new account, including tax and transaction reporting.

A more streamlined transaction experience offers increased flexibility and enables clients to use proceeds from security sales to immediately transact, eliminating the prior four-day wait. This is important as clients are increasingly investing in ETFs; more than $2 in every $5 invested at Vanguard last year went into an ETF.

Can you speak to the ways that Vanguard is lowering the cost of investing?

The cost of investing with Vanguard continues to drop. We’ve reported expense ratio reductions for 130 Vanguard fund shares, resulting in aggregate savings of nearly $142 million to date.2 And we’re not done yet.

We also continue to launch new products that are low cost leaders in their categories. Our new actively managed Core Bond Fund offers Investor Shares with an expense ratio of 0.25% and Admiral Shares for 0.15%. Vanguard Ultra Short-Term Bond Fund, which was introduced in 2015, is similarly low cost—0.20% for Investor Shares and 0.12% for Admiral Shares. The expense ratios of these funds are 70% to 85% lower than the category’s industry average expense ratio.3

Interestingly, many clients pay less than “sticker price” at Vanguard. While our average expense ratio is 0.18%, our average asset-weighted expense ratio is 0.13%. This means our clients are favoring low-cost fund shares like Admiral and ETF, which offer savings over our already low-cost Investor Shares. Vanguard investors recognize the importance of low cost, and we’re pleased to continue helping our clients increase their chances of investment success in this way.

How does Vanguard prioritize the various needs of its clients?

It’s not easy and we have to make tough decisions. But it starts with listening to our clients. We regularly review feedback to remain informed about what our clients need to be successful investors, including how Vanguard can improve and add to our product and service offerings.

While we believe new services, such as Vanguard Personal Advisor Services and the Vanguard Brokerage Account, offer tremendous value to our clients, we also realize that there are opportunities to improve the quality of our service—whether it’s the information a client receives on the phone from one of our representatives to the ease with which a client can open an IRA account online.

We also make changes when services are no longer being widely used. To that end, we value our clients’ input and suggestions based on their service experiences, good or bad.

Social Security Administration, Social Security Basic Facts (October 13, 2015)

2 Vanguard calculation based on average fund assets over a 12-month period and the change in expense ratios through fiscal year September 2015.

3 Lipper, a Thomson Reuters Company, as of December 31, 2015.


All investing is subject to risk, including the possible loss of the money you invest.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.