Mr. Buckley went on to lead three Vanguard divisions (Information Technology, Retail, and Investment Management), during which time he worked closely with Vanguard CEO Bill McNabb and former CEO Jack Brennan. His career path provided a unique opportunity to gain critical knowledge and understanding of all facets of Vanguard’s business and operations. Mr. Buckley’s leadership experience, along with a strong track record of developing teams and talent; a global mindset; and a commitment to serving clients made him the ideal choice to be named Vanguard president by Vanguard’s Board of Directors and to succeed Mr. McNabb as CEO next year.
We sat down with Tim to ask him five questions about Vanguard and his future role.
On January 1, 2018, you become Vanguard’s 4th CEO in the company’s 42-year history. What are your initial thoughts on taking on your new role?
The first thought that comes to mind – an awesome responsibility. An awesome responsibility that Vanguard has to help millions of investors retire better, put their kids through college, and achieve other financial goals. The second thought is thankful. Thankful for the mentoring Jack and Bill provided. Thankful that Vanguard has a structure that keeps us perfectly aligned with our clients and an unambiguous mission to give each one of those clients – whether an individual, financial advisor, or plan sponsor – the best chance for investment success.
Vanguard is operating from a position of real strength today. Where does Vanguard go from here? What are the big opportunities?
One could argue that no company has been more successful than Vanguard in lowering the cost and complexity of investing around the world. And, we are just getting started. There is more to do and new ways to do it.
We recognize that we serve a diverse set of clients with different needs, goals, and aspirations. We’ve invested considerable resources into helping financial advisors, for example, help their clients through thoughtfully constructed portfolios of low-cost Vanguard ETFs and funds. At the same time, we’ve reimagined our own advice offering with Personal Advisor Services, which is making it easier for individuals that we serve directly to reach their investment goals. We are working with sponsors of 401(k) plans, large and small, on better plan design and behavioral nudging to ensure that their participants have sound investment programs and are saving at sufficient levels. We are effectively serving as chief investment officer for hundreds of endowments and foundations. And we have brought our low cost investing approach to new markets in Canada, the UK, Europe, and Asia.
We will continue to change how the world invests – from changing how investors think about costs, to how they receive advice, to how they interact with their portfolios.
In what ways might Vanguard change under your leadership?
Let’s start with what will not change. There are Vanguard constants: Our mutual structure, our investment principles, our client-focused culture, and our commitment to our crew. Those are bedrock to who we are and how we operate.
That said, our clients should not only expect change, but demand change. We are a company that was built on innovation and a company that has capitalized on innovation. Consider that Vanguard, at the time of our founding, managed zero assets in-house and offered only actively managed funds sold by brokers to individual investors in the United States. Today, we manage $3.8 trillion internally and offer a broad range of index and active funds to investors of all sizes and sophistication, in more countries than I can count.
Since Vanguard introduced the first index fund for individuals, to our early adoption of the internet, to our target date and ETF offerings, to our use of advice, we have been thoughtful innovators. Our clients will continue to see change in the form of product and service innovation, adoption of technology, and a considerable reinvestment into our business and infrastructure – all with the aim of enhancing client experiences and outcomes.
What are the challenges as you see them?
One of the early lessons in my career is that the financial markets will humble you. We’ve enjoyed a long stretch of positive returns since the global financial crisis, so we have to be ready to navigate some rough waters ahead. (Pardon the nautical reference, but it comes with serving on HMS Vanguard for two-plus decades.) We can’t be lulled into complacency by the low volatility and generous performance across asset classes. I can assure you: This is not “the new normal.”
With asset classes fully priced, we should also be prepared for a lower return environment. In such an environment, it is critical that clients keep their costs low and stay disciplined. When returns are low, it is always tempting to chase the promise of return from some new approach. All too often these approaches are a fool’s errand. It is far better to stick with what the markets give you and minimize costs and taxes. Fortunately, Vanguard is better equipped than ever to encourage disciplined investing with our direct investors, to reinforce the right behavior with 401(k) participants, and to help our advisors keep their clients on track.
You’ve spent your entire career at Vanguard. What’s kept you at the company all of these years?
It is many things, but our mission rises to the top. It is a chance to make a difference. As the son of a heart surgeon, I was taught to either save lives or help people live better lives. We certainly do the latter.
Alignment is another. I sleep well at night because I don’t have to worry about putting my clients’ dreams at risk to enrich outside shareholders.
Growth. I am charged up every day to face new challenges and help my team grow and develop. That is rewarding. The people aspect of leadership has always motivated me and inspired me not only to come to work every day, but to come to work with purpose.
Finally, some of the most principled, dynamic, motivated people I know work at Vanguard. I am lucky to have them as colleagues and so many as friends.
Thanks, Tim. We wish you well.
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