Vanguard CEO Tim Buckley explains how our “mutual” corporate structure makes us unique: our investors own the funds, which in turn own the company–so there are no outside owners or conflicting loyalties. That’s why Vanguard investors can rest assured that we’re always putting their interests first.  Being entirely client-owned also helps keep our costs well below industry average–and in a low-return environment, having a low-cost portfolio becomes even more important for investors, so they can hold onto more of the money they earn.

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Rebecca Katz: Frank would like to know, “What makes Vanguard different than any other financial institution and why should he feel confident about having his investments with us during this rocky time?”

Tim Buckley: Oh, well, I love that one. So thank you.

Frank, what makes Vanguard different, what he should understand is the mutual structure, that he’s an owner of Vanguard. So to explain the mutual structure again, that if you own the funds, the funds own Vanguard, and you essentially own Vanguard. You’re our boss. And we don’t have outside owners. We always remind people of that. We don’t have outside owners, whether private or public owners, which means that we only have to serve one group, our clients, those people who invest in our funds.

So when times are tough, Greg, right, we know with companies and times are tough, what happens? They worry about profits. And they have this conflict of should I maximize my clients’ returns or should I maximize the profits of my external owners?

We don’t have to deal with that. We have one goal to maximize the returns of our clients. And at tough times like this, you can rest assured that we’re still maximizing your return regardless of what we do. We’re putting your interests first because you are our owners. You’re our boss; we have to do that.

The other element is if Greg’s prediction comes through—I’ll say it’s our prediction—that it’s a low-return environment going forward, well, costs mean that much more. And you’re not going to find anyone with lower costs than Vanguard. I mean, we’re about 1/5 the industry average. Now you might find a couple products. But overall, you won’t find a lower cost portfolio. And you don’t want cost eating up your portfolio at these times.

Rebecca: Right.

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