This is the latest in a new series of columns about portfolio strategies, planning and asset management.
Vanguard CEO Tim Buckley's surprise decision to retire by year-end, with no successor named, has left industry watchers wondering what's next for one of the world's largest asset managers.
Vanguard critics and supporters alike point to real or perceived issues that the low-fee investment giant faces, including customer service complaints, evolving business priorities and, in the near term, the search for a new CEO.
At the same time, advocates laud Buckley's role in contributing to Vanguard's success as an investment powerhouse with more than 50 million customers globally and $9 trillion in assets under management.
The retirement announcement seemed to catch Vanguard watchers by surprise. Barry Ritholtz, Ritholtz Wealth Management founder, chairman and chief investment officer, noted in a post on X, formerly Twitter, that it was unexpected.
The news was a bit surprising because "Vanguard's just doing so well," Eric Balchunas, Bloomberg senior ETF analyst, said on Bloomberg TV following the announcement.
Buckley has spent 33 years at the low-fee asset manager, including more than six as CEO. In announcing his retirement plans late last month, Vanguard noted that under his tenure, the firm's global client base expanded by tens of millions and AUM grew by 80%.
Vanguard has launched a comprehensive CEO selection process in which it's looking at both internal and external candidates. When it revealed Buckley's plans, it also announced it had appointed Greg Davis, its chief investment officer, to an additional role as Vanguard president.
Buckley's Legacy
"Under Buckley, Vanguard has taken in almost $1 billion a day, $3.6 trillion in asset growth," Balchunas said on Bloomberg TV. "Their asset growth under him is more than like two or three entire asset managers have in assets."
Balchunas, who wrote a book on Vanguard and founder John Bogle, "The Bogle Effect," also noted that the company has taken in over half of exchange-traded funds' net flows this year. Bogle was famously skeptical of ETFs, and every successor since, including Buckley, has pushed Vanguard further into ETFs, which "are clearly the vehicle of choice over the mutual fund."
Moreover, Balchunas noted, Buckley has built Vanguard's personal advisory service, which had nearly $300 billion in AUM at year-end 2023.
"This is Vanguard becoming a wealth manager," he said. "This is crucial because some of their clients are getting older, they need more help with their finances."
Customer Service Woes
Nonetheless, customer service has become a concern for many customers as well as industry experts. Balchunas called it Vanguard's "one Achilles heel" and said Buckley's yet-unnamed successor will need to focus on it. Financial advisor Rick Ferri, who hosts the "Bogleheads on Investing" podcast, agreed that tending to customer service is key.
"The biggest challenge facing the next CEO is client service. The perception, right or wrong, is that client service slipped under Tim Buckley and that everything needs an update including the website," Ferri told ThinkAdvisor by email.
Jon Luskin, a fee-only, advice-only planner and John C. Bogle Center for Financial Literacy board member, suggested that it may not be easy to eliminate client service complaints — and that the issue isn't necessarily specific to Vanguard.
