You’ve read a lot about Vanguard’s recent hiring of its news CEO, Salim Ramji. It wasn’t only Ramji’s status as the first outside hire for CEO in Vanguard’s history that made his ascension to the post odd. The way it was handled and the previous CEO, Tim Buckley’s departure, was also strange. At Morningstar, Susan Dziubinski discussed the happenings at Vanguard with Morningstar’s chief Vanguard analyst, Daniel Sotiroff, who said of the strange reshuffling at Vanguard:
Surprise is probably an understatement there. Everything about it was surprising. First, we didn’t expect Buckley to retire. I go back to the conversation we had in December. This was the last thing on my radar. Second, usually when Vanguard announces these types of things, at least in the past, they’ve always mentioned who is going to come in and take over. So, you had that assurance that there was going to be some continuity there. They left it open. They didn’t name a successor right away. And then third, they kind of left that successorship open a little bit. They said we were going to start considering an external candidate in our search. So, all of that didn’t follow their playbook that they had at least executed historically.
It was all very, very surprising. And ultimately, they went down that road of an external candidate. We know they appointed Salim Ramji a few weeks ago to take over CEO, as you mentioned, that’s going to be effective on July 8. So, all of this is very, very surprising. We’re still trying to get caught up with it here and trying to figure out what’s going on. But it’s definitely a new direction for Vanguard. Let’s put it that way.
Action Line: One word most investors don’t want to use to describe the actions of their money manager is “surprise.” Credibility, reliability, and prudence are preferred adjectives. Now, Vanguard is becoming the new BlackRock, and its investors have to ask themselves the hard questions. Read more about this change in my SPECIAL REPORT: The Trouble with BlackRo… er… ummm, Vanguard.
