The Uphill Battle at Vanguard

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You know there’s a new CEO at Vanguard. Salim Ramji is the company’s first outside hire for CEO in its history. Now, he’s facing the challenges left for him by the former Vanguard executives who pushed out John Bogle. Andrew Welsch notes in a piece in Barron’s that customers are unhappy with both Vanguard’s service and technology. He writes:

Vanguard’s new CEO Salim Ramji takes the helm today, becoming the company’s first chief executive hired from outside its ranks.

Ramji is unlikely to make big changes at the start of his tenure. For example, he previously confirmed to Barron’s that he wouldn’t reverse Vanguard’s decision not to launch a Bitcoin exchange-traded fund. Yet he has large tasks and significant opportunities ahead.

Top of the list: addressing long-standing customer complaints about service and technology. Ramji will also have an opportunity to build upon Vanguard’s large asset management and financial advice businesses, which includes a pure digital robo-advisor and a hybrid robo-advisor. In addition, he will likely aim to boost the growth of Vanguard’s lineup of actively managed funds and reassess the company’s opportunities to grow overseas.

“For nearly 50 years, Vanguard has taken a stand for individual investors, with an unyielding commitment to serving their best interests and helping them achieve their long-term financial goals,” Ramji said in a statement. “I am honored and humbled to lead Vanguard into its next chapter, and am deeply committed to continue to steward the company’s mission to give investors the best chance for investment success.”

Ramji, a former BlackRock executive, was unavailable for an interview, a company spokesman said.

Action Line: With Ramji coming directly from BlackRock, the chances he can fix Vanguard seem remote. It’s certain to be an uphill battle. For more on Vanguard’s troubles, click here to download Your Survival Guy’s Special Report: The Trouble with BlackRo… er… ummm, Vanguard.