Vanguard's founder, John Bogle promoted the idea that index funds such as the Vanguard 500 can outperform most actively managed funds because they have lower management fees and trading costs.
Here's what I think the mutual fund industry fears about retired Vanguard founder and CEO John Bogle: He's one of them. He knows where all the skeletons are hidden. And he's not afraid to reveal those hiding places.
Among the many surprising skeletons Bogle revealed in my recent conversation with him (see “Exclusive Interview with John Bogle: Industry 'Crying Out for Change'; says Fiduciary Rule 'a Turning Point',” FiduciaryNews.com, June 21, 2016) was his admission that, while he tried to make Vanguard a fiduciary business, it remains to this day a marketing business. In doing so, he exposes the ultimate fiduciary dilemma: The client isn't always right.
Before we get to that, though, let's explore the significance of Bogle's executive experience within the mutual fund industry. Remember, before Vanguard went “mutual,” it was a publicly held management company. Bogle led the transition away from serving the public company's shareholders towards serving the investment company's (i.e., mutual fund's) shareholders. In doing so, he rejected the parameters and benchmarks of public companies.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
