by Peter High, published on Forbes
The Vanguard Group is an organization that values both depth and breadth in their leaders. As a result, if someone has risen to the head a business unit or a functional area, it is likely that he or she has had experiences across range of business areas within the largest provider of mutual funds in the world. Chief information officer John Marcante is no exception.
Marcante has spent 23 years at Vanguard. From 1998 until 2001, he led Vanguard’s Institutional IT organization, supporting Vanguard’s Institutional Investor Group, which serves large institutions and is a leading provider of company-sponsored retirement plans. Shortly after September 11, 2001, Marcante became the head of Global Technology Operations, focusing on data center management and disaster recovery. He was responsible for building out and managing Vanguard’s global infrastructure. He was promoted to CIO in 2012.
Marcante has encouraged comparable outreach and breadth of experience in his leadership team. The leader of his Retail IT team is a member of the leadership team of both IT and of the Retail division. It was through this tight collaboration that the Vanguard Personal Advisor came to life. In the words of Vanguard CEO Bill McNabb, “Vanguard Personal Advisor Services represents our continued effort to lower the cost and complexity of investing by giving investors access to affordable, high-value financial advice. Demographic and behavioral trends point to an increased demand for advice, and we believe this new service can help more of our clients reach their financial goals.”
Based on this idea, John Marcante has been awarded the Forbes CIO Innovation Award for 2016. Here is our conversation about the idea. (For an overview of the award and its criteria, please visit this link.)
Peter High: Describe the genesis of Vanguard Personal Advisor.
John Marcante: In recent years, Vanguard has recognized that customer expectations in terms of technology and client experience have risen dramatically. Investors no longer judge us against our peers in the financial services industry; they have an expectation that we can deliver the same kind of customer experience as technology leaders like Google, Apple, and Amazon. As a financial services company, our clients want technology-based solutions that are sophisticated enough to navigate the complexities of their unique circumstances but are simple and intuitive to use.
Vanguard has a long history of innovating in many different ways to simplify and lower fund and ETF [exchange-traded fund] expenses to keep costs low for clients. We realized that we could leverage this experience and in-house technology to bring a greater client experience and lower the cost of advice. As the Baby Boomer generation transitions from capital accumulators to capital consumers, Vanguard saw an opportunity to better serve the increasingly complex needs of our clients. We also recognized that we had the opportunity to make advice more accessible and affordable for our clients. Our solution was to create a virtual advisory relationship that combines our time-tested investment methodology with a best-in-class online experience and sophisticated investment modeling technology. Our new Vanguard Personal Advisor Services (Personal Advisor) is rooted in Vanguard’s enduring goals-based investment approach and philosophy of broad diversification, balance, low costs, and long-term investing. Clients receive comprehensive financial planning, on-going portfolio management, access to salaried financial advisors, and a highly personalized web experience. Importantly, the current annual cost for Personal Advisor is 0.30 percent of assets under management—well below the industry average of 1.32 percent for similar services.
High: What is new about this idea?