New Bridge Wealth Management

John Bogle: Our Advocate

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Mr. John Bogle, founder of The Vanguard Group, passed away on Wed, Jan 16th at the age of 89. Much has been written about him and I encourage you to learn about the man. I offer you my personal experiences.

I had the privilege of starting my finance career at The Vanguard Group in early 2002. This was early in John Brennan’s term as CEO. As an aside, Fidelity was larger in asset size at that time and Capital Research & Management (American Funds) was nipping at Vanguard’s heels. I believe they may have jumped Vanguard for a bit. Vanguard is now double the size of Fidelity. Mr. Bogle officially stepped down as chief executive of Vanguard in January 1996 and remained as chairman until the end of 1999. It was a very interesting time at Vanguard and much different than it is today. Under Mr. Bogle’s leadership, The Vanguard Group was run with a real focus on community and had a family feel. When Jack Brennan took over the firm, they began to adopt a more corporate, growth-oriented focus. He loved to use the term BHAGs (Big Hairy Aggressive Goals). Many of the crew members that were there during that transitional time had interesting things to say about the difference in leadership styles. Jack had to step down because he had just turned 70 years old. Vanguard had a policy that retirement was a requirement when you attained the age of 70. Mr. Bogle wrote the policy.

I bring this up because most people would just retire to the background but not Mr. Bogle. He set up his research center, The Bogle Financial Markets Research Center, close to the main galley (cafeteria), Morgan. Every day that he was in the office, he would make the 100 steps walk to Morgan and greet everyone as though they were dear friends. I was able to break bread with Jack and shake his hand many times. This was before the mass adoption of cell phones so no selfies, unfortunately. My wife, Jill, at the time was the General Manager of the galleys and spent most of her time at the Morgan galley. Mr. Bogle knew my wife’s name and would make a point of visiting the kitchen and speak to the staff. On occasion, he even sat in my wife’s office to say hello. You were just blown away by his kindness and his insistence on calling him “Jack”. All of the principals that I met that were hired by Mr. Bogle shared his passion for people and they knew everyone’s name. A few of them actually kept notebooks with the crew member’s names and family member’s names.

I learned a great deal during my career at The Vanguard Group and not just about investments. I learned that you could be kind and considerate when running a company. You could fight for the little guy and make a real difference. Mr. Bogle revolutionized the industry by focusing on the individual investors versus the financial services companies that serve them. His focus on no load and low-cost funds benefited millions of investors and saved those investors hundreds of millions of dollars since Vanguard was founded in 1972. What is also amazing is his willingness to forgo a personal fortune of billions by having those investors owners of the mutual funds and the profits being used to further drive down the cost of those funds.

Mr. Bogle argues for an approach to investing defined by simplicity and common sense.

Below are his eight basic rules for investors:

  • Select low-cost funds (focus on expense ratios).
  • Consider carefully the added costs of advice (avoid load funds).
  • Do not overrate past fund performance.
  • Use past performance to determine consistency and risk.
  • Beware of stars (as in, star mutual fund managers, i.e. Morningstar).
  • Beware of asset size.
  • Don’t own too many funds.
  • Buy your fund portfolio and hold it.

My appreciation for Mr. John Bogle only grew after I left The Vanguard Group. The adoption of Vanguard Index funds by the Registered Investment Advisor (RIA) community is no accident. As a community, we value no load low-cost mutual funds. We owe Jack a debt of gratitude for rebalancing the odds in the investors’ favor.

From all of us, Jack, thank you for being our advocate. Thank you for demanding a level playing field for us, investors, even though it made you the most unpopular man in a room of your peers. The contributions that you have made to our industry can not be reversed and your philosophies on investing will continue to be embraced and practiced by all us in the RIA community.

Good night, sir. Rest in Peace.

JACK BOGLE 1929-2019

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