Investors Shouldn't Sweat Vanguard CEO Transition

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. Vanguard CEO Bill McNabb is stepping down, and I'm here with Kevin McDevitt to see what it could mean for investors.

Kevin, thanks for joining me.

Kevin McDevitt: Thank you, Jeremy.

Glaser: Were you surprised at all that Tim Buckley was elevated to this new role, or was it something that you were expecting?

McDevitt: You know, it's not necessarily, we weren't expecting it, I don't want to say, but at the same time it's not a big surprise. I think Tim Buckley has been groomed for this role for quite some time. Outside of McNabb, he's the longest-serving member of the senior advisory team, senior executive team at Vanguard. He's served in three major roles as chief information officer, as head of the retail group, and also most recently as chief investment officer. So, he's got plenty of experience for the role, and he's also very steeped in Vanguard culture. He's been there his entire career, since 1991, and even has ties going back to Jack Bogle as he was ... actually his first role was as Bogle's personal assistant.

Glaser: If you were a Vanguard investor, an announcement like this wouldn't make you nervous that there's going to be a big change in the way that the firm is run then?

McDevitt: No, certainly not. I think that the main theme here is continuity. Also, in fact, McNabb is going to stay on as chairman of the board. So, really, I think a fairly seamless transition from McNabb to Buckley. But also, I think, Buckley's experience is well suited to where the firm is going. One of the big emphases for Vanguard has been technology. Just investing heavily in technology, that's how the firm has scaled so remarkably under McNabb's tenure. I think that Buckley is well suited to continue that.

Again, given that he was chief information officer for six years and headed up Vanguard’s technology group, I think technology's going to continue to be a huge point of emphasis and investment for the firm. Whether you're talking about automated advice through the personal advisor service, or cybersecurity, or just client servicing in general. Which has been somewhat an area of concern, I think, given that Vanguard has grown so rapidly. That's an area that Buckley will need to address.

Glaser: Looking at our Analyst Ratings then, you wouldn't expect any change due to this shift at the top?

McDevitt: No, I don't think so. It's certainly something we're going to take a very long and hard look at. We want to make sure we understand fully what this transition is going to mean, and what Buckley's priorities will be going forward. But we really don't see any huge changes for the firm itself.

Again, he's so steeped in Vanguard's culture and philosophy and he's been part of the leadership team already, going back to 2001. So, again, I think the real take-home point here is that there will be continuity going from McNabb to Buckley.

Glaser: Well, Kevin, thanks for your first take on this news. I'm sure we'll be hearing more about it in the days to come.

McDevitt: Great. Thanks, Jeremy.

Glaser: For Morningstar, I'm Jeremy Glaser. Thanks for watching.