Vanguard to Launch New Advice and Wealth Unit

In addition to the creation of the Advice & Wealth Management division, Vanguard announced other senior leadership changes.

• John James, current Institutional Investor Group managing director, has been named head of Workplace & Advisor Solutions overseeing Vanguard’s intermediated businesses, focused on deepening relationships with enterprise clients.
  
• Lauren Valente, managing director and chief human resources officer, has been named head of the Institutional Investor Group.
  
• Jon Couture, a chief human resources officer who has held several senior leadership positions in the financial services industry, will join Vanguard this month as a managing director and member of the senior leadership team, succeeding Valente.

"The reshuffle is Vanguard’s way of refocusing on its advice business," Daniel Sotiroff, senior analyst, passive strategies research, North America, at Morningstar Research Services, told Think Advisor by email. "That business has always been a big initiative, but not really front-and-center. It looks like the reorganization is meant to allow Vanguard to provide a greater focus on the needs of specific groups of clients. It ultimately shows that Vanguard is making a much stronger push into the advice business.

"It’s not that surprising to me. Vanguard’s advice business has been growing over the past several years in various ways. I think it’s a huge opportunity for Vanguard, and I interpret this as the next step in that evolution," he said, noting that Ramji headed U.S. wealth and advice for four years at BlackRock before he led its iShares and indexing business.

"A lot of the discussion around him has focused on indexing and ETFs, but I think that background in wealth and advice was part of the reason Vanguard hired him. I think we’re starting to see that play out," Sotiroff said.

It remains to be seen how Vanguard's move will affect independent advisors, he added.

"It could hit some of those businesses, but I don’t think it’s going to completely disrupt RIAs. There was a lot of talk about robo-advisors disrupting RIAs a few years ago, but that didn’t really happen," he said.

"I think of Vanguard’s advice for individuals — Vanguard digital advisor and personal advisor services — as more appealing to 'delegators' —people that want someone to handle their personal financial planning and investments but don’t need to meet with an advisor face-to-face that often if at all. It’s a step between a robo-advisor and a full blown local advisor that an investor would have closer contact with," Sotiroff said.

"My best guess is that individuals that are more 'hands on' and need more frequent contact and coaching will probably gravitate toward local advisors that are more readily available and can meet their needs in that way," he added. "I think there’s room for both."