Outsider Salim Ramji Promises to Bring the Convert's Zeal to Vanguard - Latest Global News

Outsider Salim Ramji Promises to Bring the Convert’s Zeal to Vanguard

Vanguard’s newly appointed CEO Salim Ramji, the first outsider to lead the $9.3 trillion asset manager, has big plans to expand his reach far beyond the 50 million people he serves.

The Pennsylvania-based group, best known for retirement plans and low-cost funds, wants to expand its advisory offerings. A dominant player in U.S. mutual funds and exchange-traded funds, the company has struggled to grow internationally, lagging behind market leader BlackRock, which manages $10.5 trillion in assets, while its clients and counterparties regularly complain about its unwieldy nature Complain about technology.

“I really believe there can be millions more people who can benefit from what Vanguard is offering,” Ramji told the Financial Times. “Part of the opportunity in the next five, 10 years and beyond is to scale that capability. Even with 50 minutes [customers]there are millions and millions more, even in this country [the US].”

Ramji was named on Tuesday to succeed outgoing CEO Tim Buckley, joining Vanguard months after leaving BlackRock, where he led strategy, asset management and most recently the iShares ETF and index business. Former colleagues praised him as a great communicator with a clear vision of where the industry was going, but also said they could sense his desire to lead.

Ramji has in-depth knowledge of the areas that Vanguard considers to be its core business, as well as experience in asset management, in which the company aims to grow. As an outsider, however, he has to tread carefully: the company remains so closely tied to founder Jack Bogle that its singing fans still call themselves Bogleheads, five years after his death.

“Ultimately, that cultural element is a big selling point,” said Daniel Sotiroff, senior manager research analyst at Morningstar. “I think it wouldn’t be good to deviate from that and I think maintaining that will be his biggest challenge.”

Unlike most of its competitors, Vanguard has a mutual structure: it is owned by its funds and invests much of its net sales in reducing costs for investors. “The mission and intent begun by Bogle and continued by his successors will continue under my leadership,” Ramji said. “I intend to pursue this with the zeal of a convert.”

On Tuesday, Ramjii underscored that message when he publicly visited Vanguard’s headquarters for the first time and sent an email to the 20,000 employees known as crew. “I have long admired Vanguard’s clear and consistent purpose,” he wrote.

Vanguard remains so closely associated with founder Jack Bogle that its singing fans still call themselves Bogleheads © Bloomberg

After starting his career as a lawyer at the British Magic Circle firm Clifford Chance, Ramji became a McKinsey consultant and rose to senior partner in charge of the asset and wealth management practice.

“He’s world class and he’s done it,” said Andy Saperstein, Ramji’s first boss at McKinsey, who is now co-president of Morgan Stanley. “He doesn’t try to make something slightly better, [instead asking] What could we do differently that will have an impact?”

As head of iShares, Ramji helped build a launch engine that spawned a wide range of ETFs, from funds focused on narrow segments of fixed income to the wildly successful Spot Bitcoin ETF.

In contrast, Vanguard has made a conscious effort to stick with a relatively small number of funds that it believes make sense for investors. According to Morningstar, Vanguard has 348 global mutual funds and ETFs, compared to BlackRock’s 1,963.

Late last year, Vanguard reported that more than 90 percent of its assets came from the U.S., compared to 68 percent for BlackRock. The company recently closed its Chinese joint venture and a German wealth platform.

Vanguard's bar chart sits just behind BlackRock-owned iShares and shows the new boss for the established ETF leader

Ramji represented BlackRock on the board of the Investment Company Institute, where he impressed George Walker, current ICI chairman and managing director of Neuberger Berman, as someone good at “generating sensible consensus.” . . I’ve never seen him as anything other than cool.”

That calm could be tested if Ramji takes the helm of an asset manager that has been criticized by progressive activists for not joining net-zero climate initiatives and for having outsized influence over U.S. stock markets. Because of the sheer size of its index funds, Vanguard is the largest shareholder in many American companies.

Ramji was among a handful of executives named BlackRock’s next-generation leaders, but Larry Fink, its founder, remains in control. Ramji announced in January that he would look for other opportunities.

When Vanguard announced less than two months later that it was considering outside candidates for its fifth CEO, Ramji was at the top of the industry list.

“He has proven to be very versatile and resilient at BlackRock. . . He has an incredibly high IQ and high EQ,” said Ron O’Hanley, chief executive of State Street, who was a consulting client of Ramji’s and with whom we have stayed in touch.

Ramji, who will start in July, said that during the recruiting process the board appeared interested in his ability to organize technology and grow BlackRock’s asset management and ETF businesses. “Technology is something every leader of a wealth or asset management business needs to focus on. That’s what I’ve focused on as a top priority in each of my different roles,” he said.

Industry analysts said Ramji’s experience would help Vanguard benefit from expected consolidation in asset management and continued inflows into ETFs and passive index-tracking products.

“Sales, education and operational excellence are becoming more important than just guessing the next theme,” said Dave Nadig, a longtime ETF industry observer.

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