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00:00This is a departure from Vanguard. You're known for growing organically. Why not go that method
00:06in expanding into wealth? Why does it make sense for altruists who you've already partnered with
00:10to outright buy it? You know, we've been an investor in altruists going back more than half
00:15a dozen years. So we were a minority investor kind of in the early days when Jason and his team
00:20were
00:20first getting started. And what we were impressed back then about is what we're also impressed about
00:27today. The first piece was really the mission that Jason had founded the firm around which is making
00:34advice more accessible more affordable and better for many more Americans. And the second piece which is
00:41really takes us to today is just the tenacity with which Jason and the team have really been building
00:46their business. And from a Vanguard perspective we want to do for financial advice what we've done for
00:53the past 50 years for investments which is really make it much more accessible to many more people.
01:00And and part of this alignment around the mission right when Jason was talking about the mission of
01:06altruists to me and we were and we were comparing notes a lot of what he was trying to do
01:11rhymed with
01:12what we were trying to do. And and I think in that it really led to this moment. Well I'm
01:18assuming part of
01:19the mission has been this fast growth growth and nimbleness that that altruist has Jason. I mean
01:23you're in California. You know you're away from the hub of of of financial services here in New York.
01:29Why not stay independent? Why partner with the behemoth when one of the sort of bright points of altruist
01:35had been you know this independent sort of flavor that you had as a firm? Yeah I think so. We're
01:41probably
01:42more alike than people realize. I heard Salim say that you know Vanguard is not a Wall Street titan.
01:49They're a titan of Pennsylvania you know rural Pennsylvania. We were founded on Abbot Kinney Boulevard
01:53in Venice Beach California. So also about the anti-Wall Street as you can get. But altruist is a business
02:00that's designed to help independent financial advisors. Those independent advisors are often referred to as RIAs.
02:07They serve tens of millions of clients over 10 trillion dollars in assets and we're incredibly focused on
02:14empowering those advisors to make advice better more affordable accessible to everybody. You'll hear a
02:20lot of like again these the rhymes with like the the genesis of altruist in many respects was inspired by
02:26Vanguard. I've been a fan of Jack Bogle's work going back into the late 90s early 2000s. Our mission is
02:33very
02:33similar to the Vanguard mission to take a stand for all investors. Right. So you start to see these things.
02:38And when you are an entrepreneur and you're thinking about leaving a really long term legacy and in our case
02:43it's one of
02:44again this very mission orientation around making advice better and more affordable and more accessible.
02:50There's no better partner I can think of. And again this would have been likely the case when I started
02:54the company eight years ago than
02:56Vanguard. And you also very much so rhyme with a Fidelity or a Schwab though considering your business threats them.
03:02I mean Salim is this Vanguard becoming even more of a direct competitor with those.
03:07Well if you think about the problem we're trying to solve and it's not just Vanguard and altruist I think
03:13it's many
03:13firms but I'll be particular about what we're trying to solve. It's how do you get more access to financial
03:18advice.
03:19Today only one in five Americans have access to a fee based financial advisor.
03:25We would like to see that number be most Americans having access to financial advice.
03:30And even as we surveyed Vanguard's own investors just earlier this summer what they told us 74 percent of them
03:37is they want access to some form of human financial guidance to be able to make sense of all the
03:43complexity out there.
03:44Yeah. And and so part of what we're trying to do is use technology to give independent advisors greater scale
03:52greater ways to reach more and more clients but also use technology to help clients who may just
03:58want a second opinion or may just want some basic kind of guidance to be able to get that guidance.
04:03Because if you go back to our founding mission about helping improve the chances of people's investment
04:09success having low cost high performing products is one component of it. But another component is
04:16financial discipline. And what we've seen over decades is that if you got a good fee based financial
04:22advisor that's focused on your interests that they can really instill that long term discipline
04:28for an investor. And with technology we think we can do that with greater scale. So again the mission
04:34is nice but it's the business case I'm also interested in. I mean is this you wrestling market share
04:38away from some of those competitors by this. We don't because of Vanguard's unique structure we're owned by our clients.
04:45We don't necessarily think like traditional companies will. And so the the is one of the best accomplishments
04:52I think of Vanguard over the past 50 years. You know it's 50 years ago this month that we launched
04:57the the first index fund.
04:59And one of the best accomplishments in my opinion is that many more people two thirds of Americans today are
05:05investors
05:06in part because we help make investing simple and more affordable and more accessible.
05:10And what we want to do is do the same thing for advice because there is a scarcity of advisors
05:16and of fee based advisors. And there's exceptional demand whether you take my 74 percent you take other
05:23industry stats. And and we think being able to marry kind of the the scarcity of supply of great financial
05:31advisors with the technology that Jason and his team have built really helps us do for investors
05:39who are seeking advice. What we've done for investors over the past 50 years who who just want a low
05:46cost
05:47investment product in which to enter the markets. Well having like this sort of technology based
05:51IRA custodian. Again, I mentioned in February it led to kind of this panic
05:57among some of the more traditional ones. Jason, what have you seen since then?
06:02Like have you been this really disruptive force or is it more, you know, to the point that Sam Altman
06:07made the other week?
06:08Sometimes these things are slower moving in adoption and really embracing AI in some of these forms.
06:13Well, on AI, I think that there's there's still a lot more opportunity. I think there's a lot more
06:19possibility than reality today. So I think Sam's probably right in that regard. As for us, I mean, we've had
06:25a fantastic year. We're still a young enough company that virtually every quarter is a new record quarter.
06:31I think the innovation is a big part of that. And in our case, because we serve advisors, advisors,
06:37the last couple of decades have had very few choices. It's hard for them to run businesses.
06:43They have to make a lot of compromises. The compromises might be either I can only serve
06:48really wealthy people because I don't have enough capacity to serve more or I have to reduce the
06:53quality of work I can do because I want to serve many. A lot of our growth is because we're
06:59able to
07:00bridge those kind of two conflicts and make it much easier for advisors to do their best work
07:05at scale, a lot more clients, a lot higher quality work and to do it at a lot lower cost.
07:11So
07:11these are things that AI is a huge enabler for and technology in general can help.
07:15Just on that, how much of that does does it hinge on keeping compute costs low? Because
07:20this is something that businesses have also had to grapple with.
07:23For us, it's not been a challenge. So, you know, compute, I think, depending on the type of work,
07:28I mean, there are some tasks that are very compute intensive. Some knowledge work will fall in
07:34there. But definitely not an issue thus far. And I don't see that being an issue in the future.
07:37Salim, I have to get into the numbers a little bit. Wall Street Journal, I know, reported that this
07:41deal valued altruist at four billion. Is that is that the right figure?
07:45Yeah. You know, we're not disclosing the financial terms. But what we are really quite in unison about is what
07:52do we want the outcomes to be.
07:54And one of the outcomes is to get to enable most investors to have access to some form of financial
08:01advice or some form of financial guidance over the coming decade. And it is from our perspective.
08:08And it's again, we're a different type of company because we're owned by our investors,
08:13that if we can do that and give people access to that in a high quality, low cost way that
08:18people have
08:19come to expect kind of from our funds, then what we can do is help them maintain financial discipline.
08:25And ultimately, we can help them achieve investment success, which is what the company was set up.
08:30Again, given sort of the rhyming and how much you align on these sorts of things in your mind,
08:34is this sort of a one off? Because as I mentioned at the start, it is very rare for Vanguard
08:39to grow inorganically to do M&A. Or is this kind of maybe you dipping your toe in and this
08:45might be the future
08:46for Vanguard looking at adding companies like Altruist that make sense on more frequently?
08:50Yeah, like we're we're a very discerning buyer. And Jason was a very discerning kind of seller.
08:56And I think that there's so many unique circumstances that made this feel right to both of us.
09:01Some of it goes back to 2020 and the and the early investments we made. Some of it was a
09:06strong
09:07sense of alignment, kind of a mission. And some of it was just based on the very complementary
09:12nature of what Altruist does and what Vanguard does. We have a very loyal following amongst RIAs.
09:19We've been big supporters of them through kind of our funds, our models, our research.
09:24And so does Altruist. And so these are really ways in which we can serve that community better
09:31because we really believe that if we can help that community of fee based advisors scale,
09:36what they can do, they can serve more investors. And ultimately, in Vanguard kind of parlance,
09:44that's helping us take a stand for all investors and helping us kind of improve their odds of investment.
09:48I have like just over a minute, but I would love to get both of your faults, your views on
09:54prediction markets
09:55and sort of the gamification of investment. Is that trend worry you at all, Salim?
10:00Oh, it worries me tremendously. What we're about is long term investing. And we really see kind of
10:11different forms of whether it's sports betting, gambling and the like as things that start to cloud
10:16between what is investing and what is ultimately speculation. Vanguard has always been about long term
10:23investing. We're always going to be about long term investing. And even as Jason and I talked about this
10:29kind of in some of our early days, there are very similar views that that you had held kind of
10:35around
10:35just the the the the the the bad outcomes for investors. You start blurring these lines. Yeah.
10:42I look at a we have something at Altruist we call the sacred rule, which is that we will never
10:47build something
10:48that harms investors. And so I've been a very outspoken critic of prediction markets. I think they're a terrible idea
10:55for for most people. And I think they don't belong in financial services applications. Young clients
11:01though. If you if you don't want them to have money in their future, it's probably a good idea. But
11:06again,
11:06I think if we focus on like empirical evidence based ways to help people achieve their long term goals.
11:12This is partly why we focus with serving these independent fiduciary advisors. It's so critical that
11:19advisors help coach people along. Look, there may be things that are okay to do. It's for fun. And then
11:25there's
11:25things that they shouldn't do and that these advisors play a huge role in making sure that people are on
11:29the right path.
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