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The Client. The Client. The Client.

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The last words of General of the Army Douglas MacArthur’s farewell speech at West Point went like this: “…when I cross the river, my last conscious thoughts will be of the Corps, the Corps, the Corps.”

It wouldn’t surprise me if when John Bogle gives his farewell speech—which I hope is years away—his coda will be “The client. The client. The client.”

I had the honor of participating in the John C. Bogle Legacy Forum, which was organized by the Institute for the Fiduciary Standard, on Jan. 31 at the Museum of American Finance in lower Manhattan. The day-long event featured a fireside chat between Paul Volcker and Mr. Bogle and a panel that included no less than three former SEC Chairmen—Harvey Pitt, Arthur Levitt and David Ruder—and Tim Ryan of SIFMA. There was a who’s-who conclave of investment gurus moderated by Roger Ibbotson that included Burton Malkiel of Princeton, David Swenson of Yale and Vanguard CIO Gus Sauter. Gary Gensler of the CFTC spoke. The final session was a scintillating discussion of the impact of John Bogle’s writings. (OK, I was the moderator of that final session, so consider the source of the term “scintillating.”)

What I found striking was that among these titans of Wall St., of academia and financial services, Bogle stood out for one trait in particular: He kept talking about clients, about end investors, kept bringing around the conversation to how the actions of the academics and the regulators and the mutual fund industry affect the American investor.

That’s not what you normally get when Wall Streeters convene to congratulate themselves on their great investing acumen. It’s also not the first topic of conversation, as a rule, among advisors. Too often, it’s about how big your book is or how much money you have under management. (Interestingly, I can’t recall hearing that bit of boasting from women advisors, but that’s a discussion for another time).

John Bogle has never lost track of what’s important in this business. He’s never lost his focus in his books, his speeches, his Congressional testimony and his media appearances that all of us in the financial services industry must put the client first. You could argue with Bogle about the wisdom of the indexed mutual fund approach to investing, though the growing popularity of ETFs among advisors seems to validate that approach. Even the aforementioned Mr. Swenson of Yale told the audience that he thinks there are only two paths to successful investing: the index approach or to hire all the really smart people you can to embrace the world of alternatives.

That’s why putting your client first is so important. That’s why Bogle is on record as supporting a fiduciary standard for all advice givers. That, too, is why he calls for a “fiduciary society” in this country that allows for market capitalism to flourish while tempering capitalism’s essential selfishness. The 2008-2009 financial meltdown was, Bogle has said, a “crisis of ethics proportions.” His legacy is to embrace your higher calling, to be a moral absolutist, not a relativist. Be a fiduciary.


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