The past year has been an especially good one for Vanguard’s Financial Advisory Services (FAS) unit.
The index fund giant’s advisor-facing business hit the $1 trillion mark, accounting for a third of Vanguard’s total assets.
The company, known above all for its low-cost index funds, surpassed State Street to become the second biggest player in ETFs (after BlackRock).
And those mighty 1,000-plus advisory firms who have delivered that trillion to Vanguard accounted for about half of Vanguard’s cash flow, making 2014 a record-setting year for the Malvern, Pennsylvania-based firm.
“None of those are goals, but rather they’re reflective of the fact that we’re continuing to gain traction with advisors in the U.S.,” says Martha King, who heads FAS, in an interview with ThinkAdvisor at ETF.com’s annual InsideETFs conference in Hollywood, Florida.
If your mother ever told you to focus on doing the right thing, and the rest — i.e., your income — will take care of itself, that seems to be the operating principle behind most of what King had to say.
In that sense, King stands out from the army of product vendors hawking their shiny wares to any of the more than 1,800 attendees, mainly advisors, who might listen.
“We’re not here to promote a hot product; we’re never here to promote product per se,” says King, a regular at the ETF industry’s largest annual conference. It is only in passing that she makes mention of two product launches expected this year—a muni bond ETF and an ultra-short bond ETF.
She does not, as is common practice here, launch into a sermon as to why the two new funds are the best new mousetraps, noting only that they fill “minor gaps” in Vanguard’s overall product menu, of which she remarks:
“Our lineup is fairly complete. I know that doesn’t make for a great story, but that’s the reality.”
Indeed, King makes the non-excitement of Vanguard into a virtue, and in so doing draws a stark contrast with all the bling of the best new mousetraps that an ETF conference attracts.
“I know our message is a little boring, but the challenge for advisors is that a lot of information is coming at them,” King says. “Sorting through what information is lasting and important versus what is maybe just an idea du jour — that’s the challenge of any attendee.”
What King regards as timelessly true versus what is merely fleetingly attractive is that advisors add value through their relationships with clients.