On July 15, 1992, I had the privilege of introducing keynote speaker Jack Bogle at the Institute of Certified Financial Planners Retreat at Carroll College in Wisconsin. In recent days, I’ve thought about Jack and my comments that evening.
Our speaker this evening is Jack Bogle, chairman of the board of the Vanguard Group of mutual funds. In introducing Jack, I’d first like to describe my experience with Vanguard’s predecessor organization, the Wellington Group.
In 1967, I was a 23 year-old trying to eke out a living with a small broker-dealer in New Orleans and the owner of the firm said to me, “Timothy, a young man could make a lot of money selling mutual funds to the public. And I think it is the best way to invest in common stocks.”
At that time, the most popular mutual fund was the Dreyfus Fund, which had a great track record. My boss, however, had been educated at Princeton and some of his former classmates worked with the Wellington Group of funds. There was the Wellington Fund, a go-go fund called IVEST, Windsor Fund and others. But what did I know? I was a fresh accounting graduate from a regional university in Mississippi, so if the boss wanted me to sell the Wellington Funds, Wellington it was.
One day my boss and I came up with a marketing idea. (Understand that I was having trouble making my $575 monthly draw so I was eager for good ideas.) Wellington had a new stock fund called Explorer Fund, and it had a unique feature—a minimum initial investment of $25,000. (Adjusted for inflation, that amount would be in excess of $100,000 today.) We decided to do a direct mail campaign to rich New Orleans neighborhoods, marketing the Explorer Fund and its ritzy minimum. (With a 4 percent sales charge, one sale a month would more than cover my draw!) We wrote letters and followed up with phone calls. That was my early introduction to rejection, and it seemed to reach its high point when at a social gathering a young attorney asked, “What do you do?” I replied that I was a stockbroker. He smiled and said, “You stockbrokers amaze me. I got a letter recently from a stockbroker and that dumb SOB wanted me to invest $25,000 in a mutual fund.”
Jack, that was my first exposure to your mutual funds.
In the mid 1970s, I was developing my financial planning career where a vital part of my work was using mutual funds through a broker-dealer on behalf of clients. I especially used the Wellington Group, soon to be named the Vanguard Group, and then I got a letter from you saying that you were going no-load. No Load! I was stunned. Jack, I wrote to you, and among other things said, “You have turned your back on the people who have contributed to your success. You should know better. Discontinue future ($150 monthly) bank drafts on my account.” You responded and said that your decision was based on how you could best assure, and I am reading from your letter, “your continued ability to efficiently provide a full range of services and the best possible investment performance for shareholders.”
What I did not realize was that this action would be the first of many where John Bogle and Vanguard would follow through on that promise: efficiently provide a full range of services and the best possible investment performance for shareholders.
Let me cite a few examples.
Vanguard charges its shareholders less than any fund group in America. Based on assets of $89 billion, Vanguard saves its shareholders over $400 million annually. (Remember, the time period is July, 1992.)