Vanguard Group to Open Front of Battle Against PCP Poaching in Schwab-Fido-Pershing Backyard, After Its Human RIA Increases AUM 72% to $ 231 billion
The Malvern, Pa., $ 7.5 trillion manager is aggressively moving into the Dallas metro area where its big rivals employ tens of thousands, showing Vanguard CEO Tim Buckley’s confidence in the business model of the RIA
Vanguard Group appears poised to make a major commitment to its robot Vanguard Personal Advisor Services (VPAS) by significantly expanding its contingent of human advisers, in the midst of its larger competitors.
Malvern, Pa., A manager of more than $ 7.5 trillion, is considering a major expansion in the Dallas / Fort Worth area, where Charles Schwab Corp., Fidelity Investments and Pershing already have a major footprint.
But Vanguard intends to put them all forward with the PSC’s poaching blitzkreig to expand VPAS’s ranks after a year of strong growth. The robot rose to $ 231 billion as of March 31, down from $ 167 billion compared to May 31 of last year.
“We will hire locally to complement Vanguard’s full roster and advice-focused talent, “Vanguard spokesperson Charles Kurtz confirmed.” Details on recruitment plans and staffing will be confirmed in months to come up.
Significantly, Vanguard CEO Tim Buckley appears to signal his commitment to continue to use human advisers as part of his robotic service.
When VPAS launched six years ago, Vanguard moved away from pure bots like Wealthfront and Betterment by making online financial advisors available to talk to clients. The strategy seems to be paying off.
According to the company, VPAS has grown spectacularly enough to require a larger labor market and space with more office space to complement Vanguard’s 17,300 employees worldwide.
But above all, he needs a poachable “top” of trained and educated people that he can pursue. en masseBuckley alluded to in a statement.
“The establishment of a new office in Dallas reflects our continued commitment to hire the best technology advisors and talent to support our discerning clients, ”he said.
Mother lode
She now employs 700 human advisers, primarily in Arizona to manage the accounts. If it continues to grow its new net assets by $ 20 billion per year, it would literally need to hire dozens, if not hundreds, of CFPs per year, according to a simple calculation.
Right now, however, the industry faces a shortage of financial advisers. As the population ages and life expectancy increases, the demand for financial planning services is expected to increase even more, according to the Federal Bureau of Labor Statistics.
About 40% of financial advisers also plan to retire within the next ten years, according to Cerulli Associates.
“We are truly on the edge of an estate cliff,” Marina Shtyrkov, wealth management research analyst at Cerulli, told CNBC. “Over the next decade, the number of counselors will start to decline quite rapidly.”
Ultimately, the Dallas / Fort Worth area is a mother land of financial talent.
Meanwhile, Fidelity is among the 15 largest employers in North Texas and has had a presence there for more than 35 years, said spokeswoman Janelle O’Haughtery. See: Fidelity Investments set to recruit 4,000 new hires at the same time senior executives might agree to buyouts, arbitrage to match talent with digital needs
Last year, Fidelity expanded from a back office campus in Westlake and now has around 6,200 employees in Texas, she said.
Vibrant swimming pool
Vanguard is expected to open its new office in 2022.
When asked exactly where the office would be located and whether Vanguard is building or renting, spokesman Charles Kurtz said no decision has yet been made.
“Vanguard is exploring real estate opportunities to better meet the needs of our team and the business,” he said.
He declined to say how many financial advisers would work in the Texas office, but said the advisers overseeing VPAS would be housed there as well as his Phoenix office.
We are excited to combine the knowledge and experience of the current crew members who will be relocating to Dallas with the dynamic pool of advisors, UX, and IT talent that Dallas offers.
“All relocations will be voluntary,” Kurtz says.
New net assets
The explosive 72% growth rate of VPAS – primarily that of baby boomers – is somewhat misleading as the S&P 500 has grown 43% in the past year, says Anders Jones, co-founder and CEO of Facet Wealth, a Baltimore-based startup. with a roughly similar robot model. See: Facet Wealth doubles in size every six months with a subscription model, on-the-job training, no central office and a growing belief that it can be the ‘Next Fidelity’
“I imagine the vast majority of this growth is attributable to the market,” he said.
Sifting through the numbers, Michael Kitces, author of Nerd’s Eye View newsletter, still sees a positive trend, albeit more modest.
If the growth of the S&P 500 has taken Vanguard from $ 167 billion to over $ 210 billion, “Vanguard may have added $ 20 billion in the past year in new real net flows. This is not not an insignificant number, but not really shocking either, “he writes.
Other analysts say it’s upsetting on most planets.
Personal Capital, an independent rival founded in 2009 with a superficially similar call center model, had AUM $ 12 billion when Empower bought it for $ 1 billion last summer. He now has nearly $ 20 billion in assets. See: IPO dreams die, but Personal Capital gets life insurance giant’s ‘$ 1 billion’ price of unit 401 (k), which includes de facto cut on early venture capital dollars
VPAS also outperforms its purely automated sibling, Vanguard Digital Advisor, more than ten times, Kitces says.
Huge brand equity
In contrast, VPAS requires a minimum balance of $ 50,000. The service is aimed at people close to retirement; the average age of clients is 57 years old.
“If Vanguard added even $ 20 billion in new net feeds to VPAS, but only $ 1.6 billion in Digital Advisor, I think that really shows how much consumers actually want to talk to a professional. CFP and don’t really want a robot advisor, ”Kitces notes.
Digital Advisor’s assets are always an incredible achievement from the start, says Lex Sokolin, co-director of financial technology at New York-based software company ConsenSys.
“In 2011, it would have been unthinkable – for the dominant asset manager to distribute portfolio management, financial planning, and execution of fiduciary transactions on the web for 15 basis points.”
It takes years for other companies to acquire this level of assets. For example, Betterment, founded in 2008, hit the AUM $ 20 billion mark in 2020.
“I think the size of the assets gathered reflects the enormous brand equity that Vanguard has with mass affluent investors, especially with the older generations who are likely to have more assets on average,” adds Sokolin.