Christine Benz: Hi. I’m Christine Benz with Morningstar. My colleague Dan Lefkovitz and I interviewed Vanguard CEO Salim Ramji at the Morningstar Investment Conference in late June for an episode of our podcast, The Long View. Here’s an excerpt from that conversation.
Listen to the full episode of The Long View:
Salim Ramji: The Industry Uses Complexity As a Mask to Charge More
One year into his tenure, the Vanguard CEO reflects on the push to get investors into private securities, the future of advice at Vanguard, and whether the firm has addressed its customer service and technology issues.
Has Vanguard Fixed Its Customer Service Problems?
Dan Lefkovitz: The question that’s probably top of mind for a lot of our listeners: Where do things stand with regard to the customer service challenges that Vanguard has been experiencing?
Salim Ramji: It’s a good question. We have been doing for the past three years, two years before I started, a whole series of investments, particularly in technology and particularly in our technology stack. I think we’re turning the corner, but this isn’t a destination. This is a constant journey. What the technology changes have allowed us to do, and now virtually, I think it’s like 90%-plus of our personal investor platform is cloud-native, and that was really hard, laborious, costly work to make that happen. But we think we now have the most modern kind of infrastructure stack in the industry. What it allows us to do, beyond all the high levels of resilience that a platform like that now has, is be able to make improvements on a lot of the front-end design and a lot of the front-end user experience. And so we’ve already been doing that over the past six months.
Back in March, we started to see some good early signs of progress. J.D. Power ranked us number one for the first time in a while in terms of our client experience for DIY investors, but it also gives us the ability to keep innovating, making the front-end web or mobile applications better, more intuitive, more customized. So maybe different if you’re a wealth management client with some complexity versus if you’re a first-time investor. And what the really exciting part of it is that it gives us some incredible opportunity to then put AI applications on top of that, because our tech stack is now modernized in a way that just wouldn’t have been possible two years ago or three years ago.
It’s not that we’re declaring victory by any means. We’re on a journey. We’ve been doing it deliberately and methodically. We appreciate all of our clients’ patience with it, but I think that clients are starting to see some of the results, and we’re continuing to invest in a major way to make sure we continue to distinguish ourselves in a positive way on that front.
How Vanguard Is Using AI to Help Its Clients
Benz: You mentioned AI. Can you provide any specific examples of how you’re using AI to help clients?
Ramji: We have, like many companies, a lot of things in pilot, a lot of different applications, a few dozen around it. The one thing that we just released in April, it’s an AI-based tool that allows advisors to communicate in a customized way with their clients. How do you take all of the market views, synthesized views that you might get from Vanguard, you might get from a whole range of firms out there, and be able to distill it down into one or two pages, but you customize it to a client? You may be a really confident client. Dan may be anxious and in retirement. I may be a first-time investor and just want to understand what’s going on. And some of these capabilities, which we built for our own advisor team, we’ve now made available to all advisors, including those here at the conference, who are kind of Vanguard clients within their portfolios. And it’s been really, really positive. We’ve gotten really great feedback, whether it’s here at the conference or even just through our interactions with them. And I describe that as a first step of taking what is often complicated, noisy information and making it simple and more personalized.
Honestly, Christine, we’re holding back on some of the pure client-facing, direct client-facing applications. They’re really good. But we’re holding back on them because we want to make sure we’re doing it in a responsible kind of way. And so we’ve worked out any kinks, hallucinations, and the like before we do it. But just the application of that, I think, can be kind of very, very significant for what we do in advice, what we do for first-time investors. And honestly, it’s sort of on-mission, if you will, because for a very long time, Vanguard has taken the complicated and tried to make it simple and accessible. And I think that the AI applications, whether it’s with advisors, whether it’s with our direct consumers. I was with a whole group of our workplace clients last night, and so just think of the complexity of retirement plans and particularly if companies have merged and want to distill that. We have all those applications at the ready. We have a tech stack that’s able to handle it, but we’re just working it through ourselves and with clients and others just to make sure we get it right because it’s really important we do it responsibly.