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Mission accomplished, Jack Bogle dies at 89 and it's still way too soon, but his legacy looms larger than ever

Poetically born in 1929, and tragically afflicted by the Great Depression, the Vanguard founder's message, mission, impact and spirit never got old

Wednesday, January 16, 2019 – 11:33 PM by Brooke Southall
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Jack Bogle harmonized values with vocation and reaped a truly great life.

Brooke's Note: John Bogle bears all the marks of an old warrior. But as I wrote this piece it was the the Vanguard founder's very 2019 man-of-the-hour relevancy and importance that overcame me. A new generation came to know him as an almost monk-like sage who came down from the mountain. Yet in the course of his Vanguard-founding career he was every bit the entrepreneur, preceded by his groundwork-laying intrapreneurial push at Wellington. Bogle, indexing and the minimization of money management fees are all but synonymous. That Trinity removes a layer of unnecessary complexity and expense that lays the foundation for RIAs to do work of real value and keep the overall costs manageable. It allows technology to jump in and do a better job and intuit its way to better business models through a new crop of determined entrepreneurs who start with a set of values that Bogle leaves us off with. Unfortunately I never met John Bogle or saw him speak so I couldn't write a piece like Jon Stein's article that shows Bogle did far more than set an example for him. See: Remembering Jack: Why there is no Betterment without Bogle I don't think my observation from afar disqualifies me from putting him on a rare pedestal both as a person and and a warrior against Wall Street culture.  That broker-first, brokerage house-first culture continues to win daily battles but Bogle's acolytes are winning the war. Bogle and his legacy are so big that I can see them all the way from the West Coast.

Jack Bogle is gone but the Bogle effect is stronger now than ever, as indexing, ETFs, and minimal fees become the norm in the financial services industry.

The founder of The Vanguard Group died today in Bryn Mawr, Pa. of esophageal cancer. He was 89. The news was broken by Vanguard in a release.

The octogenarian created an alternative to Wall Street investing that stood politely to one side for decades-- until it swept the industry.

In 2009, unable to beat indexing, Wall Street jumped onto the Bogle bandwagon with everyone from Goldman Sachs to Fidelity Investments selling ETFs -- to the point where Vanguard itself is feeling new competitive pressures.  See: Vanguard's asset machine wobbles under Abby Johnson's withering pricing assault, but Fidelity's new cost-cutting front aimed at advisors is proving more lethal for BlackRock

"Jack Bogle made an impact on not only the entire investment industry, but more importantly, on the lives of countless individuals saving for their futures or their children’s futures,” said Vanguard CEO Tim Buckley in the release.

“He was a tremendously intelligent, driven, and talented visionary whose ideas completely changed the way we invest. We are honored to continue his legacy of giving every investor ‘a fair shake.’”   

Industry critic

Yet Bogle's objective scrutiny of investment firms even extended to Vanguard, and he challenged it -- largely because it began to introduce ETFs.   See: John Bogle tells the Morningstar crowd just why Vanguard Group has a 'problem' -- and it starts with his dogged criticism      

Despite his outspokenness and dogged determination, Bogle wasn't known to be controversial, per se, because his actions were so consistent. He remained above the fray -- as did Vanguard in receiving his criticism.

Bogle was even hard on death, which he reportedly cheated for nearly 60 years. He had his first heart attack at age 31 and dealt with the ravages of heart disease for the rest of his life.

At age 38, he was diagnosed with a rare heart disease, "arrhythmogenic right ventricular dysplasia." He received a heart transplant in 1996 at age 65.

He was, poetically, born in 1929,  as the nation plunged into the Great Depression. His family lost its money and their home to bad investments. His father became an alcoholic, and his parents divorced.

Although poor, Bogle and twin brother David won work-study scholarships to the prestigious Blair Academy in New Jersey.  Bogle showed a particular aptitude for mathematics and was accepted at Princeton University, where he studied economics and investment. 

Before Bogle could reform the world of investing, he had to win the battle from within an old-line Philadelphia-based investment management firm.

Wellington Management Company. hired Bogle, then 22, straight out of college in 1951. He started Windsor Fund, a value-oriented equity fund in 1958, to complement that the firm's Wellington Fund, the first balanced mutual fund in the United States, and also one of the oldest.

Vanguard origins

In 1967, Bogle led the merger of Wellington Management Company with the Boston investment firm Thorndike, Doran, Paine & Lewis (TDPL). Seven years later, a management dispute with the principals of TDPL led Bogle to form Vanguard in September 1974.   

It handled the administrative functions of Wellington’s funds, while TDPL/Wellington Management retained the investment management and distribution duties.  The Vanguard Group of Investment Companies commenced operations on May 1, 1975.

In 1976, Vanguard introduced the first index mutual fund—First Index Investment Trust—for individual investors. Ridiculed by others in the industry as “un-American” and “a sure path to mediocrity,” the fund collected a mere $11 million during its initial underwriting.

Now called the Vanguard 500 Index Fund, it's grown to more than $441 billion in assets. Today, index funds account for more than 70% of Vanguard’s $4.9 trillion in assets under management.

In January 1996, Bogle passed the reins of Vanguard to John J. Brennan, who had joined the company in 1982 as Bogle’s assistant. The following month, Bogle underwent heart transplant surgery.

In December 1999, he stepped down from the Vanguard board of directors and created the Bogle Financial Markets Resource Center, a Vanguard-supported venture.

Bogle worked until his death as the center’s president—analyzing issues affecting the financial markets, mutual funds and investors through books, articles, and speeches.  In all, he wrote 12 books, selling over 1.1 million copies worldwide.

Indeed, Bogle's humanity in investing was bolstered by his sharp communication skills.

He spoke frequently to industry professionals and the public and liked to write his own speeches, according to Vanguard's release.

 "He also responded personally to many of the letters written to him by Vanguard shareholders, and he wrote many reports, sometimes as long as 25 pages, to Vanguard employees—whom he called 'crew members' in light of Vanguard’s nautical theme," the release adds.

Broad legacy

What Bogle might never have imagined in starting index funds is that it plausibly could lead to a time when a world of zero-fee funds is not so implausible. 

Today investors pay advisors who channel Bogle-esque virtues and practices at an individual level with Wall Street playing a bit role.

"Betterment would not exist without the example he set. I don’t say this lightly, I mean it seriously," says Jon Stein CEO of Betterment who writes movingly of him in a blog.

Vanguard itself has begun to succeed with that model and has AUM of $110 million-plus and low fees that are set to go lower. See: Vanguard's new CEO Tim Buckley hints the next move for his firm's RIA's 30-basis-point fee may be down, down, down

Bogle saw his low-fee, high-diversity, market-level returns mission through until the successors  to his legacy could be counted in the tens of thousands. See: How many RIAs are there? No, seriously, how many?

He'll be missed. Truly missed.

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