Salim Ramji, who BlackRock may have shunned for Larry Fink's job in January, is named Vanguard CEO -- now he has to reassure investors he believes in the Vanguard way, even as an ex-Wall Street wolf

Vanguard Group has its new CEO, who will be tasked with overtaking BlackRock as the No. 1 asset manager – and, yes, it's no small irony he's a BlackRock guy.

The $7.2-trillion, Malvern, Pa., manager has tapped Salim Ramji, BlackRock’s former exchange-traded funds and index investing head, according to The Wall Street Journal and a Vanguard release.

He takes over on July 8, the same day Tim Buckley will relinquish his role as CEO and chairman.

The quick exit of Buckley, now in July – originally slated to stay until 2024 – strikes Jeff DeMaso, publisher of Vanguard Independent Adviser, as confusing compared to previous Vanguard successions.

“The oddest aspect for me is the timing and communication of this all,” he told RIABiz in his first comment on the subject. "When Vanguard announced Buckley's retirement, they said he'd stay on until at least the end of the year. Ramji is taking over in July. 

“So, Vanguard and Buckley were willing to carry on until the end of the year but happy to part ways sooner if it was possible/practical. That's just so different from past successions at Vanguard which were well telegraphed with plenty of lead time.”

Insider to outsider

Buckley's time at Vanguard is largely unimpeachable, though he was increasingly criticized for fostering what observers say was more of a Wall Street culture than Vanguard founder Jack Bogle's investor-first culture. See: During CEO Tim Buckley's waning months, Vanguard is imposing fees that may affect its older investors, while hand-off to Ascensus of certain IRA and 401(k) products also comes with some sticker shock

Ramji is likely to fuel similar concerns because of his reputation as a Wall Street denizen.

DeMaso is not concerned that an outsider is taking over.

"I think he was in the mix all along ... or at least I tipped him as a potential candidate in an interview I did with ETF.com in March."

“A lot of noise will be made about Ramji being Vanguard's first ‘outside’ CEO,” he says. “But it was bound to happen someday. 

"It may actually be a positive, as past CEOs have operated under Bogle's shadow --which has its positives and negatives. With Greg Davis operating as president, I don't expect Vanguard's culture to change dramatically overnight.”

For his part, Ramji sought to reassure investors that he wants to maintain Vanguard's mission – while promising change.

“I am drawn to Vanguard because of the firm’s clarity and consistency of purpose and am very excited to get to work and partner with the outstanding leadership team to lead the company into the future,” he said in the release.

Musical chairs

Ramji was short-listed to replace BlackRock CEO Larry Fink, according to the WSJ, but may have lost favor. A restructuring memo came simultaneously with his resignation. 

The memo referred to the “biggest transformation in 15 years” at BlackRock, with the creation of a new global product services business encompassing the firm’s investment strategies and fund structures, not least Ramji's iShares ETF business.

Ramji, 53, said he left BlackRock in January to seek new opportunities. 

In a statement, BlackRock praised and congratulated Ramji for his Vanguard appointment.

“We congratulate Salim on this accomplishment, and thank him for his leadership at our firm. BlackRock is proud to have a track record of our firm’s alumni going on to lead multiple investment management companies and other financial Institutions.”

Vanguard announced that Tim Buckley was stepping down as CEO at the end of February, but nothing suggests the two personnel moves are related.  See: Tim Buckley sends shockwaves by retiring as Vanguard CEO after adding $750 billion per year during his stay in the executive suite

Moving up

What shocked observers about Buckley's departure was his young age, at 54, but also the fact that Vanguard had not yet decided on a replacement. 

There were no reports on or off record to refute Vanguard's account that he was simply retiring young. 

Vanguard also announced that Greg Davis, president and chief investment officer, will be appointed to Vanguard’s Board of Directors and have expanded responsibility for regulatory and government affairs.

“Salim is a highly accomplished leader in the world of index investing, but importantly, also someone who shares Vanguard’s passion for serving clients,” said Davis in the release.

Democratizing investing

Buckley endorsed Ramji as his replacement based on their history of working toward common interests in their past. See: FDIC bid to strip BlackRock and Vanguard of superpower 'has legs' and reckoning may start with curbs on self-certification of passive index funds

“I have worked with Salim on the Executive Committee of the Investment Company Institute," he said in a release announcing the appointment today (May 14).

"He cares about advancing the interests of individual investors, has a strong fiduciary ethos, and thinks strategically about solutions. 

"Salim understands our organization’s deep sense of purpose and commitment to put clients first, which is a hallmark of Vanguard’s leadership team and culture.”

In its release, Vanguard says Ramji has “democratized” investing. 

"His contributions led to expanded investment access for tens of millions of investors, a more central role for ETFs in retirement and wealth portfolios and a more efficient bond market with ETFs as an enabling technology. 

"At BlackRock, he led the implementation of a voting choice platform, which democratizes client access to the proxy voting process.

Deep experience

Ramji joined BlackRock as global head of corporate strategy in 2014, and became head of its US wealth advisory in 2015. He remained there until his promotion to global head of iShares and index investments in 2019.

He left saying he was “seeking a new leadership or entrepreneurial opportunity.”

Ramji's experience goes well beyond financial products. 

He is both a former attorney, with a focus on M&A in Hong Kong, and a former senior partner for McKinsey & Co., from 1998 to 2014. He earned his JD from Cambridge University.

Driving solutions

Vanguard knows how it wants to put those qualities to work, says Mark Loughridge, lead Independent director in a release.

"We have significant opportunities for growth ahead, including how technology and the client experience can drive solutions and extend the benefits of wealth management to more investors. 

"Salim is an exceptional leader who is aligned with Vanguard’s mission-driven culture, making him the ideal candidate. Vanguard has an important future, and we believe he is the best person for the job.”

Salim noted that the current investor landscape is changing, and that presents opportunities for Vanguard to further its mission… giving people the best chance for investment success, which is more relevant today than at any time in the firm’s five-decade history,” 

"My focus will be to mobilize Vanguard to meet the moment while staying true to that core purpose – remaining the trusted firm that takes a stand for all investors,” he added. 

Vanguard’s distinctive structure and culture have helped tens of millions of “investor-owners” plan for their future and their families, the company said.