Vanguard’s Jack Bogle Skewers Financial Companies and Offers Solutions for Retirement Crisis

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John Bogle, Vanguard's founder.--via NYTimes.com

During this year’s Bogleheads meet up, admirers of Vanguard’s Jack Bogle got together to talk about index funds while the founder of the world’s largest mutual investment fund manager took the opportunity to skewer other financial companies and presents his own solution to the retirement crisis, writes Nora Morrison for The Street.

Referring to the Wells Fargo scandal, Bogle recalled that when he started Vanguard, he did his best to disrupt the industry that was, in his opinion, in dire need of disruption. That is why he gave Vanguard its unique mutual ownership structure which lowered fees.

However, despite the rapid growth of Vanguard, according to Bogle, “expense ratios haven’t gone down the way you’d think they’d go down” across the rest of the investment industry. The reason, he points out, is that other mutual fund companies have “taken all the economies of scale and have arrogated them to their own benefit.”

As far as pension funds are concerned, Bogle commented that people are making an unrealistic assumption that they will get 7 to 8 percent returns on their assets. While for defined contribution plans, he notes they are afflicted by high fees and the large commissions paid to salespeople.

“That’s just not right,” said Bogle. “That’s where the fiduciary standard may help.”

Read more of Bogle’s opinions at The Street here, and check out previous VISTA Today coverage of Vanguard here.

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