I joined Vanguard in August of 2008—just weeks before the collapse of Lehman Brothers and the height of the subprime mortgage crisis. It was a moment that tested every asset manager’s mettle. It did reveal what makes Vanguard different: our unique ownership structure and commitment to main street investors. Many of the Wall Street firms were making headlines for the wrong reasons—they had prioritized profits over purpose and taken excessive risks.
Although the circumstances are very different, 2025 has so far proved to be another year of volatile markets and investor uncertainty. Once again, investors want common-sense financial information and guidance they can trust. There’s a lot at stake given how many investors are in or nearing retirement.
Today, just like in 2008, Vanguard is owned by its funds, which in turn are owned by the fund shareholders. With no outside interests to satisfy, we have never wavered from our focus to make money for our clients, rather than from them. It is a culture that has fueled our work to lower the complexity and cost of investing for 50 years.
Improving access
The north star in the investment business should be that each client has a well-balanced, low-cost portfolio. To be managed with appropriate risk tolerance and managed to reflect their long-term goals.
For most Americans, that starts with workplace retirement plans.
In the U.S., 401(k) plans are the most convenient—and often only gateway—individuals have to the benefits of capital markets. Over the last two-plus decades, we’ve worked with employers and policymakers to make it simpler for workers to get started and grow their contributions.
Vanguard was an early proponent of automatic enrollment for 401(k) plan participants. Back in the early 2000s, about one-third of eligible workers did not participate in their retirement plan. Today, as nearly two-thirds of all plans have adopted automatic enrollment, the average plan participation rate is 85%, an all-time high. We also see record-high participant savings rates according to How America Saves.
Lowering costs
Jack Bogle founded Vanguard with the express objective of becoming the world’s lowest-cost provider of financial services. His “costs matter” thesis argued that in investing, you get what you don’t pay for. Our structure and scale have enabled us to reduce the expense ratios on our U.S. funds continually and consistently over the last five decades.
The impact of our relentless focus on lowering costs and helping investors keep more of their return extends beyond Vanguard clients. Our impact extends to the broader industry, in what Morningstar observed as “The Vanguard Effect,” a trend of competitors lowering fees in anticipation of cost competition as Vanguard entered new markets.
Low costs don’t just save clients money on fees. Low-cost active managers do not need to compensate for a higher expense ratio. They do not feel compelled to take on greater risk to deliver higher returns above fees in the same way higher-cost managers may. This is particularly true in active fixed income where costs have remained stubbornly high, and complexity gives low-cost, high-skilled active managers a better opportunity to beat the index.
The next evolution
Our work is far from finished. The world is growing more complex, and investors are increasingly looking for help as their needs evolve.
We’ve long worked to democratize access to high-quality financial advice. We began offering advice to individual investors in 1996 and to 401(k) plan participants in 2001. We have partnered with external financial advisors to deliver value to their end-investor clients since 2002.
Our next chapter will be focused on giving access to high-quality, low-cost, personalized advice to help investors achieve overall financial wellness. Whether helping younger generations with the guidance they need to resist wealth-corroding speculation and gamification of investing, helping workers focus on contributing to their 401(k) plan while also funding their emergency savings, or helping retirees figure out how to transform hard-earned savings into income for a lifetime, these benefits should not be just for the wealthy.
We will reach new horizons to bring our mission to investors and lower the cost and complexity of investing. Private equity represents more than 10% of the investable equity market but remains inaccessible to many investors. We are exploring investment solutions combining public and private assets and assessing whether the expanded market coverage and potential diversification benefits of private assets can be brought to investors in a way that appropriately accounts for the risk profile.
A lot has changed in the world since Vanguard opened its doors for business in 1975, and a lot has changed since I first joined Vanguard nearly 20 years ago. Vanguard’s mission and our commitment to investors remains unchanged. Investors still trust us to help them save and invest to reach their goals. That is a responsibility we do not take lightly—to help someone buy a home, send a child to university, or retire with dignity. These things continue to drive us in our mission to give investors the best chance for investment success.
John James is managing director of Workplace & Advisor Solutions at Vanguard
