It’s been three weeks since Jack Bogle died. For those in the Philadelphia area and those with close ties to the financial services industry, Jack Bogle requires no introduction. But, for many others, Bogle is not a name you might recognize. But, before I get started with any substance about the influence Jack Bogle has had on all of us, let me be very clear – Jack Bogle was a giant who walked among us.
Jack Bogle started a mutual fund company back in 1975 that he named Vanguard. Bogle formed Vanguard as a client owned mutual fund company by redirecting profits back to investors in the form of lower costs. In 1976, he created the first index fund – the S&P 500 index fund. The S&P 500 index fund is a passively managed fund that tracked 500 largest companies in the United States. Bogle believed that the index fund would track the broad market and actually outperform actively managed mutual funds because the costs of management are greatly reduced. He was right and the rest is history as they say. Forty-five years later Vanguard manages over 5.1 trillion dollars! That’s no typo – it’s really trillion! How did Vanguard achieve that kind of success? Bottom line, he was more interested in providing more of a return to investors through reduced fees than creating a fund that would line his own pockets with gold. It really is that simple. He fought for the common man. He fought for the small investor. He fought for doing what was right, not what Wall Street expected at the time.
Erin Arvedlund and Art Carey of the Philadelphia Inquirer wrote a beautiful article about Bogle’s life the day after he died. I would encourage you to read it. It talks about his amazing life and all of its nuances. But there was a quote in the article from one of Bogle’s longtime friends Paul Miller that really struck me. Miller said of Jack before he died “Jack operated at only two speeds – as fast as is humanly possible and stop.” “He was fiercely competitive when it counted, more intellectually alert than any person I’ve ever met, willing to face – almost court controversy and criticism, stubborn but willing to compromise when absolutely necessary, and most importantly loving, sentimental, kind, charitable and courageous.” How many people could you ever say those things about?
Bogle held the investment industry to a higher standard than it held itself. He cared deeply about his beliefs, his investors, his employees, and his country. His message to the world never wavered and over time people began to listen. As trusting investors started turning their investment dollars over to Vanguard, the investment industry started to listen and change as well. Because of his influence, today the word fiduciary is used to describe a certain type of financial advisor because of Jack Bogle. Fiduciaries must act in the best interest of their clients over their own self interests. Fiduciaries care about how costs impact the bottom line of investors. Fiduciaries hold themselves to a higher standard. Fiduciaries are transparent. Fiduciaries fight for what is right for their clients.
If all of this sounds like the principals Jack Bogle fought for, you are right. But, despite decades of work by Bogle we have not yet arrived yet to a place where all who are connected to financial services operate in the way Jack Bogle envisioned. We have a ways to go. That’s probably why Bogle never retired, until the day he died at age 89. He kept speaking, writing, and preaching about the benefits of indexing and low fees so those who hadn’t yet heard his message would. He cared too much to quit.
That’s the stuff that giants are made of. Thank you Jack Bogle for changing the direction of the investment industry, for caring about investors, and for demonstrating how to be a class act. We are grateful to you for showing us the way. We’ll take it from here.